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Progressive Insurance Co. v. Ford Motor Co.12/8/2004
This opinion is uncorrected and subject to revision before publication in the printed Official Reports.
Without specifying a section of the CPLR, Defendant moves [presumably under CPLR 3211(a)(7)] to dismiss Plaintiff's complaint. Plaintiff is the subrogated insurer of Eugene Eifert, whose ten-year-old Mercury Grand Marquis was destroyed by fire. The fire allegedly happened while the vehicle was parked and unattended. Plaintiff insurer allegedly paid a claim for the damage to the vehicle, and therefore asserts rights by subrogation for whatever claim Eugene Eifert may have had against the Defendant manufacturer. No claims for personal injury or damage to property other than the Grand Marquis are involved.
Apparently, it is undisputed that the cause of the fire was a defective electrical part, which spontaneously overheated in proximity to the master brake cylinder, thereby igniting the cylinder, which in turn ignited the entire vehicle. The function of the electrical part was to cancel the cruise control whenever the driver stepped on the brake pedal. Apparently the electrical part was already the subject of a recall.
The issue on this motion, however, is not whether Eugene Eifert would have had a products liability claim against the Defendant for damage to his vehicle. Rather, the question presented is the novel question of whether Mr. Eifert's cause of action, assuming he had one, would survive in the hands of his subrogated insurer. If not, the Plaintiff's cause of action cannot succeed.
On that subject, Defendant relies heavily on the case of Bocre Leasing Corp. v General Motors Corp., 84 NY2d 685, 621 NYS2d 497 (1995). Bocre did not involve a claim in the hands of an insurer, however. Rather, it involved a claim by a purchaser of a helicopter, several purchasers removed from the original purchaser. The Court of Appeals ruled that such a remote purchaser may not recover, against the manufacturer of the helicopter's engine, for damage to the helicopter itself caused by a defect in the helicopter's engine.
A very significant factor, in the majority's opinion, was the concept that allowing a remote purchaser to make such a recovery would essentially give the remote purchaser the benefit of a windfall. The price paid by the remote purchaser of used machinery presumably reflects the risk that the machinery might fail at some point. To hold the manufacturer liable under those circumstances would be to relieve the purchaser of some of the risk that he had assumed, and "would grant the purchaser more than the 'benefit of bargain' to which the purchaser agreed." Bocre, supra, at 688.
Although Bocre did not involve a subrogated insurer's claim, the same principle applies here. In its contract of insurance, Plaintiff accepted premiums in consideration of an assumption of risk that the vehicle might be destroyed by a variety of factors. To allow the Plaintiff to pass that risk on to the manufacturer would be to give the Plaintiff a windfall of more than the benefit of the bargain in the insurance contract.
Thus, the Court believes that the subrogated insurer is in a position analogous to that of the remote purchaser in the Bocre scenario. In reality, the Plaintiff essentially is a remote purchaser. Pursuant to the insurance contract, it purchased a well-used Mercury Grand Marquis from Eugene Eifert, albeit for a price well in excess of its then-market value. According to Bocre, public policy does not require the courts to intervene to adjust the basis of contractual bargains. The Court sees no material difference between an insurance contract and an ordinary contract of sale in that regard.
The Plaintiff seeks to d
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