-vs- Index #H-07972





Third Party Plaintiff,



Third Party Defendant.



for Plaintiff


(James D. Gauthier, Esq.

of Counsel) for Allstate


(Kristen Merrihew Wright,

Esq. of Counsel) for

Third Party Defendant

J. Pillittieri, Inc.



Plaintiff sues Allstate to recover fire loss insurance

proceeds she claims are due her under a Homeowners policy

issued to her and her late husband, Joseph, covering the home in which she lived, title to which was in the name of third party defendant J. Pillitteri, Inc. ("Corporation"). The Corporation claims it was entitled to the proceeds. Plaintiff has an interest in the Corporation.

Defendant Allstate impleaded the Corporation in a stakeholder suit; the Corporation counterclaimed for the proceeds on the ground it owned the property; that before the fire Allstate knew the Corporation owned the property; that Allstate refused to provide insurance to the Corporation even though it had paid all but the last premium.

This matter is before the Court on two motions. Defendant Allstate ("Allstate") has moved to dismiss the counterclaim of the third party defendant, J. Pillittieri, Inc., ("Corporation"), which in turn has cross-moved for leave to serve an amended answer alleging negligence.


When the policy was originally issued, J. Pillitteri, Inc., was solely owned by Joseph Pillittieri.

When Joseph died in February, 1990, his interest in the Corporation passed to Sally and his three sons.

Because Allstate could not issue a homeowners policy to a Corporation, it issued the policy in the name of Joseph and Sally. Because he and the Corporation were one and the same, there was no problem.

The Corporation paid the premiums from 1990 through July,

1992; Plaintiff Sally Pillitteri paid the premium in November, 1992.

The loss to the real property was $105,820, and $62,000 to personal property.

Allstate paid plaintiff's claim on the personal property, but has not paid over to her the insurance proceeds on the

residence because the Corporation claimed an interest in

those proceeds. The Corporation did not make a claim on the personal property until after this suit was commenced for the proceeds on the dwelling.

Allstate is willing to act as stakeholder, issue a check to all parties, or pay the proceeds into Court.

The Corporation counterclaims for the full proceeds on the house, alleging that the insurance policy in the name of

Sally and Joseph Pillittieri should have been changed to

reflect the interest of the Corporation or Allstate should

otherwise have insured the interest of the Corporation; it

cross claims against plaintiff on the theory of constructive

trust because plaintiff was an officer of the Corporation.

The Corporation also sues to recover for any loss it sustained as a result of Allstate issuing the $62,000 check for personal property directly to Sally Pillittieri.

Ray Pillittieri, Vice-President of the Corporation, presented substantial evidence of his efforts to have Allstate insure the interest of the Corporation or to change

the name on the policy. He made repeated requests of

Allstate's insurance agent who was aware of the

interest of the Corporation in the property, real and

personal. Although the agent took corporate information,

requested social security numbers and corporation titles, and

presented the problem to Allstate, the company refused to insure the Corporation's interest.

The agent, Marion Lombardo, testified at his deposition that he repeatedly told Ray Pillittieri prior to the fire that

Allstate could not insure the Corporation on the homeowner

policy, or change the existing policy without the consent of

Sally Pillittieri, nor could it provide insurance for the

Corporation without that consent.

Allstate took the position that as long as Sally Pillittieri continued to pay the premiums and would not consent to a change in her policy, Allstate was powerless to add the Corporation on the homeowner policy or issue any other policy in the corporate name. Ray Pillittieri acknowledges he was told this. See Ray Pillittieri EBT pp. 25-27.

When Allstate would not provide insurance, Ray went to other agents and was given the same advice; they could not issue a policy or provide coverage.

See for example, Ray Pillittieri EBT pp. 37-39 where he

testified referring to Bob Gray Insurance, "He said - they

all said the same that Marion said to me. I can't help you.

I can't do anything for you."

Whether or not the counterclaim may ultimately be dismissed is not the issue here. The test: if there is any basis to allow the Corporation to proceed on its counterclaim, the Court cannot dismiss it.

The Court finds that there is such a basis and that several questions of fact remain to be resolved concerning the claim.

Also, there has been no satisfactory explanation why an

additional policy or a certificate "as interest may appear"

could not have been issued specifically covering the interest

of the Corporation. Because Allstate refused to act, the insured was unable to obtain coverage elsewhere.

Allstate was accepting the Corporation money to pay the

premiums, but refused to insure the Corporation interest.

In its motion, third party defendant Corporation seeks

permission to amend its answer to add a claim for negligence

against Allstate.

The evidence from conversations and correspondence before the fire indicate Allstate knew of the Corporation's interest in personal property in the residence; other evidence indicates it at least knew of that interest before it paid the $62,000 check to Sally Pillittieri for the personal property loss.

While there may be some questions of fact, the new claim

appears to have some merit.

To explain its failure to include the negligence claim in the original pleadings, the Corporation says Allstate's

negligence became apparent only after the EBT of Agent


Allstate argues that as long as the Corporation did not give notice of a personal property claim, there should be no

liability. They cite ROSARIO-PAOLO, INC. V. C & M PIZZA

RESTAURANT,INC., 84 N.Y. 2d 379 for support. In ROSARIO-

PAOLO, the Court of Appeals said that the insurance company

had no obligation to investigate the legitimacy of a claim.

The situation here is different. Allstate knew that the

Corporation had an interest in the personal property without

conducting an investigation. In fact, it may have known this

long before Joe Pillittieri's death.

All the parties, including Allstate, were aware the

Corporation owned the property; all of them knew there was no

insurance for the benefit of the Corporation prior to the

fire. Allstate had direct knowledge of the problem when its

agent Lombardo wrote the company for solutions.

Ray Pillittieri was advised by both his personal attorney and the Corporation's Counsel of this fact and of the need for


While Allstate was under no obligation to issue a check for the personal property in both names, there is at least a

question as to whether they had an obligation to seek stake

holder status prior to issuing the check.

The motion to dismiss is denied. The motion to amend is


This is the Decision and Order of this Court. No further order is necessary.

Dated: February 24, 1995

Mayville, New York



Justice of Supreme Court