Progressive Ins. Cos. v Burt
Annotate this CaseDecided on November 7, 2005
Supreme Court, Onondaga County
Progressive Insurance Companies, Plaintiff,
against
Kimberly Burt, Defendant.
04-1111
TIMOTHY J. PERRY, ESQ.
SUGARMAN LAW FIRM LLP
Attorneys for Plaintiff
360 S. Warren Street
Syracuse, NY 13202
STEPHEN T. HELMER, ESQ.
MACKENZIE HUGHES LLP
Attorneys for Defendant
P.O. Box 4967
Syracuse, NY 13221-4967
John V. Centra, J.
Plaintiff issued an insurance policy to Defendant. On May 30, 2002, Defendant was involved in a rear end collision in which the car that she was test driving (owned by Wayne Hoffman d/b/a Silverline Auto and/or Silverline Auto, Inc. [hereinafter "Silverline Auto"]) rear-ended a vehicle operated by Donna Bushnell.
Approximately three months later, on September 4, 2002, Bushnell's attorney, Douglas H. Young, Esq., wrote to Defendant advising of his representation of Bushnell and advising Defendant to notify her insurance carrier of the claim. Defendant did not [*2]notify Plaintiff of the accident or claim. On November 18, 2003, Plaintiff received notice of the accident from TIG Insurance Company (hereinafter "TIG"), the carrier for Silverline Auto.
On November 20, 2003, Plaintiff wrote to Defendant advising her that due to her failure to promptly report the accident as well as other issues, Plaintiff was investigating under a reservation of rights. On that same day, TIG wrote to Mr. Young and advised that it was denying coverage under the TIG policy because there was other available coverage through Plaintiff herein.
On November 20, 2003, Plaintiff contacted Defendant by telephone to interview her and investigate the accident. Defendant stated that she never reported the claim to Plaintiff because she was not using her car at the time and she had given the dealership $400 to pay to Bushnell directly for damage to Bushnell's car due to the fact that Hoffman, Silverline Auto's principal, did not want to report the accident to TIG, his insurance carrier. She also stated that she received a letter from Mr. Young a year earlier which stated that she was being sued but Defendant never heard anything else about a lawsuit.
After receiving the letter indicating that she was going to be sued, Defendant became concerned and contacted Hoffman to discuss the matter. She states that she asked Hoffman about insurance coverage and Hoffman told her that there was insurance coverage available for the vehicle. Based on that, Defendant assumed that Hoffman's insurance carrier, TIG, had been notified and she took Hoffman's word that there was actually coverage available and that everything would be taken care of.
On December 8, 2003, Plaintiff disclaimed coverage to Defendant on the ground of breach of a policy condition of prompt reporting of an accident, a condition precedent to coverage under the policy. On December 11, 2003, Mr. Young wrote to TIG and advised it of Plaintiff's disclaimer and noted that, there being no other insurance for Defendant, the TIG policy would be covering the accident.
Plaintiff contends that Defendant's failure to give timely notice of the occurrence was a breach of the policy condition and vitiates insurance coverage. Plaintiff argues that Defendant is not excused from giving notice to Plaintiff after receiving Mr. Young's letter, notwithstanding that she paid cash to Hoffman to pay for Bushnell's property damage, or because Hoffman purportedly said that his insurance coverage would take care of it. Plaintiff posits that if there is any question as to who or [*3]which insurer was ultimately responsible for the accident, it was not for Defendant to unilaterally decide, particularly when advised that there was no coverage for Silverline Auto. Plaintiff maintains that prompt notice to the insurer is required so that insurance carriers may make the appropriate investigation and protect their interests in determining liability and coverage.
In response, Defendant argues she has never been employed by an insurance company, nor has she ever made a claim under her car insurance when she was driving a car owned by a dealership. The car that Defendant was driving appeared to be undamaged following the accident and the car driven by Bushnell sustained only minor damage totaling approximately $400. Bushnell was not transported to the hospital after the accident but, rather, was able to drive her own car from the scene. Bushnell did not tell Defendant that she was injured at the scene and Defendant did not observe Bushnell to be injured. At the time of the accident, Defendant did not realize that her own policy through Plaintiff would provide coverage for an accident that occurred when she was operating a vehicle other than the one she had insured.
Defendant contends that there are questions of fact as to whether Defendant provided notice of the accident as soon as practicable in light of the facts and circumstances surrounding the matter and that there are questions of fact as to whether Plaintiff's failure to deny coverage in a timely fashion following notice of the claim constitutes a waiver. Accordingly, she maintains that Plaintiff's motion should be denied.
Defendant states that she failed to timely notify her carrier because she was unsophisticated in insurance matters, she did not believe Bushnell was injured, and she believed that the insurance covering the vehicle she was driving would provide coverage. This court finds that neither Defendant's lack of sophistication regarding insurance matters nor her belief that Bushnell was not injured provides an excuse for Defendant's failure to notify her carrier. A lack of sophistication may provide a valid excuse under certain circumstances (see Mighty Midgets Inc. v. Centennial Ins. Co., 47 NY2d 12 [1979]); however, in this case, Defendant was in receipt of information from Mr. Young that reasonably should have informed her that she was required to inform her carrier of the accident. Despite this knowledge, Defendant failed to do so. Further, it was impossible for Defendant to know what injuries, if any, that Bushnell may have suffered. Defendant was not justified in relying on Bushnell's purported lack of injuries to avoid her duty to notify her carrier of the accident. Thus, neither of these excuses have [*4]merit.
As to the issue regarding another insurer's coverage, three months after the accident, Defendant was contacted by Mr. Young, the attorney representing Bushnell. He counseled her to notify her carrier. Mr. Young specifically stated that the insurance carrier for the vehicle that Defendant was driving advised that there was no insurance available to cover the accident. Despite this information, Defendant ignored the advice to notify her carrier, Plaintiff herein. Accordingly, Defendant's excuse that she thought that there was coverage through the vehicle's policy is meritless.
Under these circumstances, the court finds that Defendant failed to provide notice of the accident as soon as practicable.
As to the issue of whether Plaintiff made a timely disclaimer, this court notes that Plaintiff first received notice of the claim from TIG on November 18, 2003. On November 20, 2003, Plaintiff's claims adjuster, Claire L. Johnson, interviewed Defendant by telephone for two reasons. First, Plaintiff learned of the accident from a source other than Defendant, and, second, there were a number of coverage issues that needed further investigation. On that same day, Plaintiff issued a reservation of rights letter.
Thereafter, Johnson contacted TIG insurance and requested a copy of their policy to determine, assuming arguendo that coverage was afforded, which policy would provide primary insurance and which policy would provide excess insurance to cover the accident. Johnson was also concerned about the fact that plaintiff was driving a vehicle that was not listed on her policy. To that end, Johnson requested information from TIG. In addition, Johnson confirmed with Mr. Young's office Defendant's statement that Mr. Young advised that she should put her insurance carrier on notice. Johnson received a copy of a letter from Mr. Young on November 25, 2003. Johnson issued a coverage denial on December 5, 2003 which was approved by her supervisor and then by management prior to it being issued. Plaintiff issued a denial letter on December 08, 2003.
Between November 18, 2003 (when Plaintiff first learned of the accident from TIG) and December 8, 2003 (when the disclaimer letter was sent), there are fourteen working days. The court takes judicial notice of the fact that Thanksgiving fell between these dates on November 27, 2003. Based on the deposition testimony of Johnson, the court finds that the delay in issuing the disclaimer letter was properly the result of investigation into the issues of coverage and late notice to the insurer. [*5]Travelers Ins. Co. v. Volmar Construction Co., Inc., 300 AD2d 40 (1st Dept. 2002). Defendant has failed to raise an issue of fact to dispute this.
Although Defendant argues that there was no reason for the delay because after the telephone conference between Johnson and Defendant, Johnson was aware of the late notice, this ignores the other reasons given for the reservation of rights. Had there been a legitimate reason to disclaim for the other coverage issues, Plaintiff would have foregone the protection of the policy had it not disclaimed for that reason. An insurer is only entitled to disclaim based on the grounds stated in its disclaimer notice. Shell v. Fireman's Fund Ins. Co., 17 AD3d 444 (2nd Dept. 2005).
Based on the foregoing, Plaintiff's motion is granted. This court declares the rights of the parties as follows: Plaintiff has no duty to defend or indemnify Defendant in the underlying suit commenced by Bushnell against Defendant herein.
Plaintiff is to submit an order on notice.
JOHN V. CENTRA
Supreme Court Justice
Dated: November 7, 2005
Syracuse, New York
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