STATE OF NEW YORK
SUPREME COURT : COUNTY OF CHAUTAUQUA
-vs- Index #H-07972
ALLSTATE INSURANCE COMPANY,
ALLSTATE INSURANCE COMPANY,
Third Party Plaintiff,
J. PILLITTIERI, INC.,
Third Party Defendant.
CHARLES EDWARD FAGAN, ESQ.
HURWITZ & FINE, P.C.
(James D. Gauthier, Esq.
of Counsel) for Allstate
ERICKSON, WEBB & SCOLTON
(Kristen Merrihew Wright,
Esq. of Counsel) for
Third Party Defendant
J. Pillittieri, Inc.
DECISION AND ORDER
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
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