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December 27, 2005.


The opinion of the court was delivered by: ROBERT CARTER, Senior District Judge



The following facts are not disputed. On or about March 14, 1999, Joseph Sortino and Christine Sortino (the "Sortinos" or "defendants") entered into a lease agreement with Potamkin Toyota (the "lease") for a 1998 Toyota Corolla (the "vehicle"). Potamkin, as lessor, immediately assigned all their rights under the lease to Toyota Motor Credit Corporation ("TMCC"). On October 30, 1999, while operating the vehicle, Christine Sortino struck Vincent Poccia ("Poccia"), a pedestrian, causing serious and permanent injuries to Poccia. Poccia commenced a personal injury action against the Sortinos and later commenced a separate action against TMCC on a theory of vicarious liability. Both of Poccia's actions were settled in March of 2002 for a total of $450,000. TMCC's insurer, Tokio Marine and Fire Insurance Co., Ltd. ("Tokio Marine" and together with TMCC the "plaintiffs"), contributed $150,000 toward the settlement on behalf of TMCC. The Sortinos' insurer, Allstate Insurance Company ("Allstate"), contributed the remaining $300,000 on behalf of the Sortinos. Plaintiffs also expended $33,544.59 in attorney's fees and disbursements in defense of Poccia's personal injury actions. On September 10, 2002, Tokio Marine, as TMCC's subrogee, initiated this action seeking indemnification under the lease*fn1 from the Sortinos for the $150,000 it had paid to Poccia and for the $33,544.59 in attorney's fees and disbursements it had incurred while defending TMCC in the Poccia action.

  In the instant matter, plaintiffs move for summary judgment on their indemnification claim and for dismissal of defendants' counterclaims. Defendants cross-move to dismiss plaintiffs' complaint and for fees and expenses incurred in defending this action.


  Defendants claim that although TMCC's policy with Tokio Marine specifically excludes lessees, like the Sortinos from coverage,*fn2 Tokio Marine is required to insure lessees as "permissive users," under N.Y. Veh. & Traf. Law §§ 345 & 388. Defendants argue that as a violation of public policy, the exclusion of lessees from coverage is unenforceable and this provision should be struck from the policy. With the exclusion struck from the policy, the Sortinos would be insureds of Tokio Marine. As insureds, Tokio Marine's claims against them would be barred by New York's anti-subrogation rule, which prohibits an insurer from recovering from its insured for claims arising from the risk for which the insured was covered. See Penn. Gen. Ins. Co. v. Austin Powder Co., 68 N.Y.2d 465, 510 N.Y.S.2d 67 (1986).

  Defendants' argument that they are "permissive users" is factually misguided and legally inaccurate. The permissive user concept was designed to protect an injured third party (in this case, Poccia) from insurers who deny coverage due to use of the vehicle by someone other than the owner.*fn3 The Tokio Marine policy does not attempt to deny coverage to Poccia; to the contrary, Poccia has received a settlement. Furthermore, there is no logic and no caselaw that would support an extension of the scope of the permissive user concept to lessees, especially when they are merely seeking to escape their contractual obligations. The endorsement to the lease that excludes lessees from coverage is valid under New York law. The defendants were not insureds of Tokio Marine and, consequently, the anti-subrogation rule is inapplicable.*fn4

  In deciding a motion for summary judgment, the court's role is not to determine the truth of the matter, but to determine whether there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). Defendants can present no genuine issue of fact regarding the substance of the plaintiffs claim. Lacking compelling facts, they resort to baseless allegations regarding the fairness of the settlement and counsel's fees. The lease clearly provides that TMCC is to be reimbursed for damages and legal fees. Lease § 37. The implication that plaintiffs have artificially inflated the fees and the settlement so that they could recover in subrogation is not supported by competent facts. See Tokio Marine v. Pagan, No. 02 Civ 42112003, *4, 2003 WL 1858147 (S.D.N.Y. April 9, 2003) (Rakoff, J.). In light of the serious and permanent injuries Poccia received, there is no reason to believe that the Poccia settlement was unreasonable. Similarly, Defendants' counterclaims for deceptive business practices, fraudulent inducement and "bad faith" lack any grounding in law or fact.


  Plaintiffs' motions for summary judgment and to dismiss defendants' counterclaims are hereby GRANTED. Defendants are jointly and severally liable to plaintiffs in the amount of $183,544.59. Accordingly, defendants' motions for summary judgment and dismissal of the complaint are DENIED. Clerk to enter judgment.



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