Frank v. Liberty Mutual Insurance

Order entered April 13, 1983 in Supreme Court, New York County (Andrew R. Tyler, J.), denying plaintiff’s motion for summary judgment and granting defendant’s cross motion for leave to serve an amended answer, modified, on the law, to the extent of declaring for defendant and granting summary judgment to it, and the order is otherwise affirmed, with costs. Plaintiff was injured in a Connecticut automobile accident on June 23, 1977. Under her “no-fault” policy with defendant she received $27,886.52 for her medical costs and lost wages. Thereafter plaintiff sued the adverse parties to the accident by attachment of their insurance policy. A verdict was directed in her favor. Then, as the jury deliberated on the amount of damages to award, plaintiff settled with defendants for $25,000, against a total exposure of $50,000 on the defendant’s policy. Liberty, which had previously asserted a lien on any recovery pursuant to subdivision 2 of section 673 of the Insurance Law, agreed to waive $20,000 of its lien and consented to plaintiff giving the defendants a general release. This action followed, with plaintiff seeking a declaratory judgment that the lien asserted by Liberty was never valid since the version of subdivision 2 of section 673 in effect at the time of the accident only authorized such liens where the accident occurred “in this state”. Plaintiff further argued that, in light of her acceptance of first-party benefits from Liberty, she presented no evidence at the trial of medical bills or lost wages. Therefore, she maintains, the only item of damages the settlement could have compensated her for was her pain and suffering, having nothing to do with the payment she received from Liberty. No pleadings or trial transcript were provided for this assertion, however. Liberty opposed the summary judgment motion and cross-moved for leave to serve an amended answer conforming to the evidence, and in order to assert a common-law or equitable lien as a counterclaim. As noted, Special Term granted the cross motion and denied summary judgment, finding issues of fact for resolution. We agree that leave to amend the answer was properly given (CPLR 3025, subds [b], [c]). We further find no issue of fact left open which is critical to resolution of the legal issues. While clearly no statutory lien was available to Liberty because the accident occurred prior to the effective date of the 1977 amendment to subdivision 2 of section 673 of the Insurance Law (Hansen v Zitti, 106 Mise 2d 354), at least a de facto lien had been asserted, and all of the parties relied upon it. And just as clearly, Liberty possessed such an interest in its common-law right of subrogation (cf. Safeco Ins. Co. v Jamaica Water Supply Co., 83 AD2d 427 [per Hopkins, J. P.], affd 57 NY2d 994), and the existence of a de jure lien would not have been a bar to that right. Thus, whether or not the parties had the right label for Liberty’s interest, they all agreed to a resolution which was an 612 appropriate reflection of the actual rights involved. Liberty agreed to plaintiff’s execution of a general release, thereby extinguishing its equitable subrogation rights against the out-of-State defendants. And Liberty gave other consideration — which plaintiff accepted ■— in the form of its waiver of $20,000 of its “lien.” Plaintiff’s argument that her proof at trial went only to her pain and suffering, and is thus unrelated to the primary payment from Liberty of $27,886.52, is unpersuasive. Since the defendants in the underlying action were nonresidents and their vehicle was registered out of State, the strong likelihood is that they were “noncovered” persons. Thus, the action had to have been brought under subdivision 2 of section 673, which allows recovery of economic loss. And even under post-1977 law, there is no statutory provision whatever for the assertion of a lien in the absence of an action which includes economic loss as an item of recovery. (See Insurance Law, § 673.) Surely plaintiff would have objected to the assertion of a lien if such were not the case; nor would she have included Liberty in the settlement negotiations, instead fashioning her release to the evidence and pleadings. Plaintiff’s motion for summary judgment searches the record (Jewish Kosher Provision Corp. v Gottfried, 63 NYS2d 160), and notwithstanding the absence of a motion by defendant for this relief, it is an appropriate conservation of judicial resources to grant defendant its due. (CPLR 3212, subd [b]; Jelinek v City of New York, 25 AD2d 425; Bolten v Wemett, 3 AD2d 708.) We see no reason why this settlement should not be enforced. Concur •— Murphy, P. J., Sullivan, Ross and Carro, JJ.