PA law – a good readOctober 24, 2019

Williams v Janvier, 2019 NY Slip Op 07638 (2d Dept. 2019)

One thing that I frequently observe is Pa license plates, Pa policies and the usual EUO showing the EIP did not actually reside in Pa. Here is a great example from the Appellate Division as to the rights, remedies and perils in this choice of law paradigm:

“We disagree with Penn National Insurance’s contention that the Supreme Court, in reaching its determination, misapplied Pennsylvania law. In the seminal case of Erie Ins. Exch. v Lake (543 Pa 363, 671 A2d 681), the Pennsylvania Supreme Court held that while an insurer may rescind an automobile insurance policy retroactively on the basis of fraud or misrepresentation “as to the actual perpetrator of the fraud, where the fraud could not reasonably have been discovered within the 60 day period immediately following issuance of the policy” (543 Pa at 374, 671 A2d at 686; see Parisien v Omni Indem. Co., 63 Misc 3d 1214[A], 2019 NY Slip Op 50523[U], *2 [Civ Ct, Kings County]; Monroe v Omni Indem. Co., 60 Misc 3d 1229[A], 2018 NY Slip Op 51258[U], *2 [Civ Ct, Kings County]; Infinity Select Ins. Co. v Fleming, 159 A3d 45 [Pa Super Ct] [table; text at 2016 WL 6088065, 2016 Pa Super Unpub LEXIS 3755]), it may not deny coverage under the policy with respect to claims made by third parties “who are innocent of trickery, and injured through no fault of their own” (Erie Ins. Exch. v Lake, 543 Pa at 375, 671 A2d at 687; see Island Life Chiropractic, P.C. v Infinity Group, 55 Misc 3d 42, 43 [App Term, 2d Dept, 11th & 13th Jud Dists]; Mutual Benefit Ins. Co. v Druce, 62 Pa D & C 4th 31, 39 [Common Pleas Ct of Dauphin County]). The court reasoned that “[m]otorists carry insurance not only for their own protection, but also, for the benefit of third parties who may suffer through the negligence of the insured motorist” (Erie Ins. Exch. v Lake, 543 Pa at 374, 671 A2d at 686).

Here, Penn National Insurance’s submissions established that it properly rescinded the subject policy under Pennsylvania law with respect to Janvier, based upon the material misrepresentations he made in his application for insurance. However, since there was no evidence that the plaintiffs participated in the fraud, Penn National Insurance failed to demonstrate that the plaintiffs were not innocent third parties who should be precluded from receiving protection under the policy (see Infinity Ins. Co. v Nazaire, 2016 NY Slip Op 31454[U], *5 [Sup Ct, Kings County]; Mutual Benefit Ins. Co. v Druce, 62 Pa D & C 4th at 39; cfOptimal Well-Being Chiropractic, P.C. v Infinity Ins. Co., 46 Misc 3d 27, 29 [App Term, 2d Dept, 11th & 13th Jud Dists]). Accordingly, we agree with the Supreme Court’s determination that Penn National Insurance failed to establish its entitlement to summary judgment on its cross claims against Janvier for a judgment declaring, inter alia, that it was not obligated to “indemnify any judgment obtained against . . . Janvier” arising out of the subject accident. Contrary to Penn National Insurance’s contention, the court’s [*3]determination that the plaintiffs may not maintain a direct action against it until after a judgment is entered in each action against Janvier (see Lang v Hanover Ins. Co., 3 NY3d 350Jimenez v New York Cent. Mut. Fire Ins. Co., 71 AD3d 637, 639), is not at odds with the court’s determination that Penn National Insurance is not entitled to summary judgment on its cross claims.”