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Posted: May 10, 2018

Judge Garaufis denies insurer’s motion to dismiss in lawsuit involving “ordinary traffic accident with an international twist”

Posted by Solomon N. Klein, Litigation Partner

District Judge Nicholas G. Garaufis denied an insurer’s motion to dismiss a lawsuit brought directly by a plaintiff against the insurer of a vehicle that belonged to the Principality of Monaco. The Court ruled that the lawsuit was proper under the Diplomatic Relations Act of 1978, despite the fact that plaintiffs typically may not bring a direct lawsuit against the insurer of an alleged tortfeasor. Green v. First Liberty Insurance Corporation, 17-cv-6975 (E.D.N.Y May 8, 2018) (NGG)(CLP).

Plaintiff in this case alleged injuries resulting from a traffic accident that involved a jeep owned by Monaco and alleged driven by a member of the Monegasque mission. Plaintiff sued the jeep’s insurer directly in order to bypass the diplomatic immunities available to the registrant and driver of the jeep. Defendant moved to dismiss, arguing that plaintiff improperly brought a direct action against the insurer. The Court denied the motion – explaining the history of the Diplomatic Relations Act and holding that it provided for a direct action against the insurer in this case.

Under the common law, a tort victim had no right of action against a tortfeasor’s liability insurer, because the two were not in privity of contract. Lang v. Hanover Ins. Co., 820 N.E.2d 855, 857 (N.Y. 2004); 7A Steven Plitt et al., Couch on Insurance § 104:2 (3d ed. updated 2017). Consistent with this common-law rule, most states prohibit a party injured in a traffic accident from bringing suit solely and directly against the alleged tortfeasor’s liability insurer. 13F Charles A. Wright et al., Federal Practice and Procedure § 3629, at 186 n.4 (3d ed. 2009). Some states—among them New York—have softened this prohibition on direct actions by permitting a tort victim to sue the alleged tortfeasor’s liability insurer, provided that, among other things, the victim first obtains a judgment against the tortfeasor. N.Y. Ins. Law § 3420; see also, e.g., Md. Code., Ins. § 19-102(b)(2); Va. Code § 38.2-2200(2).

These rules had unfortunate consequences for Americans injured in domestic traffic accidents with foreign diplomats. After such accidents, these victims were often left without legal recourse. As a diplomat, the actual tortfeasor could claim immunity from suit. See Windsor v. State Farm Ins. Co., 509 F. Supp. 342, 344 (D.D.C. 1981); Diplomatic Privileges and Immunities: Hearings Before the Subcomm. on Int’l Operations of the House Comm. on Int’l Relations, 95th Cong, 1st Sess., at 3, 5-6 (1977) (hereinafter Diplomatic Privileges Hearings) (statement of Rep. Fisher). Even if the plaintiff could bring a direct action against the diplomat’s liability insurer, the insurer could escape liability by asserting the insured’s diplomatic immunity as a defense to the suit. S. Rep. 95-1108, at 3 (1978) (statement of Sen. Mathias).

Partly to address “the inequities associated with the immunity of members of diplomatic missions in civil court proceedings, “Congress enacted the Diplomatic Relations Act, which substantially revised the law of diplomatic immunity. Rodriguez v. Hanover Ins. Co., No. 14- CV-1478 (GJH), 2014 WL 3405258, at *3 (D. Md. July 9,2014) (internal quotation marks and citation omitted); see also Windsor, 509 F. Supp. at 343; S. Rep. No. 95-958, at 1 (1978). Three provisions of the Diplomatic Relations Act are relevant to this lawsuit. See Rodriguez, 2014 WL 3405258, at *3. The first, Section 5 (codified at 22 U.S.C. § 254d), “continues the long-standing concept of diplomatic immunity by providing for the dismissal of any action or proceedings brought against an individual entitled to such protection” under the Vienna Convention on Diplomatic Relations of April 18,1961, 23 U.S.T. 3227 (entered into force with respect to the U.S. Dec. 13,1972), the Diplomatic Relations Act itself, or any other laws extending diplomatic immunity or privileges. Windsor, 509 F. Supp. at 344. The second. Section 6 (codified at 22 U.S.C. § 254e), requires diplomatic missions in the United States, members of those missions, and members’ families to maintain adequate liability insurance against the risks of bodily injury, death, and property damage arising from their use of motor vehicles, vessels, or aircraft in the United States. See generally 22 C.F.R. §§ 151.11-151.11 (implementing this provision). The third. Section 7 (codified at 28 U.S.C. § 1364), provides that someone injured by certain diplomatic personnel—namely, a member of a diplomatic mission, a senior United Nations official, or a family member of either—can sue the alleged tortfeasor’s liability insurer directly in federal court, and that such a suit is tried without a jury and is not subject to the defense that the insured is protected by diplomatic immunity. By requiring individuals who are likely to be entitled to diplomatic immunity to maintain liability insurance and permitting tort victims to bring direct actions against those individuals’ insurers. Sections 6 and 7 of the Diplomatic Relations Act provide an effective remedy for Americans injured by foreign diplomatic personnel. Windsor, 509 F. Supp. at 345.
. . .
Subsection 7(a) of the Diplomatic Relations Act provides that federal courts may hear tort suits brought directly against the insurers of certain diplomatic personnel and their families. In full, this subsection reads as follows:
The district courts shall have original and exclusive jurisdiction, without regard to the amount in controversy, of any civil action commenced by any person against an insurer who by contract has insured an individual, who is, or was at the time of the tortious act or omission, a member of a mission (within the meaning of section 2(3) of the Diplomatic Relations Act (22 U.S.C. [§] 254a(3))) or a member of the family of such a member of a mission, or an individual described in section 19 of the Convention on Privileges and Immunities of the United Nations of February .13,1946, against liability for personal injury, death, or damage to property.
28 U.S.C. § 1364(a).

Plaintiff’s allegations easily satisfy Section 7. Plaintiff alleges that Defendant insured the Jeep that crashed into her car (Compl. 2, 6-7), and Defendant concedes not only that it insured the Jeep, but also that it therefore insured the party or parties allegedly responsible for the accident (Answer (Dkt. 6); Def. Mem. at 1). As the head of Monaco’s mission to the United Nations, [the registrant of the vehicle] was a “member” of that mission for purposes of the Diplomatic Relations Act. See 22 U.S.C. § 254a(l)(A). Furthermore, Plaintiff’s allegation that [the driver] worked for the mission (Compl. 6) is sufficient, at least at this stage of the litigation, to allege that he was a “member” of the mission under the Diplomatic Relations Act, which defines that term to include not only the mission’s diplomatic staff, but also its administrative, technical, and service staff. 22 U.S.C. § 254a(l)(A)-(C); see Rodriguez, 2014 WL 3405258, at *3. Defendant thus wisely concedes that “the alleged tortfeasors”—presumably both [the registrant] and [the driver]—“fall within the definitions set forth in 28 U.S.C. § 254a.” (Def. Mem. at 11.)

Green v. First Liberty Insurance Corporation, 17-cv-6975 (E.D.N.Y May 8, 2018) (NGG)(CLP).

Posted by Solomon N. Klein, Litigation Partner

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