AUTO – UM COVERAGE – "INSURED" – STAY OF UM ARBITRATION
State Farm Mut. Auto. Ins. Co. v. Sanchez(Sup. Ct., NY Co., 8/3/2020)
State Farm issued an auto policy to "Profit General Contractor & Contracting, LLC", a limited liability company having one member (owner), Alexandro Sanchez. While riding his bicycle, Mr. Sanchez was hit by an uninsured vehicle, sustaining injuries. He made a claim under his LLC's auto policy with State Farm for UM coverage, which State Farm denied on the basis that Sanchez did not qualify as an "insured" under the LLC's policy, which was defined as:
(1) you, as the named insured and, while residents of the same household, your spouse and the relatives of either you or your spouse;(2) any person while acting in the scope of that person's duties for you, except with respect to the use and operation by such person of a motor vehicle not covered under this policy, where such person is:
(i) your employee and you are a fire department;(ii) your member and you are a company, as defined in General Municipal Law section 100;(iii) your employee and you are an ambulance service, as defined in Public Health Law section 3001; or(iv) your member and you are a voluntary ambulance service as defined in Public Health Law section 3001;
(3) any other person while occupying:
(i) a motor vehicle insured for SUM under this policy; or(ii) any other motor vehicle being operated by you or your spouse ; and
(4) any person, with respect to damages such person is entitled to recover, because of bodily injury to which this coverage applies sustained by an insured under paragraph (1), (2), or (3) above.
Sanchez demanded arbitration of his UM claim and State Farm commenced this special proceeding to stay that arbitration.
In ruling in favor of Sanchez and dismissing State Farm's petition, the court, after noting that "the burden rests on the party seeking the stay to establish the existence of evidentiary facts, sufficient to conclude that there is a genuine preliminary issue", held that because the policy was issued to an LLC and afforded coverage options for the named insured's "spouse" and a discount for the named insured having taking an accident prevention course, the policy afforded UM coverage to him:
Factually, the facts of the instant matter have even more in common with with those of Morette. In Morette, Anthony Morette, the sole owner of policyholder A.T. Morette Electric LLC, allegedly was struck by an unidentified motor vehicle while he was jogging. Ultimately, Mr. Morette's wife and daughter sought a declaratory judgment that the insurer, Merchants Mutual Insurance Company, was liable for SUM coverage (Morette, supra, 35 Misc. 3d at 201-202). The court denied the insurers' motion for summary judgment, rejecting Merchants' argument that because the LLC was the named insured, SUM coverage was unavailable. In reaching such conclusion, the court relied on a few key provisions, including the option to pay a premium for spousal liability coverage (id. at 206). It further noted that the exclusions page did not exclude the member of the LLC from injuries that were relevant to the facts at hand. Here, too, the option to purchase spousal liability coverage existed, and coverage for a bike accident was not excluded. In addition, the exclusions page indicates that petitioner had the discretion to provide coverage to the surviving spouse if the insured was deceased (NYSCEF Doc. No. 5, at 000029). Further, as respondent points out, petitioner provided a discount to the LLC because respondent took an accident prevention course, and this also weighs in favor of treating him as individually covered under the policy.
LLCs don't have spouses and can't take an accident prevention course, but they can be treated as a carbon-based life form for purposes of UM (and SUM) coverage under an automobile insurance policy.