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Phelps v. Geico Indemnity Co.

United States District Court, N.D. New York

March 30, 2015

BEATRICE PHELPS, as Assignee of the Rights of Christopher M. Dwyer, Plaintiff,

OFFICE OF ROBERT E. LAHM ROBERT E. LAHM, ESQ., Syracuse, NY, Counsel for Plaintiff.

HURWITZ & FINE, P.C. DAN D. KOHANE, ESQ., JENNIFER A. EHMAN, ESQ., Buffalo, NY, Counsel for Defendant.


GLENN T. SUDDABY, District Judge.

Currently before the Court, in this insurance action by Beatrice Phelps as assignee of the rights of Christopher M. Dwyer ("Plaintiff") against GEICO Indemnity Company ("Defendant"), is Defendant's motion for summary judgment. (Dkt. No. 26.) For the reasons set forth below, Defendant's motion is granted.


A. Plaintiff's Claims

Generally, in her Complaint, Plaintiff alleges that Defendant acted in bad faith in defending its insured (who is now Plaintiff's assignor) in a personal-injury case by Plaintiff in state court, arising from a three-car motor vehicle accident that occurred on March 5, 2007, during "snow white-out" conditions. (Dkt. No. 1, Attach. 1.) More specifically, Plaintiff alleges that Defendant wrongfully refused to raise its pretrial settlement offer of $5, 000 to its policy limit of $25, 000 despite knowing at trial that (a) Plaintiff's medical expenses exceeded $16, 000, (b) the case would settle if the three auto defendants together offered their respective policy limits, (c) one of Defendant's two co-defendants had offered its policy limit of $50, 000, (d) Defendant's insured was unable to personally pay any amount of his share of damages in excess of $25, 000, and (e) the jury made it evident during deliberations that they were going to award damages to Plaintiff (by asking whether any award for future damages would be granted as an annuity or a lump sum). ( Id. ) Based on these allegations, Plaintiff claims that Defendant breached its implied duty of good faith and fair dealing to its insured. ( Id. ) As a result, Plaintiff alleges that she has been damaged in the amount of $121, 163.68, consisting of the unpaid jury verdict in the state court case, the unpaid interest on that verdict, and her costs and disbursements in that case. ( Id. ) Familiarity with Plaintiff's claim and the factual allegations supporting it is assumed in this Decision and Order, which is intended primarily for review by the parties.

B. Undisputed Material Facts

Unless otherwise noted, the following facts were asserted and properly supported by Defendant in its Statement of Material Facts (i.e., its "Rule 7.1 Statement"), and were either admitted or denied without proper support by Plaintiff in her response thereto (i.e., her "Rule 7.1 Response"). ( Compare Dkt. No. 26, Attach. 31 [Def.'s Rule 7.1 Statement] with Dkt. No. 27 [Plf.'s Rule 7.1 Response].)

The Accident

1. On March 5, 2007, at approximately 3:25 p.m., a three car-motor vehicle accident occurred on Jug Point Road, in the Town of Verona, New York.

2. The Police Accident Report, completed by Trooper Francis Labarbera, identifies the involved individuals as Melissa A. Ranger (the driver of Vehicle 1), Christopher M. Dwyer (the driver of Vehicle 2) and Jamie Cogan (the driver of Vehicle 3).

3. Plaintiff and her sister, Bonnie, are listed as passengers in the vehicle driven by Melissa A. Ranger ("Ranger").

4. Trooper Labarbera ticketed Ranger with a violation of New York Vehicle and Traffic Law ยง 1120A, entitled "Drive on right side of roadway."

5. No tickets were issued to Jamie Cogan or Dwyer.

6. On the same day as the accident, Dwyer reported the incident to his automobile insurer, Defendant.

7. Dwyer was the named insured on a family automobile policy, policy number XXXX-XX-XX-XX, with limits of $25, 000 per person and $50, 000 per occurrence.

8. In describing the loss, Dwyer reported that the Ranger vehicle came into his lane of travel and struck him.

9. Immediately upon receipt of the claim, Defendant began its investigation, which included obtaining a copy of the Police Report that identified Ranger as at fault for the loss, and attributed no liability to Dwyer.

10. Dwyer completed a GEICO accident reporting form. In resonse to the question, "state cause of damage or loss if other than accident, " Dwyer responded "she hit me head on."

11. On March 26, 2007, Defendant was faxed a letter of representation from the Joyce Law Firm. The letter indicated that Plaintiff and Bonnie Phelps sustained certain injuries as a result of the motor vehicle accident of March 5, 2007.

12. In response, Defendant denied coverage for any losses allegedly sustained by Plaintiff and Bonnie Phelps.

13. After the denial was issued, the Joyce Law Firm conducted a review of the matter identifying a potential medical malpractice claim in additional to automobile liability. On approximately December 5, 2007, the Joyce Law Firm referred Plaintiff's case to Attorney Robert E. Lahm of Robert E. Lahm PLLC, Attorneys at Law, a practitioner with significant experience in his area of the law.

14. In addition, Attorney Samantha M. Holbrook (of the Joyce Law Firm) advised that she had made a demand for Ranger's policy limit.

15. In a letter of December 10, 2007, Mr. Lahm acknowledged the file.

16. In his deposition, Mr. Lahm acknowledges that, when the file first came into this office, from the automobile prospective, Ranger was his primary target. In the letter, no reference was made to either Jamie Cogan or Dwyer, and no evidence was noted attributing negligence to them.

"Phase One" of the State Court Case

17. On September 18, 2008, a lawsuit was commenced in Supreme Court, County of Oneida, styled Beatrice S. Phelps v. Melissa A. Ranger, Christopher M. Dwyer, Jamie C. Cogan, Stephanie M. Cogan, Oneida Health Care Corporation a/k/a Oneida Heathcare Center, Michael Thomas, M.D., Robert M. Goldberg, M.D., Daniel M. Ratnarajah, M.D. Oneida Surgical Group, P.C., Alberto Delpino, M.D., and Pedro Delpino, M.D., Index Number 2008-002824.

18. The Complaint asserted that Plaintiff sustained injury as a result of the motor vehicle accident and subsequent medical malpractice.

19. The First Cause of Action was directed against Ranger.

20. The Second Cause of Action was directed against Dwyer.

21. The Third Cause of Action was directed against Jamie Cogan, and the Fourth and Fifth Causes of Action were directed at certain medical professionals that treated Plaintiff.

22. Upon receipt of the Summons and Complaint, Dwyer forwarded the papers to Defendant.

23. In a letter dated October 29, 2008, Ms. Elizabeth August, the GEICO claims examiner assigned to the claim, acknowledged receipt of the papers and informed Dwyer that his defense in the underlying action was being referred to the law firm of Melvin & Melvin, PLLC. Among other things, the letter also advised Dwyer that, "[s]ince the amount sued for is not specified and may be more than the insurance policy limits, you may want to obtain your own attorney, at your own expense, to cooperate with the defense attorney to protect your interests against an excess verdict...."[1]

24. When the case was first sued, Mr. Lahm was not looking toward early resolution or piecemeal settlement.

25. In a letter dated July 6, 2009, Phelps provided defendants an initial demand of $400, 000 to resolve all claims in the action including those ...

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