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Birsett v. General Accident Insurance Co. of America
Citations: 241 A.D.2d 683; 659 N.Y.S.2d 924; 1997 N.Y. App. Div. LEXIS 7329
Court: Appellate Division of the Supreme Court of the State of New York; July 10, 1997; New York; State Appellate Court
An appeal was made regarding an order from the Supreme Court that vacated a previous judgment against the defendant. The case originated from a motor vehicle accident involving the plaintiff's husband in December 1988, which resulted in personal injuries to passenger Lisa Moses. Moses sued the plaintiff for damages, but the defendant, the plaintiff's insurance carrier, declined to defend her, alleging the policy had expired due to nonpayment. Moses obtained a default judgment of $75,000 against the plaintiff. The defendant later paid Moses $10,000 plus interest in 1993, and a settlement was reached that fully released the plaintiff from the judgment. In 1994, the plaintiff initiated a lawsuit against the defendant for its refusal to defend her, claiming damages of $125,000. The court granted her summary judgment for $75,000, later modified to $65,000 after accounting for the payment made to Moses. After the judgment, the defendant discovered that the plaintiff had settled with Moses but had not disclosed this information during her suit. The defendant moved to vacate the judgment, citing the plaintiff's fraud and misrepresentation. The Supreme Court agreed, finding that the plaintiff was no longer liable for the $75,000 judgment when she sued the defendant and had misrepresented material facts to both the Supreme Court and the Appellate Division. The court concluded that had the settlement been disclosed, the initial summary judgment would not have been granted. Consequently, the judgment was reduced to $12,000 plus interest and counsel fees, leading to the current appeal, which affirmed the Supreme Court's decision to vacate the prior judgment. The court found no abuse of discretion in the ruling. Plaintiff contends that failure to disclose a material fact does not justify vacating the prior judgment, arguing that the collateral source rule applies to her settlement with Moses, which should protect her $75,000 judgment from reduction. She claims that a tortfeasor cannot benefit from compensation received from a source independent of them (citing Gray v Pashkow). Plaintiff maintains that her $12,000 settlement does not release the defendant from its liability for damages determined at the time of the breach, rendering the settlement irrelevant and the failure to disclose it immaterial. However, this argument is rejected as the collateral source doctrine does not apply since the defendant is only liable for losses caused by its failure to represent her. The $75,000 judgment was a contingent liability that had not matured, and its discharge extinguished liability. The court concludes that plaintiff's actions amounted to misrepresentation and misconduct warranting vacatur of the judgment. Plaintiff's argument regarding the belated discovery of public records by the defendant is dismissed due to her own material misrepresentation. Her reliance on DiIorio v Gibson, Cushman is deemed irrelevant. The order is affirmed with costs.