Advanced Chimney, Inc. v. Graziano

In an action, inter alia, for a judgment declaring that the defendant Tudor Insurance Company is obligated to defend and indemnify the plaintiff herein in an underlying action entitled Greater N.Y. Mut. Ins. Co. v Advanced Chimney, Inc., com

Ordered that the order is modified, on the law and in the exercise of discretion, by deleting the provision thereof granting that branch of the motion of the nominal defendant, Greater New York Mutual Insurance Company, as subrogee of 408 East 73 Street Housing Corporation, which was to disqualify Kaufman Borgeest & Ryan LLP, from further representation of the defendant Tudor Insurance Company in this matter, and substituting therefor a provision granting that branch of the motion only to the extent of disqualifying Stephanie Gitnik from representing the defendant Tudor Insurance Company in this matter, and otherwise denying that branch of the motion; as so modified, the order is affirmed insofar as appealed from, with one bill of costs to the respondents.

The defendant Tudor Insurance Company (hereinafter Tudor) issued an insurance policy to the plaintiff on February 25, 2011, for the policy period February 24, 2011, through February 24, 2012. Thereafter, the plaintiff was sued by the nominal defendant, Greater New York Mutual Insurance Company, as subrogee of 408 East 73 Street Housing Corporation (hereinafter GNY), seeking to recover the amount paid by GNY to its insured for damages resulting from a fire at 408 East 73rd Street on February 24, 2011, which it alleged was caused by the plaintiff’s negligence. After Tudor was notified of the underlying action against the plaintiff, it hired the law firm of Kaufman Borgeest & Ryan, LLP (hereinafter KBR), to investigate GNYs claim, as well as the plaintiff’s procurement of insurance with Tudor. Stephanie Gitnik, a member of KBR, conducted the investigation, which included interviews with the plaintiff’s representative, Peter Lippis, and with the plaintiff’s broker, Kimberly A. Graziano of K.A.G. Insurance Brokerage, Inc. After conducting the investigation, KBR sent a letter to the plaintiff dated January 6, 2012, notifying it that

The plaintiff then commenced this action seeking, inter alia, a judgment declaring that Tudor is obligated to defend and indemnify it in the underlying action. GNY, who was named as a nominal defendant in this action, moved to compel Tudor to comply with discovery demands, including the production of the investigative file of KBR for the period through and including January 6, 2012, and to disqualify KBR from further representation of Tudor in this matter. The Supreme Court granted GNY’s motion. Tudor appeals, contending that the file was not discoverable since it was privileged, and constituted its attorneys’ work product, and that the court erred in disqualifying KBR.

CPLR 3101 (a) entitles parties to “full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof.” Discovery determinations should be evaluated on a case-by-case basis “with due regard for the strong policy supporting open disclosure” (Andon v 302-304 Mott St. Assoc., 94 NY2d 740 , 747 [2000]).

“[T]he payment or rejection of claims is a part of the regular business of an insurance company. Consequently, reports which aid it in the process of deciding [whether to pay or reject a claim] are made in the regular course of its business” (Landmark Ins. Co. v Beau Rivage Rest., 121 AD2d 98 , 102 [1986] [citation and internal quotation marks omitted]; see Melworm v Encompass Indem. Co., 112 AD3d 794 , 795 [2013]; Bombard v Amica Mut. Ins. Co., 11 AD3d 647 , 648 [2004]). Reports prepared by insurance investigators, adjusters, or attorneys before the decision is made to pay or reject a claim are not privileged and are discoverable, even when those reports are mixed/multipurpose reports, motivated in part by the potential for litigation with the insured (see Melworm v Encompass Indem. Co., 112 AD3d at 795 ; Donohue v Fokas, 112 AD3d 665 , 666-667 [2013]; Bombard v Amica Mut. Ins. Co., 11 AD3d at 648 ).

Here, the Supreme Court properly compelled disclosure, as the material sought by GNY was prepared by KBR as part of Tudor’s investigation into the claim, and was not primarily and predominantly of a legal character (see Melworm v Encompass Indem. Co., 112 AD3d at 795 ; Bertalo’s Rest. v Exchange Ins. Co., 240 AD2d 452 , 454 [1997]). Nor was the file protected as the work product of KBR (see Bertalo’s Rest. v Exchange Ins. Co., 240 AD2d at 454 ).

The Supreme Court providently exercised its discretion in

Tudor’s remaining contentions are without merit.

Mastro, J.P., Rivera, Hall and Maltese, JJ., concur.