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Andrew Britt v. General Star Indemnity Company

April 4, 2011


The opinion of the court was delivered by: David N. Hurd United States District Judge



Plaintiff Andrew Britt ("plaintiff" or "Britt") brought this suit against General Star Indemnity Company ("defendant" or "General Star") to collect payment of an unsatisfied judgment pursuant to New York State Insurance Law section 3420. See N.Y. Ins. Law § 3420 (McKinney 2011). Defendant filed an answer to plaintiff's complaint with a cross-claim seeking a declaration that it has no duty to pay the judgment.

Plaintiff now moves for summary judgment to collect payment of $2,402,962.45 plus interest from November 17, 2009, and defendant opposes. In opposition, non-movant General Star also urges the grant of summary judgment to it sua sponte, in the absence of a formal cross-motion. The motion was considered on its submissions without oral argument.


The following facts are undisputed unless otherwise noted. In February 2001 General Star issued a commercial umbrella insurance policy to Pharmacologic, Ltd.*fn1

("Pharmacologic"). The policy had an aggregate limit of $3,000,000.*fn2 See Flink Affirm., Ex. 6, Dkt. No. 15-9, 3. As it related to coverage for bodily injury and property damage liability, the General Star policy stated: "We will pay on behalf of the insured for the ultimate net loss in excess of the retained limit because of bodily injury or property damage to which this policy applies." Id. at 5 (emphasis added). The "retained limit" was defined as the greater of:

a. That sum of amounts applicable to any claim or suit:

(1) From underlying insurance, whether such underlying insurance is collectible or not;

(2) From underlying insurance, which are not payable due to the reduction or exhaustion of the aggregate limits of such underlying insurance because of:

(a) Bodily injury or property damage which occurred; and

(b) Offenses which took place; either before the effective date or after the expiration date of this policy; and

(3) From other insurance; whether primary, excess, contingent or on any other basis, except such insurance as is specifically purchased to apply in excess of this policy's Limit Of Insurance; or

b. The self-insured retention.

Id. at 22. The policy defined "underlying insurance" as "the coverage(s) afforded under insurance policies, for the limits shown, as designated in the SCHEDULE OF UNDERLYING INSURANCE and any renewals or replacements of those policies." Id. at 23.

The "Schedule of Underlying Insurance" included four insurance policies with the following relevant limits: 1) a Commercial General Liability ("CGL") policy issued by St. Paul Insurance Company ("St Paul") with limits of $1,000,000 for each occurrence of bodily injury/and or property damage liability combined and $2,000,000 for the general aggregate;

2) a Professional Liability policy issued by St. Paul with limits of $1,000,000 for each occurrence of bodily injury/and or property damage liability combined and $3,000,000 aggregate; 3) an Automobile Liability policy issued by Commercial Union Insurance Company with a limit of $500,000 per occurrence of bodily injury and/or property damage liability combined*fn3 ; and 4) an Employers Liability policy issued by Guard Insurance Company with $1,000,000 limits each for bodily injury due to accident or disease. Id. at 4.

The General Star umbrella policy defined an "Insured," in part, as follows: SECTION III Who Is An Insured . . .

3. With respect to any (i) auto, or (ii) mobile equipment, provided such mobile equipment is registered in your name under any motor vehicle registration law; any person is an insured while driving such auto or mobile equipment with your permission.

Id. at 12-13. The parties do not dispute that the "Umbrella policy required underlying automobile insurance with a $500,000 limit" which Pharmacologic maintained at the time in question through The Hartford. See Pl.'s Statement of Material Facts ("SMF"), Dkt. No. 15-31, ¶¶ 4, 6. The relevant portion of The Hartford policy defined an "Insured" as follows:


The following are "insureds":

a. You for any covered "auto."

b. Anyone else while using with your permission a covered "auto" you own, hire or borrow except: See Flink Affirm., Ex. 5, Dkt. No. 15-8, 42.

At the time of the events giving rise to this litigation, Dennis Bridges ("Bridges") was employed by Pharmacologic. On September 21, 2001, he was operating a 2000 Chevy Astro van (the "van") owned by Pharmacologic. At nearly midnight that day, after using the van extensively for personal and, at times, illegal purposes, Bridges collided with a police cruiser operated by plaintiff, who was acting in the course of his employment as a police officer for the City of Albany. Plaintiff sustained serious personal injuries in the collision. Following these events, Bridges was charged with and convicted of assault, reckless endangerment, and criminal possession of stolen property. He is currently serving 25 years to life in state prison.

On October 2, 2002, plaintiff Britt and his wife Angela Britt*fn4 commenced an action against Pharmacologic and Bridges in Albany County Supreme Court. The lawsuit sought damages for personal injuries as a result of the negligence of Bridges and Pharmacologic. Bridges was served with the summons and complaint in the action on November 15, 2002. General Star received a copy of the summons and complaint on November 27, 2002.

By letter to Bridges dated November 14, 2002, The Hartford disclaimed coverage for any claims arising from the September 21, 2001, collision because Bridges was not an insured under the terms of The Hartford policy. See Flink Affirm., Ex. 8, Dkt. No. 15-11. The letter informed Bridges that The Hartford's investigation revealed he did not have permission to operate the van at the time of the incident and therefore was not covered under the policy. The Hartford copied the disclaimer letter to plaintiff's attorneys, Flink Smith LLC. General Star also received a copy of The Hartford disclaimer letter on December 2, 2003.

On February 25, 2004, General Star issued a letter to Bridges acknowledging receipt of the summons and complaint in the underlying personal injury action and receipt of The Hartford's denial letter. See Flink Affirm., Ex. 9, Dkt. No. 15-12. The letter stated that The Hartford's investigation revealed Bridges did not have permission to use the vehicle that was involved in the automobile collision. General Star referenced the relevant provisions in its umbrella policy noting that "[t]he policy indicates that one is considered an insured while operating an auto with permission of the insured." Id. The letter concluded that General Star would not provide coverage for the collision with plaintiff. The parties dispute the nature of the letter, which plaintiff characterizes as a disclaimer and defendant merely refers to as a letter. It is undisputed that the General Star letter was not served on plaintiff or his attorneys.

Pharmacologic moved for summary judgment in the underlying the personal injury action on the grounds that Bridges did not have permission to use the company van at the time of the incident, that it is not vicariously liable for the intentional torts of a person driving its vehicle, and that it did not negligently hire Bridges. On September 23, 2005, Albany County Supreme Court Judge Thomas J. McNamara issued a Decision and Order, dismissing the "portions of the complaint seeking recovery based upon [New York] Vehicle and Traffic Law § 388." Britt v. Pharmacologic Pet Servs, Inc., No. 7092-02, 2005 WL 6214678 (N.Y. Sup. Ct. Albany Cnty. Sept. 23, 2005); Flink Affirm., Ex. 10, Dkt. No. 15-13. Section 388 renders an owner liable for damages caused by the negligence of anyone using the owner's motor vehicle with permission. N.Y. Veh. & Traf. § 388 (McKinney 2011). It also creates a presumption that use is permissive; however, it does not impose liability for intentional torts. The court found that Pharmacologic made a prima facie showing that Bridges did not have permission to use the company van at the time of the incident, based on the undisputed testimony of Pharmacologic's vice president and manager that the company did not allow employees to use company vans for personal use.*fn5 The court denied summary judgment on the remaining two grounds.

On appeal, the New York Appellate Division Third Department affirmed Judge McNamara's decision, stating that "plaintiffs failed to raise a material question of fact as to whether Bridges's operation of the minivan exceeded the time, place and purpose of the use permitted by PPS [Pharmacologic]. Accordingly, we find no error in Supreme Court's determination." Britt v. Pharmacologic Pet Servs., Inc., 36 A.D.3d 1039, 1041 (N.Y. App. Div. 3d Dep't Jan. 11, 2007) (internal citations omitted). The New York State Court of Appeals dismissed plaintiffs' motion for leave to appeal on the ground that the order sought to be appealed from did not finally determine the action within the meaning of the New York State Constitution. See Britt v. Pharmacologic Pet Servs., Inc., 9 N.Y.3d 831 (2007).

The personal injury action was eventually tried before a jury in Albany County Supreme Court during February 2008. Bridges never appeared in the action and liability against him was found as a matter of law by the Albany County Supreme Court in a directed verdict. See Flink Affirm., Ex. 12, Dkt. No. 15-15, 2. On February 19, 2008, the jury reached a verdict, finding that Pharmacologic had negligently hired Bridges and negligently entrusted the van to him, and that Pharmacologic's negligence was a substantial factor in causing Britt's injuries. The jury awarded $3,162,860.63 to Britt.*fn6

Subsequent to the jury verdict, Pharmacologic made several post-trial motions including one to set aside the jury verdict and/or reduce the amount of the award. On October 21, 2008, Albany County Supreme Court Judge Kimberly A. O'Connor rendered a Decision and Order (the "remittitur") reducing the award in the amount of $792,249 based on plaintiff's failure to prove those amounts of damage. See Flink Affirm., Ex. 12. The Decision and Order vacated the award of $42,249 for loss of future household services and reduced the verdict from $500,000 to $250,000 for past pain and suffering and from $1,000,000 to $500,000 for future pain and suffering. Id.

Britt contends that the remittitur related solely to Pharmacologic while General Star maintains that it reduced the overall award irrespective of any particularly defendant's liability. On December 1, 2008, plaintiff stipulated to the reduced award as set forth in the October 21, 2008, remittitur and filed the stipulation the following day. See Flink Reply Affirm., Ex. 13a, Dkt. No. 20-1. On December 10, 2008, Pharmacologic filed a Notice of Appeal from the October 21, 2008, Decision and Order. See Flink Affirm., Ex. 14, Dkt. No. 15-17.

Following these events, plaintiff's counsel submitted to Judge O'Connor a proposed order directing entry of a judgment against Bridges, for the full amount of the jury verdict, pursuant to New York Civil Practice Law and Rules Article 50-B ("50-B"). Plaintiff argued that the 50-B judgment was appropriately in the full amount of the jury verdict, prior to the reductions directed in the October 21, 2008, remittitur, "[s]ince [they] do not believe that Dennis Bridges is entitled to the benefit of the motion of Pharmacologic . . . ." See Flink Affirm., Ex. 15, Dkt. No. 15-18. By letter to Judge O'Connor, counsel for Pharmacologic objected to the proposed order seeking judgment for the full verdict amount. See Flink Affirm., Ex. 16, Dkt. No. 15-19. Pharmacologic argued, inter alia, that there should not be two separate judgments against Pharmacologic and Bridges based on the same underlying events because there was no apportionment of liability between the two defendants. They maintained that to enter a judgment against Bridges based on the original verdict, even though he defaulted, would conflict with the October 21, 2008, remittitur and the plaintiffs' December 1, 2008, stipulation to those reductions.

On July 24, 2009, while Pharmacologic's appeal was pending, plaintiff reached a settlement with Pharmacologic for $1,200,000 relating to the negligent entrustment and negligent hiring claims rendered against them. Of that settlement, The Hartford, pursuant to the aforementioned commercial automobile policy and the negligent entrustment claim, paid its policy limit of $500,000. The remainder of the settlement, $700,000, was paid directly by Pharmacologic.*fn7 By letter dated August 12, 2009, plaintiff advised Judge O'Connor of the settlement with Pharmacologic and re-submitted the proposed order directing entry of the 50-B judgment against Bridges for the full amount of the jury verdict, before reduction. See Flink Affirm., Ex. 21, Dkt. No. 15-24. On September 11, 2009, Judge O'Connor signed an Order directing entry of the judgment against Bridges in the amount of $3,162,860.63 pursuant to 50-B. See Flink Affirm., Ex. 22, Dkt. No. 15-25. The Order and Notice of Entry of the 50-B judgment was served on Bridges at the Greenhaven Correctional Facility on September 28, 2009. On November 17, 2009, a Judgment and Bill of Costs were filed against Bridges, and served on him on November 19, 2009. See Flink Affirm., Ex. 23, Dkt. No. 15-26. Plaintiff served the Judgment and Bill of Costs via certified mail on General Star. On November 17, 2009, plaintiff contacted General Star and demanded payment of $2,402,962.45, the outstanding judgment with costs, less settlement amounts received from The Hartford and Pharmacologic, and threatened legal action if that amount was not paid within 30 days. The demand has since remained unsatisfied for more than 30 days.

General Star now asserts that plaintiff's August 12, 2009, letter to Judge O'Connor failed to advise her of the October 21, 2008, remittitur for future household services and past and future pain and suffering in a total reduction amount of $792,249, as well as plaintiffs' December 1, 2008, stipulation accepting those reductions. As a result, they contend that the September 11, 2009, Order directing entry of judgment, the Notice of Entry of judgment, and the Judgment, all failed to account for the reduction ...

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