ERIN P. VESTAL, Respondent-Appellant,
MICHAEL C. PONTILLO et al., Appellants-Respondents, et al., Defendant.
Calendar Date: January 10, 2018
Keidel, Weldon & Cunningham, LLP, White Plains (Howard S.
Kronberg of counsel), for Michael C. Pontillo and another,
Schoeneck & King, PLLC, Albany (Ryan P. Keleher of
counsel), for Hudson Heritage Capital Management, Inc.,
Gleason, Dunn, Walsh & O'Shea, Albany (Thomas F.
Gleason of counsel), for respondent-appellant.
Before: McCarthy, J.P., Devine, Aarons, Rumsey and Pritzker,
MEMORANDUM AND ORDER
appeal from an order of the Supreme Court (Platkin, J.),
entered February 17, 2017 in Albany County, which, among
other things, partially denied motions by defendants Michael
C. Pontillo, Hudson Heritage Group, Inc. and Hudson Heritage
Capital Management, Inc. to dismiss the complaint against
husband (hereinafter decedent) reached out to his
brother-in-law and financial advisor, defendant Michael C.
Pontillo, to obtain additional term life insurance coverage.
Pontillo acted as the writing agent in applying for a $5
million term life insurance policy from defendant ReliaStar
Life Insurance Company that would name plaintiff as
beneficiary. Decedent completed a medical examination
questionnaire as part of the application that contained
misstatements of fact. The policy was issued in 2011 and,
when decedent passed away less than two years later,
plaintiff made a claim for the insurance proceeds. ReliaStar
denied the claim, determining that decedent's failure to
disclose on the medical questionnaire a history of substance
abuse treatment and cocaine use constituted material
misrepresentations warranting rescission of the policy.
responded by commencing this action against Pontillo and his
alleged employers, defendants Hudson Heritage Group, Inc.
(hereinafter HHG) and Hudson Heritage Capital Management,
Inc. (hereinafter HHCM), as well as against ReliaStar. She
asserted several claims against Pontillo, HHG and/or HHCM
that, while sounding in different theories of liability, all
relate to Pontillo's alleged submission of a fatally
inaccurate insurance application while representing to
plaintiff that the policy issued upon it was valid. In lieu
of serving an answer, HHCM moved to dismiss the claims
against it as failing to state a cause of action
(see CPLR 3211 [a] ) and precluded by documentary
evidence (see CPLR 3211 [a] ). Pontillo and HHG
served an answer, then moved to dismiss the complaint against
them on the same grounds. Supreme Court granted the motions
in part, dismissing the claim against Pontillo, HHG and HHCM
for breach of contract and the claim against HHG and HHCM for
their negligent hiring, supervision and retention of
Pontillo. Supreme Court denied the motions insofar as they
sought to dismiss plaintiff's claims for breach of
fiduciary duty, negligence, negligent misrepresentation and
concealment of material facts and fraud. Pontillo, HHG and
HHCM appeal, and plaintiff cross-appeals.
a motion to dismiss under CPLR 3211, the pleading is to be
given a liberal construction, the allegations contained
within it are assumed to be true and the plaintiff is to be
afforded every favorable inference" (Simkin v
Blank, 19 N.Y.3d 46, 52  [citation omitted];
see Graven v Children's Home R.T.F., Inc., 152
A.D.3d 1152, 1153 ). Allegations contained in an
affidavit submitted by the plaintiff may likewise be used to
remedy any defects in the complaint that would otherwise fail
to state a claim (see Leon v Martinez, 84 N.Y.2d 83,
87-88 ; Muncil v Widmir Inn Rest. Corp., 155
A.D.3d 1402, 1403 ). The liberal construction and
favorable inferences to which a plaintiff is entitled will
nevertheless fail to save claims that are conclusively
refuted by documentary evidence (see CPLR 3211 [a]
) or based on indisputably incredible factual allegations
(see CPLR 3211 [a] ; Simkin v Blank, 19
N.Y.3d at 52; 511 W. 232nd Owners Corp. v Jennifer Realty
Co., 98 N.Y.2d 144, 152 ; Graven v
Children's Home R.T.F., Inc., 152 A.D.3d at 1153).
argues that the claims against it must be dismissed inasmuch
as Pontillo was not its employee, pointing to a
representative agreement in which Pontillo is categorized as
an independent contractor. HHCM overlooks that such a
portrayal does not settle the fact-specific question of
whether an employer-employee relationship exists between it
and Pontillo (see Carlson v American Intl. Group,
Inc., 30 N.Y.3d 288, 301 ; D'Allaird v
Markline Sales, Inc., 104 A.D.3d 1110, 1112 ).
Even without the benefit of discovery, plaintiff produced
proof that Pontillo used office resources at HHCM's
headquarters in contravention of the representation
agreement, corresponded using a HHCM email address and had
HHCM business cards and letterhead. The assertion that HHCM
is liable for Pontillo's conduct as his employer is not,
as a result, conclusively debunked by the representation
agreement (see Carlson v American Intl. Group, Inc.,
30 N.Y.3d at 301; Hernandez v Chefs Diet Delivery,
LLC, 81 A.D.3d 596, 598-599 ; see also Layden
v Plante, 101 A.D.3d 1540, 1542-1543 ).
HHCM's assertion that Pontillo could not have sold term
life insurance under its banner, HHCM provided its membership
agreement with the Financial Industry Regulatory Authority in
which the needed authorization to engage in the sale of term
life insurance is absent. Plaintiff responded with a HHCM
brochure proclaiming that HHCM offers "[t]erm, [w]hole,
[u]niversal and [v]ariable" life insurance products, as
well as another HHCM brochure referencing insurance sales
through its "affiliated insurance agency" HHG.
Accordingly, in light of the conflicting documentary proof
and the unclear relationship between HHCM and HHG, HHCM has
not demonstrated its entitlement to dismissal on the ground
that it could not have had any connection to the ReliaStar
policy (see Barnes v Dungan, 261 A.D.2d 797, 799
to the arguments advanced in the motion of Pontillo and HHG,
to which HHCM joins, they assert that only decedent, as the
owner of the ReliaStar policy, had standing to recover for
any alleged negligence in applying for it .
"'[A]n obligation rooted in contract may engender a
duty owed to those not in privity' but, as a general
rule, privity or its equivalent remains the predicate for
imposing liability for nonperformance of contractual
obligations" (Henry v Guastella & Assoc.,
113 A.D.2d 435, 437 , lv denied 67 N.Y.2d 605');">67 N.Y.2d 605
, quoting Strauss v Belle Realty Co., 65
N.Y.2d 399, 402 ; see Leavitt-Berner Tanning
Corp. v American Home Assur. Co., 129 A.D.2d 199, 202 ,
lv denied 70 N.Y.2d 609');">70 N.Y.2d 609 ). Accordingly,
"where an insurance agent's negligence causes an
insured to be without coverage, the agent cannot be held
liable for damages sustained by an injured third party as a
consequence thereof... [if] the third party is not in privity
with the agent and is not an intended beneficiary of the
insurance contract" (Pressman v Warwick Ins.
Co., 213 A.D.2d 386, 387-388 ; see Henry v
Guastella & Assoc., 113 A.D.2d at 438-439).
was the intended beneficiary of the ReliaStar policy
from the moment when decedent applied for the policy. She
further alleged that she was linked to Pontillo by his status
as a family member and trusted financial advisor and that
Pontillo knew not only that the policy was intended to ensure
plaintiff's financial well-being in the event of
decedent's death, but that she would rely upon his
expertise in preparing a valid application for it. Accepting
these allegations as true, they show "an affirmative
assumption of a duty of care to a specific party, [plaintiff,
] for a specific purpose, regardless of whether there was a
contractual relationship" (Credit Alliance Corp. v
Arthur Andersen & Co., 65 N.Y.2d 536, 548-549
; see Ossining Union Free School Dist. v Anderson
LaRocca Anderson, 73 N.Y.2d 417, 425 ; Glanzer
v Shepard, 233 NY 236, 238-239 ; cf. Murphy v
Kuhn, 90 N.Y.2d 266, 271-272 ). As Supreme Court
correctly determined, this alleged "reliance by...
plaintiff that was 'the end and aim of the
transaction'" (Ossining Union Free School Dist.
v Anderson LaRocca Anderson, 73 N.Y.2d at 425, quoting
Glanzer v Shepard, 233 NY at 238-239) constituted
"a relationship so close as to approach that of
privity" and created a duty of care ...