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Allstate Insurance Co. v. Choi

January 2, 2007

ALLSTATE INSURANCE COMPANY, AS SUBROGEE OF PHILOMENIA MASCIA, PHYLLIS MASCIA AND ANTOINETTE MASCIA-BELLO, PLAINTIFF,
v.
MICHAEL CHOI, SUNG HO SHIN ARCHITECT, P.C., SUNG HO SHIN CONSTRUCTION, INC., NYST CONSTRUCTION, INC., ANCOR CONSTRUCTION SERVICES, INC., AND SOO J. KIM, INDIVIDUALLY AND D/B/A SJ CONSTRUCTION, INC., DEFENDANTS.



The opinion of the court was delivered by: Sifton, Senior Judge.

MEMORANDUM OPINION AND ORDER

On August 10, 2006, Plaintiff Allstate Insurance Company ("Allstate"), as a subrogee of Philomenia Mascia, Phyllis Mascia and Antoinette Mascia-Bello (collectively, "Mascias"), filed a complaint against defendants Michael Choi, Sung Ho Shin Architect, P.C., Sung Ho Shin Construction, Inc., NYST Construction, Inc. ("NYST"), Ancor Construction Services, Inc. ("Ancor"), and Soo J. Kim, individually and d/b/a SJ Construction, Inc. ("SJ"). In this complaint, Allstate alleged that its subrogors had suffered damages resulting from the construction activities of the defendants, which Allstate, as the subrogors' insurer, had reimbursed and which Allstate now seeks to recover from defendants. Now before this Court are defendants' motion to dismiss or abstain and Allstate's motion to strike defendants' affirmative defenses. For the reasons set forth below, the defendants' motion is denied and Allstate's motion is granted in part and denied in part.

Background

The following facts are taken from the parties' submissions. Disputes are noted.

Allstate Complaint

On August 10, 2006, Allstate, as a subrogee*fn1 of the Mascias, filed its complaint asserting diversity jurisdiction. The complaint alleges that plaintiff is a corporation organized and existing under the laws of Illinois, that it has its principal place of business in that state and that all defendants are all citizens of New York.*fn2

In the complaint, Allstate states that during 2005 the Mascias owned a parcel of land at 20 Havemeyer Street in Brooklyn, New York which was insured by Allstate for property loss and damage. According to the complaint, defendant Michael Choi owned land at 22 Havemeyer Street which abuts the Mascias' property and that defendants, while engaged in construction work at 22 Havemeyer Street, caused damage to the Mascias' property, forcing the Mascias to "incur repair expenses and additional living expenses" in excess of $118,090. Under the terms of the Mascias' insurance policy, Allstate reimbursed the Mascias an amount "in excess of $118,090" for the repairs and losses sustained. It now seeks to recover that amount, alleging five causes of action: (1) negligence; (2) breach of contract; (3) ultrahazardous activity; (4) trespass; and (5) malpractice.*fn3

Related State Court Actions

In July 2005, Joseph Peluso filed a complaint against defendants Michael Choi and NYST*fn4 in Kings County Supreme Court seeking $5,000,000 for damage allegedly caused to property at 24 Havemeyer Street as the result of the construction work. The Peluso complaint also seeks $1,000,000 in lost rental income. Defendant Michael Choi thereafter commenced a third-party action against Soo J. Kim, the principal of NYST, in the Peluso action.

In March 2006, Leanna Jaramillo, Anita Jaramillo, Ana Jaramillo, Luis Jaramillo and subrogor Phyllis Mascia filed a complaint against defendants Michael Choi and SJ*fn5 in Kings County Supreme Court alleging that the Jaramillos, who resided at 24 Havemeyer Street, and Phyllis Mascia, who resided at 20 Havemeyer Street, sustained damage to property, as well as emotional, psychological and physical injuries and other economic damage as a result of the construction work performed by the defendants.*fn6

In April 2006, Allstate subrogors Antoinette Bello and Phyllis Mascia also filed a complaint against Michael Choi, Sung Ho Shin, NYST and Ancor*fn7 in Kings County Supreme Court. That complaint alleges that Antoinette Bello and Phyllis Mascia were damaged in the amount of $2,500,000 each since they were forced to vacate the premises at 20 Havemeyer Street, where they resided, due to the damage caused by defendants' construction activity next door. Defendant Sung Ho Shin thereafter commenced a third-party action against Ancor and Soo J. Kim in the subrogors action.

Present Motions

Defendant NYST filed the present motion to dismiss or abstain on October 10, 2006. Defendants Michael Choi and Sung Ho Chin Architect, P.C. thereafter filed answers to the complaint on October 18, 2006. Chin thereafter also filed a motion to dismiss, incorporating the arguments made by NYST.*fn8 Allstate filed a motion to strike several of the affirmative defenses of Chin and Choi on October 30, 2006.

Discussion

The defendants argue that Allstate's complaint should be dismissed or, in the alternative, that this Court should abstain from hearing Allstate's claim.

I. Allstate's Status as Subrogor*fn9

Defendants argue first that the case should be dismissed since Allstate has no right of subrogation unless the entire debt owed by the defendants has been paid by Allstate to the subrogors, the Mascias, referring to claims made against them by the Mascias in state court which Allstate has not reimbursed. The argument is without merit.

An insurer's subrogation rights accrue upon payment of the loss . . . . At that point, an insurer who has paid the policy limits possesses the derivative and limited rights of the insured and may proceed directly ...


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