622 N.Y.S.2d 13 | N.Y. App. Div. | 1995
OPINION OF THE COURT
Plaintiff 69th Street and 2nd Avenue Garage Associates, L.P. (hereinafter plaintiff or Garage Associates) in 1987 acquired for one million dollars the garage property of a building that had gone to a combination of condominium, cooperative, and fee simple ownership (hereinafter called the cond-op). In December 1987 it purchased a title insurance policy from defendant Ticor Title Guarantee Company (hereinafter defendant or Ticor) in the amount of one million dollars. On November 7, 1991, shareholders and unit owners of the condop notified Garage Associates that they had voted to terminate Garage Associates’ ownership in the garage unit pursuant to the Condominium and Cooperative Abuse Relief Act of 1980 (the Act; 15 USC § 3601). Garage Associates, with an interest not only in its title but in its continuing business, the retention of its employees, and the need to refinance its acquisition on the expiration of its mortgage on July 1, 1994, opted to seek a declaratory judgment in the Federal court that the Act did not apply with respect to this property. Expedited briefing and argument were granted, and by decision dated February 27, 1992, the Federal court granted summary judgment to Garage Associates and declared that the Act did not apply in the cond-op situation, where the sponsor had from the beginning set aside the garage area as a separate condominium unit and retained it until its sale to Garage Associates.
Garage Associates had by letter dated November 27, 1991, given notice to Ticor of the claim of the cond-op and of its initiation of the action in the Federal court. There was, however, a divergence in the interests of the insured and the
The motion court recognized that, where there is a conflict of interests between an insurance company and its insured, the insured has the right to independent counsel (Public Serv. Mut. Ins. Co. v Goldfarb, 53 NY2d 392, 401) and implicitly that such counsel may be of the insured’s choosing, with reasonable fees paid by the insurer (supra, at 401). Indeed, the law is clear that where a conflict of interest is probable, selection of attorneys to represent the insured should be made by the insured rather than by the insurance company, which should remain liable for reasonable fees (Prashker v United States Guar. Co., 1 NY2d 584, 593; see, 225 E. 57th St. Owners v Greater N. Y. Mut. Ins. Co., 187 AD2d 360, 360-361). The motion court concluded, however, that no conflict of interest existed between the plaintiff and the title insurance company, both having "the same united controlling interest, i.e., to vigorously defend against the adverse title claim.” This, of course, reflects misunderstanding of the law as expressed in Goldfarb (supra), Prashker (supra) and 225 E. 57th St. Owners (supra). In practically all, if not in all cases, the insured and the insurer will have a common interest in defeating the claim made against the insured. What changed the rights of the insurer and the insured in those cases were the conflicts arising from their divergent interests, in how they would prefer to go about defeating such claims. The interests of Garage Associates and Ticor diverged seriously here, though each wished to defeat the claim of the cond-op. Ticor, having insured the title of a heavily mortgaged property, could pro
Accordingly, the judgment of the Supreme Court, New York County (Burton S. Sherman, J.), entered on or about August 11, 1993, which, inter alia, granted defendant Ticor’s cross motion for summary judgment, should be unanimously reversed, on the law, with costs and disbursements, defendant Ticor’s cross motion for summary judgment dismissing the complaint should be denied, the complaint reinstated, and plaintiffs motion for partial summary judgment as to liability granted; defendant Ticor having breached its obligation to provide plaintiff with a proper defense, plaintiff should be entitled to recoup all the damages it incurred by reason of such breach, including its reasonable attorneys’ fees in defending the title claim and its costs in settling the title claim; the matter should be remanded to the Supreme Court for further proceedings not inconsistent herewith.
Murphy, P. J., Ellerin and Kupferman, JJ., concur.