American Safety Indem. Co. v 612 Realty LLC

[*1] American Safety Indem. Co. v 612 Realty LLC 2009 NY Slip Op 51704(U) [24 Misc 3d 1232(A)] Decided on August 4, 2009 Supreme Court, New York County Friedman, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 August 4, 2009
Supreme Court, New York County

American Safety Indemnity Company, Plaintiff(s),

against

612 Realty LLC, AMAURYS RODRIGUEZ, infant by her Mother and Natural Guardian, MARIA VENTURA, and MARIA VENTURA, Individually, Defendant(s).



600347/2004



For Plaintiff: William G. Hanft, Esq.

Gennet Kallman Antin & Robinson, Esqs.

45 Broadway Atrium-Litman Suite

New York, New York 10006

For Defendants:

Thomas Bracken, Esq.

Nelson Levine de Luca & Horst, LLC

Attorneys for Defendant

Certain Underwriters at Lloyd's London

120 Broadway, Suite 955

New York, NY 10271

Mark J. Elder, Esq.

Gorayeb & Associates, PC

Attorneys for Defendant Amaurys Rodriguez

and Maria Ventura

100 William St., 12th Fl.

New York, NY 10038

Stephen I. Wohlberg

Novick, Edelstein, Lubell,

Reisman, Wasserman & Laventhal, P.C.

Attorneys for Defendant-Third Party Plaintiff

612 Realty LLC

733 Yonkers Avenue

Yonkers, NY 10704

Ellen Spindler, Esq.

Lester Schwab Katz & Dwyer, LLP

Attorneys for Virginia Surety Company, Inc.

120 Broadway, 38th Floor

New York, NY 10271-0071

Lisa Shreiber, Esq.

Cozen O'Connor

Attorneys for National Union Fire Insurance

Company of Pittsburgh, PA, and Lexington

Insurance Company

45 Broadway, 16th Floor

New York, NY 10006

Sharon Angelino, Esq. Goldberg Segalla, LLP

Attorneys for Zurich Specialties, Ltd.

665 Main Street, Suite 400

Buffalo, NY 14203-1425

Leor J. Kaplan, Esq.

Coughlin Duffy, LLP

Attorneys for Zurich North America and American Guarantee and Liability

Insurance Company

Wall Street Plaza

88 Pine Street, 5th Floor

New York, NY 10005

Louis W. Pietroluongo

Acting Superintendent

NYS Insurance Dept. Liquidation Bureau

123 William Street

New York, New York 10038

Marcy S. Friedman, J.

This is a declaratory judgment action in which plaintiff American Safety Indemnity Company ("American Safety") seeks an judgment declaring that it is not obligated to defend and indemnify defendant 612 Realty LLC ("612") in an underlying personal injury action entitled Amaurys Rodriguez et al. v 612 Realty, LLC et al. (Sup Ct Bronx County, Index No. 24762/03) ("underlying action"). American Safety moves for summary judgment on its complaint against defendant 612 and defendants Amaurys Rodriguez ("the infant plaintiff"), by his mother and natural guardian Maria Ventura, and Maria Ventura individually (collectively "Rodriguez defendants"). Third-party defendant Certain Underwriters at Lloyd's London Subscribing to Policy #

07440 ("Lloyds") moves for summary judgment dismissing the third-party complaint and all cross-claims against it.[FN1] By separate motions, third-party defendant American Guarantee and Liability Insurance Company ("AGLIC") and third-party defendant Virginia Surety Company, Inc. ("VSC") each move for the same relief. By cross-motion, third-party defendants National Union Fire Insurance Company of Pittsburgh, PA ("National Union") and Lexington Insurance Company ("Lexington") move to dismiss the complaint and "counterclaims" against it. Third-party defendant Zurich Specialities London Limited ("ZSL") moves to dismiss 612's third-party complaint against it.

The following material facts are undisputed: The infant plaintiff in the underlying action [*2]allegedly sustained personal injuries due to the ingestion of or exposure to lead at 612's premises at 612 West 178th Street in Manhattan. The infant plaintiff was born on June 27, 2000, and the Rodriguez defendants allege that they resided at the subject premises from September 2000 until September 2003. (See Ps.' Bill of Particulars in the Underlying Action ¶1c [VSC's Motion, Ex. F].) The parties dispute the dates of exposure to lead during the Rodriguez' defendants' tenancy at 612's premises. There is no dispute, however, that the infant plaintiff was first diagnosed with lead poisoning on August 27, 2003. (See id. ¶2.) The complaint in the underlying action was filed on or about September 25, 2003. In the underlying action, plaintiff's verified bill of particulars pleads over $40 million in damages.

612's premises was managed by non-party Moshe Singer. 612 requested the subject insurance policies from its broker, non-party Fairmont Insurance Brokers Ltd. ("Fairmont"). Fairmont, in turn, sought policies for 612 from non-party Brooks Insurance Agency, Inc. ("Brooks"), a wholesale broker.

While 612 and its respective insurers dispute whether the insurers are obligated to defend and indemnify 612 in the underlying action, there is no dispute that 612 is a named insured on the following policies for the subject premises: A ZSL general comprehensive liability policy for the period March 14, 2000 to March 14, 2001 ("ZSL policy")[FN2]; a Lloyd's commercial general liability policy for the period March 14, 2001 to March 14, 2002 ("Lloyd's policy"); a National Union commercial umbrella policy for the period March 8, 2001 to March 8, 2002 ("National Union policy"); a VSC general liability policy for the period March 14, 2002 to March 14, 2003 ("VSC policy"); a Lexington stand alone excess policy for the period March 19, 2002 to March 19, 2003 ("Lexington policy"); and an American Safety commercial general liability policy for the period March 14, 2003 to March 14, 2004 ("American Safety policy"). The parties dispute whether two of four excess policies issued by AGLIC name 612 as a named insured.

The standards for summary judgment are well settled. The movant must tender evidence, by proof in admissible form, to establish the cause of action "sufficiently to warrant the court as a matter of law in directing judgment." (CPLR 3212[b]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980].) "Failure to make such showing requires denial of the motion, regardless of the sufficiency of the opposing papers." (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985].) Once such proof has been offered, to defeat summary judgment "the opposing party must show facts sufficient to require a trial of any issue of fact' (CPLR 3212, subd. [b])." (Zuckerman, 49 NY2d at 562.)

American Safety's Motion

American Safety moves for summary judgment seeking a declaration that it is not obligated to defend or indemnify 612 in the underlying action under its primary liability policy in effect from March 14, 2003 to March 14, 2004. Specifically, American Safety argues that the policy it issued to 612 contains an exclusion for injuries occurring prior to the effective date of the policy, and that the infant plaintiff was injured prior to the effective date.

It is well settled that an exclusionary clause in an insurance policy is to be given a strict and narrow construction. (Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311 [1984].) In order [*3]for an insurer "[t]o negate coverage by virtue of an exclusion, an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case." (Continental Cas. Co. v Rapid-Am. Corp., 80 NY2d 640, 652 [1993]; Incorporated Vil. of Cedarhurst v Hanover Ins. Co., 89 NY2d 293 [1996].)

On this record, it is undisputed that American Safety's policy provides coverage for injuries due to lead exposure. (See American Safety Policy "Lead-Based Paint Hazard Liability Endorsement" ["lead endorsement"] [American Safety Motion, Ex. H].) By its clear terms, however, the policy precludes coverage for injuries occurring prior to the effective date of the policy. Section 1.2.u of the Lead-based Paint Hazard Liability Endorsement, governing all claims for injuries due to lead exposure, provides that the " incident' must take place after the beginning of the " policy period.'" (See id.) Section V provides that "[a]ll ingestions, inhalations, absorptions of or exposures to lead' by any person or all persons residing in the same unit or apartment . . . will be deemed to be one incident.' All repeated, continuous or multiple ingestions, . . . will be deemed to be one incident.'" (Id.) Finally, section 2(aa) of the exclusions (for all bodily injury claims) states that the policy does not apply to "[a]ny claim' or suit' against any insured which is alleged to be ongoing and continuing in nature, if the bodily injury' . . . is alleged to have existed prior to the effective date of this policy, whether or not the cause or first manifestation of the bodily injury' . . . was known prior to the effective date of this policy."

In arguing that the Rodgriguez defendants' claims are not covered by the policy, American Safety cites their allegations that the infant plaintiff was exposed as early as 2000, well before the March 14, 2003 effective date of the policy. In opposition, 612 does not dispute that the policy precludes coverage for pre-existing injuries, but argues that triable issues of fact exist "as to when plaintiff [in the underlying action] will claim he was allegedly exposed to the lead based paint." (See Aff. In Opp. of S. Wolhberg [612's Attorney], ¶27 ["Wohlberg Aff."].)

In the underlying action, the infant plaintiff alleges that exposure to lead paint at the subject premises occurred from September 2000 through September 2003. (See Bill of Particulars, ¶ 1c. See also Aff. In Opp. of Mark Elder [Rodriguez' Defs' Attorney], ¶ 3 ["Elder Aff."].) The amended complaint in the underlying action alleges that plaintiff lived at the premises from April 2001 through December 2004 and sustained injuries during that period. (Amended Complaint, ¶¶ 105, 115.) Dr. John Rosen, the infant plaintiffs' expert, affirms that the infant plaintiff suffered injury from lead exposure from September 2000 through March 2003. (See Rosen Aff., ¶ 7 [Elder Aff., Ex. A.) Thus, American Safety demonstrates that the Rodriguez defendants unquestionably claim that the injuries to the infant plaintiff occurred almost immediately upon their moving into the premises, well before the first diagnosis of lead poisoning in August 2003 and also before the March 14, 2003 effective date of American Safety's policy.

612's conclusory assertion that an issue exists as to whether plaintiff was "exposed anew" during the term of the policy (see Wohlberg Opp., ¶ 27) is patently insufficient to avoid the unambiguous terms of the policy which exclude claims for injuries alleged to have existed prior to the effective date of the policy. Accordingly, American Safety's motion for summary judgment should be granted to the extent of declaring that American Safety is not obligated to [*4]defend or indemnify defendant 612 in the underlying action.[FN3]

Lloyd's Motion

It is undisputed that Lloyd's issued a commercial general liability policy naming 612 as a named insured effective from March 14, 2001 through March 14, 2002. (See Lloyd's Motion Ex. F.) In moving for a declaration that it is not obligated to defend or indemnify 612 in the underlying action, Lloyd's argues that the policy contains an exclusion for injuries due to lead exposure. 612 does not dispute that the Lloyd's policy that was initially issued contained a lead exclusion. Rather, 612 argues that after the policy was issued, its broker requested an endorsement removing the exclusion.

612 submits the deposition of Moishe Moskowitz, Fairmont's agent, who testified that he understood that the Lloyd's policy would be issued on the same terms and conditions as the prior year's policy with ZSL, which had included coverage for injuries for exposure to lead. (See Mishkowitz Dep. at 78-79.) Specifically, Mr. Mishkowitz testified that after the Lloyd's policy was issued with the lead exclusion, he made a written request to Brooks, Fairmont's wholesale broker, for an endorsement adding lead coverage. (Id. at 87-88.) He also testified that he had a copy of this endorsement but did "not know" why it was not produced at his deposition, and that he had previously produced a copy of the endorsement to 612's counsel. (Id.)

612 has not produced the endorsement on these motions. However, contrary to Virginia Surety's contention, Lloyd's motion is not premature due to a need for further discovery, as it clearly appears from the discovery already conducted that there is no record of the endorsement. More specifically, by undated affirmation submitted on the instant motions, Mr. Mishkowitz affirms that a further search of Fairmont's files failed to disclose any additional documents. (See Lloyd's Cross-motion, Ex. A.) In response to Virginia Surety's written interrogatories, David Rosen, Brook's vice-president, stated that he did not recall a request by Fairmont to delete the lead exclusion, and that he not have authority to issue a Lloyd's policy without a lead exclusion. (See Brook's Interrogatory Answers Nos. 30-31 [Lloyd's Reply, Ex. G].)

In short, there is no written documentation of either Fairmont's endorsement request to Brooks or of Brooks' or Lloyd's issuance of an endorsement adding lead coverage to the Lloyd's policy. Mr. Mishkowitz's testimony that he requested the endorsement is insufficient, without more, to raise a triable issue of fact as to the existence of the endorsement. (See Nicotra Group, LLC v American Safety Indem. Co., 48 AD3d 253 [1st Dept 2008].)

612 does not dispute that the lead exclusion in the Lloyd's policy bars 612's claims for coverage in the underlying action. Nor do the remaining bases for opposition to the motion have merit.[FN4] Accordingly, Lloyd's motion should be granted to the extent of declaring that it is not obligated to defend or indemnify 612 in the underlying action.

[*5]AGLIC's Motion

AGLIC moves for a judgment declaring that it is not obligated to defend or indemnify 612 in the underlying action. The parties dispute whether AGLIC is obligated to provide coverage under four separate policies issued by AGLIC for various periods in which the infant plaintiff alleges lead exposure in the underlying action. It is undisputed that these policies were issued to "risk purchasing groups" or entities that procure insurance for their members.[FN5] (See AGLIC Memo. in Support at 2.) The four policies are: a 2001 APO Purchasing Policy Group umbrella insurance policy for the period January 1, 2001 to January 1, 2003 ("2001 APO policy"); a 2002 Metropolitan Policy for excess insurance for the period April 1, 2002 to April 1, 2003 ("2002 Metro policy"); a 2003 Metropolitan Policy for excess insurance for the period April 1, 2003 to April 1, 2005 ("2003 Metro policy"); and a 2003 APO Purchasing Group policy for excess insurance for the period January 1, 2003 to January 1, 2005 ("2003 APO policy")

AGLIC argues that 612 is not a named insured under the 2001 APO policy and the 2002 Metro policy. As to the other two policies, AGLIC primarily argues that lead exclusions apply to the allegations of the underlying action. In opposition, 612 argues that triable issues of fact exist as to these issues.

In support of its motion, AIGLIC submits the 2001 APO policy and the 2002 Metro policy, neither of which lists 612 as a named insured. 612 fails to submit any evidence in opposition to show that it was named under the two policies. 612's wholly conclusory assertion that "there are certainly complicated and detailed questions of fact to decide at trial with regard to the coverage herein" (Wohlberg Opp., ¶ 29), is plainly insufficient to raise a triable issue of fact as to coverage. Nor is the court persuaded by VSL's contention that because the policies were redacted, an affidavit of an underwriter is required to support AIGLIC's claim that 612 was not covered by the policies. (See Aff. In Opp. Of E. Spindler [VSL's Attorney], ¶¶ 6-7].) AIGLIC's counsel represents that the policies were redacted to exclude the names of other entities that were insured under the AIGLIC group policies. (See L. Kaplan Aff. In Reply, ¶ 28.) Under these circumstances in which 612 itself does not dispute AIGLIC's showing that the two policies did not list 612 as an insured, the court finds that the redacted policies are sufficient to demonstrate AIGLIC's entitlement to judgment.

As 612 was not a named insured, AIGLIC is entitled to a declaration that it is not obligated to defend or indemnify 612 under the 2001 APO and the 2002 Metro policies. (See Tribeca Broadway Assocs. LLC v Mount Vernon Fire Ins. Co., 5 AD3d 198 [1st Dept 2004]; Moleon v Kreisler Borg Florman Gen. Constr. Co., 304 AD2d 337 [1st Dept 2003].)

AGLIC concedes that 612 is covered under the 2003 Metro policy, but contends that it not obligated to provide coverage under the policy. AGLIC argues that Coverage A does not apply because the infant plaintiff's underlying action is not covered by underlying (primary) insurance and that, in any event, coverage is not triggered until the underlying insurance has been exhausted. AGLIC further argues that Coverage B of the policy does not afford coverage due to its Lead Follow Form endorsement. [*6]

The 2003 Metro Policy only provides coverage excess to that provided in the underlying American Safety policy. Section I(A) provides that AGLIC "will pay on behalf of the insured, those damages covered by this insurance in excess of the total applicable limits of underlying insurance. . . Notwithstanding anything to the contrary contained above, if underlying insurance does not cover damages, for reasons other than exhaustion of applicable limits of insurance by payment of claims, then we will not cover such damages." (See AGLIC Motion, Ex. I at 0445.) As AIGLIC correctly argues, by virtue of this unambiguous term, the AIGLIC policy does not "drop-down" in order to provide coverage that is unavailable from the primary insurer. (See e.g. Pergament Dist. Inc. v Old Republic Ins. Co., 128 AD2d 760 [1st Dept 1987], appeal denied 70 NY2d 607.)

The court rejects AGLIC's further contention that it is not obligated to provide even excess coverage because the primary insurer, American Safety, has declined primary coverage (based on plaintiff's allegations of a pre-existing injury). While AGLIC relies on the above-cited policy provision that "if the underlying insurance does not cover damages . . . then we will not cover such damages," AGLIC cites no authority that this provision not only insulates the AIGLIC policy from dropping down to provide primary coverage, but also bars coverage for any excess that would be due if the primary coverage had been exhausted. Under settled law, the ambiguity in this policy provision must be construed against the insurer as the drafter of the agreement. (See Westview Assocs. v Guaranty Nat. Ins. Co., 95 NY2d 334, 339 [2000].) In this context, the term "covers," as related to the primary policy, should be construed as referring to whether the primary policy provides coverage and not to whether it is collectible. (See Pergament, 128 AD2d at 761.) The court accordingly holds that AIGLIC is entitled to a limited declaration that is obligated to indemnify 612 under Coverage A of the 2003 Metro policy only for any damages that are in excess of the underlying American Safety policy.

As to Coverage B, AGLIC makes a prima facie showing it is not obligated to provide coverage to 612 under a Lead Follow Form Endorsement which provides in pertinent part: "Under Coverage B only, this policy does not apply to: 1. Any liability, damage, loss, cost or expense arising out of, resulting from, caused by or contributed to by toxic or pathological properties of lead, lead compounds or lead contained in any materials." (2003 Metro policy at 0294.) In opposition, 612 does not dispute that Coverage B contains a lead exclusion that bars coverage for claims raised by the infant plaintiff. (Compare Wolhberg Opp., ¶ 32.) Thus, AIGLIC is entitled to a declaration that it is not obligated to defend or indemnify 612 under the 2003 Metro Policy Coverage B.

Finally, the 2003 APO policy, which AGLIC concedes names 612 as an insured, contains Coverage A and B provisions that are substantially similar or identical to those in the 2003 Metro policy. AIGLIC is accordingly entitled to the same declarations as granted with respect to the Metropolitan policy. While AIGLIC also requests dismissal of the cross-claims against it, this branch of its motion will be denied, as AIGLIC fails to set forth the bases for such dismissal.

VSC's Motion

VSC moves for a declaration that it is not obligated to defend or indemnify 612 in the underlying action on the ground that 612 does not show that an injury-in-fact occurred during the effective dates of its policy — namely, March 14, 2002 through March 14, 2003. In support of its motion, VSC submits the affidavit of its expert, Arlene Weiss, who attests that the Rodriguez [*7]defendants' residence at 612's premises "was not the source of any lead exposure to the infant plaintiff Amaurys Rodriguez during the coverage period from 3/14/02-3/14/03 when [VSC's] policy period was in effect." (Aff. of Arlene Weiss in Support of VSC Motion, ¶ 11.) This opinion appears to be based primarily on the facts that the infant plaintiff was first diagnosed with an elevated blood level in August 2003, and that certain repairs to the walls of the subject premises were made in June 2003.

In opposition, the Rodriguez defendants submit the affirmation of Dr. John Rosen who attests that, contrary to Ms. Weiss' conclusion, it was "impossible" for the infant plaintiff to "avoid ingestion of some lead dust sufficient" to cause damage during the period from September 2000 through March 14, 2003. (Rosen Aff., ¶ 7 [Elder Aff., Ex. A.) This opinion was based in part on the amount of lead paint identified at the subject apartment by the New York City Department of Health in records of inspections apparently conducted after the infant plaintiff's diagnosis.

It does not appear from this record that the infant plaintiff had blood tests for lead levels between 2001 and August 2003, when an elevated blood lead level was first found. Neither party's expert explicitly addresses what methodology he or she employed, in the absence of periodic blood tests, for determining the onset of the infant plaintiff's lead poisoning, or what methodology is scientifically reliable for making such a determination.

Under these circumstances, VSC's expert's affidavit is insufficient to eliminate triable issues of fact as to whether the infant plaintiff was injured during VSC's policy period or, to the extent VSC raises an issue as to the reliability of plaintiff's expert's methodology, to warrant a Frye hearing in this regard. (Cf. Parker v Mobil Oil Corp., 7 NY3d 434 [2006], rearg denied 8 NY3d 828 [2007].) The sufficiency of the foundation for the respective experts' opinions must therefore be determined at the trial. The branch of VSC's motion for a declaration that it is not obligated to indemnify 612 in the underlying action will accordingly be denied.

The court reaches a different conclusion as to the branch of VSC's motion for a declaration that it is not obligated to defend 612 in the underlying action. It is "well settled that an insurance company's duty to defend is broader than its duty to indemnify." (Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137 [2006].) "[A]n insurer's duty to defend its insured is exceedingly broad' and an insurer will be called upon to provide a defense whenever the allegations of the complaint suggest . . . a reasonable possibility of coverage. The duty to defend an insured . . . is derived from the allegations of the complaint and the terms of the policy. If a complaint contains any facts or allegations which bring the claim even potentially within the protection purchased, the insurer is obligated to defend." (BP Air Conditioning Corp. v One Beacon Ins. Group, 8 NY3d 708, 714 [2007] [internal quotation marks, brackets, and citations omitted]; General Acc. Ins. Co. of Am. v IDBAR Realty Corp., 229 AD2d 515 [2d Dept 1996].) "Thus, an insurer may be required to defend under the contract even though it may not be required to pay once the litigation has run its course." (Automobile Ins. Co. of Hartford , 7 NY3d at 137.)

Here, there is no dispute that VSC's policy provides coverage for injuries due to lead exposure, and does not contain a "pre-existing" injury exclusion. In light of the triable issues of fact as to whether injuries due to lead exposures occurred during the effective dates of the policy, the infant plaintiff's claims are potentially within the coverage of the policy, thus requiring VSC [*8]to furnish a defense. Accordingly, the court will deny VSC's motion to the extent it seeks a declaration that it is not obligated to provide a defense to 612 in the underlying action.

VSC's motion also seeks a declaration that VSC's defense and indemnification costs should be limited to its "pro rata share of defense . . . based on its allocated time on the risk' during . . . any demonstrated injury-in-fact during [VSC's] policy period," and that plaintiff and each co-defendant insurer should contribute to the defense "on a pro rata basis based on time on the risk.'" (E. Spindler Aff. In Support Of VSC Motion, ¶ 2.) This branch of the motion cannot be determined on this record in which VSC has not discussed the effect of the "other insurance clauses" in the policies of the co-defendant insurers that have disclaimed and whose share of the defense costs VSC claims should be paid by plaintiff. (See Sport Rock Int'l., Inc. v American Cas. Co. of Reading, PA., 2009 NY Slip Op 03794, 878 NYS2d 339 [1st Dept 2009].) VSC's claim for a share of the cost of indemnification is premature. The denial of this branch of the motion will be without prejudice to VSC's right to seek contribution for defense costs and indemnification from other applicable policies or from plaintiff, if appropriate, upon the resolution of the underlying action. (See Continental Cas. Co., 80 NY2d at 655-656.)

The branch of VSC's motion to dismiss the cross-claims against will be denied, based on VSC's failure to address the grounds for dismissal of the cross-claims.

National Union's and Lexington's Cross-Motion

National Union and Lexington cross-move for a judgment declaring that they are not obligated to defend and indemnify 612 in the underlying action. It is undisputed that National Union insured 612 under a commercial umbrella insurance policy effective from March 8, 2001 to March 8, 2002, and that Lexington issued a stand alone excess liability insurance policy to 612 for the period March 19, 2002 to March 19, 2003. National Union and Lexington disclaimed coverage to 612 on the grounds that 612 failed to provide timely notice of the underlying action and that Lexington's policy contained a lead exclusion.

It is well settled that prompt notice is a condition precedent to coverage by excess carriers, and that such insurers need not demonstrate prejudice in order to disclaim coverage in the event of non-compliance with prompt notice provisions in their policies. (Sorbara Constr. Corp. v AIU Ins. Co., 11 NY3d 805 [2008]; American Home Assur. Co. v International Ins. Co., 90 NY2d 433 [1997].)[FN6] "Absent a valid excuse, a failure to satisfy the notice requirement vitiates the policy." (Security Mut. Ins. Co. v Acker-Fitzsimons Corp., 31 NY2d 436, 440 [1972]. Accord Argo Corp. v Greater New York Mut. Ins. Co., 4 NY3d 332, 339 [2005].) Where notice of a claim to an excess carrier is in issue, "the focus is on whether the insured reasonably should have known that the claim against it would likely exhaust its primary insurance coverage and trigger its excess coverage, and whether any delay between acquiring that knowledge and giving notice to the excess carrier was reasonable under the circumstances." (National Union Fire Ins. Co. of Pittsburgh, PA v Connecticut Indem. Co., 52 AD3d 274, 276 [1st Dept 2008]; Morris Pk. Contr. Corp. v National Union Fire Ins. Co. of Pittsburgh, PA, 33 AD3d 763 [2d Dept 2006].)[*9]

On this record, National Union and Lexington make a prima facie showing that they properly disclaimed coverage to 612 due to 612's delayed notice to them of the underlying action. Section VII(F)(2) of National Union's policy required 612 to provide notice of a suit "which is reasonably likely to involve this policy . . . as soon as practicable" (See Aff. Of H. Urban [AIG Domestic Claims analyst] In Support Of National Union's Motion, Ex. A ["Urban Aff."].) Conditions § 4(b)(1) of Lexington's policy required 612 to provide "immediate written notice of any claim or suit which is reasonably likely to involve this policy." (See id., Ex. B.)

In support of the motion, National Union and Lexington make a prima facie showing that they did not receive notification of the underlying action until April 2007, over three years after commencement of the action in September 2003. (See Urban Aff., ¶¶ 3-4.) In opposition, 612 does not assert that it had a reasonable belief in non-liability. Rather, Moshe Singer, 612's managing agent, attests that he provided notice of the underlying action to National Union and Lexington by forwarding the papers to Mr. Mishkowitz at its broker Fairmont, with the expectation that he would "take whatever steps are necessary." (Singer Aff. in Opp., ¶ 41.) This assertion is insufficient to raise a triable issue of fact. It is well settled that "a broker is normally the agent of the insured and notice to the ordinary insurance broker is not notice to the liability carrier." (Security Mut. Ins. Co., 31 NY2d at 442 n 3.) Notwithstanding that it is a "common practice" for insureds to notify their brokers rather than their carriers of claims, an insured who notifies only its insurance broker does so at its own peril, as "the policy requirement that the notice must be provided to the carrier trumps any informal arrangement or practice" between the insured and its broker. (Gershow Recycling Corp. v Transcontinental Ins. Co., 22 AD3d 460, 462 [2nd Dept 2005].)

In any event, 612's broker, Mr. Mishkowitz of Fairmont, explicitly acknowledged that he did not give notice directly to National Union. He testified that "we only communicated with the Virginia Surety portion. When we communicated with our wholesaler, our understanding was that it went to Virginia Surety and if they saw that the claim would exceed the 250, they would, in turn, bring in National Union." (Mishkowitz Dep. at 57-58.) Any notice to VSC was plainly insufficient to constitute notice to National Union or Lexington, as "notice to the carrier under a different policy does not excuse the insured's obligation to provide timely notice under its policy." (Sorbara Constr. Corp., 11 NY3d at 806.)

612's multi-year delay in giving notice of the suit was unreasonable as a matter of law. (See id.) The court accordingly holds that National Union's and Lexington's cross-motion should be granted to the extent of declaring that they are not obligated to defend or indemnify defendant 612 as an excess insured in the underlying action.

ZSL's Motion

ZSL seeks summary judgment on the grounds that 612 failed to give it timely notice of the occurrence or suit, that the infant plaintiff did not suffer an injury during the effective dates of the policy, and that the "lead exclusion" in its policy precludes coverage. In opposition, 612 argues that the lead exclusion was deleted from the policy, and that triable issues of fact exist as to whether ZSL was given timely notice.

On this record, ZSL makes a prima facie showing that 612's notice to it of the occurrence and of the underlying action was untimely as a matter of law. Section IV(2) (a) and (b) of ZSL's [*10]policy provide that notice of an occurrence or suit must be made "as soon as practicable." (ZSL Motion Ex. H.) It is undisputed that ZSL was not notified of either the occurrence or the underlying action until November 6, 2007, over four years after commencement of the underlying action, when it received a copy of discovery materials in the underlying action from AGLIC. (See Aff. Of S. Angelino in Support of ZSL Motion, ¶9.) ZSL disclaimed coverage for 612 by letter dated November 14, 2007 on the ground of late notice and the other grounds cited above. (See id., Ex. F.)

The affidavit of 612's managing agent, Moses Singer, does not contain any assertion that 612 provided notice directly to ZSL. 612 also fails to raise a triable issue of fact based on the testimony of its broker. While Mr. Mishkowitz testified that in dealing with lead exposure claims, Fairmont generally "put a whole slew of carriers on notice, because unlike a slip or fall, or assault on property, it's not a momentary occurrence that you can put your finger on," he immediately followed that testimony by stating that he "did not know" why he did not provide notice to ZSL. (Mishkowitz Dep. at 56-57.)

612's multi-year delay in providing notice to ZSL is unreasonable as a matter of law. (See Sorbara Constr. Corp., 11 NY3d at 806.) The court accordingly holds that ZSL is entitled to a declaration that it is not obligated to defend or indemnify 612 in the underlying action.It is accordingly hereby ORDERED that the motion of plaintiff American Safety Indemnity Company is granted to the extent that it is

ORDERED, ADJUDGED, and DECLARED that plaintiff American Safety Indemnity Company is not obligated to defend or indemnify defendant 612 Realty LLC in the underlying action entitled Amaurys Rodriguez et al. v 612 Realty, LLC et al. (Sup Ct Bronx County, Index No. 24762/03) ("underlying action"); and it is further

ORDERED that the motion of third-party defendant Certain Underwriters at Lloyd's London Subscribing to Policy #

07440 is granted to the extent that it is

ORDERED, ADJUDGED, and DECLARED that third-party defendant Certain Interested Underwriters at Lloyd's London Subscribing to Policy #

07440 is not obligated to defend or indemnify defendant 612 Realty LLC in the underlying action; and it is further

ORDERED that the cross-motion of third-party defendant Certain Interested Underwriters at Lloyd's London Subscribing to Policy #

07440 is denied as duplicative; and it is further

ORDERED that the motion of third-party defendant American Guaranty and Liability Insurance Company is granted to the extent that it is

ORDERED, ADJUDGED, and DECLARED that third-party defendant American Guaranty and Liability Insurance Company is not obligated to defend or indemnify defendant 612 Realty LLC in the underlying action under its 2001 APO Policy and its 2002 Metro Policy; and it is further

ORDERED, ADJUDGED, and DECLARED that third-party defendant American Guaranty and Liability Insurance Company is obligated to defend or indemnify defendant 612 Realty LLC in the underlying action under Coverage A of its 2003 APO Policy and Coverage A of its 2003 Metro Policy only for damages in excess of the total applicable limits of underlying [*11]insurance; and it is further

ORDERED, ADJUDGED, and DECLARED that third-party defendant American Guaranty and Liability Insurance Company is not obligated to defend or indemnify defendant 612 Realty LLC in the underlying action under Coverage B of its 2003 APO Policy and Coverage B of its 2003 Metro Policy; and it is further

ORDERED that the branch of the motion of third-party defendant Virginia Surety Company, Inc. for allocation of defense or indemnification costs is denied without prejudice to renewal upon the resolution of the underlying action, and the motion is otherwise denied; and it is further

ORDERED, ADJUDGED, and DECLARED that Virginia Surety Company, Inc. is obligated to provide a defense to defendant 612 Realty LLC in the underlying action; and it is further

ORDERED that the cross-motion of third-party defendants National Union Fire Insurance Company of Pittsburgh, PA and Lexington Insurance Company is granted to the extent that it isORDERED, ADJUDGED, and DECLARED that third-party defendants National Union Fire Insurance Company of Pittsburgh, PA and Lexington Insurance Company are not obligated to defend or indemnify defendant 612 Realty LLC in the underlying action; and it is further

ORDERED that the motion of third-party defendant Zurich Specialities London Limited is granted to the extent that it is

ORDERED, ADJUDGED, and DECLARED that Zurich Specialities London Limited is not obligated to defend or indemnify defendant 612 Realty LLC in the underlying action; and it is further

ORDERED that the remaining claims are severed and shall continue.

This constitutes the decision, order, and judgment of the court.

Dated:New York, New York

August 4, 2009

___________________________

Marcy Friedman, J.S.C. Footnotes

Footnote 1:By separate notice of cross-motion dated September 16, 2008, Lloyd's moves for the identical relief. Lloyd's cross-motion will accordingly be denied as duplicative.

Footnote 2:Reliance issued an excess policy for the period March 14, 2000 to March 14, 2001. This policy is not the subject of the instant motions.

Footnote 3:In light of this holding, the court does not address American Safety's other grounds for summary judgment, including that the Rodriguez defendants were not "lawful occupants" as defined by the policy, and that 612 failed to satisfy its self-insured retention obligations under the policy.

Footnote 4:The court rejects Virginia Surety's claims that Lloyd's disclaimer was untimely or is ineffective due to Lloyd's failure to serve the disclaimer on plaintiffs in the underlying action. These claims were not pleaded and were not raised by 612 or plaintiffs, the parties with standing to raise them.

Footnote 5:The "APO" polices are those purchased by non-party Apartment & Property Owners Purchasing Group, and the "Metro" policies are those purchased by non-party Metropolitan Commercial Real Estate Association.

Footnote 6:The court notes that §3420(a) of the New York Insurance Law was recently amended to provide that a failure to give notice within the prescribed time will not invalidate any claim made by the insured unless the failure to provide timely notice has prejudiced the insurer. However, the new law is prospective and will only apply to policies issued after the effective date on January 17, 2009.