Insurance Corp. of NY v Empire Constr. Corp. of Long Is.
Annotate this CaseDecided on December 3, 2004
Supreme Court, Kings County
The Insurance Corp. of New York, Plaintiff,
against
Empire Construction Corp. of Long Island, et al.,, Defendants.
11421/04
Ira B. Harkavy, J.
Upon the foregoing papers, defendant JRS Properties, LLC (JRS) moves for an order pursuant to CPLR 3211 (a) (7), dismissing the complaint of plaintiff Insurance Corporation of New York (Inscorp) for failure to state a claim upon which relief can be granted. Defendant Junior Burke (Burke) cross-moves for an order dismissing plaintiff's complaint on similar grounds insofar as asserted against him. Inscorp moves for an order, pursuant to CPLR 3215 (a), granting leave to enter a default judgment against defendants Empire Construction Corporation of Long Island, Inc. and Empire Construction Corp. (Empire of Long Island and Empire Construction, or, collectively, Empire) and for a judgment declaring that Inscorp has no duty to defend and/or indemnify its insured, Empire of Long Island, in the underlying personal injury action and that Burke and JRS [*2]have no rights under the insurance policy issued by Inscorp. Finally, JRS cross-moves for an order, pursuant to CPLR 3212, granting summary judgment in its favor and declaring that Inscorp must defend and indemnify Empire of Long Island in the underlying action.
On or about March 3, 2001, Burke allegedly sustained injuries during the course of his employment with Empire when he fell into a shaft at a construction site. Burke thereafter commenced a personal injury action against Empire of Long Island and Empire Construction, the general contractors for the construction project, and JRS, the owner of the premises where the accident occurred. Inscorp had issued a commercial general liability insurance policy to Empire of Long Island (but not to Empire Construction) on or about November 1, 2000. On or about January 31, 2003, Burke moved for a default judgment in the personal injury action against the non-answering Empire defendants. Because Inscorp answered on behalf of Empire of Long Island on or about February 26, 2003, the motion was denied.
Inscorp never received notice of the underlying personal injury action from its insured, Empire of Long Island. The only notice it received consisted of the motion for a default judgment, along with the summons and complaint in the underlying action, which Burke served upon Inscorp on or about February 6, 2003. On or about April 15, 2003, Inscorp disclaimed coverage to Empire of Long Island based on the insured's late notice. In fact, Empire of Long island never gave notice in any form to Inscorp. Inscorp addressed such disclaimer to Empire of Long Island and sent a copy to the injured party, Burke. In its disclaimer, Inscorp does not mention that it received notice, whether timely or untimely, from the injured party, nor does it name late notice by the injured party as a basis for its disclaimer.
On or about April 1, 2004, Inscorp commenced the instant declaratory judgment action which requests a declaration that Inscorp is not obligated to provide coverage or to defend or indemnify any of the parties in the underlying action. Burke and JRS now separately seek an order dismissing Inscorp's complaint against them for failure to state a claim upon which relief can be granted. Both Burke and JRS argue that Inscorp fails to state a cause of action because it did not make an effective disclaimer to Burke, the injured party. In this regard, both Burke and JRS contend that Inscorp's disclaimer was ineffective since notice was not given to Burke in a timely manner.
In opposition to the respective motion and cross motion, Inscorp asserts that the arguments of JRS and Burke are not sufficient to support dismissal pursuant to CPLR 3211 (a) (7). Inscorp further argues that proper notice was given to Burke through the service of a notice of the disclaimer upon Burke 's counsel. However, Inscorp does not address the timeliness of its service.
In a motion to dismiss for failure to state a cause of action, the court must accept as true the facts alleged in the pleading and accord plaintiff the benefit of every possible inference (511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144 [2002]). If factual allegations are discerned which manifest any cause of action cognizable at law, the motion to dismiss must be denied (Maldonado v Olympia Mechanical Piping & Heating Corp., 8 AD3d 348 [2004]).
Here, as Inscorp points out, the arguments of Burke and JRS address the merits of Inscorp's action and do not show that Inscorp's pleadings are insufficient in any way. Indeed, accepting as true the allegations contained in Inscorp's complaint, Inscorp does not fail to state a cause of action upon which relief can be granted. Thus, the respective motion and cross motion to dismiss by JRS and Burke are denied. [*3]
In its cross motion for summary judgment, JRS argues that Inscorp must defend and, if necessary, indemnify Empire of Long Island because Inscorp never disclaimed coverage as to Burke, but only disclaimed as to Empire of Long Island. In its notice of disclaimer, Inscorp based its disclaimer on late notice given to it by its insured, Empire of Long island. It never mentioned receiving late notice from Burke and did not refer to any ground for disclaiming coverage as to Burke. Furthermore, since the reason for the disclaimer should have been evident on the face of the notice provided by Burke and since Inscorp offers no excuse for its 2-month delay in disclaiming after receiving notice from Burke, Inscorp's notice of disclaimer is untimely and ineffective as to Burke.
Inscorp argues that summary judgment is premature in this matter since the discovery process is in the initial stages and that whether or not Inscorp's disclaimer was timely is a question of fact. Inscorp also moves for a default judgment against the non-answering Empire defendants and for a declaration that Inscorp is not obligated to provide a defense or indemnification in the underlying lawsuit and that neither JRS nor Burke has any rights pursuant to the insurance policy issued by Inscorp to Empire of Long Island.
Insurance Law § 3420 (d) requires an insurer to give written notice as soon as is reasonably possible where it intends to disclaim liability or deny coverage. "The timeliness of an insurer's disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer" (New York Mut. Fire Ins. Co. v Majid, 5 AD3d 447 [2004]). Most often the question of whether an insurer has given notice as soon as reasonably possible will be a question of fact that depends upon the surrounding circumstances; however, it is clear that it is the responsibility of the insurer to provide an explanation for any delay (First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64 [2003]). Where an insurer provides no excuse or an inadequate reason for an untimely disclaimer, courts will find the delay unreasonable as a matter of law (id. [48 day delay unreasonable as a matter of law where explanation unsatisfactory]). Although investigations are encouraged to prevent insurers from disclaiming without first gathering sufficient information, where the sole ground upon which the disclaimer is based is obvious from the face of the notice of claim and accompanying complaint, no investigation is necessary and a 30-day delay has been held to be unreasonable as a matter of law (W. 16th Street Tenants Corp. v Pub. Service Mut. Ins. Co. , 290 AD2d 278 [2002]).
Here, Inscorp received notice of the underlying action from Burke on or about February 3, 2003 and informed its insured and Burke of its disclaimer on or about April 15, 2003. Although the basis for the disclaimer, late notice, should have been evident from the face of the notice it received from the injured party, Inscorp offered no excuse for its delay. Since Inscorp provided no excuse for its delay and because the reason for the disclaimer did not require any investigation, Inscorp's disclaimer was untimely as a matter of law and, therefore, ineffective against any of the parties involved (id., see also Faas v New York Cent. Mut. Fire Ins. Co., 281 AD2d 586 [2001]).
Even if the disclaimer were effective as to the insured, Empire of Long Island, it would not be effective against the injured party, Burke. While Inscorp based its disclaimer on late notice given to it by the insured, it does not mention late notice given to it by Burke. Courts have recognized that "an injured third party may seek recovery from an insured's carrier despite the failure of the insured to provide timely notice of the accident" (Gen. Acc. Ins. Group v Cirucci, 46 NY2d 862 [1979]). Where an insurer's disclaimer "was based only on its insured's failure to notify it of the claim," the [*4]disclaimer "was not effective against the plaintiffs, the injured parties, who gave notice of the claim, and the defendant is now estopped from raising the plaintiffs' allegedly late notice in the instant action as a ground for disclaiming coverage" (Hazen v Otsego Mut. Fire Ins. Co., 286 AD2d 708, 709 [2001]). "[I]n order for a disclaimer letter to be valid against an injured party, the notice of disclaimer must specifically advise the claimant that his or her notice of claim was untimely" (State Farm Mut. Auto. Ins. Co. v Cooper, 303 AD2d 414 [2003]). "[T]he injured party is not to be charged vicariously with the insured's delay" (Aetna Cas. & Sur. Co. v Nat. Union Fire Ins. Co., 251 AD2d 216, 220 [1998]).
Although Inscorp argues that summary judgment is premature since discovery is outstanding, "[t]he mere hope that evidence sufficient to defeat the motion may be uncovered during the discovery process is insufficient" (Spatola v Gelco Corp., 5 AD3d 469 [2004]; see also Capital Funding Serv. v Focus Real Estate Mgmt., 259 AD2d 510 [1999]). It is clear that Inscorp's disclaimer was untimely as a matter of law and was ineffective.
In summary, the respective motion and cross motion to dismiss by defendants JRS and Burke are denied, as is the motion of Inscorp. The cross motion by JRS for summary judgment declaring that Inscorp must provide a defense and indemnification to its insured in the underlying action is granted.
The foregoing constitutes the decision and order of this court.
E N T E R,
J. S. C.
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