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Qbe Insurance Corp. v. Maloof

Supreme Court, New York

July 11, 2013

QBE INSURANCE CORPORATION, Plaintiffs,
v.
MALOOF, LEBOWITZ, CONNAHAN & OLESKE, P.C., JACK A. MALOOF, ESQ. and JERALD F. OLESKE, ESQ. Defendants MALOOF, LEBOWITZ, CONNAHAN & OLESKE, P.C., JACK A. MALOOF, ESQ. and JERALD F. OLESKE, ESQ. Third-party Plaintiffs, V. CLAIMS SERVICE BUREAU AND NEWMAN FITCH ALTHEIM MYERS, P.C. A/WA NEWMAN MYERS KREINES GROSS HARRIS, P.C. Third-party Defendants 600412/10

Unpublished Opinion

Motion Date 2/25/2013

DECISION

HONORABLE JUSTICE MILTON A. TINGLING

The Claims Service Bureau ("CSB" or "Third-Party Defendants") moves this court under CPLR 3212 to grant their summary judgment motion and to dismiss the Third Party Complaint as to the movant. Maloof, Lebowitz, Connahan & Oleske P.C. (collectively "Maloof Lebowitz" or Third-Party Plaintiffs) opposes this motion.

On or about March 17, 2010, a civil action was commenced between QBE Insurance Corporation and Maloof Lebowitz. The complaint was an attorney malpractice suit against Maloof Lebowitz. The claims were grounded on Maloof Lebowitz's representation of QBE in an action captioned A WL Industries Inc. and Virginia Surety Company, Inc. v. QBE Insurance Corp., Index No. 600275/06, commenced on or about January 24, 2006 in the Supreme Court of New York, New York County (Affirmation of Meleena M. Bowers, ¶ 3). In the A WL Industries action, the plaintiffs therein sought insurance coverage from QBE in connection with an underlying personal injury action. The case was ultimately settled for approximately $3 million, including the $1 million limits of the policy (id. at ¶ 5). QBE's claims asserted against Maloof Lebowitz are grounded in the decision in the AWL Industries action rendered on September 15, 2009. The First Department of the New York Appellate Division determined that QBE was in default of a discovery deadline as of December 8, 2006, requiring that QBE's answer be stricken. As a result, QBE sought to recover the policy limits ($ 1 million) and defense costs it paid in the A WL Industries action allegedly as a result of such determination (id. at ¶6).

On or about August 22, 2011, Maloof Lebowitz commenced this Third Party Action in the Supreme Court of New York, New York County against CSB. The Third Party Complaint was brought against CSB for its alleged role as QBE's third party administrator under QBE's Hartan Brokerage, Inc. Program, including its administration of the AWL Industries action. Maloof Lebowitz also included claims against Third Party Defendant Newman Fitch Altheim Myers, P.C. A/K/A Newman Myers Kreines Gross Harris P.C. (id. at ¶ 7). On November 4, 2011, third party defendant, CSB served its Answer denying each and every allegation of wrongdoing (id. at ¶9).

On or about May 4, 2006, counsel for plaintiffs in the underlying A WL Industries action served a Notice for Discovery and Inspection upon QBE by its counsel Maloof Lebowitz. On June 21, 2006, a Preliminary Conference was conducted in the A WL Industries action where the court established an initial discovery schedule and required QBE to respond to AWL Industries' Notice of Discovery and Inspection by July 21, 2006 (id. at ¶¶10-11). On July 27, 2006 six days afer the court imposed deadlines for QBE to respond to the AWL Industries Plaintiffs Discovery, Maloof Lebowitz issued a request to QBE for assistance in responding to the Notice for Discovery and Inspection. Maloof also sent similar communications to CSB dated July 27, 2006, August 29, 2006 September 6, 2006 and September 12, 2006. Maloof Lebowitz's request for assistance to QBE went unheeded. Consequently, on August 23, 2006, the plaintiffs in the AWL Industries action served a motion to strike QBE's answer or to compel outstanding discovery (id. at ¶¶ 12-13). On September 6, 2006, a compliance conference was held and the court issued an order which required QBE to comply with the discovery by October 2, 2006. Following a subsequent status conference, Justice Rosalyn Richter issued a conditional order dated October 16, 2006 concerning the motion to strike. It stated in part: "In the event that defendant does not comply with this directive within the 30 day period, the Answer will be struck" (id. at 15). CSB's relationship as the third party claims administrator to QBE's Hartan Program lasted until QBE notified CSB in a letter dated October 18, 2006 that it was terminating the Claims Administration Agreement effective November 1, 2006 (id. at ¶8).

All of the files handled by CSB for QBE were transferred to Rockville Risk Management Associates in early November 2006. These included the files for the AWL Industries action. Another status conference in the AWL Industries action was held on November 8, 2006 and the court extended QBE's time to comply with the court's October 16, 2006 order to December 8, 2006 (id. at ¶¶ 18-19). On December 19, 2006 another compliance conference was held where the court entered a status order stating that the note of issue was ready to be filed. Plaintiffs in the A WL Industries action filed note of issue on or about December 21, 2006. On February 20, 2007, the plaintiffs in the underlying A WL Industries action filed a motion for summary judgment and to strike QBE's answer for failure to provide discovery (id. at ¶¶ 20-21). On February 21, 2007, Rockville informed Maloof Lebowitz that Newman Myers would substitute in as counsel for QBE. Ultimately, Judge Tingling issued and order on October 17, 2007 that granted summary judgment to AWL Industries (id. at ¶¶ 21-22). On March 24, 2008, on behalf of QBE, Newman Myers served a motion for leave to renew the motion or summary judgment. On December 22, 2008, the court issued an order denying the motion to renew. An appeal of these orders was taken and an appellate brief was filed on February 5, 2009. On September 15, 2009, the Appellate Division, First Department affirmed the trial court's orders granting summary judgment (id. at¶¶23-25). QBE claims that as a result of the First Department's decision it was forced to settle the coverage action an tender the full amount of the policy, $ 1 million, as well as AWL Plaintiffs legal fees and costs. In addition, QBE alleges that Maloof Lebowitz engaged in legal malpractice in its representation of QBE in the AWL Industries action because their answer was stricken as a result of Maloof Lebowitz's repeated failure to timely comply with discovery (id at ¶26).

The movant on a summary judgment motion must establish his case as a matter of law Winegradv. New York University Medical Center, 64 N.Y.2d 851, 853 (1985). A motion for summary judgment must be denied if a triable issue of fact exists CPLR Section 3212; Zuckerman v. City of New York, 49 N.Y.2d 557 (1980). The proponent of a summary judgment motion has the initial burden of coming forward with evidentiary proof in an admissible form demonstrating that it is entitled to summary judgment Zuckerman, supra. In the instant case the third party defendants allege entitlement to summary judgment on the grounds they bear no negligence concerning this legal malpractice and the third party plaintiff was the sole proximate cause of the legal malpractice. Third party defendant claims that since QBE absolved them of their duties by cancelling the Claims Administration Agreement, effective November 1, 2006, they were no longer responsible for the AWL Industries action which occurred on December 8, 2006. In essence, before the discovery deadline passed CSB was no longer QBE's third party administrator and their files were transferred to Rockville Risk Management Associates.

Once the movant has established a prima facie case that it is entitled to summary judgment, the burden then shifts to the party opposing the motion to tender sufficient evidence in admissible form to defeat the motion Zuckerman v. City of New York, 49 N.Y.2d 557 (1980). The third party plaintiffs opposition raises triable issues of fact in dispute concerning what caused the legal malpractice in the underlying action. Here, Maloof Lebowitz claims that CSB failed to provide them with a written statement from an employee, Frank Allecia in the underlying A WL Industries action, which they received in March of 2006. Maloof Lebowitz relied on CSB to relay its claims administrations and investigation to them on numerous occasions to no avail. In addition, CSB failed to provide Maloof with discovery assistance before the final discovery deadline became effective and before they were relieved of their third party administrator duties. Accordingly summary judgment does not lie. Therefore the third party defendant's motion for summary judgment is denied.


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