880The Rogak Report: 02 May 2006 ** Disclaimers - Judgment Against Insured **
- May 2 6:01 PMPLAINTIFF'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
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
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
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
"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.