Sefcik v. State Farm Fire And Casualty Company

Filing 28

MEMORANDUM AND ORDER granting 25 Motion for Summary Judgment. For the reasons stated herein, Defendant's motion for summary judgment is granted andPlaintiff's motion for summary judgment is denied. The Clerk of the Court is directed to close the file on this matter. (Ordered by Judge Leonard D. Wexler on 3/15/2016.) (Fagan, Linda)

UN.ITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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JOHN A. SEFCIK,
Plaintiff,

MEMORANDUM AND ORDER

cv 14-1978
(Wexler, J.)

-againstSTATE FARM FIRE AND CASUALTY
COMPANY,

FILED

IN CLERK'S OFFICE
U S DISTRICT COURT E DN Y

Defendant.

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APPEARANCES:

*

MAR 15 2016

*

LONG ISLAND OFFICE

Farley & Kessler, PC
By: Richard L. Farley, Esq.
55 Jericho Turnpike
Jericho, NY 11735
Attorneys for Plaintiff
Hurwitz & Fine, P.C.
By: Elizabeth A. Fitzpatrick, Esq.
535 Broad Hollow Road, B-7
Melville, NY 11 74 7
Attorney for Defendant
WE)(LER, District Judge:
Plaintiff John Sefcik ("Sefcik" or "Plaintiff') brings this actiori regarding his automobile
insurance policy with Defendant State Farm Fire and Casualty Company ("State Farm" or
"Defendant").

Plaintiff seeks a declaratory judgment that Defendant is obligated to provide him

coverage, and also brings claims for breach of contract and breach of the implied covenant of
good faith and fair dealing. State Farm and Plaintiff move for summary judgment pursuant to
Rule 56 of the Federal Rules of Civil Procedure ("Fed. R. Civ. Proc."), seeking a declaration on

whether State Farm is obligated to provide coverage. 1 For the reasons that follow, Defendant's
motion for summary judgment is granted and Plaintiffs motion is denied.
BACKGROUND
The facts are largely undisputed. 2 Plaintiff had automobile insurance with Defendant
State Farm, Policy Number 54 5592-B02-23B, originally effective August 2, 2013 through
February 2, 2104 ("the "Policy"). On September 27, 2013, State Farm issued a Cancellation
Notice for non-payment of premium. On October 18, 2013 at 8:52am, Plaintiff was involved in
a three-vehicle car accident while driving his own car. Later in the day on October 18th,
sometime after the accident, Plaintiff called State Farm and paid the outstanding premium due in
the amount of $267.18 to have the policy reinstated. Plaintiff does not deny that when he called
State Farm to pay the overdue premium and reinstate the policy, he did not inform State Farm of
his accident that morning. On October 22, 2013, State Farm reinstated the policy, effective
October 18, 2013 at 12:01am.
On October 29,2013, State Farm sent Plaintiff a letter stating that State Farm was
investigating the question of whether it was "obligated to pay, indemnify, defend or otherwise
perform under the policy for the loss" from the October 18th accident. Affidavit of Lee Shramko
("Shramko Aff."), Ex. B. On November 12,2013, State Farm issued to Plaintiff a New York

1

Plaintiffs original cross-motion for summary judgment was denied without prejudice to
be re-filed in accordance with this Court's rules. Despite not refiling that motion as directed, the
Court considers that cross-motion here, as originally filed.
2

The facts are taken from the parties' Local Rule 56.1 Statements, unless otherwise noted.
The Court notes that Plaintiff did not submit a Counter-Rule 56.1 Statement in opposition to
Defendant's motion, permitting the Court to deem the facts in Defendant's Local Rule 56.1
Statement as admitted for purposes ofthe motion. See Local Rule 56.1(c).
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Motor Vehicle No-Fault Insurance Denial of Claim Form, denying coverage since the Policy was
"not in force on the day of accident." See Complaint, Exhibit 1. This action, originally filed in
state court, was removed to this Court on March 24, 2014.
DISCUSSION
I.

Standards for Summary Judgment
The standards for summary judgment are well settled. Rule 56(a) of the Fed. R. Civ.

Proc. states that summary judgment is appropriate only if"the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter oflaw."
Rule 56(a). The moving party bears the burden of showing entitlement to summary judgment.
See Ruminski v. Corsones, 396 F.3d 53, 69 (2d Cir. 2005). In the context of a Rule 56 motion,
the court "is not to weigh the evidence but is instead required to view the evidence in the light
most favorable to the party opposing summary judgment, to draw all reasonable inferences favor
of that party, and to eschew credibility assessments." Amnesty Am. v. Town ofW. Hartford, 361
F.3d 113, 122 (2d Cir. 2004); see Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248 (1986)
(summary judgment is unwarranted if"the evidence is such that a reasonable jury could return a
verdict for the nonmoving party"). Once the moving party has met its burden, the opposing party
'"must do more than simply show that there is some metaphysical doubt as to the material facts
.... [T]he nonmoving party must come forward with specific facts showing that there is a genuine
issue for trial."' Caldarola v. Calabrese, 298 F .3d 156, 160 (2d Cir. 2002) (quoting Matsushita
Elec. Indus. Co. v. Zenith Radio Cor_p., 475 U.S. 574, 586-87 (1986) (emphasis in original)).
II.

Insurance Does Not Cover "Known Losses"
Defendant argues that even though the Policy was reinstated on October 22 effective
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October 18 at 12:01 am., before the accident, the long-standing "known loss" doctrine precludes
coverage for this loss. The "known loss" defense is the "insurance law principle that an insured
may not obtain insurance to cover a loss that is known before the policy takes effect." Stonewall
Ins. Co. v. Asbestos Claims Management Corp., 73 F.3d 1178, 1214 (2d Cir. 1995), modified on
other grounds, 85 F.3d 49 (2d Cir.1996) (citing Bartholomew v. Appalachian Insurance Co., 655
F.2d 27, 28-29 (1st Cir. 1981)). In other words, insurance cannot be purchased for a home that
has already burned down. Stonewall Ins., 73 F.3d at 1215. See also National Union Fire Ins. Co.
of Pittsburgh. PA. v. Stroh Companies. Inc., 265 F.3d 97 (2d Cir. 2001) (noting that New York
law bars coverage for a "known loss," but not for the risk ofloss) (citing City of Johnstown v.
Bankers Std. Ins. Co., 877 F.2d 1146, 1153 (2d Cir. 1989)).
Similarly, definitions under the New York Insurance Law require that the validity of an
insurance contract relies upon the happening of a "fortuitous event" that is "to a substantial
extent beyond the control of either party." See N.Y. Ins. Law,§ 1101(a)(l) & (2); Consolidated
Edison Co. ofNew York Inc. v. Allstate Ins. Co., 98 N.Y.2d 208, 220, 774 N.E.2d 687, 746
N.Y.S.2d 622 (2002).
Here, there is no doubt that Plaintiff knew that he had been in a car accident that morning
when he called to pay the overdue premium and reinstate the policy. He does not dispute that he
did not report the accident to State Farm during that call. Clearly, this was a "known loss" to
Plaintiff when he called to reinstate the Policy, and coverage for this loss is therefore precluded
by operation of New York law. See 84 Albany Ave. Realty Corp. v. Standard Fire Ins. Co., 13
F.Supp.3d 241, 246 (E.D.N.Y. 2014) (known loss doctrine bars coverage for Hurricane Sandy
damage where insured attempted to renew a lapsed policy the next day).
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III.

State Farm Properly Canceled the Policy
Plaintiff argues that Defendant improperly canceled the policy on September 27, 2013,

asserting that Defendant did not comply with N.Y. Insurance Law§ 3426 (b) & (c) that requires
that notice of cancellation be provided to the insured as well as the insured's authorized agent or
broker. Plaintiff argues that since notice was not provided to his broker, Robert Marciante, the
policy was improperly canceled.
Yet, it is clear on its very face that Insurance Law § 3426 applies to commercial lines, and
not to the automobile policy at issue here; a distinction not disputed by Plaintiff. Instead, New
York's Vehicle and Traffic Law ("VTL") applies, and VTL §313 requires that to properly cancel
automobile insurance in the state ofNew York, the insurer must mail a notice of cancellation
fifteen days before cancellation for non-payment of premium, and the Department of Motor
Vehicles ("DMV") must be advised of the cancellation within thirty days of the effective date.
VTL § 313 (1) and (2).
As noted above, there is no dispute that on September 27, 2013, State Farm sent Plaintiff
a notice of cancellation, effective October 15, 2013, more than 15 days before the cancellation.
Affidavit of Dawn Thompson ("Thompson Af£"), Ex. D. There is also no dispute that DMV
was advised of the cancellation on October 22, 2013, within thirty days of the effective date.
Thompson Aff., Ex. F. Therefore, Plaintiffs Policy was properly canceled by State Farm.
The Court finds that the Policy does not cover this loss, and therefore further finds that
there is no basis for Plaintiffs claims for breach of contract and breach of the implied covenant
of good faith and fair dealing. Defendant's motion for summary judgment is granted in its
entirety.
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CONCLUSION
For the reasons stated above, Defendant's motion for summary judgment is granted and
Plaintiff's motion for summary judgment is denied. The Clerk ofthe Court is directed to close
the file on this matter.
SO ORDERED.

./)
/1/\
s/ Leonard D. Wexler

uioN'.kfn t wf.XtE't' ;1_

UNITED STATES DISTRICT- UDGE

Dated: Central ,?lip, New York
March1~ 2016

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