| N.Y. App. Div. | Jul 12, 1984
— Order of the Supreme Court, New York County (Thomas V. Sinclair, J.), entered November 18, 1983, is unanimously modified, on the law and the facts, without costs, to strike so much of the last decretal paragraph as declares that “plaintiffs’ obligations to the defendants under the terms of the policies, are binding prior to the effective cancellation date of the policies in question”; and to grant leave to plaintiff to make application at Special Term, pursuant to CPLR 3211 (subd [e]), for leave to replead and is otherwise affirmed. K Plaintiffs herein, Middlesex Insurance Company and Sentry Insurance, a mutual company, are participants in the New York Automobile Insurance Plan, an assigned-risk pool established under section 63 of the Insurance Law. They appeal from that part of the order below which granted the motion of intervenor, Motor Vehicle Accident Indemnification Corporation, to dismiss the first, fourth and eleventh causes of action of the complaint, pursuant to CPLR 3211 (subd [a], par 7), and denied plaintiffs’ motion for a stay of all arbitrations and court actions arising out of or related to the policies of automobile insurance which are the subject of this action. H Plaintiffs allege that they were defrauded by an insurance scheme pursuant to which they, as mandatory participants in the New York Automobile Insurance Plan, were induced to issue policies of motor vehicle insurance to some 24 “insureds” who allegedly were engaged in taxicab businesses in upstate New York, where their vehicles allegedly were operated and garaged and thus were subject to lower premium rates. In truth, however, say the plaintiffs, these “insureds” were merely “management companies” who, although listed as the “registered owners” of the taxis, were not the real owners. They were engaged in the business of procuring insurance coverage for undisclosed gypsy cab owners and operators (the “operational defendants”) some of whom were unlicensed and others of whom were uninsurable for other reasons, whose vehicles were operated and garaged in New York City. This action is brought against the “insureds”, the “operational defendants”, various insurance brokers and parties who have brought claims either in court actions or in arbitration proceedings, arising from accidents in which the “insured vehicles” were involved. Motor Vehicle Accident Indemnification Corporation has intervened and successfully moved to dismiss the first, fourth and eleventh causes of action. The first and fourth causes of action allege the fraudulent misrepresentations by the “insured defendants”, the knowing participation therein and ratification thereof by the “operational defendants”. Plaintiffs seek both injunctive and declaratory relief declaring that they have no obligations or liabilities under the questioned policies either to defend or indemnify any of the defendants herein, including the “insureds”, the “operational defendants”, insurance brokers or third-party claimants and to enjoin the “operational defendants” from taking any further action on claims or suits already made or instituted against them or making any further claims or instituting any further suits. The eleventh cause of action seeks injunctive relief against claimants and plaintiffs who have filed claims or brought actions pursuant to or in connection with the challenged policies from prosecuting those claims or suits beyond any stage necessary to preserve any such claims against any time limitations. U Special Term concluded that these causes of action in fact sought to void and cancel the policies of insurance ab initio and thus contravened the public policy of this State as expressed in its compulsory automobile insurance laws which provide only for prospective cancellation of such policies and thus abrogate the insurers’ common-law right to void a policy from its inception on the ground that it has been obtained through fraud and misrepresentation. (Aetna Cas. & Sur. Co. v O’Connor, 8 NY2d 359; Teeter v