POMERICO v. ELRAC INC., 475 (1-6-2004)

BERNICE D. SIEGAL, J.

Upon the foregoing cited papers, the Decision/Order on this Motion is as follows:

Petitioners move to compel New York State Motor Vehicle Accident Indemnification Corporation (hereinafter referred to as "MVAIC") to accept petitioners' late notices of claim, and to provide coverage, a defense and indemnification to defendant JEET SINGH. This matter arose from a car accident on July 31, 1998, whereby defendant Singh rear ended the vehicle belonging to co-defendants ELRAC, INC. and THOMASINA RICHARDSON. Petitioners JULIO POMERICO and GLORIA POMERICO were passengers in defendant Singh's vehicle, and commenced this action to recover for injuries they sustained. Based upon the controlling law and legislative intent, this Court grants petitioners' motion.

Petitioners contend that MVAIC should accept petitioners' late notices of claim because defendant Singh only recently became uninsured, necessitating MVAIC's representation. While petitioners acknowledge that they did not file notices of intention with MVAIC within 180 days of the accident as required by statute, they maintain that defendant Singh only became qualified once its insurance company Reliance Insurance Company went into liquidation. Petitioners further contend that they filed their notices of intention within a reasonably practical time, and that MVAIC will suffer no prejudice by accepting the late notices. Petitioners argue that, should MVAIC be allowed to deny the claims, the purpose behind the legislation creating MVAIC would be frustrated, and petitioners would have no legal recourse against defendant.

MVAIC contends that it does not have to represent defendant Singh, as petitioners submitted late claims and are not qualified to bring this motion. MVAIC argues that petitioners were aware of Reliance Insurance's status as of May 2002, and gave no valid reason why they filed their notices of claim eight months later. MVAIC further contends that the mere fact that defendant Singh's insurance company became insolvent subsequent to the accident does not render the vehicle uninsured.

It is the holding of this Court that petitioner correctly moved to compel MVAIC to appear on behalf of defendant Singh in this matter. Petitioners are qualified persons who should not be penalized because the tortfeasor Singh is no longer insured. It is not relevant for purposes of invoking MVAIC that defendant Singh had been insured at the time of the accident. Rather, the case law is clear that once Reliance Insurance became insolvent, that defendant Singh is an uninsured party that should be represented by MVAIC. Further, MVAIC has failed to demonstrate any prejudice in petitioners filing late notices of intention of claim and should be required to accept them.

Article 52 of the Insurance Law, also known as the "Motor Vehicle Accident Indemnification Corporation Act", sets the guidelines for proceeding against uninsured motorists. Insurance Law § 5208 sets the standard for determining whether an individual is a qualified person for whom protection should be granted. Specifically, under Insurance Law § 5208(a)(3)(B), a qualified person is required to submit a notice of claim to MVAIC within 180 days of disclaimer or denial of insurance coverage.

The legislative purpose in establishing MVAIC was to afford injured parties the same protection they would have if the tortfeasor were covered by insurance. See Dixon v. MVAIC, 56 AD2d 650, 651 (2nd Dept. 1971). The legislature enacted these statutory protections to benefit victims of uninsured accidents and should be liberally construed to serve rather than defeat those ends. Dixon, 56 AD2d at 651; see also Allstate v. Shaw, 52 NY2d 818 (1980); Canty v. MVAIC, 95 AD2d 509, 512 (2nd Dept. 1983).

Under Insurance Law § 5208, for petitioners to be qualified persons, they would have to prove that there was a disclaimer or denial of coverage by defendant Singh's insurance company. Based upon the case law and legislative intent, petitioners are qualified persons entitled to compel MVAIC to represent defendant Singh. The only issue in contention is whether Reliance Insurance's subsequent insolvency is tantamount to a disclaimer or denial of coverage, so that MVAIC would be responsible to represent defendant Singh. MVAIC relies on the decision in Uline v. MVAIC, 28 Misc2d 1002 (Sup. NY 1961), which states that the insolvency of an insurance company subsequent to an accident does not require MVAIC to take over representation. However, that decision is not binding on this Court and, for all intents and purposes, has been overruled by the First Department in the seminal decision Matter of Taub, 31 AD2d 378 (1st Dept. 1969).

In Taub, the Appellate Division specifically addressed the issue of whether the standard uninsured motorist endorsement extends coverage when the tortfeasor's insurance company subsequently becomes insolvent. In that decision, the Appellate Division found that insolvency of an insurer is tantamount to a disclaimer or denial of coverage, and that holding otherwise would be contrary to the legislative intent of the MVAIC law. See id. at 381. The Appellate Division further found that Article 52 of the Insurance Law did not require a particular method of disclaiming coverage, and that the determinative factor was whether the insurance company was able to provide the protections required under the insurance contract. This decision is in direct contradiction to the previous holding of Uline, where the lower court found that insolvency was not the equivalent of disclaimer or denial of coverage, thereby failing to comply with the requirements of Insurance Law § 5208. As Taub is the controlling decision, this Court finds that MVAIC's position is incorrect and unsupported by the law.

Therefore, once Reliance Insurance became insolvent, defendant Singh became an uninsured person for purposes of Insurance Law § 5208, so that petitioner may compel MVAIC to represent defendant Singh. See Taub, 31 AD2d at 381; Matter of Goldberg, 65 Misc2d 778 (Sup. NYC 1970). To find otherwise would thwart the very purpose of the uninsured motorist law, in providing innocent victims with compensation against uninsured tortfeasors. See Taub, 31 AD2d at 381; Matter of Goldberg, 65 Misc2d at 778. Further, distinguishing between an insurer's insolvency prior and subsequent to the accident serves no valid purpose, and prevents innocent victims from recovering for their injuries under circumstances over which they have no control. See Bendelow v. Travelers Indem. Co., 57 Misc2d 327 (Sup. NY 1968) ("one who has an insurance policy backed by an insolvent carrier and the party he injuries are just as unprotected as where there is no insurance at all.") There is no public policy goal that is served by maintaining a distinction between insolvency prior and subsequent to the accident, while the public policy goals of allowing qualified persons to present valid claims are clear and present in the statute and case law. See Insurance Law §§ 5201, 5208; Taub, 31 AD2d at 378-79.

As the Court finds that petitioners are qualified to bring the action against MVAIC, it further finds that MVAIC should accept petitioners' late notices of claim. Under Insurance Law § 5208, a court may require MVAIC to accept the late notices of claim, if it finds that petitioners submitted the late notices of claim in a reasonably practical time, and there is no prejudice to MVAIC or defendant. See Application of Lavin v. MVAIC, 23 Misc2d 126 (Sup. NYC 1960). In determining whether MVAIC suffers any prejudice due to the late notice of claim, the Court must look to whether MVAIC's inability to investigate while the claims are still fresh in the minds of those involved significantly prejudices its ability to present a timely and competent defense. See Lloyd v. MVAIC, 23 NY2d 478 (1969).

In this matter, petitioners did not have standing to make any claims against MVAIC until defendant Singh became an uninsured motorist. See Allstate v. Giordano, 108 AD2d 910, 912 (2nd Dept. 1985); Taub, 31 AD2d at 378; Goldberg, 65 Misc2d at 778. It is unclear when petitioners became aware of Reliance Insurance's status, although defendant attaches an exhibit indicating petitioners may have known in May 2002. Therefore, it appears that the 180 day period would begin to run in May 2002, and would have expired in November 2002, making petitioners' notice of claim only two months late. It is also noted that defendant Singh had been represented by counsel since the commencement of the action, and counsel's records could be used by MVAIC to investigate and defend the claims. The Court finds that the two-month delay is not overly burdensome, and that MVAIC has recourse through prior counsel's records to adequately investigate and defend Mr. Singh. See Daniels by Clarke v. Rodriguez, 171 Misc2d 420 (Sup. NYC 1996) (four month delay not prejudicial); Munoz v. MVAIC, 49 Misc2d 70 (Sup. NYC 1966) (two month delay not prejudicial). As MVAIC failed to demonstrate significant prejudice sustained by the late notices of claim, its rejection of the claims was unwarranted. See Uline, 28 Misc2d at 1002.

Therefore, this Court holds that petitioners' motion is granted. MVAIC is compelled to accept petitioners' late notices of claim, and to represent defendant Singh in the instant matter.