National Grange Mutual Insurance v. T.C. Concrete Construction, Inc.

Appeal from a judgment (denominated order and judgment) of the Supreme Court, Onondaga County (John V. Centra, J.), entered October 3, 2006 in a declaratory judgment action. The judgment, among other things, declared that plaintiff does not have a duty to indemnify defendants T.C. Concrete Construction, Inc. and Timothy J. Cummings for attorneys’ fees incurred in defending the underlying action. It is hereby ordered that the judgment so appealed from be and the same hereby is unanimously modified on the law by vacating the second decretal paragraph and directing plaintiff to 1322 reimburse defendants T.C. Concrete Construction, Inc. and Timothy J. Cummings for their attorneys’ fees and costs incurred in their defense of the declaratory judgment action and as modified the judgment is affirmed without costs, and the matter is remitted to Supreme Court, Onondaga County, for further proceedings in accordance with the following memorandum: Plaintiff commenced this action seeking a declaration that it is not obligated to defend or indemnify defendants in the underlying personal injury action because they failed to provide timely notice of the accident, loss or claim as required by the insurance policy issued by plaintiff to defendant T.C. Concrete Construction, Inc. (T.C. Concrete). T.C. Concrete and defendant Timothy J. Cummings (collectively, defendants) appeal from a judgment that, inter alia, declared that plaintiff does not have a duty to indemnify them for attorneys’ fees incurred in defending the underlying action. We conclude that Supreme Court erred in determining that this declaratory judgment action was dismissed pursuant to a stipulation entered into by T.C. Concrete’s attorney in the underlying action. Pursuant to the terms of that stipulation, the parties in the underlying action entered into a binding arbitration agreement, and T.C. Concrete’s attorney also stipulated that the declaratory judgment action would be dismissed. It is well settled that “a stipulation is generally binding on parties that have legal capacity to negotiate” (McCoy v Feinman, 99 NY2d 295, 302 [2002]; see also CPLR 2104). T.C. Concrete’s attorney in the underlying action erred in representing to the court in the underlying action that he had legal capacity to negotiate dismissal of the declaratory judgment action. He was not the attorney for any party in the declaratory judgment action, and thus his stipulation is not binding on the parties in the declaratory judgment action.