Car strikes pedestrian and pedestrian sues driver.  Driver notifies its insurance company, and from there on in, the insurance company is in charge.  Everything’s good, no?  In this case, definitely not.

Kaur v American Tr. Ins. Co. ;2011 NY Slip Op 05938 ;Decided on July 14, 2011 ;Appellate Division, First Department shows just how wrong things can go, and how the insurance company is left on the hook for $ 3.6 million dollars on a $ 100.000 policy.
 

"On March 3, 2003, Major Singh was injured when he was struck by a car owned by Gladys Towncars, Inc. (Gladys) and operated by Jose Grullon. On April 7, 2003, Singh and his wife, Sarbjeet Kaur, commenced a personal injury action against Gladys and Grullon claiming damages in the amount of $5 million. Upon the failure of Grullon’s insurer, American Transit Insurance Company (ATIC), to answer or appear in the suit, Supreme Court, Bronx County (Norma Ruiz, J.), entered a default judgment on April 6, 2005, against Gladys and Grullon in the amount of approximately $5.4 million. On July 5, 2007, this Court reduced the judgment to approximately $3.6 million and otherwise affirmed (42 AD3d 313 [2007]). "

Plaintiff Kaur, who was appointed temporary receiver of the judgment debtors Gladys and Grullon with respect to the causes of action possessed by Gladys and Grullon, brought the instant action on March 3, 2008, alleging, inter alia, legal malpractice [FN1]. Plaintiff claims that ATIC’s in-house counsel, Norman Volk & Associates, P.C. (Volk) failed to represent Gladys and Grullon in accordance with good and accepted legal principles and practices. Plaintiff further asserts that [*2]Baker, McEvoy, Morrissey & Moskovits, P.C. (BMMM) is liable as Volk’s successor for the alleged malpractice.

By notice of motion dated September 12, 2008, BMMM moved for summary judgment dismissing the complaint against it on the grounds that it is not a successor to Volk, and has not merged or consolidated with Volk. In support, Ronit Moskovits, a partner at BMMM, submitted an affidavit stating that none of the principals of BMMM were principals of Volk, BMMM had not represented Gladys or Grullon in the underlying action, and BMMM had not assumed any of Volk’s liabilities.

In this case, it is clear that the attorneys who worked at Volk continued to work exclusively as counsel for ATIC under BMMM. McEvoy affirmed that all of BMMM’s partners had been attorneys at Volk, that BMMM would hire a majority of Volk’s employees, and BMMM would maintain the same office location and phone number as Volk. He further stated that BMMM was formed for the express purpose of assuming and continuing Volk’s business.

BMMM’s argument that it cannot be a "mere continuation" because Volk survived the transaction "as a distinct, albeit meager, entity" (Schumacher, 59 NY2d at 245) is unavailing. John McEvoy affirmed that Volk’s entire caseload consisted of its representation of ATIC, and that Volk was retiring as ATIC’s attorney of record and from daily practice. Thus, when BMMM was substituted for Volk, Volk’s business was effectively ended (cf. Schumacher, 59 N.Y.2d at 245; see also Woodson v American Tr. Ins. Co., 292 AD2d 160 [2002]). "