Case Information
*1 UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
________________________________________
MARY M. SICOLI, AS PERSONAL REPORT AND REPRESENTATIVE OF THE ESTATE OF RECOMMENDATION BENJAMIN M. SICOLI, DECEASED,
12-CV-00508(S)(M) Plaintiff,
v.
THE HARTFORD INSURANCE COMPANY
OF ILLINOIS,
Defendant.
_______________________________________
Before me is the motion of defendant Hartford Insurance Company of Illinois (“Hartford”) for summary judgment [18]. For the following reasons, I recommend that the [1] [2]
motion be granted in part and denied in part.
BACKGROUND
The action arises from a July 16, 2007 incident in which Thomas Rall was struck by an automobile operated by Benjamin Sicoli while he was performing construction work. Mr. Rall sued Mr. Sicoli and his wife, Mary Sicoli in State of New York Supreme Court, County оf [3]
Erie on January 7, 2008 (Thomas M. Rall v. Benjamin M. Sicolli, et al, Index No. 2008-344).
*2 Hartford’s Statement of Undisputed Facts [18-9], ¶¶3-4; Fanizzi Affidavit [18-5], Ex. A. Mr. Sicoli was insured by a personal automobile insurance policy issued by Hartford , providing $100,00 in liability coverage. Id. ¶¶1, 2.
Hartford assigned Walter R. Pacer, Jr., Esq., of the Law Office of Walter R. Pacer, Jr., who it alleges was an employee of the Hartford Fire Insurance Compаny (“Hartford Fire”), to defend Mr. Sicoli. Id., ¶¶5-6. Mr. Pacer’s letterhead indicates that the attorneys in his office are either “Employees of The Hartford Group of Affiliated Insurance Companies” (Roscetti Declaration [22], Exs. A, B) or “Employees of a Subsidiary of The Hartford Financial Services Group, Inc.” Id., Ex. C. Hartford paid all expenses incurred in defending Mr. Scioli against Mr. Rall’s suit. Id. ¶7.
On December 4, 2008, Mr. Sicoli was convicted in Niagara County Court of two criminal offenses arising from the accident: assault in the third degree (NY Penal Law §120.00(2)) and reckless endangerment in the second degree (NY Penal Law §120.20). Fanizzi Affidavit [18-5], Ex. D. His convictions were affirmed by the State of New York Supreme Court, Appellate Division, Fourth Department, on April 30, 2010. Id., Ex. E.
*3 A second action (Thomas R. Rall v. Benjаmin M. Sicoli, et al., Index No. 2008- 6735) was also commenced by Mr. Rall against Mr. Scioli and others (Fanizzi Affidavit [18-5], Ex. B), but Hartford declined to defend or indemnify Mr. Scioli in connection with that action, which alleged certain New York State Labor Law violations. Roscetti Declaration [22], Ex. G. By Order granted January 6, 2009, both of Mr. Rall’s cases against Mr. Sicoli were consolidated. Fanizzi Affidavit [18-5], Ex. C.
On June 30, 2010, Mr. Rall moved for summary judgment in the consolidated action on the issue of Mr. Sicoli’s negligence, arguing that Sicoli’s criminal convictions arising from the incident collaterally estopped him from relitigating this issue. Fanizzi Affidavit [18-5]. While Mr. Rall’s motion for summary judgment was pending, Mr. Pacer’s relationship with Hartford ended, and Mr. Sicoli’s defense was then “assigned” to Susan Owens, Esq., an attorney employed by Hartford Fire. Ciriellо Affidavit [18-4], ¶7; Hartford’s Statement of Undisputed Facts [18-9], ¶8. Mr. Rall’s motion, which was not opposed by Mr. Sicoli, was granted on July 23, 2010 [18-7].
Although the trial, which was originally scheduled to commence on August 12, 2010, was ultimately adjourned, Mr. Scioli allegedly first learned of the trial on August 4, 2010, when he was served with a trial subpoena. Complaint [4], ¶¶ Twentieth-Twenty Second. On August 5, 2010 Hartford authorized Ms. Owens to offer $100,000 to settle the Rall lawsuit, but Mr. Rаll demanded $900,000. Ciriello Affidavit [18-4], ¶¶7-8. At or about this time, Hartford “retained” Dennis Mescall, Esq. of Smith, Murphy & Schoepperle, LLP to defend Mr. Scioli. Id., ¶9.
*4 Mr. Sicoli died on September 18, 2010, and Ms. Sicoli was appointed the representative of his estate. Complaint [4], ¶¶Second - Third. Mr. Mescall continued to represent the estate until the lawsuit was settled for $325,000 on January 30, 2012, comprised of $100,000 paid by Hartford on behalf of the estate and $225,000 paid from the Estate. Ciriello Affidavit [18-4], ¶¶9-11.
The Complaint alleges, in relevant part, that Hartford: “failed to provide a proper and adequate defense to lawsuit brought by Thomas Rall, by such actions including, but not limited to, failing to make a motion for summary judgment on personal injury threshold issues, failing to appropriately review medical reports, failure to adequately prеpare Plaintiff, failure to advise Plaintiff of up coming trial dates, failure to defend a motion for summary judgment on liability and defaulting on same, failure to advise insureds of the motion for summary judgment, neglecting the file, failure to take such actions so as to mitigate Plaintiff Thomas Rall’s damages and claim for damages and, failure to conduct meetings with decedent insured, failure tо obtain proper medical opinion, failure to settle the matter within policy limits.” Complaint [4], ¶Twenty Sixth.
As a result of this alleged conduct, the estate alleges that Hartford “breached its contract of insurance” (Complaint [4] , ¶¶Twenty Eighth - Thirty Second (First Cause of Action)) and committed “professional negligence, malpractice” (id., ¶¶ Thirty Third - Thirty Seventh (Second Cause of Actiоn)).
At the Fed. R. Civ. P. (“Rule”) 16 scheduling conference, the issue of the legal
sufficiency of the estate’s claims was raised, and the parties agreed to a briefing schedule for
Hartford’s motion for summary judgment. September 5, 2012 Minute Entry and Order
*5
Thereafter, Hartford moved for summary judgment, arguing that the estate’s claims fail as a
matter of law because “New York’s Court of Appeals [in Feliberty v. Damon,
ANALYSIS
A. Summary Judgment Standard
“Summary judgment is a drastic remedy to be granted only where the
requirements of Rule 56 . . . have clearly been met.” United States v. Bosurgi,
Rule 56(a) requires the moving party to demonstrate “that there is no genuine
dispute as to any material fact and [that] the movant is entitled to judgment as a matter of law”.
“If the evidence submitted in support of the summary judgment motion does not meet the
movant’s burden of production, then summary judgment must be denied
even if no opposing
evidentiary matter is presented . . . .
[T]he non-movant is not required to rebut an insufficient
showing.” Vermont Teddy Bear Co., Inc. v. 1-800 Beargram Co.
B. The Estate’s Malpractice Claim
In moving to dismiss this claim, Hartford argues that “[t]he undisputed facts establish that Hartford . . . retained counsel, Mr. Pacer, to defend Mr. Sicoli from the Rall Lawsuit . . . . In acсordance with applicable ethical requirements, Mr. Pacer exercised independent professional judgment in representing Mr. Sicoli.” Hartford’s Memorandum of Law [18-8], p. 7. In response, the estate argues that Hartford has failed to establish “that the attorneys it assigned (not who Hartford Fire Insurance Company assigned), and who Defendant controlled, were truly independent even if they could establish they were not employees of Defendant directly”. Roscetti Declaration [22], ¶27.
Hartford relies heavily on Feliberty, in which the court declined to find the insurer
vicariously liable for the conduct of the attorney it hired to represent its insured, explaining that
“since the duty to defend an insured is by its very nature delegable . . . an insurance company is
in fact prohibited from the practice of law . . . . Accordingly, the insurer necessarily must rely on
independent counsel to conduct the litigation . . . . [T]he paramount interest independent counsel
represents is that of the insured, not the insurer. The insurer is precluded from interference with
counsel’s independent professional judgments in the conduct of the litigation on behalf of its
client”.
However, in Feliberty the plaintiff did not “seriously dispute that the law firm
retained by defendant to represent him was an independent contractor”, or “that, in the conduct of
his defense, the law firm was subject to defendant’s actual direction and control.” Id. at 118. The
*7
question in that case was “simply whether the facts . . . [fell] within one of the recognized
excеptions to the general rule that an employer is not liable for the acts of an independent
contractor, and if not, whether a new exception should be recognized.” Id. Accordingly,
Feliberty established a general rule that “insurers are not vicariously liable for the malpractice of
attorneys they retain to defend their insureds
when the lawyers are independent contractors.
”
Tokio Marine and Fire Insurance Co., Ltd. v. Grodin,
“[D]etermination of whether a particular individual is an employee or independent
contractor requires consideration of the degree of control the employer has over the ‘methods and
means by which the work is to be done.’” Dean v. City of Buffalo,
2003)). The record beforе me does not establish that, as a matter of law, Mr. Pacer or his law firm were independent contractors of Hartford. While Hartford relies on an initial Affidavit [18- 4] from its Claim Consultant, Joanne Ciriello, which states that Mr. Pacer was not an employee of Hartford (id., ¶4), Ms. Ciriello later states in the same Affidavit that “Mr. Pacer resigned from *8 Hartford ”. Id., ¶7 (emphasis added). The inconsistency between thеse two statements creates an issue of fact as to whether Mr. Pacer was an independent contractor.
In an attempt to remedy this deficiency, Hartford’s reply includes a second affidavit from Ms. Ciriello which states that “Mr. Pacer terminated his employment with Hartford Fire Insurance Company”. Ciriello Affidavit [28-1], ¶8. Ms. Ciriello’s affidavit offers no explanation as to why shе previously stated that Mr. Pacer had resigned from Hartford. Even assuming that this second affidavit supplants Ms. Ciriello’s earlier statement, the estate has submitted Mr. Pacer’s January 25, 2008 letter to Mr. Scioli, which states, “We are staff attorneys employed by your insurance carrier”. Roscetti Declaration [22], Ex. A. (emphasis added). That statement is sufficient to raise a triable issue of fact - especially at this pre-discovery stage.
Hartford argues that “the Estate ignores the theory of liability it actually pleaded
in its Complaint - a direct malpractice claim against Hartford”. Hartford’s Reply Memorandum
of Law [27], p. 4 of 11. While Hartford suggests that “[t]he Complaint does not allege a cause of
action in vicarious liability” (id, p. 5 of 11), “vicarious liability is not an indepеndent cause of
action, under either federal or state law. It is merely a doctrine that enables, in certain
circumstances, a defendant who played no part in the occurrence causing the plaintiff’s injury
[to] be held legally responsible for the plaintiff’s injury caused by the tort of another person.”
Mitchell v. County of Nassau,
Hartford also argues that “[n]othing in the Complaint remotely alleges an action for vicarious liability.” Hartford’s Reply Memorandum of Law [27], p. 5 of 11. However, this ignores the Complaint’s allegations that Mr. Pacer “was an employee of the Defendant” ([4], ¶Fourteenth) and that Hartford “through its agents, representatives and employees, failed to *9 provide an adequate and proper defense” (id. ¶Sixteenth), which were incorporated by reference into the estate’s malpractice claim. Id., ¶Thirty Third.
The estate also argues that “[t]he entire Hartford family tree is suspect”. Roscetti
Declaration [22], ¶27. Hartford responds that the estate has alleged an alter ego or veil piercing
theory of liability. Hartford’s Reply Memorandum of Law [27], pp. 6-7 of 11. “[P]iercing the
corporate veil does not constitute an independent cause of action under New York law. . . .
Instead, the alter ego doctrine is a theory of liability”. First Keystone Consultants, Inc. v.
Schlesinger Electrical Contractors, Inc.,
motion be denied. [8]
*10 C. The Estate’s Breach of Contract Claim
1. Hartford’s Duty to Defend
Hartford argues that that “allegations that an insurer provided an inadequate defense are insufficient to sustain a breach of contraсt action against an insurer”, and that “[t]he undisputed evidence shows that [it] met its obligation to defend Mr. Sicoli by assigning his defense to Pacer and subsequently to Mr. Mescall each of whom carried out the day-to-day activities of Mr. Sicoli’s and the Estate’s defense.” Hartford’s Memorandum of Law [18-8], pp. 10, 13.
However, an “insurer does not satisfy its duty to defend merely by designating
independent counsel to defend the litigation” when an insured is sued. Feliberty, 72 N.Y.2d at
117. Whether that duty has been satisfied “it is a fact-based inquiry.” National Casualty Co. v.
Vigilant Insurance Co.,
At minimum, there remains an open question as to whether Hartford appointed
independent counsel.
Compare with
Elm Insurance Co. v. GEICO Direct,
2. Hartford’s Duty to Indemnify
Hartford argues that “the Estate does not allege that [it] breached its duty to
indemnify the insured, nor can it, because it is undisputed that [it] paid the policy limit in
contribution to settlement of the Rall Lawsuit.” Hartford’s Memorandum of Law [18-9], p. 11.
In response, the estate argues that it alleges that Hartford “breached its contact of insurance”,
which includes its duty to indemnify. Roscetti Declaration [22], ¶26. Even assuming that the
Complaint alleges that Hartford breached its duty to indemnify, the estate does not explain how
this duty was breached when Hartford offered its policy limits and ultimately paid the policy
limit in contribution to settling Mr. Rall’s lawsuit.
See
McDonough v. Dryden Mutual Insurance
Co.,
Therefore, I recommend that Hartford’s motion be granted to the extent it seeks dismissal of the estate’s claim that it breached its duty to indemnify.
CONCLUSION
For these reasons, I recommend that Hartford’s motion for summary judgment
[18] be granted to the extent it seeks dismissal of the estate’s claim for breach of its duty to
indemnify, but otherwise be denied. Unless otherwise ordered by Judge Skretny, any objections
*12
to this Report and Recommendation must be filed with the clerk of this court by July 22, 2013
(applying the time frames set forth in Rules 6(a)(1)(C), 6(d), and 72(b)(2)). Any requests for
extension of this deadline must be made to Judge Skretny. A party who “fails to object timely . .
. waives any right to further judicial review of [this] decision”. Wesolek v. Canadair Ltd., 838 F.
2d 55, 58 (2d Cir. 1988); Thomas v. Arn,
Moreover, the district judge will ordinarily refuse to consider
de novo
arguments,
case law and/or evidentiary material which could have been, but were not, presented to the
magistrate judge in the first instance. Patterson-Leitch Co. v. Massachusetts Municipal
Wholesale Electric Co.,
The parties are reminded that, pursuant to Rule 72(b) and (c) of this Court’s Local Rules of Civil Procedure, written objections shall “specifically identify the portions of the proposed findings and recommendations to which objection is made and the basis for each objection . . . supported by legal authority”, and must include “a written statement either certifying that the objections do not raise new legal/factual arguments, or identifying the new arguments and explaining why they were not raised to the Magistrate Judge”. Failure to comply with these provisions may result in the district judge’s refusal to consider the objections.
Dated: July 3, 2013 /s/ Jeremiah J. McCarthy JEREMIAH J. MCCARTHY United States Magistrate Judge
Notes
[1] Hartford is improperly named in the Complaint as “The Hartford Insurance Company of Illinois”, whereas its correct name is “Hartford Insurаnce Company of Illinois”. Hartford’s Memorandum of Law [18-8], p. 2 n. 1.
[2] Bracketed references are to the CM/ECF docket entries.
[3] Mr. Rall’s suit as against Ms. Sicoli was discontinued on August 11, 2010. Hartford’s Memorandum of Law [18-8], p. 3 n. 2.
[4] Hartford argues that since plaintiff failed to respond to its Statement of Undisputed Facts
[18-9] these facts should be deemed admitted. Omilian Reply Affirmation [28], ¶3. L.R. Civ. P. (“Local
Rule”) 56(a)(2) states that “[e]ach numbered paragraph in the moving party’s statemеnt of material facts
will be deemed admitted for purposes of the motion unless it is specifically controverted by a
correspondingly numbered paragraph in the opposing statement.” Recognizing that “the local rule does
not absolve the party seeking summary judgment of the burden of showing that it is entitled to judgment
as a matter of law, and a Local Rule . . . statement is not itself a vehicle for making factual assertions that
are otherwise unsupported in the record”, I accept Hartford’s Statement of Undisputed Facts [18-9] as
true for purposes of this motion, where supported by admissible evidence. Giannullo v. City of New
York,
[5] It is unclear from the record whether the $325,000 was paid to settle both of Mr. Rall’s lawsuits against the Estate and hоw, if at all, the settlement was apportioned between the two cases.
[6] The Estate fails to cite any legal authority in opposition to Hartford of Illinois’ motion much less submit a Memorandum of Law as required by L.R. Civ. P. 7(a)(2)(A).
[7] I also have not reached Hartford’s arguments that Mr. Roscetti’s Declaration offers inadmissible hearsay in form of out-of-court statements from Mr. Rall and еxpert testimony as to what constitutes legal malpractice because I did not consider these aspects of the Declaration in reaching my recommendation. Hartford of Illinois’ Reply Memorandum of Law [27], p. 8-10 of 11.
[8] In the event the Estate’s legal malpractice claim is denied, Hartford requests leave to implead additional parties as Third Party Dеfendants to this action. Hartford’s Memorandum of Law [18-8], p. 9. If my recommendation is adopted, at that time Hartford of Illinois may file a proper motion to commence a third party action.
[9] While Hartford speculated that in response to its motion the estate might attempt to characterize its claim as alleging bad faith (Hartford’s Memorandum of Law [18-8], p. 13), the еstate did not do so. In any event, such claim would be barred by the fact that there is no indication in the record that Mr. Rall offered to settled his claim within Mr. Sicoli’s policy limits. See Tokio Marine, 803 F.Supp.2d at 204 (“Because the Macreadys have not come forward with any evidence that Kaplan offered to settle his claims for an amount less than the Macreadys’ policy limit . . . , their bad faith claim against Nationwide must be dismissed”).