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Hartford Acci. & Indem. Co. v. Michigan Mut. Ins. Co.

Supreme Court of New York, Appellate Division, First Department

May 3, 1983

No Number in Original



 [**176]  The action, brought by the excess insurer, Hartford Accident and Indemnity Co. (Hartford), individually and as subrogee of L.A.D. Associates,  [***4]  Inc. (L.A.D.) and DeFoe Corporation (DeFoe), is premised, inter alia, upon (1) the alleged breach of fiduciary duty owed to plaintiff by Michigan Mutual Insurance Co. (Michigan Mutual), the primary insurer in the underlying action, and (2) the malpractice by Montfort, Healy, McGuire & Salley (Montfort, Healy), counsel for the prime carrier in that action.

The underlying negligence action, brought by Davor Gobin, sought recovery for personal injuries, sustained as a result of an explosion at a construction site at Manhattan State Hospital. That action was brought against a painting contractor, DeFoe, and a subsidiary, L.A.D., both insured by Michigan Mutual, with prime coverage of $ 1,000,000 and by Hartford, with excess coverage of $ 5,000,000. Gobin had been an employee of D.A.L. Construction Corporation (D.A.L.), another subsidiary of DeFoe. D.A.L., named as an additional insured on both the Michigan Mutual and Hartford policies, was not a party in the underlying action, although Hartford had demanded of Michigan Mutual and Montfort, Healy, that D.A.L., as the employer, be impleaded as a third-party defendant. When the negligence action was settled in the sum of $ 1,400,000,  [***5]  Hartford paid the amount of the settlement in excess of the prime coverage, but reserved its rights to proceed in the future as against both Michigan Mutual and Montfort, Healy.

Hartford had contended throughout that the primary insurer and its counsel had deliberately withheld instituting a third-party action against D.A.L., which allegedly was at least partially responsible for the accident, solely to avoid further liability which would have attached to Michigan Mutual since it was also the workers' compensation insurer for the employer. Had D.A.L. been impleaded,  [*339]  Michigan Mutual, as compensation (employer's liability) carrier, would have assumed the defense of the third-party action and would have presumably been obligated to contribute toward any settlement. The complaint here charges bad faith and breach of fiduciary duty by Michigan Mutual, as primary insurer, and malpractice by Montfort, Healy, as their  [**177]  attorneys, in failing to give undivided loyalty to L.A.D. and DeFoe.

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93 A.D.2d 337 *; 462 N.Y.S.2d 175 **; 1983 N.Y. App. Div. LEXIS 17128 ***; 49 A.L.R.4th 291

Hartford Accident and Indemnity Co., Individually and as Subrogee of L.A.D. Associates, Inc., and Another, Appellant-Respondent, v. Michigan Mutual Insurance Co., Respondent-Appellant, et al., Defendant, and Montfort, Healy, McGuire and Salley et al., Respondents

Prior History:  [***1]  Cross appeals from so much of an order of the Supreme Court at Special Term (Louis Grossman, J.), entered August 16, 1982 in New York County, as granted a motion by respondents and a cross motion by respondent-appellant to dismiss the complaint insofar as it asserts causes of action on behalf of plaintiff in its individual capacity and denied a cross motion by respondent-appellant to dismiss certain causes of action alleged in the complaint and/or for summary judgment on its cross claim.

Disposition: Order, Supreme Court, New York County, entered on August 16, 1982, modified, on the law, to the extent of denying the motion to dismiss and the cross motion for summary judgment, reinstating the complaint insofar as plaintiff asserts causes of action in its individual capacity against Michigan Mutual and Montfort, Healy, and otherwise affirmed. Plaintiff-appellant-respondent shall recover of Michigan Mutual Insurance Co. and Montfort, Healy, McGuire and Salley one bill of $ 75 costs and disbursements of this appeal.


insured, underlying action, coverage, primary insurer, implead, subrogation, third-party, settlement, excess insurer, carrier, fiduciary, assured, cause of action, excess carrier, fiduciary duty, workers' compensation, individual capacity, summary judgment, primary carrier, good faith, obligations, equitable, dollars, rights

Insurance Law, Claim, Contract & Practice Issues, Subrogation, General Overview, Fiduciary Responsibilities, Governments, Fiduciaries, Liability & Performance Standards, Good Faith & Fair Dealing, Types of Insurance, Excess Insurance, Obligations, Duty to Defend, Contracts Law, Third Parties, Subrogation, Indemnification Obligations, Torts, Intentional Torts, Breach of Fiduciary Duty, Defenses