SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
726
CA 15-01754
PRESENT: CARNI, J.P., LINDLEY, DEJOSEPH, AND NEMOYER, JJ.
ZELASKO CONSTRUCTION, INC.,
PLAINTIFF-RESPONDENT,
V MEMORANDUM AND ORDER
MERCHANTS MUTUAL INSURANCE COMPANY,
DEFENDANT-APPELLANT.
HURWITZ & FINE, P.C., BUFFALO (STEVEN E. PEIPER OF COUNSEL), FOR
DEFENDANT-APPELLANT.
PHILLIPS LYTLE LLP, BUFFALO (CRAIG R. BUCKI OF COUNSEL), FOR
PLAINTIFF-RESPONDENT.
Appeal from an order of the Supreme Court, Erie County (Penny M.
Wolfgang, J.), entered December 12, 2014. The order, insofar as
appealed from, awarded plaintiff attorneys’ fees upon plaintiff’s
motion for summary judgment.
It is hereby ORDERED that the order insofar as appealed from is
unanimously reversed on the law without costs, plaintiff’s motion is
denied in part and that part of the complaint seeking to recover
attorneys’ fees incurred in prosecuting this action is dismissed.
Memorandum: Plaintiff insured commenced this action against
defendant insurer seeking, inter alia, damages in the amount of
$49,302.57 arising from defendant’s breach of its payment obligations
under the “physical damage” coverage provisions of a commercial auto
insurance policy. Defendant appeals from an order granting
plaintiff’s motion for summary judgment on the complaint only insofar
as Supreme Court awarded plaintiff the attorneys’ fees it incurred in
commencing and prosecuting this action.
The court erred in granting that part of the motion seeking
attorneys’ fees. This case is governed by the general rule that
attorneys’ fees and other litigation expenses are “incidents of
litigation” that the prevailing party may not collect “from the loser
unless an award is authorized by agreement between the parties or by
statute or court rule” (Matter of A.G. Ship Maintenance Corp. v Lezak,
69 NY2d 1, 5; see Mt. Vernon City Sch. Dist. v Nova Cas. Co., 19 NY3d
28, 39; The Wharton Assoc., Inc. v Continental Indus. Capital LLC, 137
AD3d 1753, 1755). Indeed, it is well established that “an insured may
not recover the expenses incurred in bringing an affirmative action
against an insurer to settle its rights under the policy” (New York
-2- 726
CA 15-01754
Univ. v Continental Ins. Co., 87 NY2d 308, 324; see U.S. Underwriters
Ins. Co. v City Club Hotel, LLC, 3 NY3d 592, 597; Mighty Midgets v
Centennial Ins. Co., 47 NY2d 12, 16). Here, there is nothing in the
insurance policy that obligates defendant to reimburse or indemnify
plaintiff for attorneys’ fees incurred by it in prosecuting an action
to enforce the property coverage provisions of the policy, nor does
plaintiff refer to any statute or a court rule authorizing its
recovery of attorneys’ fees from defendant.
The decisions of the Court of Appeals in Bi-Economy Mkt., Inc. v
Harleysville Ins. Co. of N.Y. (10 NY3d 187, 192-193, rearg denied 10
NY3d 890) and Panasia Estates, Inc. v Hudson Ins. Co. (10 NY3d 200,
203), which concern an insured’s entitlement under given circumstances
to consequential damages for breach of an insurance policy, do not
warrant a different result here (see e.g. Pandarakalam v Liberty Mut.
Ins. Co., 137 AD3d 1234, 1235-1236; O’Keefe v Allstate Ins. Co., 90
AD3d 725, 726). There is no support in this record for plaintiff’s
allegation that the insurer breached its implied covenant of good
faith and fair dealing by not investigating the claim before denying
it, or that the insurer otherwise acted in bad faith toward plaintiff
(see Panasia Estates, Inc., 10 NY3d at 203; see also Bi-Economy Mkt.,
Inc., 10 NY3d at 194-196). Nor is there any justification for a
conclusion that the recovery of attorneys’ fees by plaintiff was, at
the time of formation of the contract, within the contemplation of the
parties as an intended or foreseeable consequence of any breach (see
Bi-Economy Mkt., Inc., 10 NY3d at 192-193; Panasia Estates, Inc., 10
NY3d at 203).
Finally, because there is no merit to the request for attorneys’
fees, we search the record and grant defendant summary judgment
dismissing that part of plaintiff’s complaint (see generally Merritt
Hill Vineyards v Windy Hgts. Vineyard, 61 NY2d 106, 110).
Entered: September 30, 2016 Frances E. Cafarell
Clerk of the Court