Laskowski et al v. Liberty Mutual Fire Insurance Company

Filing 59

MEMORANDUM-DECISION and ORDER - That Liberty's 48 Motion for Summary Judgment is DENIED. That, upon the resolution of any outstanding discovery matters, this case is deemed trial ready and the court, in due course, shall issue a trial scheduling order. Signed by Chief Judge Gary L. Sharpe on 6/11/2012. (jel, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
________________________________
MARK R. LASKOWSKI et al.,
Plaintiffs,

5:11-cv-340
(GLS/ATB)

v.
LIBERTY MUTUAL FIRE
INSURANCE COMPANY,
Defendants.
________________________________
APPEARANCES:
OF COUNSEL:
FOR THE PLAINTIFFS:
Anderson, Kill Law Firm
1251 Avenue of the Americas
42nd Floor
New York, NY 10020-1182
FOR THE DEFENDANT:
Hiscock, Barclay Law Firm
50 Beaver Street
Fifth Floor
Albany, NY 12207-2830

DENNIS J. ARTESE, ESQ.
FINLEY HARCKHAM, ESQ.

THOMAS J. O’CONNOR, ESQ.

Gary L. Sharpe
Chief Judge
MEMORANDUM-DECISION AND ORDER
I. Introduction
Plaintiffs Mark R. Laskowski and Richard Hall commenced this
diversity action against defendant Liberty Mutual Fire Insurance Company

under 28 U.S.C. § 1332 claiming, among other things, breach of a fire
insurance policy. (See Compl., Dkt. No. 1.) Pending is Liberty’s motion for
summary judgment. (See Dkt. No. 48.) For the reasons that follow, the
motion is denied.
II. Background
A.

Facts1
On January 10, 2010, a second home owned by Laskowski and Hall,2

and its contents, which included valuable antiques, were damaged in a fire.
(See Def.’s Statement of Material Facts (SMF) ¶¶ 1-2, Dkt. No. 50; Dkt.
No. 54, Attach. 1 ¶ 3.) In February 2010, Laskowski and Hall submitted
claims for their losses to Liberty, which insured both the residence and its
contents. (See Dkt. No. 49, Attachs. 6, 7.) The prevailing fire insurance
policy provided that, after a loss, the insureds, Laskowski and Hall, were
required to cooperate with Liberty by submitting to an examination under

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Unless otherwise noted, the facts are undisputed.

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It is noted that, in July 2009, Hall filed for bankruptcy, (see Dkt. No. 49, Attachs. 2223)—a fact which was apparently uncovered during Liberty’s investigation of the claims later
made by Laskowski and Hall. (See Dkt. No. 48, Attach. 1 ¶¶ 3-4.) Hall did not include any of
the antiques or other personal property that was later damaged in the fire on his bankruptcy
schedules, indicating that he had no ownership interest in that property at the time of the
bankruptcy proceeding. (See Dkt. No. 49, Attach. 10 at 242-44.)

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oath (EUO) “[a]s often as [Liberty] reasonably require[d].”3 (Dkt. No. 48,
Attach. 2 at 18.) Consistent with that condition of cooperation, in April
2010, Liberty, which had already “determined that the fire in question was
other than natural or accidental in origin,” demanded that Laskowski and
Hall appear for an EUO. (Dkt. No. 49, Attach. 8.) Laskowski and Hall
appeared as required in May 2010 and, for two days, answered questions
posed by Liberty regarding their loss. (See Dkt. No. 49, Attachs. 9-13.) At
the conclusion of the EUOs, Liberty’s counsel stated: “That will conclude
today’s examination under oath. We’re going to continue, of course, as
soon as we get the transcripts to you and reviewed and we receive the
claim documentation, which hopefully will be forthcoming shortly.” (Dkt.
No. 49, Attach. 13 at 191.)
In July 2010, Liberty made a another demand on Laskowski and Hall
that they appear for additional EUOs. (See Dkt. No. 49, Attach. 14.)
Laskowski and Hall objected, claiming that more EUOs would be
unreasonable because the initial examinations were “lengthy and thorough”

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This provision, which required Laskowski and Hall to cooperate with Liberty’s
investigation, tracks the language of “the standard fire insurance policy of the state of New
York.” N.Y. Ins. Law § 3404(e) (McKinney 2010) (“The insured, as often as may be
reasonably required, shall . . . submit to examinations under oath.”).

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and “fully explored” the relevant issues. (Dkt. No. 49, Attach. 15 at 3.)
Laskowski and Hall also requested that Liberty inform them of what other
subject areas it felt were “necessary to explore so that [they could] further
consider whether [the] request for further EUOs [wa]s reasonable.” (Id.) In
September 2010, Liberty made an additional demand; Laskowski and Hall
again objected and reiterated their request regarding the topic areas to be
explored in follow-up examinations. (See Dkt. No. 49, Attachs. 16, 17.)
Liberty made yet another demand in October 2010 and also advised
Laskowski and Hall that their continued failure to submit to its request “may
result in a forfeiture of their rights under the policy.” (Dkt. No. 49, Attach.
18.) Laskowski and Hall responded by explaining that they viewed further
EUOs on previously covered topics as unreasonable; however, they
agreed to answer questions “on subject matters not previously covered.”
(Dkt. No. 49, Attach. 19 at 2.) Liberty interpreted Laskowski and Hall’s
response as a refusal to submit to EUOs as required by the policy. (See
Dkt. No. 49, Attach. 20.) One last time, Laskowski and Hall offered to
appear, but, again, only for questioning on topics that were not previously
covered. (See Dkt. No. 49, Attach. 21.) On January 11, 2011, Liberty
notified Laskowski and Hall that it was rejecting their claims because they
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violated the policy by: (1) failing to “appear for a continued [EUO]”; (2)
engaging in concealment and fraud; and (3) intentionally causing their loss.
(Dkt. No. 48, Attach. 3.)
B.

Procedural History
Laskowski and Hall commenced the instant action, which was

transferred to this District from the Southern District of New York, on
February 16, 2011. (See Compl.; Dkt. No. 9.) Liberty thereafter moved for
partial dismissal of the Complaint, and this court granted that motion in its
entirety, leaving only a claim for breach of contract. (See Dkt. Nos. 13,
34.) Liberty joined issue and asserted a counterclaim against Laskowski
and Hall, which has gone unanswered,4 for indemnification in the event that
it is determined that Laskowski and Hall caused their loss and Liberty has
to pay a mortgagee pursuant to the policy’s terms. (See Dkt. No. 36.)
III. Standard of Review
The standard of review pursuant to Fed. R. Civ. P. 56 is well
established and will not be repeated here. For a full discussion of the
standard, the court refers the parties to its decision in Wagner v. Swarts,

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Fed. R. Civ. P. 12(a)(1)(B) requires service of an answer to a counterclaim within
twenty-one days after service of the pleading asserting such claim. Laskowski and Hall’s time
to answer the counterclaim has long since expired.

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No. 1:09–cv–652, 2011 WL 5599571, *4 (N.D.N.Y. Nov. 17, 2011).
IV. Discussion
In support of its argument for summary judgment, Liberty asserts that
Laskowski and Hall’s refusal to submit to further EUOs—except to answer
questions on topics not previously covered—constitutes a breach of the
policy, which entitled them to deny the claims. (See Dkt. No. 51 at 3-9.)
Liberty also contends that, should the court deny its motion based on the
foregoing argument, Laskowski and Hall should be estopped from
recovering more than “50% of claimed personal property losses” because
Hall excluded both the antique collection and other jointly-owned personal
property, which were later damaged in the fire, from his bankruptcy
schedules in an effort to protect his one-half interest in that property. (See
id. at 9-16.)
Laskowski and Hall counter that Liberty’s demand for further EUOs
was “unreasonable and unnecessary as a matter of law” and, thus, they
were not obligated to appear for them, did not breach the policy, and,
under Fed. R. Civ. P. 56(f)(1), are entitled to summary judgment as to their
compliance with the cooperation clause. (Dkt. No. 54 at 5-14.) Laskowski
and Hall also assert that estoppel is inapplicable here because the position
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that Hall took in his bankruptcy proceeding is not inconsistent with his
position in this action; i.e., Hall testified that he transferred his interest in
the damaged personal property to Laskowski prior to the fire and has not
made any claim under the policy regarding the contents of the residence.
(See id. at 15-18.) Finally, Laskowski and Hall argue that even if Hall’s
former position is inconsistent, it cannot be imputed to Laskowski. (See id.
at 18-19.) Because summary judgment is inappropriate on either ground,
the court denies Liberty’s motion.
A.

EUOs5
Turning first to the issue of Laskowski and Hall’s cooperation with

Liberty’s investigation of their claims, an “insured’s willful failure to appear
at an EUO constitutes ‘a material breach of the cooperation clause and a
defense to an action on the policy.’” Rosenthal v. Prudential Prop. & Cas.
Co., 928 F.2d 493, 494 (2d Cir. 1991) (quoting Ausch v. St. Paul Fire &
Marine Ins. Co., 125 A.D.2d 43, 50 (2d Dep’t 1987)). The burden of
establishing such a material breach, as demonstrated by the insured’s
“willful and avowed obstruction,” In re Empire Mut. Ins. Co. Stroud, 36

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In the absence of a choice of law provision in the policy, the parties apparently agree,
as does the court, on the application of New York law to Laskowski and Hall’s breach of
contract claim. (See, e.g., Dkt. No. 51 at 3, 9; Dkt. No. 54 at 6-8.)

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N.Y.2d 719, 721 (1975) (internal quotation marks and citation omitted), is
“‘a heavy one’” that must be carried by the insurer. Ingarra v. Gen.
Accident/PG Ins. Co., 273 A.D.2d 766, 767 (3d Dep’t 2000) (quoting Levy
v. Chubb Ins., 240 A.D.2d 336, 337 (1st Dep’t 1997)); see N.Y. Ins. Law
§ 3420(c)(1); Cont’l Cas. Co. v. Stradford, 11 N.Y.3d 443, 450 (2008). Not
every failure to attend an EUO entitles the insurer to deny a claim,
however. Indeed, where the insured’s conduct was not willful and avowed
or where he can offer a “reasonable excuse” for his noncooperation, the
insurer will not be permitted to deny the claim on that basis. Mehtani v.
Paul Revere Life Ins. Co., No. 94 Civ. 2880, 1995 WL 617229, at *3
(S.D.N.Y. Oct. 20, 1995) (applying New York law); see Erie Inc. Co. v.
JMM Props., LLC., 66 A.D.3d 1282, 1284-85 (3d Dep’t 2009); Baerga v.
Transtate Ins. Co., 213 A.D.2d 217, 217-18 (1st Dep’t 1995).
Here, a material—and potentially dispositive—question of fact exists
regarding whether Laskowski and Hall’s refusal to answer questions at
additional EUOs on topics already covered constitutes a material breach of
the cooperation clause. Viewing the facts in a light most favorable to
Laskowski and Hall, a reasonable jury could find that their refusal did not
constitute willful and avowed obstruction or that they had a reasonable

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excuse. See Ingarra, 273 A.D.2d at 768. Unlike several of the cases
relied upon by Liberty wherein an insured or its agents failed to submit to
any EUOs or refused to answer any questions on certain topics, (see
generally Dkt. No. 51 at 3-8), Laskowski and Hall gave testimony over a
two-day period, Liberty determined “the extent of the questioning [it] chose
to conduct,” and Laskowski and Hall at no point “decided or requested to
end the examinations.” (Pl.s’ SMF ¶¶ 7-9, Dkt. No. 54, Attach. 7.)
Moreover, Laskowski and Hall’s refusal only related to what they viewed as
unreasonable, repetitive questioning on topics that they considered
thoroughly and fully explored. (See Dkt. No. 49, Attachs. 15, 17, 19, 21.)
At this juncture, Liberty has failed to meet its heavy burden. See Thrasher
v. U.S. Liab. Ins. Co., 19 N.Y.2d 159, 168 (1967). In light of the identified
issue of fact, judgment for Laskowski and Hall as to their cooperation
under Rule 56(f)(1) is also inappropriate.
B.

Judicial Estoppel6
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While Liberty relies upon New York case law in support of its argument regarding
judicial estoppel, (see, e.g., Dkt. No. 51 at 9-10), the Second Circuit has endorsed the
application of the federal judicial estoppel doctrine to diversity cases. See Stichting Ter
Behartiging Van de Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt Int’l B.V. v.
Schreiber, 407 F.3d 34, 45 (2d Cir. 2005); see also Intellivision v. Microsoft Corp., 784 F.
Supp. 2d 356, 363 (S.D.N.Y. 2011); Vitrano v. State Farm Ins. Co., No. 08 Civ. 103, 2009 WL
3365866, at * 4 (S.D.N.Y. Oct. 19, 2009). The court, therefore, proceeds by applying the
federal doctrine, which varies from the rule applicable in New York. See Vitrano, 2009 WL
3365866, at *4 (“New York State’s judicial estoppel doctrine requires that a party take a
position inconsistent with a prior position and that a judgment was entered in that party’s favor

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On the issue of whether Laskowski and Hall should be estopped from
recovering more than one-half of their claimed personal property losses,
judicial estoppel “applies only in situations where a party both takes a
position that is inconsistent with one taken in a prior proceeding, and has
had that earlier position adopted by the tribunal to which it was advanced.”
Stichting Ter Behartiging Van de Belangen Van Oudaandeelhouders In Het
Kapitaal Van Saybolt Int’l B.V. v. Schreiber, 407 F.3d 34, 45 (2d Cir. 2005).
The appropriateness of estoppel is informed by three factors: whether (1)
the later position advanced is clearly inconsistent with an earlier one; (2)
the former position was accepted by a court; and (3) the party advancing
“an inconsistent position would derive an unfair advantage or impose an
unfair detriment on the opposing party if not estopped.” New Hampshire v.
Maine, 532 U.S. 742, 750-51 (2001).
Here, estoppel is not warranted on the facts now before the court.
Despite the fact that Hall did not list the antiques and other personal
property on his bankruptcy schedules, (see Def.’s SMF ¶ 65; Dkt. No. 49,
Attach. 10 at 242-244), the position he has taken now is not “‘clearly

as a result of the prior court adopting the inconsistent position. In contrast, the federal
doctrine, as applied in this Circuit, requires only that the party to be estopped have argued an
inconsistent position in a prior proceeding and that the prior court adopted that position.”
(internal citations omitted)).

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inconsistent’” with his prior position of non-ownership. New Hampshire,
532 U.S. at 750 (quoting United States v. Hook, 195 F.3d 299, 306 (7th
Cir. 1999)); (see Dkt. No. 49, Attach. 3 at 150-51.) Hall testified that he
probably transferred the property in question to Laskowski “[s]ometime in
2009”—in advance of the fire—knowing that his failure to include the
property would protect it from his creditors. (Dkt. No. 49, Attach. 3 at 15152) Currently, Hall does not seek recovery as to the personal property
damaged or destroyed by the fire, (see Pl.s’ SMF ¶ 5); in fact, only
Laskowski made a claim as to that property, which he also contends he
owned solely at the time of the fire. (See id.; Dkt. No. 54, Attach. 1 ¶ 4,
Attach. 3 at 7.) While the court certainly does not condone furtive conduct
in bankruptcy proceedings, estoppel is inappropriate on these facts at this
time.
V. Conclusion
WHEREFORE, for the foregoing reasons, it is hereby
ORDERED that Liberty’s motion for summary judgment (Dkt. No. 48)
is DENIED; and it is further
ORDERED that, upon the resolution of any outstanding discovery
matters, this case is deemed trial ready and the court, in due course, shall
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issue a trial scheduling order; and it is further
ORDERED that the Clerk provide a copy of this MemorandumDecision and Order to the parties.
IT IS SO ORDERED.

Albany, New York
June 11, 2012

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