The 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
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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.
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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
ORDERED that the motion, pursuant to CPLR 3211(a) (8), of
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Motion No. 001 002 003 004
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defendant Mark Rigerman (motion sequence number 002) is denied;
and it is further
ORDERED that the motion, pursuant to CPLR 3015 (b), of
defendant Strekte Corp. (motion sequence number 003) is denied;
and it is further
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 No. 001 002 003 004
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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, <JI 14;
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, <JI<JI 9-32.
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., <JI 19. Hartford further avers
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., <JI<JI 9-65.
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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Motion No. 001 002 003 004
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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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Motion No. 001 002 003 004
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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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