Michael J. Carlson, Sr., &c., Appellant, v. American International Group, Inc., et al., Respondents.
No. 47
State of New York Court of Appeals
This opinion is uncorrected and subject to revision before publication in the New York Reports.
Kevin D. Szczepanski, for respondents American International Group, Inc., et al.
Paul Kovner, for respondent American Alternative Insurance Co.
Patrick J. Lawless, for respondent DHL Express (USA),
New York State Trial Lawyers Association; American Insurance Association et al.; New York State Academy of Trial Lawyers, amici curiae.
WILSON, J.:
Plaintiff Michael Carlson, individually and in his capacity as Administrator of his deceased wife‘s estate and as assignee of William Porter, commenced this action pursuant to
I.
Claudia Carlson was killed when a truck painted with DHL‘s logo, owned by MVP and driven by William Porter, an employee of MVP, crossed the double-yellow divider and hit her car head-on. Prior to the accident, Mr. Porter had driven the truck home on a scheduled break, when he learned that his son had been in an accident. Mr. Porter drove the truck to the accident site, and while driving the truck to retrieve a tool to repair his son‘s vehicle, Mr. Porter veered into Mrs. Carlson‘s car, killing her. A jury awarded her husband, individually and as administrator of her estate, $20 million against MVP, Mr. Porter and DHL. The Appellate Division set aside the verdict against DHL and dismissed the complaint against it, concluding that DHL was not vicariously liable under the doctrine of respondeat superior. The court also found damages to be excessive, and Mr. Carlson stipulated to a reduced judgment of $7.3 million. MVP‘s insurer paid Mr. Carlson approximately $1.1 million, and Mr. Porter assigned to Mr. Carlson whatever rights Mr. Porter had to any other insurance coverage.
At the time of the accident, DHL and MVP were parties to a cartage agreement, pursuant to which MVP used its fleet of trucks and employees to perform DHL‘s package delivery services in Western New York. DHL had three insurance policies relevant here: (1) a $3 million primary policy issued by National Union, which included “hired auto” coverage insuring DHL, its employees, and “[a]nyone else while using with your permission a covered ‘auto’ you own, hire, or borrow“; (2) a $2 million excess insurance policy with AAIC, with the exact same coverage as the National Union policy; and (3) a $23 million umbrella policy with National Union, which covered vehicles “hired by [DHL] or on [DHL‘s] behalf and used with [DHL‘s] permission.” American International Group, Inc. and AIG Domestic Claims, Inc. (collectively, AIG) did not issue any relevant policy to DHL.
Mr. Carlson commenced this action against National Union, AAIC, AIG, and DHL, alleging five causes of action. The first asserted a claim under
Defendants moved to dismiss the complaint in its entirety. As to the first cause of action, AAIC moved to dismiss on the ground that section 3420 did not permit a claim against it because its policy, initially issued by it to DHL‘s predecessor, Airborne Inc. (headquartered in Washington), and later assumed by DHL (headquartered in Florida), was not “issued or delivered” in New York. Supreme Court denied that motion, and allowed discovery to proceed on the issue of coverage. After limited discovery had occurred, Supreme Court granted the motions and cross motion to the extent of dismissing causes of action 2, 3 and 5 of the complaint, but refused to dismiss the first and fourth causes of action.
The Appellate Division dismissed Mr. Carlson‘s
II.
On a motion to dismiss for failure to state a cause of action, the complaint must be liberally construed, and courts must provide a plaintiff with every favorable inference (see 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 152 [2002]; Leon v Martinez, 84 NY2d 83, 87 [1994];
“Under
A.
As to the hired auto issue, dismissal on that ground was erroneous, for two additional reasons. First, defendants and the Appellate Division rely on the contract of insurance, without reference to extrinsic evidence, to conclude that the truck driven by Mr. Porter was not a hired auto, thus entitling them to dismissal. However, as Mr. Carlson argues, and defendants admit, a portion of the insurance contract, the Schedule of Hire, has not been produced. According to the expert, the Schedule of Hire would show that DHL‘s insurance policies cover all of MVP‘s vehicles. Mr. Carlson also points to evidence concerning the underwriting of the policies, which demonstrates that DHL‘s policies were priced to cover MVP‘s trucks
one of the limited exceptions to the parol evidence rule“], affd 61 NY2d 802 [1984]) or, perhaps, would be entitled to an adverse inference based on defendants’ duty to maintain the Schedule (see Pegasus Aviation I, Inc. v Varig Logistica S.A., 26 NY3d 543, 551 [2015];
Defendants’ argument that the Schedule of Hire would have been unlikely to list MVP‘s vehicles individually, and therefore defendants should prevail as a matter of law, is in any event foreclosed by our decision in Jefferson Ins. Co. of New York v Travelers Indemnity Co. (92 NY2d 363, 370 [1998]), in which we held: “that the van is not specifically listed [in the Schedule of Hired and Non-Owned Coverage] is not determinative” of coverage, because the policy “listed ‘N.Y.’ as the State in which such coverage would apply, and also listed a ‘Rate per each $100 cost of hire’ and a premium amount.”
Second, the insurance policies do not define “hired auto,” and neither the Appellate Division nor defendants point to any industry-standard definition. Defendants argue, and we agree, that the degree of control exercised by DHL over MVP‘s trucks is pivotal to the determination of whether they are hired autos. However, the issue of control is fact-specific. The cartage agreement contains some terms militating against a finding of control; for example, Section 3.3 of the cartage agreement gives MVP control over the manner of performance, including the
Most significantly for the purpose of this appeal, determining the extent of control is not limited to the face of the contract, but concerns the actual degree of control exercised by DHL over MVP. Mr. Carlson, who obtained some limited discovery, has pointed to evidence supporting the proposition that DHL actually exercised substantial control over MVP‘s trucks.3 For example, MVP‘s entire fleet was used exclusively for DHL deliveries; DHL prescribed the make and model of the vehicles to be used by MVP; MVP‘s vehicles were garaged in DHL‘s facility; DHL had keys to MVP‘s offices, which were located inside the DHL facility; DHL dispatched MVP drivers and owned the equipment used to do so; DHL sent MVP drivers instructions via text message; DHL provided routing specifications for express shipments and required MVP to follow them; DHL required MVP to collect money on COD (collect on delivery) shipments and remit those monies to DHL; and if a
Contrary to the Appellate Division‘s holding, the fact that the cartage agreement labels MVP an “independent contractor” is not dispositive of the issue of control, but is a factor to be weighed with others. In Matter of Rivera (State Line Delivery Serv.-Roberts) (69 NY2d 679, 682 [1986]), we noted that “whether the relationships of the operators-deliverers with the delivery
companies is that of employees or independent contractors involves a question of fact as to whether there is evidence of either control over the results produced or over the means used to achieve the results.” In various other contexts, we and other courts have held that the determination of whether someone is an independent contractor is a fact-specific question (see e.g. Matter of Empire State Towing & Recovery Assn., Inc. [Commissioner of Labor], 15 NY3d 433, 437 [2010]; Herman v RSR Sec. Services Ltd., 172 F3d 132, 139 [2d Cir 1999]; Brock v Superior Care, Inc., 840 F2d 1054, 1059 [2d Cir 1988]; Cross v Supersonic Motor Message Courier, Inc., 140 AD3d 503, 504 [1st Dept 2016] [concluding that whether delivery driver was employee or independent contractor was a question of fact where, although the contract labeled the driver an independent contractor, “he was required to maintain insurance in an amount dictated by Continental, his delivery process was controlled by the Continental dispatcher, he used Continental‘s forms, was required to wear a Continental shirt, and the truck he drove bore the Continental logo“]).
Although we express no opinion as to whether Mr. Carlson will ultimately succeed in demonstrating that the MVP vehicle constituted a “hired auto,” defendants have not shown that, as a matter of law, Mr. Carlson failed to “manifest any cause of action cognizable at law” (Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]) or that defendants submitted “‘documentary evidence [to] conclusively establish[] a defense to the asserted claims as a matter of law‘” (98 NY2d at 152).4
As to the issue of whether DHL granted “permission” to MVP to use the vehicle in question, dismissal on that ground was also erroneous.5 “Permission” is not defined in the insurance agreement. “While the rights and obligations of parties under insurance contracts should be determined by the specific language of the policies, if the language of the policy is susceptible of two reasonable meanings, the parties may submit extrinsic evidence of their intent at the time of contracting” (Newin Corp. v Hartford Acc. & Indem. Co., 62 NY2d 916, 919 [1984]). There is a well-understood meaning of permission in the context of motor vehicle liability insurance, which turns not on whether the
driver had permission to use the vehicle for the particular activity at issue, but on whether the driver had permission to use the vehicle at all (i.e. the distinction between a permissive user and a thief)(see Motor Vehicle Accident Indemnification Corp. v Continental Nat‘l Am. Group Co., 35 NY2d 260, 263-265 [1974]; Murdza v Zimmerman, 99 NY2d 375, 381 [2003]; State Farm Mut. Auto. Ins. Co. v Taveras, 71 AD3d 606, 606 [1st Dept 2010]; Lancer Ins. Co. v Republic Franklin Ins. Co., 304 AD2d 794, 797 [2nd Dept 2003]). That established meaning is consistent with industry practice, public policy and DHL‘s insurance agreement itself.
In Motor Vehicle Accident Indemnification Corp., Continental Insurance attempted to deny coverage after an accident on the ground that the driver of a rental car was forbidden, by the terms of the rental agreement, from driving the car. We held that the driver nevertheless drove the car with constructive “permission” of the owner, as that term is used in
“The restrictions sought to be imposed by Continental violate the public policy of this State . . . . The
lessor (and Continental) . . . knew or should have known that the probabilities of the car coming into the hands of another person were exceedingly great and in these circumstances they are to be charged with constructive consent . . . Any other interpretation would be placing an unreasonable limitation on the ‘permission’
contemplated by [section 388] . . . [section 388] expresses the policy that one injured by the negligent operation of a motor vehicle should have recourse to a financially responsible defendant . . . To put it another way, these considerations of sound public policy will prevent the evasion of the liability of one leasing cars for profit (and in turn, his insurer) via the attempted device of restrictions on or conditions of use which run counter to the recognized realities and, in a measure, disguise the transaction”
(35 NY2d at 264-265). Subsequently, in Murdza, we explained that “our finding of constructive consent [in Motor Vehicle Accident Indemnification Corp.] -- despite the owner‘s restrictions -- rested, in part, on the public policy concerns surrounding the large number of vehicles placed on the road by businesses that rent cars to others for profit, and the inevitability that these vehicles will ‘become involved in their fair share of accidents‘” (99 NY2d at 380, quoting Motor Vehicle Accident Indemnification Corp., 35 NY2d at 263). The Vehicle and Traffic Law‘s understanding of “permission” is echoed in
Those same public policy concerns are at issue here. DHL contracted with MVP for the operation of fleets of thousands of vehicles with DHL‘s logos, for the purpose of the exclusive delivery of DHL‘s packages nationwide, including Western New York. Mr. Carlson pointed to evidence showing
Mr. Carlson‘s expert, who claims forty years of experience in the insurance industry, opined that, as a matter of common industry usage, “the term ‘permission’ in an insurance policy is broad and simply means that the operator was legally allowed to use that vehicle at the time of an accident. To put in simpler terms, in an insurance context an operator is either a permissive user or a thief who stole the vehicle” (cf. Murdza, 99 NY2d at 381 [“because the lessee gave his consent to (the third-party driver) to operate the rental vehicle () we (found) that he was operating it with the constructive consent of (the lessor) and, perforce, with the permission envisioned by the provisions of
DHL argues that the interpretation of “permission” is controlled by the Appellate Division‘s decision in Carlson v Porter (53 AD3d 1129 [4th Dept 2008]). There, the Appellate Division concluded as a matter of law that “neither the DHL defendants nor MVP may be held vicariously liable under the theory of respondeat superior” because Porter was on a personal errand at the time of the accident and that “his employment did not create the necessity for the travel” (id. at 1132). However, the doctrine
Under the terms of the insurance contract, coverage is not limited to circumstances where DHL is held directly liable or liable by way of the doctrine of respondeat superior. The contract contemplates coverage in circumstances where the driver may not be an employee, or where the driver may not be acting within the scope of employment, so long as the other requirements for coverage are met.
III.
AAIC adopts the Appellate Division‘s rationale that because AAIC‘s policy was issued in New Jersey and delivered in Washington and then in Florida, it was neither issued nor delivered in New York, and therefore plaintiff cannot recover from AAIC pursuant to
Preserver resolves that question, and we now reiterate that section 3420 applies to policies that cover insureds and risks located in the State.
Applying the Preserver standard to the facts of this case, it is clear that DHL is “located in” New York because it has a substantial business presence and creates risks in New York. It is even clearer that DHL purchased liability insurance covering vehicle-related risks arising from vehicles delivering its packages in New York, because its insurance agreements say so.
This interpretation of “issued or delivered” is consistent with the reasoning behind the legislature‘s enactment of
law rule that an injured person had no cause of action against the insurer of a tortfeasor and to protect the tort victims of New York (see Lang v Hanover Ins. Co., 3 NY3d 350, 353-354 [2004]). “Generally, statutes designed to promote the public good will receive a liberal construction and be expounded in such a manner
In 2008, the legislature amended
The 2008 amendments also changed the “issued for delivery” language in subsection (d) to match the “issued or
delivered” language elsewhere in the statute. Nothing in the bill jacket or other legislative history mentions that change, so that it appears to have been a stylistic change with no intended import. If anything, “issued or delivered” is facially broader than “issued for delivery.” Moreover, there is certainly no indication that the legislature‘s minor amendment to subsection (d) was intended to overturn this Court‘s holding in Preserver.
Interpreting “issued or delivered in this state” to apply exclusively to policies issued by an insurer located in New York or by an out-of-state insurer who mails a policy to a New York address would undermine the legislative intent of
Second, we do not here purport to judge the meaning of the words “issued or delivered” in any context other than section 3420. Identical words may be used in different contexts with different meanings and different legislative histories, and we do not foreclose any such interpretations by our decision here.
Third, the dissent would restrict section 3420 (d) to policies that were either issued in New York or delivered to New York, and would exclude, for example, an insurance policy issued by a national insurer located in Connecticut to a retailer operating in all fifty states, if the policy was delivered to the retailer‘s headquarters in Arkansas -- even if the policy was specifically written to cover risks in New York created by the insured‘s extensive operations in this state. The same concerns that animate our consideration of section 3420 are also relevant to and consistent with the purpose of other provisions of the Insurance Law, which has as its overriding purpose the protection of New Yorkers and the coverage of injuries occurring in New York (see e.g.
In light of the above, we conclude that the term “issued or delivered” does not alter our conclusion in Preserver, and that section 3420 (a) encompasses situations where both insureds and risks are located in this state. In so holding, we further conclude that the policies here fall within the purview of
IV.
Mr. Carlson‘s remaining claims are without merit, and we review them briefly.
“The elements of a cause of action for fraud require a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff[,] and damages” (Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 559 [2009]; see Lama Holding Co. v Smith Barney, 88 NY2d 413, 421 [1996]). In an action for fraud, “the circumstances constituting the wrong shall be stated in detail” (
Accordingly, the orders of the Appellate Division should be modified, without costs, by denying defendants’ motions to dismiss the first cause of action and, as so modified, affirmed.
Carlson v American International Group, Inc. et al.
No. 47
GARCIA, J.(dissenting):
The vehicle involved in the tragic accident underlying this case was not a “hired auto” under settled principles of insurance law (see Dairylea Coop. v Rossal, 64 NY2d 1, 9-10 [1984]; see also Toops v Gulf Coast Marine Inc., 72 F.3d 483, 487-488 [5th Cir 1996]; 8A Couch on Ins. § 118:49). I would therefore affirm on that basis.
I.
In April 2004, MVP Delivery and Logistics, Inc. (MVP) entered into a cartage agreement with DHL Express (USA) Inc. (DHL) to provide package delivery services in the Western New York region. The agreement expressly identified MVP as an independent contractor. As such, MVP owned and registered the vehicles in its delivery fleet. MVP also maintained control over its employees and the manner and means of its performance under the cartage agreement. Pursuant to the terms of the agreement, MVP obtained a $1 million liability insurance policy to cover the vehicles.
In the underlying wrongful death litigation, a jury awarded Michael Carlson, in both his individual capacity and as administrator of his deceased wife‘s estate, $20 million against William Porter, MVP, and DHL. The Appellate Division reversed the judgment against MVP and DHL, reasoning that MVP and DHL could not be held vicariously liable on a theory of respondeat superior because Porter‘s employment did not create the need for the travel (Carlson v Porter, 53 AD3d 1129, 1132 [4th Dept 2008]). In other words, Porter exceeded the scope of his employment by running a personal errand at the time of the accident. MVP was nonetheless still held statutorily liable as owner of the vehicle (see
Seeking to satisfy the deficient judgment, plaintiff, in his individual capacity and as administrator of his wife‘s estate, commenced this action under
Three DHL insurance policies are relevant here. First, National Union Fire Insurance Company of Pittsburgh (National Union), a subsidiary of American International Group, Inc. (AIG), issued DHL‘s primary insurance policy in the amount of $3 million. This liability policy contained a “hired auto” provision defining an insured as anyone “using with your permission a covered auto you own, hire or borrow . . . .” Second, National Union issued a $23 million umbrella policy defining an insured as “[a]ny person . . . or organization with respect to any auto owned by you, loaned to you or hired by you on your behalf and used
These defendant insurance companies moved to dismiss this action under
On appeal, the Appellate Division reversed and granted the motion to dismiss, concluding that plaintiff could not state a claim against National Union because DHL did not “hire” the vehicle in question and could not have given MVP permission to use MVP‘s own vehicle (130 AD3d 1479, 1481 [4th Dept 2015]). As a result, MVP was not an “insured” under the applicable policies. In a companion appeal, the Appellate Division also dismissed the first cause of action against AAIC (130 AD3d 1477, 1477-1478 [4th Dept 2015]). The court reasoned that the excess policy had not been “issued or delivered in this state” as required by
II.
The majority holds that whether MVP is an “insured” under DHL‘s insurance policies presents a question of fact to be resolved by a jury. I disagree. The cartage agreement on its face establishes that MVP is an independent contractor responsible for the purchase, operation, and maintenance of its delivery fleet. As such, MVP exercised meaningful control over its vehicles, thereby precluding “hired auto” coverage, as a matter of law, under the relevant insurance policies.
A.
“The key inquiry regarding whether an automobile will fall within the hired automobiles provision of [a] policy is whether
MVP, not DHL, owned the delivery vehicle at issue. Accordingly, to obtain coverage, plaintiff has the burden of establishing that the MVP vehicle was (1) “hired” by DHL and (2) used with DHL‘s permission at the time of the accident. Here, the fourteen-page cartage agreement, read in conjunction with the insurance policies, conclusively defeats plaintiff‘s “hired auto” claim.
By its very terms, the cartage agreement referred to MVP as an independent contractor. As such, MVP maintained sole control over the manner and means of its performance:
“3.3 Manner of Performance. Subject to the terms and conditions of this agreement by which Contractor performs the Services shall be at Contractor‘s sole discretion and control and are Contractor‘s sole responsibility, including, with respect to (a) the hours and days worked by Contractor Workers, (b) the selection and supervision of Contractor Workers, and (c) the number of Contractor Vehicles used by Contractor in providing the Services. Contractors shall have the sole right to determine all aspects of its performance of its obligations under the Agreement, including the staffing, operation, and routing of the Contractor Vehicles in the Service Areas . . . .”
(Cartage Agreement at ¶ 3.3 [emphasis added]).
The cartage agreement further provides MVP with exclusive control over the purchase and maintenance of its delivery vehicles (see id. at ¶ 3.5.1 [“Contractor Vehicles. Without limiting the generality of Section 3.3, Contractor, at is sole cost and expense, shall obtain, furnish, operate, and maintain in good working condition such Contractor Vehicles as may be necessary for Contractor to perform the Services in accordance with the provisions of this Agreement“][emphasis added]). Moreover, MVP was solely responsible for the licensing, registration, and insurance of its delivery vehicles (see id. at ¶ 3.5.2; ¶ 12.1 [“(MVP) shall, at its sole cost and expense, maintain in effect continual insurance coverage . . . . All such insurance coverages . . . shall be primary to, and shall receive no contribution from any other insurance maintained by, on behalf of, or benefitting DHL“] [emphasis added]). Finally, the agreement specified that MVP was responsible for the hiring, training, and firing of all its employees (see id. at ¶ 3.4). Clearly, pursuant to the cartage agreement, MVP maintained direct control over the purchase, operation, and maintenance of its vehicles -- and more. MVP, among other things, selected individual drivers, selected delivery routes, loaded and unloaded the vehicles, and furnished the vehicles with gas and other supplies.
As the majority notes, the cartage agreement contained strict regulations for, among other things, the vehicles’ operating and performance standards, the vehicles’ markings, employee uniforms, and employee standards of conduct. DHL also had the right to inspect MVP‘s records and audit its compliance with the agreement. MVP even used DHL‘s facilities and housed its vehicles on site. The majority stresses these aspects of the business relationship in holding that there is a cognizable factual dispute here (see majority op at 9-10). However, none of these requirements in the cartage agreement -- with the limited exception of vehicle performance standards -- affect the MVP vehicles in their functional or operational capacities. The markings requirement, for instance, simply reflects DHL‘s control over its own intellectual property and brand, not the vehicle itself. Accordingly, even assuming DHL exercised some “supervisory powers,” MVP was still an independent contractor responsible for its own performance (see Chicago Ins. Co. v Farm Bureau Mut. Ins. Co. of Arkansas, Inc., 929 F.2d 372, 374 [8th Cir 1991]).
Absent any indication that DHL specifically hired MVP‘s vehicles for its own exclusive control, there can be no “hired auto” coverage as a matter of law (see American Cas. Co. of Reading, Pa. v Denmark Foods, 224 F.2d 461, 463 [4th Cir 1955]). I would therefore hold that MVP -- an independent contractor solely responsible for the purchase, operation, and maintenance of its vehicles -- exercised such exclusive control over the vehicle so as to preclude “hired auto” coverage.
B.
That result is the same one we reached in Dairylea Coop. v Rossal (64 NY2d 1 [1984]). There, R&H Hauling, an independent contractor, entered into a hauling contract with Dairylea Cooperative, Inc. and an accompanying lease agreement for a tanker truck. Several months later, R&H purchased the tanker with Dairylea retaining a security interest. The truck, which was still titled in Dairylea‘s name, was subsequently involved in an accident with another vehicle while being driven by a R&H employee. After a jury returned a verdict for the plaintiff in the underlying personal injury action, Dairylea and R&H‘s insurers initiated a declaratory judgment action to determine coverage. Much like the insurance policies at issue here, Dairylea‘s insurance policy defined an insured as “any other person while using an owned automobile or a hired automobile with the permission of the named insured” (id. at 9).
We held in Dairylea that the truck did not constitute a “hired auto” under Dairylea‘s insurance policy. In doing so, we emphasized the fact that the hauling contract between the parties called for R&H to transport milk as an independent contractor, and did not require the use of a particular tanker to perform that service (see id. at 9-10). Even though Dairylea still had title to the truck and the truck still carried license plates issued to Dairylea, we concluded that “it cannot be said in any realistic sense that once the . . . agreements and note were executed, Dairylea had any control over use of the tanker or could grant R&H permission to use it” (id. at 10). We further observed that “as the owner of the tanker, R&H had the right to use it without permission from Dairylea or anyone else” (id.).
Similarly, here, the cartage agreement between DHL and MVP explicitly refers to MVP as an independent contractor.
Our decision in Dairylea reflects the nationwide consensus on “hired auto” coverage (see e.g. Toops v Gulf Coast Marine, Inc., 72 F.3d 483, 487 [5th Cir 1996] [“(I)n order for a vehicle to constitute a hired automobile it must be under the named insured‘s exclusive use or control“]; Sprow v Hartford Ins. Co., 594 F.2d 418, 422 [5th Cir 1979] [“(F)or a vehicle to constitute a hired automobile, there must be a separate contract by which the vehicle is hired or leased to the named insured for his exclusive use or control“]; Russom v Ins. Co. of North America, 421 F.2d 985, 993 [6th Cir 1970] [“Where there is a separate contract for hiring or leasing a vehicle in addition to an agreement to haul a particular load, courts have held that the vehicle becomes a ‘hired automobile‘“]; Phillips v Enterprise Transp. Serv. Co., 988 So. 2d 418, 422 [Miss Ct App 2008] [citing Toops and Sprow for the proposition that the vehicle must be hired or leased for the named insured‘s exclusive use or control]). Courts have also held that independent contractor status cannot create “hired auto” coverage as a matter of law (see e.g. Chicago Ins. Co., 929 F.2d at 374; Transport Indem. Co., 620 F.2d at 1371; American Cas. Co., 224 F.2d at 463).4
Accordingly, based on the face of the cartage agreement, plaintiff cannot, as a matter of law, meet his burden of proving coverage (see Cons. Ed. of N.Y. v Allstate Ins. Co., 98 NY2d 208, 218 [2002]).
C.
Relying on the standard of review on a motion to dismiss, the majority holds that “[w]hether MVP was an insured under DHL‘s policies presents a question of fact to be resolved by the trier of fact” (majority op at 2). According to the majority, “the insurance policies do not define ‘hired auto,’ and neither the Appellate Division nor defendants point to any industry-standard definition” (id. at 8). The majority opinion then relies heavily on an expert affidavit proffered by plaintiff to conclude that a jury should determine whether the vehicle was a “hired auto.” The majority even implies that a “missing” Schedule of Hire, which is purportedly “essential to [the] determination of the full content of the contract[,]” is admissible through the parol evidence rule (id. at 7).
But “a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms” (Greenfield v Philles Records, Inc., 98 NY2d 562, 569 [2002]). The rule‘s operation is no different in the context of insurance contracts: “[w]here the terms of an insurance policy are clear and unambiguous, interpretation of those terms is a matter of law for the court” (Town of Harrison v Nat‘l Union Fire Ins. Co. of Pittsburgh, 89 NY2d 308, 316 [1996]; see also White v Continental Cas. Co., 9 NY3d 264, 267 [2007] [“(U)nambiguous provisions of an insurance contract must be given their plain and ordinary meaning“]). We have, in Dairylea, defined the parameters of hired auto coverage, consistent with the interpretations adopted by courts in a number of states, and that definition should govern here. Yet, instead, the majority impermissibly uses extrinsic evidence “to create an ambiguity in a written agreement which is complete and clear and unambiguous upon its face” (W.W.W. Associates, Inc. v Giancontieri, 77 NY2d 157, 163 [1990]).5 Consequently, under the majority‘s holding, a plaintiff may now use extrinsic evidence to alter the express terms of an insurance policy whenever an insurer moves to dismiss the action.
The majority also appears to suggest that MVP and William Porter had implied permission to operate the vehicle under
The majority also relies on the public policy considerations underlying section 388. In Motor Vehicle Accident Indemnification Corp. v Continental Nat‘l Am. Group Co., for example, we held that a driver of a rental car had the constructive permission of the owner, overcoming the permissive use restrictions found in the lease agreement (35 NY2d 260, 264-265 [1974]). Later, in Murdza v Zimmerman, we explained that “[o]ur finding of constructive consent -- despite the owner‘s restrictions -- rested, in part, on the public policy concerns surrounding the large number of vehicles placed on the road by businesses that rent cars to others for profit, and the
inevitability that these vehicles will “become involved in their fair share of accidents“” (99 NY2d 375, 380 [2003], quoting Motor Vehicle Accident Indemnification Corp., 35 NY2d at 263). If anything, these cases undermine the majority‘s position.
The constructive permission theory applied in Motor Vehicle Accident Indemnification Corp. and Murdza is intended to ensure that a
The case before us involves a straightforward application of contract interpretation and settled insurance law. Rather than apply those established principles, the majority‘s approach permits litigants to introduce extrinsic evidence to create ambiguity in contracts, upsetting not only our own precedent but the settled expectations of parties to commercial agreements. I would instead apply our longstanding precedent and affirm the Appellate Division‘s holding that the vehicle was not a “hired auto.”
III.
Affirming on these grounds would dispose of the case without consideration of the second issue -- the application of
In order to recover under
The majority holds that dismissal of the cause of action against AAIC was improper under the standard announced in Preserver Ins. Co. v Ryba (10 NY3d 635 [2008]). In Preserver, we considered a different provision of
“Issued for delivery” -- the phrase then used in
In holding that an insurance policy is “issued for delivery” if it covers both insureds and risks in New York, the Preserver Court cited American Ref-Fuel Co. of Hempstead v Employers Ins. Co. of Wausau (Preserver, 10 NY3d at 642, citing American Ref-Fuel, 265 AD2d 49, 53 [2d Dept 2000]). American Ref-Fuel held that an insurance policy was “issued for delivery” in New York where the policy expressly listed, as a named insured, a New York corporation (265 AD2d at 53). In so holding, the court expressly noted that “the language in issue here, ‘delivered or issued for delivery in this State’ differs from the language in . . .
The majority asserts that, “[i]f anything, ‘issued or delivered’ is facially broader than ‘issued for delivery‘” (majority op at 20). This misrepresents the former statutory language in
Recognizing the distinction between the terms, the Appellate Division in this case properly dismissed the cause of action against AAIC:
“The parties and the court have improperly conflated the phrase ‘issued or delivered’ with ‘issued for delivery,’ which was used in the former version of
Insurance Law § 3420(d) , and therefore the definition of ‘issued for delivery’ is not relevant here.”
(Carlson, 130 AD3d at 1477-1478). The excess policy was issued by AAIC from New Jersey and delivered to the insured in Washington and then in Florida. Thus, the policy was not “issued or delivered in this state” as that phrase is ordinarily understood (id. at 1478; see also Taggert v Security Ins. Co. of New Haven, Conn., 277 AD 1051, 1051 [2d Dept 1950] [“A policy of insurance is issued when it is delivered and accepted, whereby it comes into full effect and operation as a binding mutual obligation, or when it is prepared and signed, as distinguished from its delivery to the insured“]; cf. American Continental Props., 200 AD2d at 446-447 [questioning where the endorsements were signed and therefore finding a question of fact as to whether a policy was “issued or delivered” in New York]).
Rather than give “issued or delivered” the plain meaning it has previously been assigned, the majority -- attempting to rectify a perceived injustice -- defines two distinct terms to have identical meaning (
The majority‘s assertion that its holding may be confined to
Moreover, the majority‘s claim that a literal interpretation of the phrase “issued or delivered” would permit insurers to
may not be issued or delivered in the State, but which cover automobiles that present a significant risk to the residents of New York, must comply with specific provisions of the Insurance Law (see e.g.
While the majority claims that it is “simply not plausible” to conclude that the legislature intended to exclude policies issued or delivered outside the State because of the potential burden on New York residents in pursuing insurers in their home states, it is hardly plausible that the legislature intended to require every automobile insurer throughout the country -- regardless of where the policy was issued or delivered -- to comply with New York insurance statutes on the chance that
many of the provisions of
This unhappy result may be avoided -- the vehicle was not a “hired auto” and we should leave it at that. I respectfully dissent.
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Orders modified, without costs, by denying defendants’ motions to dismiss the first cause of action and, as so modified, affirmed. Opinion by Judge Wilson. Judges Rivera, Feinman and Eng concur. Judge Garcia dissents in an opinion, in which Chief Judge DiFiore and Judge Stein concur. Judge Fahey took no part.
Decided November 20, 2017