Tokio Marine & Fire Insurance v. Rosner

Citation: 206 F. App'x 90Docket: No. 05-6481-cv

Court: Court of Appeals for the Second Circuit; November 21, 2006; Federal Appellate Court

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Ingrid K. Rosner appeals a summary judgment favoring Tokio Marine and Fire Insurance Co. Ltd. and Toyota Motor Credit Corporation (TMCC), alongside the denial of her motion for partial summary judgment. Tokio Marine, as TMCC's insurer, covered damages paid for injuries Rosner caused while using a leased vehicle. Despite Rosner acknowledging the indemnification clause in her lease, she argues its invalidity under New York law, claiming she is a permissive user and therefore an 'insured' under TMCC's liability policy with Tokio Marine, which should protect her from indemnification claims due to the anti-subrogation rule. Additionally, Rosner contends that evidence of deceptive practices and fraudulent inducement raises genuine issues of material fact regarding the lease's validity, and questions the reasonableness of the settlement and lease reassignment's impact on the case.

The court reviews summary judgment de novo, favoring the non-moving party. Rosner's assertion that the indemnification clause is invalid hinges on her status as an insured under the Tokio Marine policy. However, New York Vehicle and Traffic Law § 345(b)(2-3) indicates that while a liability policy must cover named individuals and their permitted users, sections 345(f) and 345(g) clarify that excess insurance policies, such as Tokio Marine's, do not afford the same protections as primary insurance. Rosner's own insurance policies, which include primary coverage and name TMCC as an additional insured, do not classify her as an insured under the Tokio Marine policy. Consequently, she is not shielded from the indemnification claim, affirming the summary judgment.

Rosner argues that Tokio Marine's policy for TMCC is primary insurance, not excess, asserting that as a permissive user, she is required to have coverage. She references the Business Auto Coverage Form, which indicates that it provides primary insurance for TMCC-owned vehicles. Rosner contends that Endorsement 4, which states it provides excess insurance, is meaningless as it offers no insurance itself; however, legal principles discourage interpretations that render provisions meaningless. Contextually, the endorsement clarifies that it modifies the primary coverage originally provided by the Business Auto Coverage Form to become excess coverage. The endorsement also defines "leased auto" in a way that implies long-term leaseholders like Rosner lack coverage under the policy.

Consequently, the law and evidence do not support Rosner's claim of being insured under Tokio Marine's policy, leaving her vulnerable to indemnification claims under N.Y. Veh. Traf. Law § 345(b)(2-3). Further, her reliance on 11 NYCRR § 60-1.1(c)(2) is misplaced; while the regulation mandates primary insurance for permissive users, it allows exclusions for liabilities assumed under contracts. Rosner's lease with TMCC required her to maintain primary coverage with State Farm and acknowledged that it did not provide her insurance, thus not protecting her from indemnification actions. Finally, New York Insurance Law § 3420 does not assist Rosner, as it does not stipulate that permissive users must be treated as insureds under the policy.

The statute emphasizes New York's commitment to ensuring that injured individuals have access to financially responsible insured parties for recovery. In ELRAC, Inc. v. Ward and Royal Indem. Co. v. Providence Washington Ins. Co., limitations on a lessor's indemnification rights were identified, but they pertain specifically to short-term rentals under N.Y. Veh. and Traf. Law § 370, which does not apply to long-term leases like Rosner's. Therefore, her assertion that the lease’s indemnification clause is void under New York law is rejected.

Regarding claims of deceptive practices and fraudulent inducement, Rosner argues that a lease clause stating that TMCC requires no insurance beyond specified minimums indicates deceptive practices. However, the lease clearly states, in bold, that no physical damage or liability insurance is included, negating any reasonable reliance on the clause in question. Furthermore, Rosner's reference to a May 2003 news article about TMCC's fees is deemed inadmissible hearsay and insufficient to create a factual dispute.

In terms of the reasonableness of an underlying settlement for indemnification, Rosner must demonstrate that the settlement was reasonable. She presents three arguments suggesting unreasonableness: (1) being excluded from the settlement process by Tokio Marine; (2) potential overpayment due to Tokio Marine's contingency-fee arrangement; and (3) her belief that Tokio Marine was assuming risk for any payments. However, the court finds these arguments do not establish a triable factual issue regarding the settlement's reasonableness, thus supporting the decision for summary judgment.

Arguments presented regarding the settlement's reasonableness lack evidence and are deemed conclusory. The record indicates that during the settlement memorialization, TMCC’s counsel confirmed that the settlement did not prejudice TMCC's rights to seek common-law or contractual indemnification from Rosner, with no objections raised by Rosner’s counsel at the hearing. Additionally, Rosner's claim that the reassignment of her lease from TMCC to Bay Ridge Toyota in April 2000 absolves her of indemnification obligations is incorrect. The accident occurred in 1999, and Rosner had a binding agreement to indemnify TMCC for liabilities arising from that incident, which was not nullified by the lease transfer. TMCC's right to indemnification arose upon its payment to the injured party. All other arguments presented by the defendant are found to lack merit. The district court's September 30, 2005 order granting summary judgment to the plaintiffs is affirmed. Rosner’s argument regarding missing language in a policy issued by Tokio Marine is speculative and insufficient to challenge the summary judgment.