Ocean Partners, LLC v North Riv. Ins. Co.

[*1] Ocean Partners, LLC v North Riv. Ins. Co. 2004 NY Slip Op 51785(U) Decided on November 4, 2004 Supreme Court, New York County Kornreich, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on November 4, 2004
Supreme Court, New York County

OCEAN PARTNERS, LLC, Plaintiff,

against

NORTH RIVER INSURANCE COMPANY and GA INSURANCE COMPANY OF NEW YORK, Defendants.



0605267/01

Shirley Werner Kornreich, J.

Before the Court is defendant insurer's motion for summary judgment in plaintiff insured's action seeking recovery for fire damage to its property. For the reasons that follow, defendant's motion is granted. This action was previously discontinued as against defendant GA Insurance Company of New York.

I. Facts

On the morning of November 18, 1999, a fire broke out on the 31st floor of 17 Battery Place, New York, New York (the "building"), a high-rise condominium. Ocean Partners, LLC ("Ocean Partners" or "plaintiff") owned title to the top third of the building, and the blaze damaged some of its property. At the time, the building was insured by a policy from North River Insurance Co. ("North River" or "defendant"). Ocean Partners was a named insured on the insurance policy, which listed SL Green Realty Corp. ("SL Green") as first named insured. Aff. of Vincent J. Velardo, Ex. B, FM 206.0.1. SL Green was the property manager, as well as a tenant, of the building. Aff. of Lisa Wall, ¶ 3, 13.

Several hours after the fire occurred, Dennis Egan, employed by SL Green as property manager, phoned Kassole Co. Inc. ("Kassole") to report the fire. Kassole was SL Green's insurance broker and at the time had an agency relationship with North River. Wall Aff., Ex. B p. 25. The property loss notice form Kassole generated that day listed "SL Green Realty Corp." as the insured on the claim, and described the damage simply as "water damage to bldg in approx 8 tenants (sic) spaces due to water pressure to extinguish fire." Wall Aff., Ex. A. The property loss notice did not mention Ocean Partners. SL Green eventually withdrew its claim, since its losses did not exceed the deductible on the policy.

The insurance policy stated:

Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations. ...

(a) You must see that the following are done in the event of loss or damage to Covered Property:

(2) Give us prompt notice of the loss or damage. Include a description of the property involved.

(3) As soon as possible, give us a description of how, when and where the loss or damage [*2]occurred.

The requirement that you give notice and description of loss to us will be complied with if notice is given by you, or on your behalf, to any of our licensed agents in New York. Velardo Aff., Ex. B, FM 600.0.1110, p. 1, 19, FM 600.0.1099.

Plaintiff does not contend that Ocean Partners itself ever attempted to contact North River or Kassole during the 16 months between the fire and the commencement of this action.

Ocean Partners filed suit against defendant in April 2002 for losses sustained during the fire, asking for damages of over $600,000. Plaintiff increased the amount requested to over $1.3 million when it amended the complaint to include damages to the building's roof. Plaintiff also originally named GA Insurance Co. ("GA"), with whom it had a builder's risk policy, as a defendant in the action. However, plaintiff discontinued the action against GA after it ascertained that the fire did not occur while the building was under construction, thus relieving GA of liability. Wall Aff., ¶ 6.II. Discussion

Summary judgment is appropriate where the moving party has established its defense "sufficiently to warrant the court as a matter of law in directing judgment in [its] favor." CPLR 3212(b). A party moving for summary judgment bears the burden of tendering evidentiary proof in admissible form to substantiate its defense; upon such showing, the burden shifts to the party opposing summary judgment to show that there exists a triable issue of material fact. Zuckerman v. New York, 49 NY2d 557, 562 (1980).

The insurance contract stated that in event of loss, Ocean Partners, or someone acting on its behalf, must give notice to North River. Ocean Partners never contacted the insurer itself to report its property damage. SL Green was the only entity to inform North River's agent of the fire, and that was in regard to SL Green's own claim, as evidenced by the fact that it later withdrew the claim. New York law is clear that "notice provided by one insured in accordance with the policy terms will not be imputed to another insured." Travelers Ins. Co. v. Volmar Const. Co., 300 AD2d 40, 44 (1st Dept. 2002). Additionally, it is irrelevant that the insurer might have acquired actual knowledge of the occurrence underlying the potential claim, even if it acquired that knowledge from another insured. Id. at 43, citing American Mfrs. Mut. Ins. Co. v. CMA Enters., 246 AD2d 373 (1st Dept 1998).[FN1] Notice for SL Green's claim cannot, in itself, [*3]serve as notice for a claim by Ocean Partners as well. [FN2]

Thus the present action hinges on whether the phone call by Dennis Egan was on behalf of Ocean Partners. Plaintiff does not contend that Egan mentioned Ocean Partners when phoning in the incident, nor does the claim form generated by Kassole mention any party other than SL Green. Furthermore, Egan, an employee of SL Green, explicitly stated in his deposition that he had no authority to act on behalf of Ocean Partners. Reply Aff. of Vincent J. Velardo, Ex. A. There was no reason for North River to assume that Egan was acting on behalf of Ocean Partners, and there is no basis for making the conclusion now.

The Appellate Division has repeatedly emphasized the necessity of insureds' compliance with notice provisions. "[Without] timely notice, an insurer may be deprived of the opportunity to investigate a claim and is rendered vulnerable to fraud. Late notification may also prevent the insurer from providing a sufficient reserve fund." Heydt Contracting Corp. v. American Home Assurance Co., 146 AD2d 497, 498 (1st Dept. 1989), quoting Power Authority of New York v. Westinghouse Electric Corp., 117 AD2d 336, 339 (1st Dept. 1986). Here, where one named insured notifies its insurer of a potential claim and tangentially mentions that other tenants in its building have sustained damage, it is not realistic to expect the insurer to follow up with every other insured named on the policy to check whether they own the other property in question. The insurer is justified in expecting each of its insureds to provide clear, timely notice of any potential claims.

Since Egan did not give notice for Ocean Partners, plaintiff first gave notice of claim when it filed suit in April 2002, nearly 16 months after the fire occurred. An insurer is not obligated to cover its insured's loss unless the insured gives timely notice of its loss as provided in the insurance contract. Travelers, 300 AD2d at 42, citing Power Authority of New York v. Westinghouse Electric Corp., 117 AD2d 336 (1st Dept. 1986). An insurance contract requiring notification as soon as possible, as here, requires the insured to give notice within a reasonable time under the circumstances. Heydt Contracting Corp. v. American Home Assurance Co., 146 AD2d 497, 498 (1st Dept. 1989). Sixteen months is an impermissibly long gap between the loss and the notice of claim. While the question of unreasonable delay is typically for a jury, summary judgment is appropriate even for relatively short periods of time when there is no excuse for the delay. Heydt, 146 AD2d at 498-499; Power Authority, 117 AD2d at 339-340. In Heydt, for example, the plaintiff insured suffered loss from a fire and waited four month before giving notice to its insurer; the Court held that was unreasonable. Heydt, 146 AD2d at 499. Here, where the delay is four times longer, it is clear that Ocean Partners waited an unreasonably long time.

Accordingly, it is

ORDERED that defendant's motion for summary judgment is granted and the complaint is dismissed with costs as taxed by the Clerk; and it is further

ORDERED that the Clerk is directed to enter judgment accordingly.

The foregoing constitutes the decision and order of the Court. [*4]

Date:November 4, 2004___________________________________

New York, New YorkSHIRLEY WERNER KORNREICH

Footnotes

Footnote 1: A recent Southern District decision, U.S. Underwriters Ins. Co. v. City Club Hotel, LLC, 2003 U.S. Dist. LEXIS 7266 (S.D.NY 2003), runs counter to the line of Appellate Division cases. In that case, Shelby Realty and City Club were named insureds on a general commercial liability policy; Shelby Realty owned a building and leased it to City Club. A City Club employee fell from scaffolding and filed suit against Shelby Realty. However, the claim form submitted to the insurer listed City Club as the insured party. Despite the broad statement of the rule in Volmar that "notice provided by one insured will not be imputed to another insured," 300 AD2d at 44, the District Court distinguished the facts of City Club by pointing out that the two parties were primary co-insureds, whereas prior Appellate Division cases had dealt only with notice by an additional insured imputed to a named insured, or vice versa. 2003 U.S. Dist. LEXIS 7266 at 14-15 However, in City Club, the two insureds were not separately seeking coverage from the insurer, and the claim filed in City Club's name clearly indicated that there was a suit pending against Shelby Realty. 2003 U.S. Dist. LEXIS 7266 at 15. In the present case, SL Green had an insurable interest of its own, as evidenced by the fact that SL Green later notified North River it would not pursue its claim. Further, SL Green's notice never mentioned Ocean Partners, or any loss that party sustained. Given those substantial distinctions, this case is not governed by City Club.

Footnote 2: Della Porta v. Hartford Fire Ins. Co., 118 AD2d 1045 (3rd Dept. 1986), cited in plaintiff's memorandum of law, is not on point. In that case, which dealt with proof of loss rather than notice of claim, the property in question was jointly owned by a partnership; proof of loss from one partner was ascribed to another partner. Here, Ocean Partners and SL Green do not share an ownership interest in plaintiff's damaged property.