The opinion of the court was delivered by: Mukasey, District Judge.
Plaintiffs Arthur Richards and Charlotte Richards bring this
action for declaratory relief pursuant to 28 U.S.C. § 2201
(1984). Plaintiffs allege that defendant, Select Insurance
Company, Inc. ("Select") breached an insurance contract by
refusing to defend and indemnify its insured, Barco Auto Leasing,
Inc. ("Barco") for plaintiffs' personal injury claims resulting
from an accident with a vehicle leased by Barco. Select moves to
dismiss on the ground that plaintiffs, as the injured parties and
not the named insured, have no standing to seek a declaratory
judgment. In the alternative, Select moves for abstention in
favor of an existing state court action brought by Barco seeking,
inter alia, indemnification in plaintiffs' personal injury
action. For the reasons set forth below, Select's motion to
dismiss is granted.
This action arises out of a personal injury suit filed in this
court on February 21,
1997, by plaintiffs against Barco, Carlos Ortiz and Naomi Tanaka.
See Richards v. Ortiz, No. 97 Civ. 1233 (S.D.N.Y. filed Feb.
21, 1997). In that diversity action, plaintiffs sued defendants
for damages resulting from an alleged accident where Arthur
Richards was hit by a motor vehicle leased by Barco. (Compl. ¶
12)*fn1 Upon receiving the summons and complaint from
plaintiffs, Barco notified Select of the accident and the pending
action. (Barco Compl. ¶ 72) Select declined to indemnify or
represent Barco, claiming that Barco failed to notify Select of
the Richards' claim in the manner required by the terms of
Barco's insurance policy (the "Barco Policy"). (Id. ¶ 74) In
response, Barco filed an action in Supreme Court, Nassau County,
on or about September 2, 1997, against Select and the previous
owners of the Barco Policy. See Barco Auto Leasing Inc. v. Gulf
Ins. Co., No. 97-25466 (Sup.Ct. Nassau County filed Sept. 2,
1997). In that action, Barco sought a declaration of its rights
and Select's liabilities in regard, inter alia, to plaintiffs'
tort action. (Barco Compl. ¶¶ 18-76)
Unaware of the pending state court action, plaintiffs filed
this complaint seeking a declaration that Select has a duty to
defend and indemnify Barco in the current tort action. (Compl. ¶
28) Select now moves to dismiss this action on the ground that
plaintiffs lack standing.
As a threshold matter, it is useful at least to consider the
proper procedural basis for Select's motion. It is unclear
whether Select filed its answer to plaintiffs' complaint before
or after filing a motion to dismiss on the pleadings. If this
motion was filed before the answer, it would be properly
construed as a motion for judgment on the pleadings pursuant to
Fed.R.Civ.P. 12(c). If it was filed after, it would be a motion
to dismiss for failure to state a claim upon which relief can be
granted pursuant to Fed.R.Civ.P. 12(b)(6). The difference,
however, is largely academic because the standard under Rule
12(c) is the same as the standard under Rule 12(b)(6): Accepting
the non-moving party's allegations as true and viewing the facts
in the light most favorable to that party, judgment on the
pleadings or dismissal for failure to state a claim should be
granted if the moving party "is entitled to judgment as a matter
of law." Burns Int'l Sec. Servs., Inc. v. International Union,
47 F.3d 14, 16 (2d Cir. 1995) (per curiam): see Narvarte v.
Chase Manhattan Bank, N.A., 969 F. Supp. 10, 11 (S.D.N.Y. 1997)
(stating that the standard for a Rule 12(c) motion is the same as
for a Rule 12(b)(6) motion, and citing cases).
Select claims that because plaintiffs sue on a contract to
which they are not parties, their standing depends on the
statutory rights granted third parties under New York Insurance
Law § 3420, N.Y.Ins. Law § 3420 (McKinney 1985 & Supp. 1998),
which permits a judgment creditor to sue an insurer directly on
an unpaid judgment. Select contends that an unpaid judgment is a
condition precedent to any action, and because plaintiffs have no
such judgment, plaintiffs' complaint must be dismissed.
Plaintiffs counter that Insurance Law § 3420 is procedural and,
therefore, inapplicable in a federal court which is guided by
federal procedural rules; or, alternatively, plaintiffs argue
that although § 3420 bars an injured party from bringing a direct
action for money damages, it does not bar that party from
bringing a declaratory judgement action.
(a) No policy or contract against liability for
injury to person . . . shall be issued or delivered
in this state, unless it contains in substance the
following provisions or provisions which are equally
or more favorable to the insured and to judgment
creditors so far as such provisions relate to
(2) A provision that in case judgment against the
insured . . . shall remain unsatisfied at the
expiration of thirty days from the serving of notice
of entry of judgment . . . upon the insurer, then an
action may . . . be maintained against the insurer
under the terms of the policy or contract for the
amount of such judgment not exceeding the amount of
the applicable limit of coverage under such policy or
(b) . . . [A]n action may be maintained by the
following persons against the insurer . . . to
recover the amount of a ...