MATTER OF INSURANCE COMPANY OF STATE OF PENNSYLVANIA v. EDKINS

DECISION AND ORDER

Judge: JOSEPH J. MALTESE

Upon the foregoing papers, (1) the petition for a temporary stay (Seq. No. 001) is granted to the extent indicated; (2) respondents' cross motion (Seq. No. 003) to dismiss the proceeding as jurisdictionally defective is denied;1 (3) respondents' motion for sanctions (Seq. No. 002) is granted, in part, and denied, in part, as herein provided; and (4) petitioner's uncalendared "cross motion" for relief nunc pro tunc is denied.

To the extent relevant, this action arises from a motor vehicle accident that occurred on January 10, 2006. It is alleged that at the time of the accident, the decedent, Mariana Edkins, was a passenger in an automobile operated by nonparty Josephine DiDonato and owned by nonparty Giacomo DiDonato, when the DiDonato vehicle was struck by a vehicle operated by nonparty John L. Sambuco and owned by nonparty Denise L. Gillott, thereby inflicting the injuries which purportedly caused the death of respondents' daughter. Respondents have settled their claims as against the owners and operators of the vehicles involved in the subject accident, and presently seek to recover additional damages for the injury and death of their daughter pursuant to the arbitration provision of the $500,000.00 supplemental uninsured/underinsured motorist (hereinafter "SUM") endorsement of the insurance policy issued to them by the Insurance Company of the State of Pennsylvania (Petitioner's Exhibit "A").

In seeking to stay arbitration in order to permit discovery, petitioner contends that depositions (i.e., Examinations Under Oath) have yet to be conducted, and that medical authorizations concerning the injury and death of respondents' decedent remain outstanding. In this regard, petitioner points to the provisions of its SUM endorsement, which requires its insureds to provide "the full particulars of the nature and the extent of the injuries, treatment, and other details [needed] to determine the SUM amount payable" (Petitioner's Exhibit "C" p 2). In response, respondents have cross-moved2 to dismiss the proceeding as being jurisdictionally defective, citing a purportedly improper attorney's verification. More specifically, respondents maintain that notwithstanding petitioner's out-of-state address, the petition could not be verified by an attorney pursuant to CPLR 3020(d) as counsel lacks personal knowledge of the facts relative to their SUM claim. In further opposition, respondents submit copies of various correspondence to the petitioner dated January 23, 2006 through July 26, 2007, which include, inter alia, authorizations for the release of their no-fault file and decedent's hospital records (Respondents' Exhibits "A" through "M").

CPLR 3020(d)(3) provides that "if the party is a foreign corporation... or if all the material allegations of the pleading are within the personal knowledge of an agent or the attorney, the verification may be made by such agent or attorney" (see Matter of Tenneriello v. Board of Elections, 63 N.Y.2d 700 [1984]). Here, petitioner has submitted the affidavit of its Vice President attesting that it is a foreign (i.e., Pennsylvania) corporation (Petitioner's Exhibit "A"), while the verification of its attorney affirms the truth of the petition based on personal knowledge and/or "[investigations and records on file with the Petitioner". Pertinently, CPLR 3020(a) defines a "verification" as "a statement under oath that the pleading is true to the knowledge of the deponent, except as to matters alleged on information and belief, and that as to those matters [they are] believe[d] to be true" (see Matter of Henry M., 194 A.D.2d 606, 607 [2nd Dept 1993]). As a result, since the opposing papers are devoid of any claim that the substantial right of any party has been prejudiced, it is the opinion of the Court that the proceeding was properly commenced (CPLR 402, 7502[a]; see Matter of Page v. Ceresia, 265 A.D.2d 730 [3rd Dept 1999]; cf. Berger v. Feinerman, 203 A.D.2d 407 [2nd Dept 1994]). Accordingly, the remaining branches of respondents' cross motion, including their request for costs and sanctions for the error in venue, is denied.3

Turning to the issue of discovery, the application for a stay (Seq. No. 001) asserts that petitioner's prior requests to obtain an authorization for, e.g., the autopsy report, and to conduct an Examination Under Oath ("EUO") of either respondent remain outstanding, and that the SUM arbitration cannot fairly proceed without them (Petitioner's Exhibits "B", "D"). However, in support of their separate motion to impose costs and sanctions on the petitioner (Seq. No. 002), respondents assert that the deposition of a non-party witness, Josephine DiDonato, was conducted by petitioner without leave of court (see CPLR 408), and while the instant motions were pending. Moreover, it is undisputed that respondents' attorney did not receive either a confirmation or a "courtesy phone call" on the day prior to the date stated on the subpoena, and that the deposition was conducted despite the nonappearance of respondents' attorney. This may be partially explained by the claim of respondents' attorney that he notified his adversary by "speed memo" that the subpoena was a "nullity" (see Respondents' Exhibit "F"), a fact which his adversary denies (see infra).

In further support of their request for sanctions, respondents submit the affidavits of Mary Ann Edkins and Charles Edkins, each stating that due to the acts of petitioner's attorney, they were never afforded an opportunity to attend Ms. DiDonato's deposition describing the final moments of their daughter's life (Respondents' Exhibits "G", "H"). Finally, respondents seek to preclude Ms. DiDonato's deposition transcript from being admitted in the arbitration proceeding pursuant to CPLR 3126(2).

In opposition to the motion for sanctions, petitioner maintains that respondents (1) failed to file a demand for SUM arbitration with the American Arbitration Association, and (2) never objected to the subpoena calling for the non-party deposition. Petitioner further denies receipt of the aforementioned "speed memo", and denies knowledge of the Edkins' purported interest in appearing at the deposition. In the alternative, petitioner has cross-moved pursuant to CPLR 408 for leave to conduct the non-party deposition of Josephine DiDonato nunc pro tunc, and to allow the deposition transcript to be admitted in the arbitration proceeding.

CPLR 3102(c) provides that before an action or proceeding is commenced, disclosure "to aid in bringing an action, to preserve information or to aid in arbitration, may be obtained, but only by court order" (see CPLR 103[b]; 408). Moreover, in a special proceeding under CPLR article 75, a petitioner is not entitled to discovery as of right, but must again seek the leave of court (see CPLR 408; cf. Matter of Town of Pleasant Val v. New York State Bd of Real Prop Servs, 253 A.D.2d 8, 15 [2nd Dept 1999]). Because discovery tends to prolong a case, it is generally perceived as inconsistent with the summary nature of a special proceeding. Accordingly, it is incumbent upon the party seeking disclosure in an arbitrable dispute to demonstrate that discovery is necessary (id. at 16; see Matter of State Farm Mut Auto Ins Co v. Wernick, 90 A.D.2d 519 [2nd Dept 1982]; cf. Matter of Goldsborough v. New York State Dept of Correctional Servs, 217 A.D.2d 546 [2nd Dept 1995]). In this regard, the trial court has been granted broad discretion to grant or deny pre-arbitration disclosure in matters involving SUM coverage (see e.g. Matter of NY Cent Mut Fire Ins Co v. Serpico, 45 A.D.3d 598 [2nd Dept 2007]; Matter of State Farm Mut Auto Ins Co v. Goldstein, 34 A.D.3d 824 [2nd Dept 2006]; Matter of State Farm Mut Auto Ins Co v. Bautista, 11 A.D.3d 471 [2nd Dept 2004]).

Here, while the examination of the surviving occupant of the host vehicle, Ms. DiDonato, was otherwise warranted (see Matter of State Farm Mut Auto Ins Co v. Wernick, 90 AD2d at 519), the fact that petitioner improperly proceeded with her deposition on January 18, 2008 during the pendency of these motions and without the leave of court, provides this Court with little or no reason to sanitize petitioner's misdeeds by granting its request for nunc pro tunc relief. Still, the nature and degree of any penalty to be imposed pursuant to CPLR 3126 lies within the court's discretion (see e.g. Brown v. United Christian Evangelistic Assn, 270 A.D.2d 378, 379 [2nd Dept 2000]), and in this case, the proper penalty would seem to require only that petitioner be precluded from using the deposition testimony of the non-party witness in the arbitration. Accordingly, respondents' further request to impose costs and sanctions for frivolous conduct pursuant to 22 NYCRR 130-1.1 is denied, as there is no evidence that the conduct in question was undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another (cf. Dun-Zheng Yan v. Klein, 35 A.D.3d 729 [2nd Dept 2006]; Letterese v. Dashman, 289 A.D.2d 378 [2nd Dept 2001]).

Finally, respondents have failed to demonstrate that petitioner intended to waive its policy rights to obtain disclosure. Accordingly, the arbitration will be stayed 90 days during which respondents are directed to provide petitioner any and all authorizations necessary to obtain relevant medical records and a copy of the autopsy report pertaining to their decedent, and to appear for such EUOs as may be required by their insurance contract (see e.g. Matter of NY Cent Mut Fire Ins Co v. Serpico, 45 AD3d at 598-599; Matter of State Farm Mut Auto Ins Co v. Goldstein, 34 AD3d at 824-825; Matter of State Farm Mut Auto Ins Co v. Bautista, 11 A.D.3d 471, supra).

Accordingly, it is hereby:

ORDERED that the supplementary underinsured motorist arbitration is stayed ninety (90) days from the date hereof; and its is further

ORDERED that respondents are directed to provide petitioner forthwith with any and all authorizations necessary to obtain relevant medical records and a copy of the autopsy report pertaining to the deceased, Mariana Edkins; and it is further

ORDERED that respondents are directed to appear for Examinations Under Oath at a mutually convenient time and place, but in no event later than forty-five (45) days after the service upon them of a copy hereof, with notice of entry; and it is further

ORDERED that the previously unresolved branches of respondents' cross motion are denied; and it is further

ORDERED that respondents' motion for sanctions is granted to the extent that petitioner is precluded from admitting the deposition transcript of non-party witness Josephine DiDonato at the arbitration proceeding; and it is further

ORDERED that the balance of the above motion is denied; and it is further

ORDERED that petitioner's request for leave to conduct the deposition of non-party witness Josephine DiDonato nunc pro tunc is also denied.