Corporate Elec. Group, Inc. v Nova Cas. Co.

[*1] Corporate Elec. Group, Inc. v Nova Cas. Co. 2012 NY Slip Op 51388(U) Decided on July 25, 2012 Supreme Court, Queens County Markey, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 July 25, 2012
Supreme Court, Queens County

Corporate Electric Group, Inc., Plaintiff,

against

Nova Casualty Company and ISLAND RISK MANAGEMENT ASSOCIATES, INC., Defendants.



4818/2010



Appearances of Counsel:

For the Plaintiff:Frenkel Lambert Weiss Weisman & Gordon, LLP, by Todd Weisman, Esq., 20 West Main Street, Bay Shore, New York 11706

For Defendant Nova Casualty Company: Melito & Adolfsen, P.C., by S. Dwight Stephens and Ignatius John Melito, Esqs., 233 Broadway, New York, New York 10279

For Defendant Brown & Brown of New York, Inc., sued herein as Island Risk Management: Satterlee Stephens Burke & Burke, LLP, by Thomas J. Cahill, Esq., 230 Avenue, New York, New York 10169 [no papers submitted on this motion]

Charles J. Markey, J.

The following papers numbered 1 to 20 read on this motion by defendant Nova Casualty Company ("Nova") for summary judgment, pursuant to CPLR 3212, declaring that Nova has no duty to defend or indemnify plaintiff Corporate Electric Group, Inc. ("Corporate Electric") in an underlying personal injury action, Miguel Montesdeoca v 419-421 West Broadway Realty Corp., et al, pending in the Supreme Court, Queens County (Index Number 4219/09), and on this cross motion by plaintiff Corporate Electric, pursuant to CPLR 3212, for judgment declaring that defendant Nova has a duty to provide insurance coverage pursuant to its insurance policy with Corporate Electric in the underlying personal injury action entitled Miguel Montesdeoca v 419-421 West Broadway Realty Corp., et al, pending in the Supreme Court, Queens County (Index Number 4219/09).Papers Numbered

Notice of Motion - Affidavits - Exhibits ..................................................................1-5

Notice of Cross Motion - Affidavits - Exhibits .......................................................6-10

Answering Affidavits - Exhibits ...............................................................................11-15 [*2]

Reply Affidavits .......................................................................................................16-20

This insurance coverage action arises out of a personal injury action in which Miguel Montesdeoca, an employee of plaintiff Corporate Electric Group, Inc. ("Corporate Electric") seeks to recover for injuries he sustained on November 20, 2008, during the course of his employment, when he fell from a ladder on a construction project at premises located at 419-421 West Broadway, in New York County, New York.

The underlying action, Miguel Montesdeoca v 419-421 West Broadway Realty Corp., et al, under Index No. 4219/09, was commenced on February 23, 2009, in Supreme Court, Queens County, against various defendants including, among others, the owners of the premises and DGC Capital Contracting Corp. ("DGC"), the general contractor of the project. A review of court records reveals that in an order of the Honorable Martin E. Ritholtz, J.S.C., dated March 17, 2011, the action under Index Number 4219/09 was consolidated with another action Miguel Montesdeoca v Peter Lik Soho, et al., under Index Number 2222/10. The consolidated actions are marked "Final, Final" for the Trial Scheduling Part on October 10, 2012.

Pursuant to the terms of its subcontract with DGC, plaintiff Corporate Electric agreed to indemnify DGC and to obtain a general liability policy naming DGC as an additional insured. Corporate Electric was insured under commercial liability policy No.HMD-GL-0010176-0 issued to Corporate Electric by Nova Casualty Company ("Nova"), effective May 21, 2008 to May 21, 2009. The policy obligated Corporate Electric to notify defendant Nova "as soon as practicable of an occurrence' or an offense which may result in a claim."

On January 20, 2009, plaintiff Corporate Electric received a tender letter, dated January 13, 2009, from Zurich American Insurance Company (Zurich), DGC's insurer, seeking defense and indemnification, as a result of the claim by Miguel Montesdeoca against DGC. The Zurich tender letter states that on November 28, 2008, Miguel Montesdeoca, an employee of Corporate Electric, struck his face on a ladder and was injured during a construction project at 416 West Broadway in New York City.

The letter also advises that a letter of representation has been received by DGC from counsel for Montesdeoca, and asserts that, pursuant to Corporate Electric's subcontract with DGC, Corporate Electric is required to defend and indemnify DGC against any action by Montesdeoca. The letter also asserts that considering Corporate Electric's contractual and insurance obligations to DGC, the tender letter should be immediately forwarded to Corporate Electric's carrier with a demand that the insurer assume the defense and indemnification of DGC against any claims asserted by Montesdeoca.

On January 20, 2009, plaintiff Corporate Electric emailed the Zurich letter to its broker, [*3]defendant Island Risk Management Associates, Inc. ("Island Risk")[FN1], which, in turn, emailed the Zurich letter that same day to Specialty Claims Management, the claims administrator for defendant Nova. On January 22, 2009, plaintiff Corporate Electric received a letter from Specialty Claims acknowledging its receipt of the Montesdeoca claim and noting that the file claim #NLL0397 was assigned to Vanessa Scrudato.

On January 26, 2009, Vanessa Scrudato retained Paul Grits of the Goliath Group to investigate the claim. On January 30, 2009, Paul Grits telephoned the claim handler, Scrudato, and informed her that he had been in contact with the insured, plaintiff Corporate Electric, which confirmed that its employee, Montesdeoca, was injured on the project and that Corporate Electric owned the ladder. Paul Grits also reported that Montesdeoca had suffered concussion, nasal fracture with surgery, back injury and cognitive injuries, and that he was still out of work. Paul Grits thereafter interviewed employees of Corporate Electric and prepared two reports dated February 5, 2009, and February 6, 2009, which were both received by mail by Specialty Claims on February 9, 2009.

The reports contained a written statement of Nicholas Zunno, Corporate Electric's foreman on the project, who saw Montesdeoca immediately after the accident, and a transcript of a recorded statement of Anthony Petrozelli, a co-worker of Montesdeoca, who witnessed the accident. Zunno indicated that he filled out a 24-hour incident report on November 20, 2008, and advised DGC's supervisor on the project, Robert Woods, of the incident, who filled out his own report. Zunno also asserts that on that same day, he contacted the office about the incident and filled out a C-2 Worker's Compensation Report.

As noted, the underlying Montesdeoca action, now consolidated under Index Number 2222/10 and marked "Final, Final" on the Trial Scheduling Part calendar for October 10, 2012, was commenced on February 23, 2009.

On February 24, 2009, defendant Nova disclaimed coverage based upon late notice of the claim.

In October, 2009, a third-party action was commenced in the Montesdeoca action by DGC against Corporate Electric seeking contribution, indemnification and breach of contract for failure to obtain insurance as required by contract. Plaintiff Corporate Electric submitted the lawsuit papers to defendant Island Risk, which forwarded them to defendant Nova on November 5, 2009. In a letter dated November 25, 2009, Specialty Claims reiterated its prior denial of coverage based upon late notice of claim. Plaintiff Corporate Electric thereafter commenced this action seeking, among other relief, a declaration of coverage.

Defendant Nova, upon the foregoing papers, seeks summary judgment in its favor [*4]declaring that it has no obligation to defend and/or to indemnify plaintiff Corporate Electric in the underlying personal injury action because it received late notice of the subject accident. Defendant Nova argues that both plaintiff Corporate Electric and DGC had notice of the underlying accident on the date it occurred, and that notice was not given to Nova until January 20, 2009. In opposition and in support of its cross motion, plaintiff Corporate Electric asserts that its sixty-one (61) day notice was reasonable in view of all the circumstances, and that defendant Nova's thirty-five (35) day delay in disclaiming coverage was unreasonable as a matter of law.

Where an insurance policy, such as the one involved here, requires an insured to provide notice of a claim or suit against it "as soon as practicable," such notice must be provided within a reasonable time in view of all of the facts and circumstances (see, Pile Foundation Const. Co., Inc. v Investors Ins. Co. of America, 2 AD3d 611, 612-613 [2nd Dept. 2003]). Pursuant to Insurance Law section 3420(d), an insurer must provide a written disclaimer of coverage "as soon as is reasonably possible." An insurer's failure to provide notice of disclaimer as soon as is reasonably possible precludes effective disclaimer, even where the insured's notice of the incident is untimely (see, Matter of New York Cent. Mut. Fire Ins. Co. v Aguirre, 7 NY3d 772 [2006]; Tex Dev. Co. v Greenwich Ins. Co., 51 AD3d 775, 778 [2nd Dept. 2008]).

Timeliness of an insurer's disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage (see, First Financial Ins. Co. v Jetco Contracting Corp., 1 NY3d 64 [2003]; George Campbell Painting v. National Union Fire Ins. Co. of Pittsburgh, PA, 92 AD3d 104, 114 [1st Dept. 2012]; Halloway v State Farm Ins. Cos., 23 AD3d 617, 618 [2nd Dept. 2005]; New York Cent. Mut. Fire Ins. Co. v Majid, 5 AD3d 447, 448 [2nd Dept. 2004]). An insurer who delays in giving written notice of disclaimer bears the burden of justifying the delay (see, First Financial Ins. Co. v Jetco Contracting Corp., 1 NY3d 64, supra).

Where, as in the present case, the explanation offered by the insurer for the delay in disclaiming is an assertion that there was a need to investigate issues that will affect the decision on whether to disclaim, the burden is on the insurance company to establish that the delay was reasonably related to the completion of a necessary, thorough, and diligent investigation (see, Quincy Mut. Fire Ins. Co. v Uribe, 45 AD3d 661, 662 [2nd Dept. 2007]; Schulman v Indian Harbor Ins. Co., 40 AD3d 957, 958 [2nd Dept. 2007]). An insurer's explanation is insufficient, as a matter of law, where the basis for denying coverage was or should have been readily apparent before the onset of the delay (see, First Financial Ins. Co. v Jetco Contracting Corp., 1 NY3d 64, supra).

In this case, plaintiff Corporate Electric established its entitlement to summary judgment declaring that defendant Nova is obligated to provide coverage to it in the underlying action. Plaintiff Corporate Electric demonstrated a prima facie entitlement to judgment with evidence that defendant Nova's 35-day delay in issuing a disclaimer of coverage was unreasonable as a matter of law, and that, consequently, Nova is precluded from disclaiming coverage based on a [*5]late notice of claim (see, Insurance Law § 3420 [d]; Tex Dev. Co., LLC v Greenwich Ins. Co., 51 AD3d 775, supra; Sirius Am. Ins. Co. v Vigo Constr. Corp., 48 AD3d 450, 452 [2nd Dept. 2008]; Matter of Allstate Ins. Co. v Cruz, 30 AD3d 511, 512-513 [2nd Dept. 2006]).

In opposition, defendant Nova, which had the burden of explaining its delay in providing the written notice of disclaimer, failed to raise a triable issue of fact. Defendant Nova contends that its 35-day delay was reasonably related to the completion of a necessary investigation. Nova's ground for disclaimer, based on plaintiff Corporate Electric's delay in providing notice of the Montesdeoca claim, was or should have been readily apparent upon defendant Nova's receipt of the Zurich tender letter, containing sufficient facts to allow the Nova claims analyst to conclude that its insured breached the notice provisions of the insurance policy by reporting the accident to Nova 61 days after learning of it (see, First Financial Ins. Co. v Jetco Contracting Corp., 1 NY3d 64, supra; Matter of Allstate Ins. Co. v Cruz, 30 AD3d 511, supra; Gregorio v J.M. Dennis Constr. Co. Corp., 21 AD3d 1056, 1056-1057 [2nd Dept. 2005]).

Under these circumstances, even though plaintiff Corporate Electric's notice of the subject incident was untimely, defendant Nova's failure to provide notice of disclaimer as soon as was reasonably possible precluded effective disclaimer (see, Matter of New York Cent. Mut. Fire Ins. Co. v Aguirre, 7 NY3d 772 [2006]; How Shim Yu v. General Sec. Ins. Co., 95 AD3d 627 [1st Dept. 2012]; Bellavia v. Seneca Ins. Co., Inc., 78 AD3d 1153 [2nd Dept. 2010]; Tex Dev. Co. v Greenwich Ins. Co., 51 AD3d 775 [2008]).

Accordingly, it is ORDERED and ADJUDGED that plaintiff Corporate Electric's cross motion for summary judgment is granted; and it is further

ORDERED, ADJUDGED and DECLARED that defendant Nova is obligated to provide coverage to plaintiff Corporate Electric in the underlying action entitled Miguel Montesdeoca v 419-421 West Broadway Realty Corp., et al, now consolidated under Index Number 2222/10, under the subject policy of insurance issued to plaintiff Corporate Electric; and it is further

ORDERED and ADJUDGED that defendant Nova's motion for summary judgment is denied.

This constitutes the decision, order, opinion, and judgment of the Court.

Either counsel shall serve a copy of this decision bearing the Clerk's stamped date of entry together with notice of entry upon all parties.

Dated: July 25, 2012

J.S.C. Footnotes

Footnote 1:In its amended complaint, plaintiff Corporate Electric asserts a cause of action against Island Risk for failing to notify defendant Nova of the underlying claim.