- October 13, 2017
Keidel, Weldon & Cunningham, LLP, White Plains, NY
(Darren P. Renner and John J. Iacobucci of counsel), for
EwingLLP, New York, NY (William C. Baton of counsel), for
WILLIAM F. MASTRO, J.P. L. PRISCILLA HALL ROBERT J. MILLER
VALERIE BRATHWAITE NELSON, JJ.
DECISION & ORDER
from an order of the Supreme Court, Dutchess County (James V.
Brands, J.), dated October 6, 2014. The order denied the
defendant's motion pursuant to CPLR3211(a)(7) to dismiss
that the order is modified, on the law, by deleting the
provision thereof denying that branch of the defendant's
motion pursuant to CPLR 3211(a)(7) which was to dismiss the
complaint insofar as asserted by the plaintiff Vassar
College, and substituting therefor a provision granting that
branch of the motion; as so modified, the order is affirmed,
without costs or disbursements.
plaintiff Vassar College (hereinafter Vassar) was insured
under a primary policy and an umbrella policy issued by the
plaintiff United Educators (hereinafter UE). The policies
were obtained for Vassar by its insurance broker, the
defendant, Marshall & Sterling, Inc. (hereinafter
M&S). M&S was also the insurance broker of Kirchhoff
Construction Management, Inc. (hereinafter Kirchhoff), a
contractor hired by Vassar to perform construction work on
Vassar's property. M&S obtained primary insurance
coverage for Kirchhoff from ACE Property & Casualty
Insurance Comp any (hereinafter ACE), and excess insurance
coverage from Diamond State Insurance Company (hereinafter
Diamond State) and Scottsdale Insurance Co. (hereinafter
Scottsdale). Under all three of these policies, Vassar was an
additional insured in connection with the subject
Kirchhoffs employees was injured during the construction
project, and he later commenced an action against Vassar to
recover damages for personal injuries. Vassar requested that
M&S give notice of the action to ACE, Diamond State, and
Scottsdale. However, Diamond State and Scottsdale disclaimed
coverage based upon late notice.
eventually negotiated a $7 million settlement in that action,
paid the full amount on behalf of Vassar, and received
reimbursement from ACE and, despite its initial coverage
disclaimer, from Diamond State, up to their policy limits.
However, UE received only $2.5 million from Scottsdale, which
was less than its $4 million policy limit, resulting in a
$1.5 million shortfall that UE paid from its umbrella policy
with Vassar. Unlike Diamond State, Scottsdale continued to
invoke its late notice defense to justify its refusal to pay
its full policy limit. It is undisputed that pursuant to the
priority of coverage determined by this Court in an appeal in
a prior related insurance coverage action brought by Vassar
(Vassar Coll. v Diamond State Ins., Co., 84 A.D.3d
942), had Scottsdale paid up to its policy limit, UE would
not have had to contribute any money from the umbrella policy
towards the settlement in that action.
plaintiffs commenced this action against M&S, seeking to
recoup the $1.5 million shortfall UE paid through the
umbrella policy, alleging, inter alia, that the shortfall was
the result of M&S's negligence in failing to give
timely notice of the underlying action to Scottsdale. The
plaintiffs also sought to recover the attorney 's fees
incurred to enforce full coverage from Kirchhoffs excess
carriers. The Supreme Court denied the motion by M&S
pursuant to CPLR 3211(a)(7) to dismiss the complaint, holding
that the complaint stated a cause of action sounding in
negligence as to Vassar and subrogation on behalf of UE as
Vassar's subrogee, and for recovery of attorney 's
fees. M&S appeals.
considering a motion pursuant to CPLR 3211(a)(7) to dismiss a
complaint, the court must accept the facts as alleged in the
complaint as true, accord the plaintiff the benefit of every
possible favorable inference, and determine only whether the
facts as alleged fit within any cognizable legal theory (see
Goshen v Mutual Life Ins. Co. of N.Y., 98 N.Y.2d
314, 326; Leon v Martinez, 84 N.Y.2d 83, 87-88;
Randazzo v Nelson, 128 A.D.3d 935, 936).
''Although the facts pleaded are presumed to be true
and are to be accorded every favorable inference, bare legal
conclusions as well as factual claims flatly contradicted by
the record are not entitled to any such consideration"
(Zuniga v BAC Home Loans Servicing, L.P., 147 A.D.3d
882, 883 [internal quotation marks omitted]).
the complaint sufficiently alleged a cognizable cause of
action sounding in subrogation by UE as Vassar's subrogee
against M&S (see Allianz Underwriters Ins. Co. v
Landmark Ins. Co., 13 A.D.3d 172; Granite State
Insurance Co. v Diversified Edwards Agency, 304 A.D.2d
304), and for recovery of UE's attorney 's fees
(see Martini v Lafayetts Studio Corp., 273 A.D.2d
the complaint failed to state a cognizable cause of action by
Vassar sounding in negligence against M&S. The
traditional common-law elements of negligence include, inter
alia, damages (see Hyatt v Metro-North Commuter
R.R., 16 A.D.3d218). Here, it is undisputed that the
settlement of the underlying action and the attorney 's
fees at issue were fully paid by insurance proceeds.
Consequently, Vassar has failed to sufficiently allege that
it sustained any direct damages as a result of M&S's
alleged negligence. Accordingly, the Supreme Court ...