Case of the Day: Green v. First Liberty
Posted on May 11, 2018
The case of the day is Green v. First Liberty Ins. Corp. (E.D.N.Y. 2018). Nefeteri Green was driving in New York City when his car was hit by a car driven by Marco Suazo. Suazo’s car was owned by Monaco and registered to Isabelle Picco, Monaco’s representative to the United Nations. Green alleged that Suazo himself was an employee of the Monegasque mission; Suazo said instead that he was Picco’s husband. Green sued First Liberty, which had issued an insurance policy for Picco’s car. First Liberty moved to dismiss for failure to state a claim on which relief can be granted.
Ordinarily, of course, the victim cannot sue a negligent tortfeasor’s insurer, because there is no privity of contract between them. That’s a fancy way of saying the insurer undertook a duty to the insured, not to the plaintiff. By statute in New York, an injured person can sometimes sue the insurer, but only if he first gets a judgment against the tortfeasor. This rule was problematic in New York, where diplomats are a dime a dozen, because of the diplomat’s immunity from suit.
Under the Diplomatic Relations Act, which Congress enacted in order to address problems like these, diplomats are of course immune from suit; but diplomatic missions and their members are required to maintain liability insurance, and injured persons can sue the insurer directly in federal court, and the insurer cannot assert an immunity defense:
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.
The intent of the statute seems pretty clear, but nevertheless, First Liberty sought dismissal on the grounds that under New York law, a victim has a direct claim against an insurer only if it already has obtained a judgment against the insured. The judge correctly rejected this argument in light of the DRA: First Liberty’s argument “would render nugatory” the statutory scheme, because the whole point of the statute is that the injured person can’t sue the diplomat.
First Liberty also argued that the DRA’s special remedy is unavailable because Green could have sued Picco and Suazo directly under the non-commercial tort exception to the FSIA’s rule of sovereign immunity. The judge correctly rejected this argument, going so far as to call it “frivolous”: the FSIA is about the immunity of states, not diplomats.
Perhaps the closest argument was that the DRA’s direct suit provision should apply only when the plaintiff could not recover from the foreign state itself under the non-commercial tort exception to foreign sovereign immunity. But nothing in the DRA itself suggests that that’s right, and in any case, on the facts of the case, Monaco most likely couldn’t be held liable the accident, since Suzao was driving for personal reasons and not in connection with work for the mission.
So the judge correctly denied the motion. He went further and ordered First Liberty’s lawyer to show cause why she should not be sanctioned for violating FRCP 11. He pointed out that among other problems, First Liberty’s brief had mistaken foreign sovereign immunity for diplomatic immunity. It’s true that FRCP imposes an objective standard, not a subjective standard, on counsel. But it seems clear to me that First Liberty’s counsel was just badly mistaken, not malicious, and if we start handing out Rule 11 sanctions every time a lawyer misunderstands the FSIA …