AAPS AAO v. Liberty Mutual Fire Insurance Company, Defendant(s) (2026)

Upon the foregoing cited papers, the decision on Defendant's motion to stay the trial scheduled in this matter is as follows:

AAPS Medical Supply Corp. (hereafter referred to as "Plaintiff"), as assignee of Daquon Gore (hereafter referred to as "Assignor"), commenced this action against Liberty Mutual Fire Insurance Company (hereafter referred to as "Defendant"), to recover assigned first-party automobile insurance (hereafter referred to as "No-Fault") benefits for medical treatment provided to the Assignor pursuant to a No-Fault insurance policy issued by the Defendant.

The bill at issue, in the amount of $3,301.10, relates to medical supplies provided to the assignor on December 5, 2023. The Defendant issued a denial of the bill for the supplies on May 4, 2024 on the grounds that:

"Claim has been denied due to fraud. Further denial details will follow under separate cover. Therefore, all No-Fault benefits for the above applicant are denied effective 10/23/2023."¹

The explanation provided on the "Explanation of Review" dated June 11, 2024 that was submitted with the NF-10 stated:

"All No-Fault benefits to this claimant are denied. Liberty mutual's investigation has revealed false information submitted in support of this claimant's claim revealing misrepresentations of material facts. Per the policy, Fraud 'we do not provide coverage for any insured ("insured') who has made fraudulent statements or engaged in fraudulent conduct in connection with any loss ("loss") or damage for which coverage is sought under this policy.' Accordingly, the claim is denied in its entirety."²

The summons and complaint were filed by the Plaintiff with the Clerk of the Court on December 4, 2024. The Defendant's answer was filed on December 30, 2024, alleging inter alia, "The eligible injured parties breached the policy of insurance by making material misrepresentations in the presentation of the claim."³

The Plaintiff served and filed the Notice of Trial on June 27, 2025. The Defendant filed a motion for summary judgment on October 22, 2025. A motion briefing order was issued by the Court and the matter was adjourned to February 19, 2026 for the argument of the motion for summary judgment. After the argument, the decision on the motion was issued from the bench subject to an order settled by the parties. The Court's Order, dated March 16, 2026, ruled there was insufficient evidence, in a form admissible at trial, to support a finding of judgment as a matter of law (CPLR § 3212). The order was served on the parties via NYSCEF on March 18, 2026.

In the interim, the matter appeared on the Part 58 Trial calendar for conference on February 11, 2026. The parties were given a trial date of March 23, 2026, subject to the outcome of the pending summary judgment motion.

On December 10, 2025, the Defendant filed a lawsuit in Supreme Court, Nassau County, titled Liberty Mutual Fire Insurance Company v. Chelsee Ann Shanya Sutherland et. al. (hereafter referred to as "Liberty Mutual v. Sutherland") (Index #626589/2025), seeking a declaration that Liberty Mutual is not responsible for payments under the No-Fault policy due to alleged misrepresentations by the "Individual Defendants." The Plaintiff was named among those parties labeled "Healthcare Provider Defendants," and the Assignor was named among those parties labeled "Individual Defendants."⁴

On March 20, 2026, the Friday before the scheduled trial on Monday March 23, 2026, the Defendant filed a motion by order to show cause in this N.Y.C. Civil Court action seeking relief:

"Pursuant to CPLR §§ 2201 and 6301, immediately staying the instant action entitled AAPS Medical Supply Corp., as assignee of Daquon Gore v. Liberty Mutual Fire Ins. Co. (Index No. CV-784563-24/RI), including, but not limited to, any trials, settlement conferences, motions, or any other matters, pending the hearing and resolution of the declaratory judgment action entitled Liberty Mutual Fire Insurance Company v. Chelsee Ann Shanya Sutherland, et. al. in the Supreme Court of the State of New York, county of Nassau, 626589/2025.⁵

The relief requested would stay the trial in this matter re-scheduled for September 8, 2026.

Discussion

The affirmation by Steven Daniel Levy, Esq., in support of the motion, sets forth the sum and substance of the Defendant's investigation and relies on the conclusions reached by the Defendant's investigator, Amanda Semmel. Her affidavit, sworn to on October 21, 2025,⁶ deduces that the Assignors made material misrepresentations regarding the policy.

Mr. Levy's affirmation states that upon the completion of the investigation, the Defendant commenced the Declaratory Judgment action in Liberty Mutual v. Sutherland. The Court finds this statement to misrepresent the timing of the declaratory judgment action since that action was not filed until nearly 18 months after the Explanation of Review stated the results of the investigation revealed the alleged fraud. The Defendant's motion does not include any representation or evidence to show any further investigation took place between June 11, 2024 (the date of the Explanation of Review) and December 10, 2025 (the date the declaratory judgment was filed).

The Court finds the timing relevant since many of both the Plaintiff's and the Court's resources were employed by the Defendant during this period. A declaratory judgment action and a motion for a stay filed in December of 2025 would have timely preserved those judicial resources. Instead, the Defendant delayed until the business day before the scheduled trial and seeks the remedy to prevent an "undue burden" to the Defendant.

Furthermore, the Defendant's order to show cause also seeks equitable relief, namely a preliminary injunction pursuant to CPLR § 6301. Mr. Levy's affirmation contends that the Defendant can show immediate and irreparable injury, loss or damages unless the defendant is restrained before a hearing can be held. However, the Defendant's motion does not address the jurisdiction of the N.Y.C. Civil Court to issue such an injunction in accordance with the N.Y.C. Civil Court Act. The Appellate Term has ruled that the N.Y.C. Civil Court "may not grant injunctive relief" (Green Lakeside Manor Home for Adults, Inc. 30 Misc 3d 16 [App Term, 2d Dept., 2010]; citing, Topaz Realty Corp. v. Morales, 9 Misc 3d 27, 28 [App Term, 2d &11th Jud. Dists., 2005]). Issuing preliminary injunctions is not one of the remedies authorized by the N.Y.C. Civil Court Act (CCA §§ 202, 203.). Therefore, while the Court is authorized to stay a proceeding in its court (CPLR § 2201), it cannot issue any preliminary injunction. The Defendant would have to request that relief from the New York State Supreme Court (CPLR § 6301).

The affirmation in support of the motion requesting a preliminary injunction expresses confidence in the defense's success in proving the Assignor's fraudulent acts sufficient to warrant precluding any recovery under the policy. However, the Defendant does not provide any justification why it cannot prove such a defense during a trial in the N.Y.C. Civil Court. The affirmation of Mr. Levy makes the conclusory statement that "litigating the underlying matter would create an undue burden on Liberty Mutual and create a multiplicity of decision relating to the issue of coverage."⁷ The motion does not present any evidence or testimony that explains what the undue burden is.

The Defendant does not provide the Court with the captions or index numbers of any other actions or arbitrations pending between the parties, other than the declaratory judgment. While the Court knows that, generally, claims that are made pursuant to No-Fault insurance policies arising from motor vehicle accidents involve multiple demands for payment by healthcare providers, the Court cannot make an assumption that there are a "multiplicity of other cases" pending involving this assignor when evaluating the request for a stay. The Defendant has named multiple parties (other than the Assignor) and listed multiple claim numbers in the declaratory judgment action but did not provide any information regarding other pending N.Y.C. Civil Court cases in this motion or in the declaratory judgment pleading. Therefore, the argument that litigating THIS matter would result in a multiplicity of decisions involving the other parties to the declaratory judgment action is an exaggerated statement without any foundation.

The Defendant's motion also makes no mention of the prejudice to the Plaintiff by the request to stay this trial. The Defendant issued a delay letter dated January 19, 2024 acknowledging receipt of the Plaintiff's bill and notifying the Plaintiff the bill was not being paid subject to the Defendant's investigation. The Plaintiff has waited 2 years and 6 months to resolve the outstanding bill and now, based upon the Defendant's argument, would wait indefinitely while the declaratory judgment action proceeds from initial filing to its conclusion.

In addition, the Defendant did not provide any explanation regarding the delay in applying for the stay until the day before the trial in this matter. The bill in this matter was denied on June 4, 2024 due to alleged "misrepresentations" in this claim determined by the Defendant's investigation. Therefore, the Defendant knew of its defense of alleged fraud and did not file the declaratory judgment until nearly 18 months later, after the Defendant completed motion practice in this matter. It waited to move for the stay of the proceeding until the business day before the trial. The Defendant wasted the Court's time by delaying its motion to stay the proceeding and should not benefit from the intentional delay.

This Court must weigh the due process to be afforded to the Plaintiff against the burden of defending the action and the serious nature of the allegations by the Defendant. Both parties have the right to have their claim heard by the Court in a timely manner. If the trial were to proceed in the N.Y.C. Civil Court action, the Defendant can still raise and prove its fraud defense. The Defendant has not offered an argument to suggest otherwise.

The matter before the bar involves one transaction between the parties. The Defendant's motion alleges that the motor vehicle accident at issue was the "product of an intentional act" and that [the Assignor] intentionally materially misrepresented the facts of the subject incident in furtherance of the fraudulent scheme to obtain pecuniary gain at the expense of insurance companies and the public at large."⁸ As a result, the Defendant contends it is not responsible for the payment of the Plaintiff's bill. The declaratory judgment alleges a far greater conspiracy involving multiple parties and much more than one bill. The Defendant has not identified a single other matter that is pending trial. Therefore, the Court finds the Defendant did not define, nor does the Court foresee, the irreparable harm alleged by trying this one claim.

The Defendant unjustifiably relies on the Appellate Division's decisions in Agway Insurance v Alvarez, 258 AD2d 487 [2d Dept., 1000]) and Hout v Coffman, 126 AD2d 973 [4th Dept., 1987). The Court in Agway did not address the lower court's stay of the trial, but rather affirmed the lower court ruling on other grounds. Therefore, the Defendant's reliance upon that case is unfounded.

The Court in Hout v Coffman, id., affirmed the lower court's stay of the underlying action pending the decision of the insurer's duty to defend in that action, but found the lower court abused its discretion in staying the underlying action pending determination of the insurer's duty to indemnify. In that matter, Colonial Cooperative Insurance Company was arguing that it did not have a duty to defend the party in the underlying lawsuit. The Appellate Division, Fourth Department affirmed the stay regarding the duty to defend because the litigation was premature, but there may be an issue of liability under the insurance policy that would invoke the duty to indemnify so that issue must proceed to litigation.

Compare that case to the Defendant in this case who is a party itself to the N.Y.C. Civil Court matter and argues to delay this action because if it is successful in the declaratory judgment action then its defense in the N.Y.C. Civil Court case will already be litigated. That is a different issue and standard altogether. There is a substantial distinction between the status of the insurer in Agway and Hout compared to the Defendant in this case. For these reasons, the Court does not find these cases are persuasive regarding the need for a stay of the trial in this matter.

The Defendant also argues that this Court has stayed or delayed trials in N.Y.C. Civil Court when there is a dispositive motion pending in the declaratory judgment action, therefore this case should also be delayed. While it is true that this Court has delayed litigation of Civil Court matters while awaiting a decision of a dispositive motion pending in a declaratory judgment action, there is no such motion pending in the declaratory judgment action at this time. In this instance, there is not a reasonable expectation of the amount of time that will pass before a decision is made in the declaratory judgment action. Therefore, the prejudice to the Plaintiff by delaying this litigation cannot be weighed against time for a decision in the declaratory judgment matter. This negates the Defendant's argument.

Decision

The New York City Civil Court Act does not give this Court the jurisdictional authority to issue a preliminary injunction pursuant to CPLR § 6301. Therefore, that portion of the Defendant's motion must be denied.

Regarding the remainder of the motion, trial courts have broad discretion to stay their own proceedings (Merola v. Bell, 47 NY2d 985 [1979]). The Defendant's motion for a stay did not provide any testimony or facts to support its allegation of an undue burden upon the Defendant. The Defendant has not justified the prejudice to the Plaintiff by seeking to stay this matter on the eve of trial for an indefinite period of time. The Court recognizes the serious nature of allegations of fraud raised by the defense in this matter, however, merely claiming fraud does not warrant delaying the trial. Rather, it justifies the opportunity to prove the defense.

Furthermore, the conclusory statement that proceeding in this matter may result in a multiplicity of decisions, is not persuasive when the Defendant did not produce any evidence of other cases pending. For these reasons, the Court finds the Defendant did not justify any basis to stay the trial.

Having considered the Defendant's motion, its arguments and the applicable law, the Court finds a stay of the trial would contravene the Court's obligation to promote the timely resolution of this case.

Accordingly, the Defendant's motion to stay the trial is DENIED and the motion for a preliminary injunction is DENIED.

It is hereby:

ORDERED, that the trial of this matter is scheduled for September 8, 2026 at 9:30 A.M. via Microsoft TEAMS. All parties and witnesses may appear via TEAMS. Both parties are to pre-mark and upload all trial exhibits to NYSCEF no later than September 1, 2026 at 4:00 P.M. Any evidence received after that date and time may be subject to preclusion. Any request for a subpoena shall be filed with the Court no later than August 10, 2026. The Court will provide the parties with a separate video-conference link for the trial.

This is the decision and order of the Court.

FOOTNOTES

1.   NYSCEF Doc: 17, NF-10 and Denial of Claim Form. Page 4.

2.   NYSCEF Doc: 17, Explanation of Review, Page 2 of 3 (PDF Page 3).

3.   NYSCEF Doc: 3, Answer, Par. 17, Thirteenth Affirmative defense

4.   NYSCEF Doc: 40, Declaratory Judgment Summons and Complaint.

5.   NYSCEF Doc: 42, Motion for Stay and Preliminary Injunctive Relief.

6.   NYSCEF Doc 10, Affidavit of Amanda Semmel.

7.   NYSCEF Doc#36, Affirmation in Support of Order to Show Cause, by Steven Daniel Levy, Esq., p. 19, Par. 59.

8.   NYSCEF #36, affirmation of Steven Daniel Levy, Esq., Page 18, Par. 44.

Robert J. Helbock, J.