Equinox Partners Ltd. v Greenwich Ins. Co.

[*1] Equinox Partners Ltd. v Greenwich Ins. Co. 2008 NY Slip Op 50263(U) [18 Misc 3d 1132(A)] Decided on February 15, 2008 Supreme Court, Richmond County Minardo, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 15, 2008
Supreme Court, Richmond County

Equinox Partners Ltd., Plaintiff,

against

Greenwich Insurance Company, Defendant.



101670/07

Philip G. Minardo, J.

Plaintiff Equinox Partners Ltd. (hereafter "Equinox") moves by show cause for an order granting it summary judgment in its action for a declaratory judgment action against defendant Greenwich Insurance Company (hereafter "Greenwich") regarding the latter's obligation to indemnify and pay the cost of its defense in a lawsuit entitled Vasquez v. Equinox Partners Ltd., which is pending in Richmond County under Index No. 12117/04. Greenwich opposes such motion and cross-moves for an order pursuant to CPLR 3212 granting it summary judgment and dismissing the complaint.

In the underlying action, Vasquez alleges, inter alia, that on April 26, 2004, Equinox was negligent in the ownership, operation, maintenance and control of the premises located at 2701 Clove Road, Staten Island, thereby causing him to sustain severe personal injuries. At the time in question, Equinox had in place a policy of insurance with Greenwich. Upon being served with a summons and complaint in the Vasquez action, Equinox promptly forwarded a copy of same to Greenwich on or about September 13, 2004. On September 22, 2004, Greenwich acknowledged its receipt of this notice of loss in a letter to Equinox, but indicated that coverage may be unavailable because of the six-month delay in providing notice of the April 26, 2004 accident. Thereafter, by correspondence dated November 17, 2004, Greenwich formally disclaimed coverage based on untimely notice of the alleged occurrence. Equinox claims that the insurer's disclaimer is untimely as a matter of law, and that any defense of late notice has been waived. On or about April 20, 2007, Equinox commenced this declaratory action by the filing and service of a summons and complaint. Issue was joined by the service of an answer on or about June 1, 2007. Equinox commenced this motion by order to show cause because the Vasquez action is presently on the JCP-8 calendar awaiting trial.

In support of the motion, Equinox has submitted an attorney's affirmation, a copy of the policy in question and copies of the letters it received from by Greenwich on September 22, 2004 and November 17, 2004. It is the position of Equinox that defendant's disclaimer of coverage is untimely as a matter of law. Plaintiff argues that, by its own admission, Greenwich received notification of the alleged incident on or about September 13, 2004, but waited at least sixty-five (65) days before issuing its disclaimer.

In opposition to the motion and in support of its cross motion, Greenwich relies upon an attorney's affirmation and the affidavits by Michael Barnaba (hereafter "Barnaba") and Anthony Siconolfi (hereafter "Siconolfi"). Based on these submissions, Greenwich contends its disclaimer was both timely and proper, and that the complaint must be dismissed. Greenwich maintains, in relevant part, that it is a condition precedent to coverage under the applicable policy that notice of any occurrence which might result in a claim must be provided to the insurer "as soon as practicable". In the instant case, it is undisputed that notice was not given until September 13, 2004, i.e., almost five months after the alleged occurrence.

According to Greenwich, upon the receipt of said notice of loss, Barnaba, a claim administrator, recognized two potential coverage issues, (1) whether notice was timely, and (2) [*2]whether Equinox had prior knowledge of the occurrence. Thus, Greenwich takes the position that its letter dated September 22, 2004 constituted a reservation of its right to later disclaim coverage based on either of the unresolved coverage issues.

For his part, Barnaba retained Siconolfi to conduct an investigation on behalf of Greenwich in order to discover, e.g., when Equinox first obtained knowledge of the alleged accident. Siconolfi is the owner and president of Chrinickinian, Inc. d/b/a Frontier Adjusters. In his supporting affidavit, Siconolfi states that Frank Cretella of Equinox (hereafter Cretella) admitted to him that he was aware that Vasquez had been injured as early as the evening of the alleged incident, and that he had visited Vasquez in the hospital "a couple of times". On October 22, 2004, Siconolfi reported these statements to Barnaba, and on October 26, 2004, Greenwich retained counsel to assess the coverage issue in light of the information obtained by Siconolfi. Subsequently, on the advice of counsel, a letter was transmitted to Equinox denying coverage based upon late notice. This transmission occurred November 17, 2004, some 21 days after counsel had been retained.

In opposition to the cross motion and in further support of its own motion, Equinox has submitted an affidavit by its employee, Cretella, in which he describes the nature of the accident as follows: On the date of the accident, Vasquez, an employee of Landmark Development DCH Group LLC., d/b/a Black Dog Construction (a maintenance and construction company), was given a "punch list" of items to be performed at the site of the occurrence, 2701 Clove Road in Staten Island, New York. While most of these items were for work to be done inside the building, it also included the changing of light bulbs located on the exterior. The accident occurred when Vasquez slipped from a rung of a ladder outside the premises that had become wet due to rain. Cretella states that "there was no defect to the ladder and the property upon which the ladder was placed was in good condition and repair". Since no one from Equinox was present, and it neither directed or controlled the work, Cretella believed there was no basis for liability on the part of Equinox. In addition, upon his visits to Vasquez in the hospital, Cretella states that Vasquez "indicated [to Cretella] that he [Vasquez] had no intention of suing Equinox", which Cretella believed, inter alia, because he knew that Vasquez was an undocumented alien. However, upon receipt of the summons and complaint in the action, Cretella immediately notified Greenwich, and forwarded the pleadings to the insurer. Thus, Equinox contends that (1) notice was timely given; (2) Greenwich is required to defend it in the Vasquez action; and (3) the cross motion must be denied.

In reply, Greenwich alleges that Cretella's subjective belief that Vasquez did not intend to sue does not excuse the delay in giving notice, especially since the severity of the injuries required hospitalization. Moreover, since Cretella was not a witness to the accident, his allegations as to causation are entirely speculative. In addition, it is noted that Cretella admitted to Siconolfi (a) that he wholly owns Landmark DCH Group, (b) that he and his cousin were primarily responsible for directing Vasquez in his work and ( c) that it was Cretella who had given the punch list to Vasquez on the day of the accident. Under these circumstances, Greenwich alleges it was well within its right to disclaim coverage based on late notice, and that its cross motion to dismiss the complaint should be granted.

Summary judgment is a drastic remedy that should be granted only if no triable issues of fact exist and the movant is entitled to judgment as a matter of law (see Rotuba Extruders v. Ceppos, 46 NY2d 223; Herrin v. Airborne Freight Corp., 301 AD2d 500). On a motion for summary judgment, the function of the court is issue finding, not issue determination (see Weiner v. Ga-Ro Die Cutting, 104 AD2d 331, affd 65 NY2d 732). In making such an inquiry, the proof must be scrutinized carefully in the light most favorable to the party opposing the motion (see Glennon v. Mayo, 148 AD2d 580). To prevail upon the motion, the moving party must present prima facie evidence of its entitlement to judgment as a matter of law (Alvarez v. Prospect Hosp., 68 NY2d 320, 324), and on its failure to do so, the motion will be denied. Once a prima facie showing has been made, however, the burden shifts to the party opposing the motion to produce competent evidence demonstrating the existence of triable issues of fact (Zuckerman v. City of New York, 49 NY2d 557, 562). In this [*3]regard, "mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient" to raise a triable issue (id. at 562). Thus, summary judgment, which operates to deprive a party of his or her day in court, is only appropriate where the movant's initial burden of proof has been satisfied, and the opposing party has failed to adduce competent evidence demonstrating the presence of a genuine issue of material fact (Persaud v. Darbeau, 13 AD3d 347).

Notice

It is well established that when a policy of insurance requires that notice of an occurrence be given "as soon as practicable", the requirement operates as a condition precedent to coverage, and the failure to give such notice vitiates the contract (see Argo Corp. v. Greater NY Mut. Ins. Co., 4 NY3d 332, 339; Security Mut. Ins. Co. of NY v. Acker-Fitzsimons Corp., 31 NY2d 436, 441). Nor is it necessary for the carrier to demonstrate prejudice before disclaiming coverage (Argo Corp. v. Greater NY Mut. Ins. Co., 4 NY3d at 339). The problem arises in the determination of what constitutes "as soon as practicable", as there may be extenuating circumstances in a particular case that excuse the failure to give notice earlier (see Great Canal Realty Corp. v. Seneca Ins. Co., Inc., 5 NY3d 742). The burden of establishing a reasonable excuse for the delay in giving notice rests upon the insured (see Argentina v. Otsego Mutual Fire Insurance Co, 86NY2d 748 (1995); Pile Found Constr. Co., v. Investors Ins. Co. of Amer, 2 AD3d 611, 613; 1700 Assoc. v. Public Serv Mut. Ins. Co., 256 AD2d 456).

Here, Equinox has proffered several reasons to support the belief that it could not be held liable in the underlying matter, as well as the further belief that it would not be sued. As to the former, the determinative issue is not whether Equinox believed that it could be held liable, but whether its belief that no claim would be asserted against it was reasonable (see Philadelphia Indemn Ins. Co. v. Genesee Valley Improvement Corp., 41 AD3d 44, 46; SSBSS Realty Corp. v. Public Serv. Mut. Ins. Co., 253 AD2d 583, 584). In this regard, reliance upon an injured party's representation that it does not intend to sue has been held to present a triable issue of fact (see

D'Aloia v. Travelers Insurance Co, 85 NY2d 825 (1995); Jordan Constr. Prods Corp. v. Travelers Indemn Co. of Am, 14 AD3d 655, 656). Thus, the reasonableness of an insured's good faith belief that no claim of liability will be asserted against it generally presents an issue of fact rather than one of law (see St. James Mech Inc. v. Royal & Sunalliance, 44 AD3d 1030). It is only where the facts are uncontroverted and not subject to conflicting inferences that these issues can be decided as a matter of law (SSBSS Realty Corp. v. Public Serv. Mut. Ins. Co. 253 AD2d at 584).

In the instant case, Greenwich has made a prima facie showing of its entitlement to judgment based upon plaintiff's delay in reporting the underlying occurrence. Nevertheless, it is the opinion of this Court that Equinox has met its burden of creating a triable issue of fact as to the reasonableness of its delay in providing such notice. Accordingly, defendant's cross motion for summary judgment must be denied.

The Disclaimer

As is relevant, Insurance Law §3420 (d) requires an insurer to "give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured" after it learns of a valid reason to support the disclaimer (see Pennsylvania Lumbermans Mut. Ins. Co. v. D & Sons Constr Corp. 18 AD3d 843, 845). The failure to timely disclaim may result in a waiver of the affirmative defense of late notice (see Matter of Allcity Ins. Co., [Jimenez], 78 NY2d 1054, 1056). Where a delay in disclaiming coverage does occur, the burden is on the insurer to explain its reasonableness, and an unsatisfactory explanation will render the delay unreasonable as a matter of law (see Moore v. Ewing, 9 AD3d 484, 488). This is especially true where the reason for denying coverage was or should have been readily apparent to the insurer (see First Fin. Ins. Co. v. Jetco Contr. Corp., 1 NY3d 64, 68-69). The reasonableness of any delay is computed from the time that the insurer becomes sufficiently aware of the facts which would support a disclaimer (see Pawley Interior Contr.v. Harleysville Ins. Cos., 11 AD3d 595), and when that delay is alleged to result from a need to investigate the facts underlying the proposed disclaimer, the insurer must demonstrate the necessity of conducting a thorough and diligent investigation (see Quincy Mutual Fire Ins. Co. v. Uribe, __AD3d__, 845 NYS2d 434; Schulman v. Indian Harbor Ins. Co., 40 AD3d 957). Finally, any failure on the part of an insured to timely notify its insurer will not excuse the latter's failure to [*4]disclaim coverage in a timely manner (see Delphi Restoration Corp. v. Sunshine Restoration Corp., 43 AD3d 851).

In the instant case, it is uncontroverted that Equinox notified Greenwich of the underlying occurrence on or about September 13, 2004. Nineteen days later, i.e., on September 22, 2004, Greenwich acknowledged receipt of that notice, but indicated that the presence of potential coverage issues rendered it unable to confirm coverage at that time. In the same letter, it indicated that it was investigating the claim, and had assigned counsel to look into a possible breach of the policy's terms and conditions. It also indicated that late notice was not the only potential issue. Although Greenwich might have disclaimed at this juncture, it did not. Rather, its elected to notify its insured that it "would tender a defense and indemnification subject to a reservation of [its] rights based upon the late notice provision of the policy". In fact, it was on November 17, 2004, i.e., 66 days after it was notified of the claim, that Greenwich formally disclaimed coverage, basing its decision, e.g., on Cretella's apparent knowledge of the Vasquez injury prior to being served with the summons and complaint. Notably, the fact of this knowledge was disclosed in the report rendered by Siconolfi 28-days earlier, on October 20, 2004. As for this 28-day delay it is uncontroverted that it was caused by the insurer's request for legal advice on the issue of whether the facts uncovered would support a disclaimer of coverage. Thus, the disclaimer letter dated November 17, 2004 was signed and transmitted by counsel for Greenwich, rather than a Greenwich employee.

While there is case law to the effect that an insurer's unexplained delay of two months in disclaiming coverage is unreasonable as a matter of law (see Hartford Ins. Co. v. County of Nassau, 46 NY2d 1028, 1029), such decisions(s) appear to represent an exception to the rule that the timeliness of an insurer's disclaimer ordinarily presents a jury question, and depends upon the facts and circumstances of the particular case (see Allstate Ins. Co. v. Gross, 27 NY2d 263, 270; Colonial Coop. Ins. Co. v. Desert Storm Constr. Corp., 305 AD2d 363). Here however, the defendant insurer has adequately explained its delay in disclaiming coverage by its need to investigate the claim to determine when its insured received notice of the accident. The court finds this delay to be reasonable under the circumstances. (See Hermitage Insurance Company v. Arm-ing, Inc., 2007 WL 4328575 (NYAD 2 Dept.) As a result, it is the opinion of this Court that while notice requirements are typically construed liberally in favor of the insured (see Greenburgh Eleven Union Free School Dist. v. National Union Fire Ins. Co. of Pittsburgh, PA, 304 AD2d 334), the insurer at bar has established its reasonableness in its decision to conduct a diligent investigation before disclaiming . Here, it is uncontroverted that Greenwich undertook to conduct such an investigation, and has proceeded diligently and acted reasonably before denying coverage (see Morris Park Contr. Corp. v. National Union Fire Ins. Co. Of Pittsburgh, PA, 33 AD3d 763; cf. Tully Constr. Co. Inc. v. TIG Ins. Co., 43 AD3d 1150). Thus, if plaintiff fails in its burden of proving its reasonableness in delaying its notification of the accident to defendant, defendant's application for summary judgment shall be granted..

Accordingly, it is

ORDERED that the applications for summary judgment are denied.

ENTER,

s/ Philip G. Minardo

J.S.C.

Dated: February 15, 2008