Hartford Ins. Co. of the Midwest v. Strekte Corp.

2024 NY Slip Op 33679(U)

• Court: New York Supreme Court, New York County
• Decided: October 10, 2024
• Docket: Index No. 650213/2020
• Status: Unpublished

Opinion

Hartford Ins. Co. of the Midwest v Strekte Corp. 2024 NY Slip Op 33679(U) October 10, 2024 Supreme Court, New York County Docket Number: Index No. 650213/2020 Judge: Debra A. James Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 650213/2020 NYSCEF DOC. NO. 91 RECEIVED NYSCEF: 10/10/2024

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. DEBRA A. JAMES PART 59 Justice ----------------------------------------------------------------- ----------------X INDEX NO. 650213/2020 THE HARTFORD INSURANCE COMPANY OF THE MIDWEST, MOTION DATE 10/25/2023

Plaintiff, 001 002 003 MOTION SEQ. NO. 004 - V -

STREKTE CORP., PAUL JENSEN, and MARK RIGERMAN, DECISION + ORDER ON MOTION Defendants. ------------------------------------------------------------------- --------------X

The following e-filed documents, listed by NYSCEF document number (Motion 001) 13, 14, 15, 35, 36, 37, 38, 39,40,41,42,43,44, 83, 85 were read on this motion to/for DISMISSAL

The following e-filed documents, listed by NYSCEF document number (Motion 002) 16, 17, 18, 45, 46, 47,48,49,50,51,52,53,54,82,84 were read on this motion to/for DISMISSAL

The following e-filed documents, listed by NYSCEF document number (Motion 003) 19, 20, 21, 22, 55, 56,57,58,59, 60, 61, 62, 63, 64, 87 were read on this motion to/for AMEND CAPTION/PLEADINGS

The following e-filed documents, listed by NYSCEF document number (Motion 004) 23, 24, 25, 26, 27, 28,29, 30, 31, 32, 33, 34, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81,86 were read on this motion to/for JUDGMENT-SUMMARY

ORDER

Upon the foregoing documents, it is

ORDERED that the motion, pursuant to CPLR 3211(a) (8), of

defendant Paul Jensen (motion sequence number 001) is denied;

and it is further

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defendant Mark Rigerman (motion sequence number 002) is denied;

ORDERED that the motion, pursuant to CPLR 3015 (b), of

defendant Strekte Corp. (motion sequence number 003) is denied;

ORDERED that the motion, pursuant to CPLR 3212, of

defendant Strekte Corp. (motion sequence number 004) is denied,

without prejudice to defendants' right to renew such motion at

the close of discovery and filing of a note of issue; and it is

further

ORDERED that counsel are directed to post on NYSCEF a joint

proposed discovery status conference order or competing proposed

discovery status conference order(s) at least two days before

October 22, 2024, on which date counsel shall appear via

Microsoft Teams, unless such appearance (upon joint request of

counsel sent to IAS Part 59 Clerk, SFC-Part59-

Clerk@nycourts.gov) be waived by the court.

DECISION

In this action for, inter alia, reformation of a commercial

insurance policy, individual co-defendants Paul Jensen (Jensen)

and Mark Rigerman (Rigerman) submit separate motions to dismiss

pursuant to CPLR 3211 (motion sequence numbers 001 & 002), and

corporate co-defendant Strekte Corp. (Strekte) submits one

motion for leave to amend its answer pursuant to CPLR 3025 (b)

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(motion sequence number 003) and one motion for summary judgment

to dismiss pursuant to CPLR 3212 (motion sequence number 004).

The court hereby consolidates the foregoing motions for

deliberation and decision.

Facts

Strekte is a New York State-licensed general

contractor/construction management company of which Jensen and

Rigerman are principals. See NYSCEF Document Nos. 1, ~~ 3-6

(complaint); 25, ~ 1 (Jensen aff); 73 (New York City Department

of Buildings [DOB] filings). Plaintiff the Hartford Insurance

Company of the Midwest (Hartford) is a Connecticut-based

insurance company that is licensed to do business in New York.

Id., NYSCEF Document No. 1, ~~ 1-2.

On January 18, 2018, Jensen and Rigerman, on behalf of

Strekte, applied for a workers' compensation insurance policy

with Hartford through an online brokerage service called

Automatic Data Processing Insurance Agency (ADPIA). See NYSCEF

Document Nos. 1, ~ 9; 65, ~~ 1-8 (statement of material facts).

Thereafter, Hartford issued a workers' compensation insurance to

Stretke which was effective from January 1, 2018 through January

1, 2019 (the 18-19 policy). Id., NYSCEF Document Nos. 1, ~ 12;

71 (18-19 policy). Hartford later renewed the 18-19 policy

automatically and issued another workers' compensation insurance

policy that was effective from January 1, 2019, through January

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1, 2020 (the 19-20 policy). Id., NYSCEF Document Nos. 1,

72 (19-20 policy). Hartford alleges that it subsequently

conducted an audit to verify the accuracy of Stretke's payroll

as recorded on ADPIA. Id., NYSCEF document 1,

Hartford avers that the audit revealed that Jensen's and

Rigerman's application omitted the fact that they and Stretke

were actually general contractors and not salespersons/clerical

staff performing non-construction related work (as they had

reported) . Id. Hartford states that, as a result of Jensen's

and Riggerman's omissions and their subsequent refusal to

cooperate with the audit, it cancelled the 19-20 policy

effective June 26, 2019. Id.,

that, had it been in possession of the correct information, it

would not have issued the 18-19 or the 19-20 policies to Stretke

because the company's policy is not to provide workers

compensation coverage to general contractors. Id.,

Hartford finally alleges that, as a result of the incorrect

information on the ADPIA application, Stretke paid lower

premiums than were proper for both the 18-19 and 19-20 policies

while they were in effect. Id.

Hartford commenced this action on January 17, 2020 via

electronic service on the New York State Secretary of State of

a summons and complaint with causes of action for: 1) money

damages for fraudulent misrepresentation; and 2) piercing the

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corporate veil. See NYSCEF Document Nos. 1, 2. On November 11,

2020, defendants filed a joint answer which raised the

affirmative defenses of: 1) failure to state a claim; 2) failure

to state an amount; 3) defendants' own negligence; 4) other

insurance exists; 5) failure to name necessary parties; 6)

statute of frauds; 7) doctrine of justification; 8) doctrine of

estoppel; 9) ratification; and 10) doctrine of waiver. Id.,

NYSCEF document 3. Notably, defendants' answer did not raise

the affirmative defense of lack of personal jurisdiction. Id.

Nevertheless, on September 14, 2023 (long after the time to

do so had expired), both Jensen and Rigerman submitted identical

CPLR 3211 motions to dismiss the complaint as against them on

the ground of lack of personal jurisdiction. Specifically, they

argued that because Stretke's counsel did not represent them

personally, Hartford's service of the complaint on Stretke did

not constitute valid service on them (motion sequence numbers

001 & 002). See NYSCEF Document Nos. 13-18. On September 15,

2023, Stretke filed a motion for leave to serve an amended

answer (motion sequence number 003). Id., NYSCEF Document Nos.

19-22. The proposed amended answer is identical to the original

answer but is raised only on behalf of Stretke. Id.

On September 26, 2023, Stretke filed a separate motion for

summary judgment to dismiss the complaint (motion sequence

number 004). See NYSCEF Document Nos. 23-34. Hartford has

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served opposition to all of these motions and defendants have

served reply papers as well. See NYSCEF Document Nos. 35-87.

All four motions are fully submitted, while discovery is ongoing

in this action and no note of issue has yet been filed.

DISCUSSION

This decision will address each of defendants' motions in

turn.

As stated above, defendants' first two motions are the

respective applications of Jensen and Rigerman to dismiss this

action (as against each) pursuant to CLR 3211 (a) (8) on the

ground of lack of personal jurisdiction due to improper service

of the complaint. CPLR 3211, subsection (e), is the relevant

portion of the statute, and provides, in pertinent part:

" . an objection that the summons and complaint, summons with notice, or notice of petition and petition was not properly served is waived if, having raised such an objection in a pleading, the objecting party does not move for judgment on that ground within sixty days after serving the pleading, unless the court extends the time upon the ground of undue hardship. ***The papers in opposition to a motion based on improper service shall contain a copy of the proof of service, whether or not previously filed. An objection based upon a ground specified in paragraph eight . . of subdivision (a) of this rule is waived if a party moves on any of the grounds set forth in subdivision (a) of this rule without raising such objection or if, having made no objection under subdivision (a) of this rule, he or she does not raise such objection in the responsive pleading". As previously noted, Hartford commenced this action on

January 17, 2020,via electronic service on the New York State

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Secretary of State. See NYSCEF Document No. 2. The 60-day

period specified in CPLR 3211 (a) (8), therefore, expired on

March 17, 2020. As Jensen and Rigerman neither filed their

respective dismissal motions until three and a half years later

on September 14, 2023, nor preserved such objection in their

answer, their objections to service are deemed waived. In sum,

CPLR deems a service-based objection to personal jurisdiction

waived where a defendant has failed to raise the objection in a

responsive pleading, and as noted, the affirmative defenses in

the November 11, 2020 answer did not assert improper service of

process or lack of personal jurisdiction. See NYSCEF Document

No. 3.

For its part, Hartford has satisfied the requirements of

CPLR 3211 (a) (8), since its opposition papers to both Jensen's

and Rigerman's motions include: 1) the affidavit of service of

the summons and complaint on the New York State Secretary of

State; and 2) copies of the representation that Stretke's

counsel's recorded electronically on November 6, 2020 on the

court's NYSCEF system stating that he represented Stretke,

Jensen and Rigerman. See NYSCEF Document Nos. 2, 38, 48. The

evidence before the court indicates that Hartford's service on

Jensen and Rigerman was sufficient to confer personal

jurisdiction over them by the court. Moreover, Jensen and

Rigerman waived their right(s) to object to it by filing a

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timely challenge in accordance with CPLR 3211 (e). Therefore,

individual defendants' CPLR 3211(a) (8) motions shall be denied.

Defendants' third motion seeks leave to file and serve an

amended answer on behalf of Stretke only (motion sequence number

003) . Pursuant to CPLR 3025 (b), "[a] party may amend his or

her pleading. at any time by leave of court .," such

"[l]eave shall be freely given upon such terms as may be just

including the granting of costs and continuances," and "[a]ny

motion to amend. . pleadings shall be accompanied by the

proposed amended. . pleading clearly showing the changes or

additions to be made to the pleading." Further, "leave to amend

should be freely granted unless the proposed claim is palpably

insufficient as a matter of law or patently devoid of merit."

Herrera v Highgate Hotels, L.P., 213 AD3d 455, 456-457 (1 st Dept

2023), citing Cafe Lughnasa Inc. v A & R Kalimian LLC, 176 AD3d

523,523 (1 st Dept 2019); Cruz v Brown, 129 AD3d 455, 456 (1 st Dept

2015). Here, Stretke's proposed amended answer is "patently

devoid of merit." It is completely identical to defendants'

original answer with the sole change being a recitation that

counsel represents only Stretke rather than all three

defendants. See NYSCEF Document No. 21 (proposed amended

answer) . There are no other additions or substantive changes.

The pleading contains the same ten affirmative defenses as the

original and likewise omits any objections to personal

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jurisdiction or service of process. Id. It is not apparent how

Stretke would benefit from re-serving an amended answer that is

identical to the original. Courts have recognized that, by

itself, a party's failure to add any new material to an amended

pleading militates in favor of denying a request for leave to

amend. See e.g., Thompson v City of New York, 83 Misc 3d

1213(A), 2024 NY Slip Op 50701(U), *2 (Sup Ct, Kings County

2024) .

This does not end the inquiry, however. The Appellate

Division, First Department, has held that the expedient of an

amended pleading cannot be used to save claims that have been

waived by a party who has failed to assert a timely

jurisdictional objection and instead chosen to appear and

participate in the subject litigation. See e.g., CDR Creances

S.A.S. v Cohen, 77 AD3d 489, 490-491 (1 st Dept 2010). Although

Stretke does not seek to assert such an objection in its

proposed amended answer, it is evident from the first two

motions that Jensen and Rigerman do seek to assert a

jurisdictional objection, which they waived. As held above,

they may not do so. The court observed that Jensen and Rigerman

have been content to participate in this action for three and a

half years under the representation of Stretke's counsel. If

they are no longer satisfied with counsel's representation, they

must move for permission to substitute new counsel of their

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choosing, or Stretke's counsel must move for permission to be

relieved. Counsel cannot avoid his professional obligation to

represent Jensen or Rigerman in any other way. To date, neither

the defendants nor counsel has moved for such relief. However,

it is clear that a CPLR 3025 (b) motion to amend is not the

proper procedural vehicle with which to seek it. Therefore,

because it lacks merit vis a vis Stretke and seeks to employ an improper procedure vis a vis Jensen and Rigerman, defendants' third motion must be denied.

Defendants' fourth motion seeks summary judgment to dismiss

the complaint as against Stretke (motion sequence number 004).

The party moving for summary judgment bears the burden of proof,

by competent, admissible evidence, that no material and triable

issues of fact exist. See e.g., Winegrad v New York Univ. Med.

Ctr., 64 NY2d 851, 853 (1985); Sokolow, Dunaud, Mercadier &

Carreras v Lacher,, 299 AD2d 64, 70 (1 st Dept 2002). Once that

showing has been made, the burden shifts to the party opposing

the motion to produce evidentiary proof, in admissible form,

sufficient to establish the existence of material issues of fact

which require a trial of the action. See e.g., Zuckerman v City

of New York, 49 NY2d 557, 562 (1980); Pemberton v New York City

Tr. Auth., 304 AD2d 340, 342 (1 st Dept 2003). However, appellate

precedent recognizes that, pursuant to CPLR 3212 (f), it is

proper to deny a motion for summary judgment as premature in an

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action where limited discovery has taken place and no

depositions have been conducted. See e.g., Burlington Ins. Co.

v 54th St. Auto Ctr., Inc., 208 AD3d 401, 401 (1 st Dept 2022),

citing Reid v St. Luke's-Roosevelt Hosp. Ctr., 191 AD3d 545, 547

(1 st Dept 2021); Blech v West Park Presbyt. Church, 97 AD3d 443,

443 ( 1 st Dept 2012) .

Review of the NYSCEF docket reveals that the parties have

only engaged in limited document discovery, and that defendants

have declined to schedule EBTs while they pursue "dispositive

motions". (Moreover, no note of issue has been filed, despite

the fact that by Discovery Compliance Order dated June 14, 2023,

such filing deadline was November 17, 2023.) Given the

outstanding discovery, the court finds Stretke's summary

judgment premature. Defendants' fourth motion must therefore be

denied with leave to apply again at the close of the discovery

process and the filing of a note of issue pursuant to CPLR

3212 (a).

P-~ f l - } ~ 20241010125615DJAME5B101D06542Fl4FFF849EC87227FD821D

10/10/2024 DATE DEBRA A. JAMES, J.S.C.

~ CHECK ONE: CASE DISPOSED NON-FINAL DISPOSITION

GRANTED 0 DENIED GRANTED IN PART □ OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER

CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT □ REFERENCE

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