Consolidation of Tort & Insurance Action Inherently Prejudicial to Insurer

Never Shall the Liability Insured & Insurer Meet in Suit Brought by Tort Plaintiff

Since insurers are not popular in the minds of the general public tort plaintiffs will often try to bring an insurer into a tort action to convince the jurors that the tort defendant – insured – has unlimited funds to pay any judgment they may award to the plaintiff.

THE LITIGATION

McGinty v. Structure-Tone, — N.Y.S.3d —-, 2016 WL 3148494, 2016 N.Y. Slip Op. 04365 2016 WL 3148494, Supreme Court, Appellate Division, First Department, New York (June 7, 2016) the plaintiff sought to consolidate two actions, a personal injury action and an insurance coverage action.

The New York Supreme Court, Appellate Division, exercising its usual wont to enter a brief, clear, and succinct opinion, found that the two suits do not involve common questions of law or fact. Rather, they involve different contracts, different parties, and different factual issues.

Moreover, litigating an insurance coverage claim together with the underlying liability issues is inherently prejudicial to the insurer. (see Kelly v. Yannotti, 4 N.Y.2d 603, 607 [1958]; McDavid v. Gunnigle, 50 A.D.2d 737 [1st Dept 1975]; D’Apice v. Tishman 919 Corp., 43 A.D.2d 925 [1st Dept 1974] ). Consolidation in this case would result in a single action involving the insured, the insurance policy, and the construction of that policy.

FACTS

In addition, Eurotech did not bring its coverage action against QBE until more than six years after it was named as a third-party defendant in the liability action and almost four years after plaintiff McGinty filed the note of issue and certificate of readiness in the liability action.

DECISION

Litigating the actions separately will allow QBE to take any necessary discovery to which it is entitled, while avoiding prejudice caused by delay to McGinty.

The appellate court, therefore, affirmed the decision of the Supreme Court, Bronx County (Larry S. Schachner, J.) that was entered January 28, 2016, which denied Eurotech Construction Corp.’s motion to join QBE Insurance Corp. as a party to a personal injury action and consolidate the personal injury action with Eurotech’s coverage action against QBE, unanimously affirmed, without costs.

ZALMA OPINION

Why this case was litigated is beyond me since the prejudice to an insurer is obvious. The plaintiff wanted to profit from the prejudice and, wisely, was refused the ability. The law in New York, and across the country, would prevent dragging an insurer into a suit where its insured was named as a defendant and who it is defending.

ZALMA-INS-CONSULT                      © 2016 – Barry Zalma

Barry Zalma, Esq., CFE, practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 49 years in the insurance business.  He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes.

Mr. Zalma is the first recipient of theLEGENDAWARD first annual Claims Magazine/ACE Legend Award.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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