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Wausau Business Insurance Co. v. Sentosa Care LLC

United States District Court, S.D. New York

March 28, 2014

WAUSAU BUSINESS INSURANCE CO., Plaintiff,
v.
SENTOSA CARE LLC, et al., Defendants

For Wausau Business Insurance Company, Plaintiff: David Ross Shyer, Glenn Peter Berger, Marshall Todd Potashner, Jaffe & Asher LLP, New York, NY.

For Sentosacare, LLC, Brookhaven Rehabilitation & Health Center, LLC, Avalon Gardens Rehabilitation & Health Care Center, LLC, B& B Management LLC, Bay Park Center for Nursing & Rehabilitation, LLC, Eastchester Rehabilitation & Health Care Center, LLC, NMC Acquisition, LLC, Park Avenue Operating Company LLC, Pinegrove Manor II, LLC, Townhouse Operating Co. LLC, West Lawrence Care Center, LLC, White Plaints Center for Nursing Care LLC, Woodmere Rehabilitation & Health Care Center Inc., Prompt Nursing Employment Agency, LLC, Allstate ASO Inc., Little Neck Nursing Home LLC, Congregation Chareidim Corp, Economy Exterminating USA LLC, Defendants: Ira S. Lipsius, LEAD ATTORNEY, Lipsius-Benhaim Law, LLP, New York, NY; Ralph J. Drabkin, LEAD ATTORNEY, Drabkin & Margulies, Esqs, New York, NY; Phillip M. Manela, Lipsius-Benhaim Law, LLP, Kew Gardens, NY; Robert W. Margulies, Drabkin & Margulies, Esqs, New York, NY.

For Garden Care Center, Inc., Golden Gate Rehabilitation & Health Care Center LLC, Nassau Operating Co. LLC, New Surfside Nursing Home, LLC, North Sea Associates, LLC, Throgs Neck Operating Co. LLC, Willoughby Rehabilitation & Health Care Center LLC, Greater New York Home Care LLC, Stat Portable X-Ray, Inc., Greater New York Home Care Systems, Inc., Greater New York Services, Inc, Magna Management Inc., Defendants: Ira S. Lipsius, LEAD ATTORNEY, Lipsius-Benhaim Law, LLP, New York, NY; Ralph J. Drabkin, LEAD ATTORNEY, Drabkin & Margulies, Esqs, New York, NY; Phillip M. Manela, Lipsius-Benhaim Law, LLP, Kew Gardens, NY.

For Franklin Center for Rehabilitation & Nursing, Inc., Defendant: Ira S. Lipsius, Phillip M. Manela, Lipsius-Benhaim Law, LLP, Kew Gardens, NY; Floyd G. Grossman, Dollinger, Gonski & Grossman, Carle Place, NY.

For Split Rock Rehabilitation & Health Care Center, LLC, Fort Tryon Center for Rehabilitation & Nursing, Inc, Defendants: Ira S. Lipsius, Lipsius-Benhaim Law, LLP, New York, NY; Jessica M. Seidman, Floyd G. Grossman, Dollinger, Gonski & Grossman, Carle Place, NY; Phillip M. Manela, Lipsius-Benhaim Law, LLP, Kew Gardens, NY.

For Bayview Manor LLC, Defendant: Ira S. Lipsius, Lipsius-Benhaim Law, LLP, New York, NY; Phillip M. Manela, Lipsius-Benhaim Law, LLP, Kew Gardens, NY.

For New Franklin Center for Rehabilitation & Nursing, LLC, Defendant: Ira S. Lipsius, Lipsius-Benhaim Law, LLP, New York, NY; Jessica M. Seidman, Dollinger, Gonski & Grossman, Carle Place, NY; Phillip M. Manela, Lipsius-Benhaim Law, LLP, Kew Gardens, NY.

For Franklin Center for Rehabilitation & Nursing, Inc., Fort Tryon Center for Rehabilitation & Nursing, Inc, Split Rock Rehabilitation & Health Care Center, LLC, Cross Claimants: Ira S. Lipsius, Lipsius-Benhaim Law, LLP, New York, NY; Floyd G. Grossman, Dollinger, Gonski & Grossman, Carle Place, NY.

For Allstate ASO Inc., Avalon Gardens Rehabilitation & Health Care Center, LLC, B& B Management LLC, Bay Park Center for Nursing & Rehabilitation, LLC, Brookhaven Rehabilitation & Health Center, LLC, Congregation Chareidim Corp, Eastchester Rehabilitation & Health Care Center, LLC, Economy Exterminating USA LLC, Little Neck Nursing Home LLC, Park Avenue Operating Company LLC, Prompt Nursing Employment Agency, LLC, Sentosacare, LLC, Townhouse Operating Co. LLC, West Lawrence Care Center, LLC, White Plaints Center for Nursing Care LLC, Willoughby Rehabilitation & Health Care Center LLC, Woodmere Rehabilitation & Health Care Center Inc., NMC Acquisition, LLC, North Sea Associates, LLC, Pinegrove Manor II, LLC, Magna Management Inc., Throgs Neck Operating Co. LLC, U.C.P. Bayview Nursing Home, Cross Defendants: Ralph J. Drabkin, LEAD ATTORNEY, Drabkin & Margulies, Esqs, New York, NY; Ira S. Lipsius, Lipsius-Benhaim Law, LLP, New York, NY; Robert W. Margulies, Drabkin & Margulies, Esqs, New York, NY.

For Garden Care Center, Inc., Golden Gate Rehabilitation & Health Care Center LLC, Greater New York Home Care LLC, Greater New York Home Care Systems, Inc., Greater New York Services, Inc, Nassau Operating Co. LLC, New Surfside Nursing Home, LLC, North Sea Associates, LLC, Pinegrove Manor II, LLC, Stat Portable X-Ray, Inc., Throgs Neck Operating Co. LLC, Townhouse Operating Co. LLC, Magna Management Inc., Willoughby Rehabilitation & Health Care Center LLC, Cross Defendants: Ralph J. Drabkin, LEAD ATTORNEY, Drabkin & Margulies, Esqs, New York, NY; Ira S. Lipsius, Lipsius-Benhaim Law, LLP, New York, NY.

For Split Rock Rehabilitation & Health Care Center, LLC, Bayview Manor LLC, Cross Defendants: Ira S. Lipsius, Lipsius-Benhaim Law, LLP, New York, NY.

For Wausau Business Insurance Company, Wausau Business Insurance Company, Cross Defendants: Ralph J. Drabkin, LEAD ATTORNEY, Drabkin & Margulies, Esqs, New York, NY; David Ross Shyer, Glenn Peter Berger, Marshall Todd Potashner, Jaffe & Asher LLP, New York, NY.

For Fort Tryon Center for Rehabilitation & Nursing, Inc, Franklin Center for Rehabilitation & Nursing, Inc., Split Rock Rehabilitation & Health Care Center, LLC, Cross Defendants: Ira S. Lipsius, Lipsius-Benhaim Law, LLP, New York, NY; Floyd G. Grossman, Dollinger, Gonski & Grossman, Carle Place, NY.

For Fort Tryon Center for Rehabilitation & Nursing, Inc New Franklin Center for Rehabilitation & Nursing, LLC, Split Rock Rehabilitation & Health Care Center, LLC, Cross Claimants: Ira S. Lipsius, Lipsius-Benhaim Law, LLP, New York, NY; Jessica M. Seidman, Dollinger, Gonski & Grossman, Carle Place, NY.

For Wausau Business Insurance Company, Cross Defendant: David Ross Shyer, Glenn Peter Berger, Marshall Todd Potashner, Jaffe & Asher LLP, New York, NY.

Page 445

OPINION & ORDER

HONORABLE PAUL A. CROTTY, United States District Judge.

Plaintiff Wausau Business Insurance Co. (" Wausau" or " Plaintiff" ) brings this action in diversity against Sentosa Care LLC (" Sentosa" ), and the other named defendants[1] (collectively " Defendants" ) for breach of contract, alleging that Defendants failed to pay outstanding premiums under three separate Workers' Compensation and Employers' Liability policies for the years 2008-09, 2009-10, and 2010-11.

Wausau now moves for summary judgment. Defendants oppose the motion and cross-move for summary judgment. Defendants maintain that (1) there were no contracts between Wausau and any of the Defendants other than Sentosa, because Sentosa is the only one named on the policies; and (2) the contracts are illegal because Defendants were not commonly owned and therefore could not be properly combined under the same policies with Sentosa. Defendants also argue that, even if there were a contract--and the Court determines that there certainly was an

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insurance contract between the parties--Wausau has failed to establish a prima facie case for the unpaid premiums because Wausau (i) did not submit a full copy of the policies; (ii) did not sufficiently explain how the premiums were calculated; and (iii) failed to authenticate the audits it relied upon for damages, which were created in the course of litigation. Defendants also move the Court to reconsider its prior order of November 21, 2011 determining that it has diversity jurisdiction over this action.

Wausau argues there is an enforceable contract with Defendants: (1) each Defendant was a party to a policy endorsement; (2) the Defendants were properly combined under the same policy; (3) even if they were not, Defendants never submitted information indicating they could not be combined, as required by the New York Experience Rating Plan Manual, so the contracts cannot be invalidated; and (4) having received the benefits of coverage under the policies for years, Defendants cannot now argue a contract never existed. Wausau also submits it provided all necessary documentation, authentication, and explanation to support its damages claims. Wausau urges the Court to reaffirm its prior position regarding diversity jurisdiction.[2]

For the reasons that follow, the Court denies Defendants' motion for reconsideration of the November 21, 2011 Order and motion for summary judgment, and grants Wausau's motion for summary judgment in its entirety.

BACKGROUND

I. The Parties and Policies

Wausau is a stock insurance company organized under the laws of Wisconsin, with its primary place of business in Boston, Massachusetts. (Second Am. Compl. ¶ 1; Def.'s Answer ¶ 1.) It is undisputed that Wausau issued three Workers' Compensation and Employers' Liability policies to Sentosa.[3] The first policy, No. WCK-Y91-448515-018 (the " 018 Policy" ), had a policy period of February 1, 2008 to March 1, 2009. (Gauthier May Decl. Ex. 1.) The second policy, No. WCK-Z01-448515-019 (the " 019 Policy" ) had a policy period of March 1, 2009 to March 1, 2010. ( Id. Ex. 3.) The third policy, No. WCK-Z91-448515-010 (the " 010 Policy" ), had a policy period of March 1, 2010, to March 1, 2011. ( Id. Ex. 5.)

In each of the three policies, Item 1 lists Sentosa Care LLC as the name of the primary insured. (Gauthier May Decl. Ex. 1 WAU 010000, Ex. 3 WAU 010533, Ex. 5 WAU 011096.) The section below Item 1 entitled " Coverage" states " This policy includes these endorsements and schedules: See Item 3. Coverage D - Extension of Information Page." ( Id.) Item 3 modifies Item 1, stating " Change in Item 1 of the Information Page Endorsement (Add Insureds)." ( Id. Ex. 1 WAU 010002; Ex. 3 WAU 010535; Ex. 5 WAU 011098.) The form referenced in that section is entitled " Change in Item 1 of the Information Page Endorsement (Add Insureds)," and it lists the names of additional insured entities for each policy. ( Id. Ex. 1 WAU 010028-29; Ex. 3 WAU 010598-99; Ex. 5 WAU

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011140-41.) Additional insureds' names are also listed on separate endorsements and schedules incorporated by reference. ( See, e.g., id. Ex. 1 WAU 010094 (" Policy Information Page Endorsement" adding " Insured's Name" ); Ex. 3 WAU 010595 (" Named Insured Link Schedule" ).)

Specifically, the 018 Policy endorsements list the following additional entities--Defendants in this action--as insureds: Brookhaven Rehabilitation & Health Center, LLC; Avalon Gardens Rehabilitation & Health Care Center, LLC; B& B Management LLC; Bay Park Center for Nursing & Rehabilitation, LLC; Bayview Manor LLC[4]; Eastchester Rehabilitation & Health Care Center, LLC; Garden Care Center, Inc.; Golden Gate Rehabilitation & Health Care Center LLC; Nassau Operating Co. LLC; New Surfside Nursing Home, LLC; NMC Acquisition, LLC; North Sea Associates, LLC; Park Avenue Operating Company LLC; Pine Grove Manor II, LLC; Throgs Neck Operating Co. LLC; Townhouse Operating Co. LLC; West Lawrence Care Center, LLC; White Plains Center for Nursing Care LLC; Willoughby Rehabilitation & Health Care Center LLC; Woodmere Rehabilitation & Health Care Center Inc.; Allstate ASO Inc.; Greater New York Home Care, LLC; Stat Portable X-Ray, Inc.; Little Neck Nursing Home LLC; Franklin Center for Rehabilitation & Nursing, LLC; Split Rock Rehabilitation & Health Care Center, LLC; and Fort Tryon Center for Rehabilitation & Nursing, LLC (collectively, with Sentosa, the " 018 Policy Defendants" ). (Gauthier May Decl. Ex. 1 WAU 010028-29, WAU 010094, WAU 010177, WAU 010268, WAU 010332.)

The 019 Policy endorsements and schedules list as insureds all of the 018 Policy Defendants, plus the following entities, also Defendants in this action: Prompt Nursing Employment Agency, LLC; Greater New York Home Care Systems, Inc.; Greater New York Services, Inc.; Congregation Chareidim Corp.; and Economy Exterminating USA LLC (the insureds covered by the 019 Policy are hereinafter the " 019 Policy Defendants" ). ( Id. Ex. 3 WAU 010595-99, WAU 010702, WAU 010898, WAU 010963.)

The 010 Policy endorsements and schedules list as insureds all of the 019 Policy Defendants, except for Franklin Center for Rehabilitation & Nursing, LLC; Split Rock Rehabilitation & Health Care Center, LLC; and Fort Tryon Center for Rehabilitation & Nursing, LLC (the insureds covered by the 010 Policy are hereinafter the " 010 Policy Defendants" ). ( Id. Ex. 5 WAU 011140-42.)

In addition to adding insureds to each policy, Item 3 refers to policy schedules under " Item 4. Premium -- Extension of Information Page." (Gauthier May Decl. at Ex. 1 WAU 010002; Ex. 3 WAU 010535; Ex. 5 WAU 011098.) Item 4 lists information about the additional insureds covered under each policy--the same entities listed above. This information includes classification of each additional insured's operations, the insured's class code, the premium basis (which defaults to payroll unless otherwise indicated), applicable rate, and the estimated premium. ( See, e.g., id. Ex. 1 WAU 010004.) The 018 Policy contains this information about the 018 Policy Defendants ( id. Ex. 1 WAU 010004-23); the 019 Policy contains this information about the 019 Policy Defendants ( id. Ex. 1 WAU 010538-92); and the 010 Policy

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contains this information about the 010 Policy Defendants ( id. Ex. 1 WAU 011100-134).

The 018 Policy was signed by Nachie Blumenfrucht ( id. Ex. 2.), the accountant for Allstate ASO (Blumenfrucht Decl. ¶ 1). Both the 019 Policy and the 010 Policy were signed by Sam Schlesinger. ( Id. Ex. 4, Ex. 6.) Sam Schlesinger is the President and 100% owner of Allstate ASO. (Schlesinger July Decl. ¶ 1.) The signature page of the 019 Policy states, " In witness whereof, the parties have caused this Master Agreement to be executed by their respective representatives thereunto duly authorized . . . ." (Gauthier May Decl. Ex. 4 WAU768). Sam Schlesinger's name appears below the name of the party " Sentosa Care LLC." ( Id.) The signature page of the 010 Policy states, " You, by signature of your qualified officer, agree to abide by the terms and conditions of this endorsement." ( Id. Ex. 6 WAU752.)

The parties dispute whether the Allstate ASO representatives signed on behalf of the Defendants listed on the policies, and whether they had authority to do so.[5] Defendants admit, however, that Allstate ASO managed the insurance programs for all of the named Defendants, except for Congregation Chareidim Corp., Stat Portable X-Ray Inc., and Economy Exterminating USA LLC. (Schlesinger July Decl. ΒΆ 2.) Contrary to Allstate ASO's disclaiming representation of these other Defendants, however, Schlesinger admits later in his affidavit that the Workers' Compensation Risk Manager for ...


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