United States District Court, E.D. New York
MEMORANDUM & ORDER
NICHOLAS G. GARAUFIS, United States District Judge.
parties in these two related cases seek the court's
determination as to the Government Employees Insurance
Company's ("GEICO") obligation to pay certain
costs under its insurance policy issued to Diane Saco
("Saco"). Underlying the actions is a prior state
court trial, in which a jury adjudged Saco to be liable to
Suzanne Kusulas ("Kusulas") for injuries sustained
in an automobile accident.
the court are GEICO's Motion for Summary Judgment as to
all claims in both actions (see GEICO's Mot. for Summ. J.
("GEICO Summ. J. Mot.") (Dkt. 115), No.
12-CV-5633),  and Kusulas's Motion for Partial
Summary Judgment as to her counterclaim for breach of
contract (see Kusulas Summ. J. Mot. (Dkt. 117), No.
following reasons, the court DENIES Kusulas's Motion for
Partial Summary Judgment and GRANTS IN PART and DENIES IN
PART GEICO's Motion for Summary Judgment.
The Parties' Statements of Undisputed Facts
facts in this opinion are drawn, where possible, from the
parties' statements of undisputed facts, submitted
pursuant to Local Rule 56.1. (See Kusulas Rule 56.1
Statement (Dkt. 117-1); GEICO Rule 56.1 Statement (Dkt.
115-1).) See also Holtz v. Rockefeller & Co.,
258 F.3d 62, 73 (2d Cir. 2001) (The court "is not
required to consider what the parties fail to point out in
their Local Rule 56.1 statements." (internal quotation
marks and citations omitted)).
addition to submitting their initial statements of
"undisputed" facts, the parties both submitted
counterstatements to each other's statements, and GEICO
additionally submitted a reply to Kusulas's
counterstatement. (See GEICO 56.1 Counterstatement
(Dkt. 123-1); Kusulas Rule 56.1 Counterstatement (Dkt. 121);
GEICO Rule 56.1 Reply (Dkt. 128)).) This opinion relies only
on facts in the parties' Rule 56.1 statements that are
truly undisputed and notes any apparent disagreement over any
issue in both of these cases is a car accident and subsequent
state court case, the facts of which are undisputed. On
February 23, 2006, Saco collided with a car in which Kusulas
was a passenger. (Kusulas Rule 56.1 Statement ¶ 2.) At
the time of the accident, Saco held two insurance policies
issued by GEICO: an automobile policy with a policy limit of
$300, 000 (the "Automobile Policy") and a personal
umbrella policy, with a policy limit of $1, 000, 000 (the
"Umbrella Policy;" collectively, the
"Policies"). (See GEICO Rule 56.1 Statement
¶¶ 1, 5.) The Umbrella Policy provided cumulative
"excess coverage" to the Automobile policy, and so
Saco's coverage as to the accident in question had a
combined limit of $1, 300, 000 (the "Policy
January 2007, Kusulas instituted an action against Saco in
the Supreme Court of the State of New York, Kings County (the
"Underlying Action"). (Id. ¶ 3.) On
June 16, 2010, the state court granted Kusulas's motion
for summary judgment as to liability, holding that Saco was
fully liable for Kusulas's injuries resulting from the
accident. (See Id. ¶ 16; see
also Kusulas Rule 56.1 Statement ¶ 5.) On March 5,
2012, a jury considering only the issue of damages returned a
verdict of $3, 369, 066.75. (GEICO Rule 56.1 Statement ¶
100; Kusulas Rule 56.1 Statement ¶ 8.) Following further
proceedings, the state court entered judgment entered
judgment for Kusulas in the amount of $2, 857, 900.55 on
October 10, 2014. (GEICO Rule 56.1 Statement ¶ 106;
Kusulas Rule 56.1 Statement ¶ 10.) Significantly for the
motions considered here, this judgment included $779, 273.26
in interest, calculated at the statutory rate of nine percent
per annum from the date of the June 16, 2010, judgment as to
Saco's liability for Kusulas's injury. (Kusulas Rule
56.1 Statement ¶ 10.)
October 2007 through return of the jury verdict, the parties
engaged in off-and-on settlement discussions and GEICO
developed internal case valuations, reviewed in greater
detail below. (See Section II.C.l, infra.)
filed the first of the two captioned cases in this court on
November 15, 2012, and named both Saco and Kusulas as
defendants. (Compl. (Dkt. 1).) That complaint seeks
declaratory judgment that (1) GEICO is not required to make
any payments in excess of the Policy Limits; (2) the Policies
do not require payment for Saco's personal attorney's
fees; and (3) GEICO is not subject to any claim for bad faith
in relation to its obligations to Saco. (Id. ¶
41.) In her answer, Kusulas included two counterclaims: (1)
GEICO breached its contract in failing to tender to Saco the
full Policy Limits plus prejudgment
interest on that amount; and (2) GEICO acted
in bad faith towards Saco in its failure to settle the
Underlying Action. (See Kusulas Answer &
Countercl. (Dkt. 51) ¶¶ 21-28; id.
¶¶ 29-63.) While, as noted, Saco originally
appeared as a defendant in the case, she assigned her rights
against GEICO to Kusulas on December 23, 2014. (GEICO Rule
56.1 Statement ¶ 107.)
before the court are the parties' cross-motions for
summary judgment. GEICO seeks summary judgment as to all
claims in both actions. (See Mem. in Supp. of
GEICO's Mot. for Summ. J. ("GEICO Summ. J.
Mem.") (Dkt. 116) at 1.) Kusulas moves for summary
judgment only as to her claim for breach of contract based on
GEICO's failure to pay prejudgment interest on the Policy
Limits. (See Mem. in Supp. of Kusulas's Mot. for
Partial Summ. J. ("Kusulas Summ. J. Mem.") (Dkt.
120) at 1.) The court concludes that GEICO is entitled to
summary judgment as to its liability for prejudgment interest
in excess of the Policy Limits, as extrinsic evidence
demonstrates that the parties to the Policies lacked intent
for GEICO to be liable for those payments. Kusulas's
Motion for Partial Summary Judgment must therefore be denied.
The court also denies GEICO's request for summary
judgment as to whether it discharged its duty of good faith
to Saco in the Underlying Action, as conflicting evidence
presented by the parties gives rise to a genuine dispute of
must grant summary judgment where "the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a). "A 'material' fact is one
capable of influencing the case's outcome under governing
substantive law, and a 'genuine' dispute is one as to
which the evidence would permit a reasonable juror to find
for the party opposing the motion." Figueroa v.
Mazza, 825 F.3d 89, 98 (2d Cir. 2016) (citing
Anderson v. Liberty Lobby. Inc.. 477 U.S. 242, 248
(1986)). "The movant may discharge this burden by
showing that the non-moving party has 'fail[ed] to make a
showing sufficient to establish the existence of an element
essential to that party's case, and on which that party
will bear the burden of proof at trial.'"
Lantheus Med. Imaging. Inc. v. Zurich Am. Ins. Co.,
___ F.Supp.3d ___, No. 10-CV-9371 (KPF), 2015 WL 1914319, at
*6 (S.D.N.Y. Apr. 28, 2015) (citing Celotex Corp. v.
Catrett. 477 U.S. 317, 322 (1986)).
determining whether an issue is genuine, '[t]he
inferences to be drawn from the underlying affidavits,
exhibits, interrogatory answers, and depositions must be
viewed in the light most favorable to the party opposing the
motion.'" SCW West LLC v. Westport Ins.
Corp.. 856 F.Supp.2d 514, 521 (S.D.N.Y. 2012) (quoting
Cronin v. Aetna Life Ins. Co., 46 F.3d 196, 202 (2d
Cir. 1995)). "[T]he judge's function is not Q to
weigh the evidence and determine the truth of the matter but
to determine whether there is a genuine issue for
trial." Redd v. N.Y. Div. of Parole. 678 F.3d
166, 173-74 (2d Cir. 2012) (quoting Liberty Lobby.
477 U.S. at 249). However, "[a] party may not rely on
mere speculation or conjecture as to the true nature of the
facts to overcome a motion for summary judgment, " and
"[m]ere conclusory allegations or denials ... cannot by
themselves create a genuine issue of material fact where none
would otherwise exist." Hicks v. Baines. 593
F.3d 159, 166 (2d Cir. 2010) (internal quotation marks and
Breach of Contract Claim
Kusulas and GEICO move for summary judgment as to GEICO's
obligation to pay the prejudgment interest that accrued
between the June 16, 2010, decision regarding liability and
the March 5, 2012, jury verdict on damages. (See
Kusulas Summ. J. Mem. at 10; GEICO Summ. J. Mem. at 7-10).
Kusulas does not claim payment for all prejudgment interest
on the total judgment; rather, she seeks the
interest accrued "on the portion of the Judgment up to
GEICO's policies' limits (i.e. up to $1, 283,
500)." (See Kusulas Summ. J. Mem. at 10.)
parties raise two issues for the court's consideration:
(1) Is GEICO required to pay prejudgment interest in excess
of the Policy Limits as a matter of New York law? (2) If not,
do the Policies' terms require such payment? The court
finds that neither state law nor the Policies' terms
obligate GEICO to pay prejudgment interest in excess of the
Policy Limits and so concludes that GEICO is entitled to
summary judgment on the issue.
Obligation to Pay Prejudgment Interest Under New York
court's previous decision on the parties'
cross-motions for judgment on the pleadings, the undersigned
determined that "New York regulations do not require
that an automobile insurance policy cover prejudgment
interest in excess of the policy limit." (Apr. 2, 2015,
Mem. & Order (Dkt. 90) at 7.) Kusulas urges the court to
reconsider its position and argues that the previous decision
misconstrued the applicable cases. (Kusulas Summ. J. Mem. at
20.) The court finds no support for her argument that New
York requires insurers to pay prejudgment interest.
argument hinges on the New York Court of Appeals'
decision in Dingle v. Prudential Property & Casualty
Ins. Co.. 85 N.Y.2d 657 (N.Y. 1995). In a bifurcated
trial, the defendant was found to be 100% liable for a car
accident. Id. at 659. The defendant's insurance
policy did not address payment of interest accrued between
the dates on which liability was adjudged and damages were
set in a bifurcated trial, but the insurer agreed to pay
interest during that period on an amount up to the policy
limit. Id. Following the damages determination, the
insurer-defendant paid out the policy limit amount, the
interest on the policy amount "accruing from the date of
the liability verdict to the date of the damages award"
(i.e. prejudgment interest on the policy limits),
and interest on the entire verdict from the date of the
damages award to the date of tender. Id. at 659-60.
The issue before the court was thus not the payment of
interest on the policy limit, but rather the plaintiffs
request for the "difference between the interest on the
entire judgment... and the amount actually tendered."
Id. at 660.
therefore takes as a given the precise issue that is in
dispute here: the defendant-insurer had already agreed to pay
prejudgment interest on the policy limits in addition to the
entire policy limit, exactly what GEICO is refusing to do
here. In support of her contrary reading of the case, Kusulas
points to the first "Question Presented" in the
Dingle plaintiffs brief: "Must an insurance
carrier... pay interest on the judgment against its insured
from the date of liability determination to the date of the
tender of the policy?" (Ex. E to Kusulas Summ. J. Mot.
at 1.) However, she presents this argument entirely without
context, as the remainder of the cited brief reaffirms that
the defendant insurer had already agreed to pay prejudgment
interest and was not contesting that point. (Id. at
3-4.) For the same reason, Kusulas's citations to broad
policy statements in Dingle do not bind the court