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880The Rogak Report: 02 May 2006 ** Disclaimers - Judgment Against Insured **

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  • Lawrence Rogak
    May 2 6:01 PM
    • 0 Attachment
      PLAINTIFF'S ATTORNEY MAY FACE SANCTIONS FOR TRYING TO EXECUTE ON
      JUDGMENT WHILE LITIGATION OVER DISCLAIMER IS STILL PENDING

      Igor Dolgenkov, et al. v. Denis Pertsyuk et al., 2006 NY Slip Op 50772
      (U) (Civil Court, Kings County) (index no. 41316/2000)(THOMAS, j)

      Merchants Insurance Group moved for an order: quashing, vacating and
      setting aside the execution with notice to garnishee served on it in
      this matter; staying the execution of the garnishment of alleged
      insurance policy proceeds; and for sanctions against plaintiffs'
      attorney for frivolous abuse of judicial process.

      Plaintiffs initially commenced this action against defendants
      alleging they were injured in an automobile accident that occurred on
      February 4, 1999 while they were passengers in the vehicle owned by
      defendant Pertsyuk and operated by another defendant.

      Merchants was defendant's insurance carrier for the subject vehicle
      at the time of the accident on February 7, 2000. After having
      received a notice of claim for coverage for the accident, Merchants
      disclaimed coverage under the policy and issued a letter to defendant
      of its disclaimer.

      Subsequently, plaintiffs obtained a default judgment after inquest
      held on December 11, 2001. Each plaintiff was awarded a $25,000
      judgment against only defendant Aleksander Pertsyuk.

      On or about October 27, 2005 plaintiffs commenced suit against
      Merchants in Supreme Court, Kings County, pursuant to New York
      Insurance Law § 3420 to establish that an automobile liability
      insurance policy had been issued by Merchants to defendant Aleksander
      Pertsyuk. Plaintiffs stated that the policy was in full force and
      effect at the time of the accident and that the policy had not been
      canceled. Merchants served an answer to the complaint denying the
      allegations.

      On January 30, 2006, the parties appeared in Supreme Court for a
      preliminary conference where an order was issued scheduling
      examinations before trial on April 20, 2006. The order also provided
      for other discovery matters. The Supreme Court action has not been
      resolved.

      Subsequent to the preliminary conference, the Erie County Sheriff's
      Office on February 2, 2006 served Merchants with an execution with
      notice of garnishment issued by plaintiffs-judgment creditors
      pursuant to CPLR 5232(a) for proceeds of an automobile liability
      insurance policy issued by Merchants to defendant-judgment debtor
      Aleksander Pertsyuk.

      Merchants argued that after it received notice of the insurance claim
      it disclaimed coverage for Aleksander Pertsyuk based on his lack of
      cooperation in Merchants' investigation of the claim and that
      therefore, there are no proceeds under the policy and it is not
      indebted to Pertsyuk as claimed by plaintiffs. Merchants further
      argued that as litigation is pending in the Supreme Court action on
      the issue of the availability of automobile liability insurance
      coverage for Aleksander Pertsyuk, and as plaintiffs have not obtained
      a judgment or order against Merchants finding that Merchants is
      obligated to indemnify Aleksander Pertsyuk, it is improper for
      plaintiffs to issue a notice of garnishment against it.

      Merchants requested that this Court issue an order quashing, vacating
      and setting aside the execution with notice to garnishee and staying
      execution of the garnishment of alleged insurance proceeds. Merchants
      also asked that sanctions pursuant to 22 NYCRR § 130-1.1 be imposed
      for issuing the execution with notice while litigation was pending as
      such action was a frivolous abuse of judicial process.

      In opposition, plaintiffs stated that after being unable to locate
      any assets of the judgment debtors they discovered that Merchants had
      issued an automobile liability insurance policy to defendant
      Aleksander Pertsyuk and that the policy and its proceeds are personal
      property of the judgment debtor and are subject to execution and levy
      against the interest of the judgment debtor.

      "Section 3420(a)(2) of the New York Insurance Law provides that if
      judgment against an insured remains unsatisfied for thirty days after
      service of notice with entry of judgment upon the insured and the
      insurer, an action may be maintained against the insurer for the
      amount of the judgment," held the Court. "Plaintiffs had initiated an
      action based on this statute prior to serving the execution with
      notice to garnishee upon Merchants which indicates that they were
      familiar with the statute's requirements."

      "The Supreme Court action will determine if Merchants' disclaimer of
      coverage based on its insured's lack of cooperation relieves the
      insurer of its coverage obligation and will also determine whether or
      not plaintiffs are entitled to judgment against Merchants. Until that
      matter is adjudicated, plaintiffs have no enforceable order or
      judgment against Merchants."

      "Merchants has asked that this Court impose sanctions against
      plaintiffs' attorney pursuant to 22 NYCRR § 130-1.1 for frivolous
      conduct for needlessly burdening Merchants, the Court, and the Erie
      County Sheriff's Office by issuing the execution with notice to
      garnishee while an action plaintiffs Igor Dolgenkov and Yurity
      Sirotin had initiated against Merchants was pending in Supreme
      Court."

      "22 NYCRR §130-1.1 provides that the court in its discretion may
      impose sanctions for frivolous conduct by any party or attorney in a
      civil action or proceeding."

      "In view of the above, the motion is granted as follows. The
      execution with notice to garnishee dated January 27, 2006 and served
      upon Merchants is vacated and this matter is set down in Room 1102 of
      this Courthouse on June 20, 2006 at 2:30 PM for a hearing with
      respect to whether and, if so, to what extent, sanctions shall be
      imposed against plaintiffs' attorney."

      Comment: Send an execution to the Sheriff for enforcement on the
      insurer while the coverage litigation is still pending?!? I guess
      some plaintiff's attorneys have itchy trigger fingers.

      Larry Rogak