Justice Schack’s decision in Taveras v American Tr. Ins. Co.; 2011 NY Slip Op 51831(U) ; decided on October 17, 2011 ;Supreme Court, Kings County ; Schack, J. is an eye-opener. Basically put, this was a three car accident in which American Transit had two of the cars. Each of the cars had a $ 100,000 policy. The entire case could have been settled within policy limits, yet American Transit failed to offer the policies. The verdict, even after reduction by the Appellate Division was $2.25 million.
The decision is well worth reading, as Justice Schack has lovingly quoted from the deposition transcripts and from the trial transcript. The effect is devastating.
One interesting sidelight was the preclusion of expert reports by defendants based upon late production. We wonder if a legal malpractice case will follow this bad faith case.
"The first time AT weighed the comparative risk to its insured AMIR was on April 26, 2006, after defendants had been precluded from offering the testimony of ELRAC’s experts. (Jay Ellenberg EBT, pp. 86 – 87). AT admitted that it did not have the information necessary to evaluate the relative financial risk to its insured and failed to do so. (Jay Ellenberg EBT, p. 165, p. 169). Mr. Ellenberg testified that based upon the relative exposure of AMIR and AT, AT failed to put itself on equal footing with their insured at the time the damages phase of the trial commenced. (Jay Ellenberg EBT, p. 230)."
"Therefore, based upon applicable case law and AT’s own admissions, AT is estopped from denying that AMIR is its insured. Defendant AT has absolutely no good faith basis to deny AMIR is its insured. It is perfectly clear that AT represented and defended AMIR for nine years. Even after becoming aware, in 2009, of STEED’s death, AT did nothing to disclaim coverage and on a number of occasions admitted that AMIR is its insured. Further, it is disingenuous for AT to claim that it did not know STEED was dead while it actively represented him and assigned defense counsel to him. This is yet another example of AT’s pattern of gross disregard for the interests of its insureds. Obviously, AT would have learned of STEED’s death if AT fulfilled its obligation to communicate with its insureds at any point during the pendency of the underlying action.
Further, defendant AT, in its instant cross-motion, in a deliberate attempt to deceive the Court and harm its insured, AMIR, takes the absurd position that only the $100,000 PLATFORM/SINGH policy existed and was available to TAVERAS’ claim. This is an outrageous mischaracterization of the actual facts and another failure to handle the truth. Defendant AT’s counsel manufactured for the instant cross-motion the fiction that AT’s $100,000 settlement offer during the damages portion of the underlying trial was actually an offer of the entire coverage available. This is false and cannot be countenanced by the Court. The actual record of the underlying trial makes it clear that at no time during the trial did AT ever disclaim coverage for AMIR or limit their settlement discussion to only the $100,000 PLATFORM/SINGH policy. Both AT’s Vice President and Treasurer Richard Carroll and AT’s Claims Examiner Rick Persaud, in their sworn depositions, admit that the $100,000 offer to settle the underlying action, which Mr. Sands, in ¶’s 3 (d) and 26 of his affirmation in support of cross-[*36]motion, asserts was only the $100,000 PLATFORM/ SINGH policy, was in reality an offer of $50,000 each from the STEED/AMIR and the PLATFORM/SINGH policies. (Rick Persaud EBT, pp. 116 – 117; Richard Carroll EBT, p. 162). Accordingly, the $100,000 offered was not the total amount of available coverage. AT offered half of each of the two available policies. This proved to be inadequate, in light of AT’s own evaluation of the risks to its insureds and the economic damages presented in excess of $1,500,000 on behalf of TAVERAS.Therefore, in the absence of triable issues of fact, the Court denies defendant AT’s cross-motion for summary judgment and dismissal of plaintiff’s complaint. "