Argued-May 19, 2017
Kaufman Borgeest & Ryan LLP, Valhalla, NY (David A.
Beatty, Jacqueline Mandell, and Rebecca A. Barrett of
counsel), for appellant.
Luglio & Arcuri, LLP, Deer Park, NY (Andrew A. Arcuri of
counsel), for plaintiff-respondent.
Gwertzman Lefkowitz Burman Smith & Marcus, New York, NY
(Barbara J. Marcus of counsel), for nominal
WILLIAM F. MASTRO, J.P. REINALDO E. RIVERA L. PRISCILLA HALL
JOSEPH J. MALTESE, JJ.
DECISION & ORDER
action, inter alia, for a judgment declaring that the
defendant Tudor Insurance Company is obligated to defend and
indemnify the plaintiff herein in an underlying action
entitled Greater New York Mutual Insurance Company, as
subrogee of 408 East 73 Street Housing Corporation v Advanced
Chimney, Inc., commenced in the Supreme Court, New York
County, under Index No. 11-111190, the defendant Tudor
Insurance Company appeals, as limited by its brief, from so
much of an order of the Supreme Court, Suffolk County (Mayer,
J.), entered May 30, 2014, as granted those branches of the
motion of the nominal defendant, Greater New York Mutual
Insurance Company, as subrogee of408 East 73 Street Housing
Corporation, which were to disqualify the law firm of Kaufman
Borgeest & Ryan LLP, from further representation of the
defendant Tudor Insurance Company in this matter, and to
compel the defendant Tudor Insurance Company to produce the
claim and investigative file maintained by it and Kaufman
Borgeest & Ryan LLP, with respect to the underlying
that the order is modified, on the law and in the exercise of
discretion, by deleting the provision thereof granting that
branch of the motion of the nominal defendant, Greater New
York Mutual Insurance Company, as subrogee of 408 East 73
Street Housing Corporation, which was to disqualify Kaufman
Borgeest & Ryan LLP, from further representation of the
defendant Tudor Insurance Company in this matter, and
substituting therefor a provision granting that branch of the
motion only to the extent of disqualifying Stephanie Gitnik
from representing the defendant Tudor Insurance Company in
this matter, and otherwise denying that branch of the motion;
as so modified, the order is affirmed insofar as appealed
from, with one bill of costs to the respondents.
defendant Tudor Insurance Company (hereinafter Tudor) issued
an insurance policy to the plaintiff on February 25, 2011,
for the policy period February 24, 2011, through February 24,
2012. Thereafter, the plaintiff was sued by the nominal
defendant, Greater New York Mutual Insurance Company, as
subrogee of 408 East 73 Street Housing Corporation
(hereinafter GNY), seeking to recover the amount paid by GNY
to its insured for damages resulting from a fire at 408 East
73rd Street on February 24, 2011, which it alleged was caused
by the plaintiffs negligence. After Tudor was notified of the
underlying action against the plaintiff, it hired the law
firm of Kaufman Borgeest & Ryan, LLP (hereinafter KBR),
to investigate GNY's claim, as well as the plaintiff s
procurement of insurance with Tudor. Stephanie Gitnik, a
member of KBR, conducted the investigation, which included
interviews with the plaintiff s representative, Peter Lippis,
and with the plaintiffs broker, Kimberly A. Graziano of
K.A.G. Insurance Brokerage, Inc. After conducting the
investigation, KBR sent a letter to the plaintiff dated
January 6, 2012, notifying it that Tudor was rescinding the
policy based on material misrepresentations made by the
plaintiff in the procurement of the policy.
plaintiff then commenced this action seeking, inter alia, a
judgment declaring that Tudor is obligated to defend and
indemnify it in the underlying action. GNY, who was named as
a nominal defendant in this action, moved to compel Tudor to
comply with discovery demands, including the production of
the investigative file of KBR for the period through and
including January 6, 2012, and to disqualify KBR from further
representation of Tudor in this matter. The Supreme Court
granted GNY's motion. Tudor appeals, contending that the
file was not discoverable since it was privileged, and
constituted its attorneys' work product, and that the
court erred in disqualifying KBR.
3101(a) entitles parties to "full disclosure of all
matter material and necessary in the prosecution or defense
of an action, regardless of the burden of proof."
Discovery determinations should be evaluated on a
case-by-case basis "with due regard for the strong
policy supporting open disclosure" (Andon v
302-304Mott St. Assoc., 94 N.Y.2d 740, 747).
[T]he payment or rejection of claims is a part of the regular
business of an insurance company. Consequently, reports which
aid it in the process of deciding [whether to pay or reject a
claim] are made in the regular course of its
business'' (Landmark Ins. Co. v Beau Rivage
Rest., 121 A.D.2d 98, 102 [citation and internal
quotation marks omitted]; see Melworm v Encompass Indem.
Co., 112 A.D.3d 794, 795; Bombard v Amica Mut. Ins.
Co., 11 A.D.3d 647, 648). Reports prepared by insurance
investigators, adjusters, or attorneys before the decision is
made to pay or reject a claim are not privileged and are
discoverable, even when those reports are mixed/multi-purpose
reports, motivated in part by the potential for litigation
with the insured (see Melworm v Encompass Indem.
Co., 112 A.D.3d at 795; Donohue v Fokas, 112
A.D.3d 665, 666-667; Bombard v Amica Mut. Ins. Co.,
11 A.D.3d at 648).
the Supreme Court properly compelled disclosure, as the
material sought by GNY was prepared by KBR as part of
Tudor's investigation into the claim, and was not
primarily and predominantly of a legal character (see
Melworm v Encompass Indem. Co., 112 A.D.3d at 795;
Bertalo's Rest. v Exchange Ins. Co., 240 A.D.2d
452, 454). Nor was the file protected as the work product of
KBR (see Bertalo's Rest. v Exchange Ins. Co.,
240 A.D.2d at 454).
Supreme Court providently exercised its discretion in
disqualifying Stephanie Gitnik, the attorney who conducted
the investigation, from further representation of Tudor in
this matter since she was likely to be a witness on a
significant issue of fact (see Rules of Professional Conduct
rule 3.7 [22 NYCRR 1200.0]; VanNostrand v New York Cent.
Mut. Fire Ins. Co.,127 A.D.3d 851, 852-853; Fuller
v Collins,114 A.D.3d 827, 830). However, it
improvidently exercised its discretion in disqualifying KBR
itself (see Aloyts v 601 Tenant's Corp., 84
A.D.3d 1287, 1288; Hillcrest Owners v Preferred Mut. Ins.
Co.,234 A.D.2d 269, 270). Pursuant to Rule 3.7(b)(1) of
the Rules of Professional Conduct, "[a] lawyer may not
act as [an] advocate before a tribunal in a matter if . . .
another lawyer in the lawyer's firm is likely to be
called as a witness on a significant issue other than on
behalf of the client, and it is apparent that the testimony
may be prejudicial to the client" (Rules of Professional
Conduct [22NYCRR 1200.0] 3.7[b]; see S & S Hotel
Ventures Ltd. Partnership v 777S. H. Corp., 69 N.Y.2d
437, 446;McElduff v. McElduf101 A.D.3d ...