Gardner v Phoenix Ins. Co.

[*1] Gardner v Phoenix Ins. Co. 2008 NY Slip Op 52390(U) [21 Misc 3d 1135(A)] Decided on November 25, 2008 Supreme Court, Kings County Knipel, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 25, 2008
Supreme Court, Kings County

Jean Gardner, Plaintiff,

against

Phoenix Insurance Company, et ano., Defendants,



7562/08



Attorneys for Plaintiff

Chesney & Murphy, LLP

2305 Grand Avenue

Baldwin, NY 11510

(516) 378-1700

Attorneys for Defendants

Lazare Potter Giacovas & Kranjack LLP

950 Third Avenue

New York, NY 10022

(212) 758-9300

Lawrence S. Knipel, J.

Upon the foregoing papers, defendant Phoenix Insurance Company (Phoenix), also erroneously sued herein as Travelers Insurance Company, moves for an order, pursuant to CPLR 3212, granting it summary judgment dismissing the complaint and any cross claims against it in the instant declaratory judgment action brought by plaintiff Jean and declaring that Phoenix has no obligation to defendant or indemnify plaintiff in an underlying personal injury action, on the ground that plaintiff failed to notify Phoenix of such underlying claim as soon as was practicable and has no viable excuse for such untimely notice. In the alternative, Phoenix seeks an order, pursuant to CPLR 603, severing the action against Phoenix from each of the non-insurance coverage claims. In addition, it seeks a dismissal of all claims asserted against Travelers Insurance Company as such company allegedly never issued a policy to plaintiff or issued a policy pursuant to which she was an additional insured. Plaintiff opposes the instant motion on the ground that issues of fact exist with respect to the adequacy of her notice to Phoenix and the validity of her excuses for the subject [*2]allegedly late notice which she provided which preclude the grant of summary judgment to Phoenix. Plaintiff does not appear to oppose that portion of the motion seeking severance or the dismissal of any and all claims against Travelers Insurance Company.

The facts and circumstances surrounding plaintiff's status as an additional insured under the subject insurance policy is undisputed as are the facts surrounding her notice to Phoenix of the underlying personal injury action. Phoenix issued an insurance policy to Kimco Fine Interior Painting & Decorating ("Kimco") which was effective from November 3, 2005 to November 3, 2006. Said policy includes a Commercial General Liability (CGL) coverage form which contains a notice provision requiring any insured thereunder to provide notice "as soon as practicable of an occurrence' or an offense which may result in a claim," as well as of any lawsuits or claims brought against the insured. The policy also contains an Additional Insured Endorsement which lists plaintiff in the Schedule as an additional insured and provides that :

Who is an insured (Section II) is amended to include as an insured the person or organization shown in the Schedule as an insured but only with respect to liability arising out of your acts or omissions.

In the underlying personal injury action, the plaintiff therein, Mizanur Rahman, asserts claims against Orease Cohen d/b/a Kimco and the plaintiff in this action, Ms. Gardner, with respect to injuries he allegedly sustained while working at premises located at 584 Greene Avenue and owned by Gardner. He alleges that such injuries were caused by the negligence of both Kimco and Ms. Gardner. The summons and complaint in the action were filed April 2, 2007 and, according to said complaint, the date of the accident which allegedly caused his injuries was October 27, 2006.

On October 5, 2007, Travelers Indemnity Company, of which Phoenix is an affiliate, received a letter from plaintiff's counsel, dated September 28, 2007, seeking defense and indemnification with respect to the subject personal injury action. On October 25, 2007, Phoenix disclaimed coverage based upon plaintiff's allegedly late notice of the subject occurrence and resulting legal action. The denial of coverage letter states, in relevant part, the following:

Since your client [Gardner] was aware of this accident immediately and [was] served a summons sometime in April of 2007, I must respectfully decline your request for additional insurance based upon your late notice of the claim and the summons.

In opposition to the instant motion, plaintiff submits evidence that Kimco notified Phoenix of the personal injury action on August 6, 2007, 52 days prior to the notice afforded to Phoenix pursuant to plaintiff's counsel's letter dated September 28, 2007. Plaintiff maintains that Phoenix has not disclaimed coverage for Kimco based upon any late notice grounds. In addition, plaintiff submits an affidavit which states, in relevant part, the following with respect to her evaluation of her potential liability in the underlying action:

Plaintiff [in the underlying personal injury action] has alleged that he was injured while performing work at the premises which I own. Plaintiff was employed by a subcontractor who was performing work for [Kimco]. I had no supervision or control of the work being performed. I had no control over the means, manner and method of work being performed. Therefore, it was reasonable for me to believe under the circumstances that I was not liable for the occurrence. [*3]

I also did not believe that [plaintiff in the underlying action] had sustained a serious injury as I had been told by Mr. Drummond of Kimco that [said plaintiff] was not seriously hurt. It was reasonable for me to believe at the time that should [the plaintiff] be entitled to any compensation, same would have been provided by his employer or Kimco . . . .

(Original paragraph numbering omitted).

Phoenix also submits the following deposition testimony of plaintiff concerning the timing and level of her knowledge concerning the accident:

Q. What about after the accident that day, were you notified about the accident on that day or later on?

A. Mr. Drummond [from Kimco] discussed it with me. I don't recall if it was the next day or the same day. I don't recall, but it was discussed with me. He discussed it with me.

Q. What did he tell you?

A. He said one of the guys, one of [the subcontractor's] guys fell off the bucket [on the scaffold].

Q. The bucket or the scaffold?

A. He fell from the bucket. The bucket, he had placed a bucket on the scaffold and he fell. I was shocked because being there, I was not aware of any accident.

Q. Did he [Mr. Drummond] say anything else that you recall?

A. The general discussion, did he get hurt, was it serious, what happened, those kind of questions.

The only thing I could relate to a bucket, it sounds silly and stupid that someone would stand on a bucket, but I did not question it because I was not - - this was his job. I hired him to do the work. So, therefore my concern was that someone didn't get seriously hurt and based on, I said was he seriously hurt and he said no, he was brought to the emergency room.

That was the extent of my knowing what really took place. I'm thinking that if he went to the hospital or the emergency room, it could have been serious and it could not have been. I don't know.

Based upon the foregoing, Phoenix contends that plaintiff had a duty, as an additional insured, separate and apart from Kimco, to notify Phoenix as soon as was practicable of the underlying accident, particularly given her nearly contemporaneous knowledge of same, but she failed to inform Phoenix of same until approximately one year after the incident occurred and five months after she received a summons and complaint in the action. Based upon such alleged [*4]untimely notice, Phoenix maintains that it is entitled to summary judgment dismissing the complaint and cross claims against it and declaring that it has no duty to defend or indemnify plaintiff in the underlying action.

In opposition, plaintiff argues that Kimco's presumably timely notice to Phoenix is applicable also to plaintiff as an additional insured under the policy and that, in any event, plaintiff had a good faith belief in nonliability which excused any alleged lateness with respect to her notice to Phoenix of the occurrence or resulting lawsuit. In addition, plaintiff contends that summary judgment is premature as little discovery taken place to date in this action.

Summary judgment should only be granted where there are no triable issues of fact (Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395, 404 [1957]). In order to prevail on a motion for summary judgment, the movant must present a prima facie case demonstrating entitlement to judgment as a matter of law (Prince v Di Benedetto, 189 AD2d 757, 759 [1993]; Zarr v Piccio, 180 AD2d 734, 735 [1992]). Once the movant has established his or her prima facie case, the party opposing a motion for summary judgment bears the burden of "produc[ing] evidentiary proof in admissible form sufficient to require a trial of material questions of fact . . . mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient" (Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; see also Romano v St. Vincent's Medical Center of Richmond, 178 AD2d 467, 470 [1991]; Tessier v New York City Health & Hospitals Corp., 177 AD2d 626 [1991]). Stated differently, "the plaintiff must establish the existence of material facts of sufficient import to create a triable issue" (Shaw v Time-Life Records, 38 NY2d 201, 207 [1975]). In addition, the evidence presented on summary judgment must be scrutinized in the light most favorable to the party opposing the motion (Goldstein v Monroe County, 77 AD2d 232, 236 [1980]). Since summary judgment deprives a party of his or her day in court (Henderson v City of New York, 178 AD2d 129 [1991]), it is a drastic remedy that will only be awarded when there is no triable issue of fact and the court can render a decision as a matter of law (Barclay v Denckla, 182 AD2d 658 [1992]). Nonetheless, where a party has established his or her prima facie case, a motion for summary judgment based thereupon "may not be defeated merely by surmise, conjecture or suspicion" (Shaw, 28 NY2d at 207).

It is well settled that "[c]ompliance with the notice requirements of an insurance policy is a condition precedent to coverage" (Centrone v State Farm Fire & Casualty, 275 AD2d 728, 729 [2000], lv denied 96 NY2d 704 [2001]). Accordingly, a provision in an insurance policy which requires notice to be afforded to the insurer "as soon as practicable" mandates that notice be given within a reasonable time under the circumstances (see Holmes v Morgan Guar. and Trust Co. of New York, 223 AD2d 441, 442 [1996]; see also matter of American Casualty Ins. Co. v Silverman, 271 AD2d 528, 528 [2000]). Absent a valid excuse for an insured's failure to provide timely notice to the insurer, said failure vitiates insurance coverage (American Cas. Ins. Co., 271 AD2d at 528). This is the case even where no demonstrable prejudice has inured to the insurer as a result of the complained-of notification delay (see Holmes, 223 AD2d at 442).

Relatedly, "the fact that an insurer may have received notice of the claim from the primary insured, or from another source, does not excuse an additional insured's failure to provide notice" (City of New York v St. Paul Fire and Marine Ins. Co., 21 AD3d 978, 981 [2005]; accord Structure Tone, Inc. v Burgess Steel Prods. Corp., 249 AD2d 144, 145 [1998]); American Mfrs. Mut. Ins. Co. v CMA Enter., Ltd., 246 AD2d 373, 373 [1998]). "However, there are situations in which timely [*5]notice furnished by one insured may be deemed timely notice by another. Where two or more insureds are defendants in the same action, notice of the occurrence or of the lawsuit provided by one insured will be deemed notice on behalf of both insureds only where the two parties are united in interest or where there is no adversity between them" (23-08-18 Jackson Realty Assoc. v Nationwide Mut. Ins. Co., 53 AD3d 541, 543 [2008]; Sayed v Macari, 296 AD2d 396, 397 [2002]; see also City of New York v Certain Underwriters at Lloyd's of London, 294 AD2d 391, 391 [2002] National Union Fire Ins. Co. of Pittsburgh, PA. v State Ins. Fund, 266 AD2d 518, 520 [1999]; Delco Steel Fabricators, Inc. v American Home Assur. Co., 40 AD2d 647, 648 [1972], affd 31 NY2d 1014 [1973]). Accordingly, in cases where one insured defendant has asserted cross claims against another defendant, adversity is established and the notice of claim of one defendant will not suffice to fulfill the other insured defendant's notice requirement (see City of New York v Welsbach Electric Corp., 11 Misc 3d 1085 (A), *3 [2006], affd 49 AD3d 322 [2008][finding that co-defendants were adverse where one had cross-claimed against the other and, therefore, each had an independent duty to provide notice to their insurer]).

An additional exception to the stringent notice requirements cited above exists where a defendant "has a good-faith belief of nonliability, provided that belief is reasonable" (Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743 [2005][internal quotation marks and citation omitted]). Accordingly, "an insured's good-faith belief that the injured party would not seek to hold it liable, when reasonable under the circumstances, may excuse a delay in notifying an insurer of an occurrence or potential claim" (Donovan v Empire Ins. Group, 49 AD3d 589, 591 [2008][internal quotation marks and citation omitted]). The insured, however, bears the burden of establishing the reasonableness of such belief under the circumstances (Town of Smithtown v Nat. Union Fire Ins. Co., 191 AD2d 426, 427 [1993]). "Ordinarily, the question of whether the insured had a good-faith belief in nonliability, and whether that belief was reasonable, presents a question of fact and not one of law" (St. James Mechanical, Inc. v Royal & Sunalliance, 44 AD3d 1030,1031 [2007]). Accordingly, "[i]n determining whether an insured's belief in nonliability is unreasonable as a matter of law, the court should consider, inter alia, whether the insured failed to make an adequate inquiry into the injured party's condition to determine its seriousness, and whether the insured failed to make a deliberate determination in evaluating potential liability" (Philadelphia Indem. Ins. Co. v Genesee Valley Improvement Corp., 41 AD3d 44, 46-47 [2007][internal quotation marks and citations omitted]). "Ultimately, the determination turns on whether an ordinary prudent person could have reasonably believed himself to be immune from potential civil liability under the circumstances" (id. [internal quotation marks and citation omitted]). In addition, the salient issue "is not whether the [insured] reasonably believed that any claim brought by [the injured party] or on his behalf would lack merit. Rather, the issue is whether the [insured] reasonably believed that no claim would be asserted against it" (Avery & Avery, P.C. v Amer. Ins. Co., 51 AD3d 695, 698 [2008]; accord Lyell Party House v Travelers Indem. Co., 11 AD3d 972, 973 [2004]).

Based upon the above standards, New York courts consistently find that an insured has failed to establish that he or she possessed a good faith belief in nonliability where the insured had knowledge that the injured party was hospitalized or otherwise treated for the injury sustained and failed to make further inquiry into the nature and extent of the alleged injury (see York Specialty Food, Inc. v Tower Ins. Co. of New York, 47 AD3d 589, 590 [2008][reversing denial of summary judgment to insurer where insured failed to notify insurer of accident until eight months after it [*6]occurred and noting that "there is no indication that plaintiff ever took any action to ascertain the possibility of its liability for the claimant's accident. Had plaintiff's president questioned his employees, some of whom witnessed the accident, he would have learned that the claimant, after falling in front of the premises, had been taken away in an ambulance. Since he made no investigation at all, there is no basis for a good faith belief in plaintiff's nonliability"]; Felix v Pinewood Builders, 30 AD3d 459, 461 [2006][finding that, as a matter of law, the insured's failure adequately to inquire into the injured party's condition precluded a finding that he had a good faith belief of nonliability where the insured was informed by the injured party's employer three days after the injury occurred that the injuries were not serious and the party would be returning to work, when in actuality the injured party suffered extensive injuries, and the insured claimed he never learned of such injuries until receiving a claim letter from the injured party's attorney]; Pendill v Furry Paws, Inc., 29 AD3d 453, 454 [2006][affirming grant of summary judgment to insurer and declaration of trial court that insurer had no obligation to defend or indemnify third-party plaintiff where the store manager of same testified at deposition that she witnessed plaintiff's fall in the store, sat with plaintiff for 30 minutes while plaintiff recovered and was informed by plaintiff an hour later that plaintiff was going to seek medical treatment, thus demonstrating, "as a matter of law, the possibility of a claim and the unreasonableness of third-party plaintiff's alleged good-faith belief to the contrary"]; Rondale Building Corp. v Nationwide Property and Casualty Ins. Co., 1 AD3d 584, 585 [2003][finding that "a reasonable and prudent insured would have concluded that there existed a strong possibility that a liability claim would be made due to the fact that the victim was removed from the scene by ambulance and hospitalized for three days"]; Zadrima v PSM Ins. Co., 208 AD2d 529, 530 [1994], lv denied 85 NY2d [finding that "no ordinary prudent person could have reasonably believed himself to be immune from potential civil liability" where the insureds were aware that the injured party had been transported by ambulance to a hospital following his fall]; Winstead v Uniondale Union Free School Dist., 201 AD2d 721, 722-723 [1994][finding that "[n]o ordinarily prudent person could reasonably have felt immune from potential civil liability under these circumstances" where the insured "failed to prove that the injuries suffered by the plaintiff in the main action were so trivial as to justify a reasonable belief that no liability could arise," given that said injuries were serious enough to require the injured party's hospitalization and police intervention in the subject incident also had been necessary]).

In the instant action, Phoenix is entitled to a declaration that it has no duty to defend or indemnify plaintiff in the underlying personal injury action. It is undisputed that plaintiff did not notify Phoenix of the subject accident until almost approximately a year after same occurred and five months after she was served with the summons and complaint in the underlying action. Although plaintiff argues that the named insured on the policy, Kimco, supplied the insurer with timely notice of the claim and, in any event, she possessed a good faith belief in her own nonliability which excuses her late notice of claim, such arguments are unavailing. As an additional insured, it is well settled that plaintiff had an independent duty to notify Phoenix "as soon as practicable of an occurrence' or an offense which may result in a claim," as well as of any lawsuits or claims brought against her (see City of New York, 21 AD3d at 981; American Manufacturers Mut. Ins. Co., Ltd., 246 AD2d at 373; Structure Tone, Inc., 249 AD2d at 145). Timely notice furnished by one insured may be deemed timely notice by another only where the two parties are united in interest or where there is no adversity between them (see 23-08-18 Jackson Realty Assoc., 53 AD3d at 543). Here, plaintiff [*7]has asserted cross claims as against her co-defendant, Kimco, thus creating an adversarial relationship between the named insured and herself, the additional insured. Such adversarial relationship precludes the use by plaintiff of Kimco's presumably timely notice of claim in order to avoid the consequences of her own late notice to Phoenix.

With respect to plaintiff's alleged good faith belief of nonliability, the court finds that, as a matter of law, plaintiff has failed to demonstrate that said belief was reasonable in light of the circumstances. Plaintiff testified at her deposition that she was informed by a representative of Kimco either on the day of the accident or a day later that same had occurred. Although she was allegedly told by said representative that the injured party's injuries were not serious, she was aware that the injured party had gone to the emergency room of a hospital as the result of the accident. There is no indication that plaintiff ever attempted to ascertain the nature or extent of the party's injuries, despite knowledge of his trip to the hospital. Moreover, plaintiff's implied skepticism as to the colorability of the injured party's claims, as evidenced by remarks at her deposition that it seemed "silly and stupid" to her that he had been standing on a bucket on the subject scaffolding when he was injured and her affidavit testimony stating that she had no control or supervision over the work being performed by him at her property, while demonstrating that she perhaps did not believe that there were meritorious grounds for the suit in question do not serve to establish that she had a reasonable belief "that no claim would be asserted against [her]" (see Avery & Avery, P.C., 51 AD3d at 698 [2008]; accord Lyell Party House, 11 AD3d at 973), particularly in light of the worker's appearance in the emergency room after the accident. Under these circumstances, the court determines that plaintiff's lack of further inquiry or additional follow-up as to the medical condition fo the party in the underlying action precludes her, as a matter of law, from claiming a good faith belief of nonliability (see York Specialty Food, Inc., 47 AD3d at 590; Felix, 30 AD3d at 461; Pendill, 29 AD3d at 454; Rondale Building Corp., 1 AD3d at 585; Zadrima, 208 AD2d at 530; Winstead, 201 AD2d at 722-723).

"Where an insurance policy, such as the one is this case, requires an insured to provide notice of an accident or loss as soon as practicable, such notice must be provided within a reasonable time in view of the facts and circumstances" (Sayed, 296 AD2d at 397). Here, plaintiff does not argues that she provided such notice within a reasonable time, but instead contends that her alleged ate notice is excusable due to timely notice on the part of Kimco, the named insured, and her own alleged good-faith belief of nonliability. Accordingly, unless she can demonstrate that the excuses proffered for her late notice are valid, her "failure to satisfy the notice requirement vitiates the policy" (National Union Fire Ins. Co. of Pittsburgh, 266 AD2d at 519) and deprives her of any right to either a defense or indemnity from Phoenix. Given that the court has rejected such excuses, as discussed within, as invalid, Phoenix is entitled to the relief which it seeks.[FN1] [*8]

Accordingly, Phoenix is entitled to an order in its favor. However, an action for a declaratory judgment is not subject to dismissal merely because the plaintiff is not entitled to the declaration it seeks (see Lanza v Wagner, 11 NY2d 317, 340 [1962], lv dismissed 371 NY2d 317 [1962] and cert denied 371 U.S. 901 [1962] ). Rather than dismiss the complaint, the court should make an appropriate declaration of the rights and obligations of the parties with respect to the subject matter of the litigation (see Sweeney v Cannon, 30 NY2d 633, 633 [1972]), and direct entry in favor of the defendants to the degree same is warranted under the prevailing law (see McKechnie v Ortiz, 132 AD2d 472, 475 [1987], lv dismissed 71 NY2d 873 [1988] and order aff'd 72 NY2d 969 [1988]). Accordingly, the motion for summary judgment of Phoenix is resolved to the extent that the court hereby declares that it has no duty to defend or indemnify plaintiff with respect to the underlying personal injury action. Any and all cross claims based upon Phoenix's alleged duty to defend and indemnify plaintiff are dismissed, as are any and all claims against "Travelers Insurance Company," as Phoenix has demonstrated that it was erroneously sued as such entity herein and plaintiff has not objected to such dismissal. That portion of Phoenix's motion seeking severance is denied as moot.

The foregoing constitutes the decision, order and judgment of the court.

E N T E R ,

J. S. C. Footnotes

Footnote 1: The court also rejects plaintiff's contention that the grant of the relief sought by Phoenix is premature given the alleged inadequacy of discovery in the case to date. The court finds, however, that the relevant facts are largely undisputed by the parties, and the denial of summary judgment and related relief on the basis of lack of discovery is not appropriate unless the information sought from additional discovery is clearly specified and relevant to the issues raised in the motion (see Campbell v City of New York, 220 AD2d 476, 477 [1995]). Speculation or surmise that such information exists will not suffice to defeat summary judgment (see Smith v Fishkill Health-Related Center, Inc., 169 AD2d 309, 316 [1991], lv denied 78 NY2d 864 [1991]). Here, plaintiff has failed to specify any relevant material that would be gleaned by further discovery in this action.