Petrillo Stone Corp. v QBE Ins. Corp.

[*1] Petrillo Stone Corp. v QBE Ins. Corp. 2014 NY Slip Op 50002(U) Decided on January 3, 2014 Supreme Court, Westchester County Connolly, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 January 3, 2014
Supreme Court, Westchester County

Petrillo Stone Corp., Plaintiff,

against

QBE Insurance Corp., PETRILLO SETTING CORP., PETER LOMBARDO, NY-1095 AVENUE OF THE AMERICAS, L.L.C. and TISHMAN INTERIORS CORPORATION, Defendants.



52790/2011



McMahon, Martine & Gallagher, LLP

Attorneys for Plaintiff/Third-Party Defendant Petrillo Stone

55 Washington Street, Suite 720

Brooklyn, NY 11201

By: NYSCEF

Abrams, Gorelick, Friedman & Jacobson, P.C.

Attorneys for Defendant/Third-party Defendant QBE

One Battery Park Plaza-4th Floor New York, NY 10004

By: NYSCEF

Steven L. Kroleski, Esq.

Attorney for Defendant/Third-Party Defendant Petrillo Setting

201 Wolfs Lane

Pelham, NY 10803

By: NYSCEF

Cornell Grace, P.C.

Attorneys for Defendants/Third-Party Plaintiffs Tishman and NY-1095

111 Broadway, Suite 810

New York, NY 10006

By: NYSCEF

Galbo & Associates

Attorneys for Third-Party Defendant Selective

1830 Liberty Building

Buffalo, NY 14202

By: NYSCEF

Fine, Olin & Anderman, LLP

Attorneys for Defendant Peter Lombardo

c/o Processing Center

1279 Route 300

P.O. Box 1111

Newburgh, NY 12551

By: NYSCEF

Francesca E. Connolly, J.

The following documents were read in connection with the defendants/third-party plaintiffs NY-1095 and Tishman's motion for summary judgment and a declaratory judgment (Seq. No. 1), defendant/third-party defendant QBE's cross motion for summary judgment and for a declaratory judgment (Seq. No. 2), and plaintiff/third-party defendant Petrillo Stone's cross motion for summary judgment and a declaratory judgment (Seq. No. 3):

Defendants/third-party plaintiffs Tishman and NY-1095's notice of motion,

affirmation, exhibits1- 21

Plaintiff/third-party defendant Petrillo Stone's affirmation in opposition to

defendants/third-party plaintiffs Tishman and NY-1095's motion,

exhibits22-29 Defendant/third-party defendant Petrillo Setting's affidavit in opposition to

defendants/third-party plaintiffs Tishman and NY-1095's motion30 [*2]

Third-party defendant Selective's affirmation in opposition to

defendants/third-party plaintiffs Tishman and NY-1095's

motion, exhibits31-45

Third-party defendant Selective's memorandum of law in opposition to

defendants/third-party plaintiffs Tishman and NY-1095's

motion, exhibits46

Defendant/third-party defendant QBE's notice of cross motion, affirmation47-62

Defendant/third-party defendant QBE's memorandum of law in opposition to

defendants/third-party plaintiffs Tishman and NY-1095's

motion and in support of QBE's cross motion63

Third-party defendant Selective's affirmation in opposition to QBE's

cross motion64

Third-party defendant Selective's memorandum of law in opposition

to QBE's cross motion65

Plaintiff/third-party defendant Petrillo Stone's notice of cross motion,

affirmation, exhibits66-69

Defendant/third-party defendant QBE's affirmation in opposition to Petrillo Stone's

cross motion70-79

Defendants/third-party plaintiffs Tishman and NY-1095's reply affirmation

in further support of motion and in partial opposition to cross motions

of third-party defendants QBE and Selective Way, exhibit80-81

Plaintiff/third-party defendant Petrillo Stone's affirmation in reply to QBE's

opposition and in further support of Petrillo Stone's cross motion82-84

Plaintiff/third-party defendant Petrillo Stone's affirmation in reply to

defendants/third-party plaintiffs Tishman and NY-1095's opposition

and in further support of Petrillo Stone's cross motion85

Defendant/third-party defendant QBE's memorandum of law in further support of

QBE's cross motion and in reply to defendants/third-party

plaintiffs Tishman and NY-1095's opposition86

This declaratory judgment action arises out of an action commenced by Peter Lombardo (hereinafter "Lombardo")[FN1] in New York County Supreme Court under Index No. 101392/2010 for personal injuries he allegedly sustained on December 28, 2007 while working as a stone setter for Petrillo Setting Corporation (hereinafter "Petrillo Setting") at a construction project owned by NY-1095 Avenue of the Americas, LLC (hereinafter "NY-1095"), located at 1095 Avenue of the Americas, New York, NY (hereinafter "the premises"), in which Tishman Interiors Corporation (hereinafter "Tishman"), acted as the construction manager. The plaintiff Petrillo Stone Corporation (hereinafter "Petrillo Stone") seeks a determination that it is entitled to coverage on a primary basis as an additional insured on the commercial general liability insurance policy issued by defendant QBE Insurance Corporation (hereinafter "QBE") to Petrillo Setting, or alternatively, that Petrillo Setting is in breach of contract for failure to procure insurance coverage. The defendants/third-party [*3]plaintiffs Tishman and NY-1095 seek a determination that they are entitled to coverage on a primary basis as additional insureds on the commercial general liability insurance policies issued by third-party defendant Selective Way Insurance Company (hereinafter "Selective") to Petrillo Stone and the commercial general liability policy issued by QBE to Petrillo Setting, or alternatively, that Petrillo Stone and Petrillo Setting are in breach of contract for failure to procure insurance coverage.

For the reasons set forth in this decision, the Court makes the following findings on the motions:

1. Tishman and NY-1095 are entitled to coverage as additional insureds on the commercial general liability policies of insurance issued by Selective to Petrillo Stone and by QBE to Petrillo Setting on a co-primary basis to cover Tishman and NY-1095's defense and indemnification for the underlying personal injury action commenced by Lombardo in New York County Supreme Court under Index No. 101392/2010. Although the notice given by Tishman and NY-1095 to QBE of the Lombardo claim and their tender of defense and indemnification was late, Tishman and NY-1095 had a reasonable excuse for their delay and, in any event, QBE's late disclaimer of coverage to Tishman and NY-1095 precludes an effective disclaimer under Insurance Law § 3420 (d).

2. Petrillo Stone qualifies as an additional insured on the QBE commercial general liability policy issued to Petrillo Setting on a primary basis. Although Petrillo Stone's notice to QBE of the Lombardo claim and its tender of defense and indemnification was late, Petrillo Stone has raised a triable issue of fact as to whether it had a good faith belief of non-liability to excuse its nearly two-year delay in notifying QBE.

3. Since Petrillo Stone and Petrillo Setting provided the insurance coverage to Tishman and NY-1095, as required by contract, their breach of contract claim is without merit.

4. Similarly, since Petrillo Setting provided the insurance coverage to Petrillo Stone, as required by their contract, its breach of contract claim is without merit.

FACTUAL BACKGROUND/PROCEDURAL HISTORY

I. Background

The underlying personal injury action from which this insurance coverage dispute arises occurred on December 28, 2007 when Lombardo allegedly tripped and fell on an angle iron left in the lobby of the premises under construction while working as a stone setter for Petrillo Setting. The premises were owned by NY-1095, who contracted with Tishman to act as the construction manager for the project. Tishman contracted with Petrillo Stone to furnish and install the stone for the main lobby of the premises. Thereafter, Petrillo Stone subcontracted the stone installation to Petrillo Setting under an agreement that Tishman claims it had no knowledge of until sometime after the underlying litigation was underway.

Although Lombardo was an employee of Petrillo Setting, the accident report prepared on [*4]December 28, 2007 by Tishman's on-site safety consultant, Select Safety Consulting Services, listed Petrillo Stone as Lombardo's employer. According to the report, Lombardo was working as a marble mechanic for Petrillo Stone when he tripped and fell on a piece of angle iron causing him to sprain or twist his lower back. Lombardo refused medical attention and continued to work. The C-2 workers' compensation accident report dated January 4, 2008, which was prepared internally by Petrillo Setting, indicates that Lombardo was employed by Petrillo Setting at the time of the accident. There is no indication in the record that the C-2 was shared with Tishman at that time.

On or about October 27, 2009, Lombardo commenced an action against Tishman by filing a summons and complaint in New York County Supreme Court under Index No. 101392/2010 as the result of the December 28, 2007 trip and fall accident. According to the complaint, Lombardo alleged that he was an employee of Petrillo Stone. On or about February 2, 2010, the plaintiff filed a separate action against NY-1095 and Tishman in New York County Supreme Court, in which the complaint continued to allege that Lombardo was an employee of Petrillo Stone. In or about April 2010, Petrillo Stone and Petrillo Setting were impleaded into the action as third-party defendants. In his bill of particulars and supplemental bill of particulars, both dated December 21, 2010, Lombardo alleged for the first time in a pleading that he was an employee of Petrillo Setting. The two actions were subsequently consolidated by stipulation and order dated March 17, 2011 (Friedman, J.).

II. The Contracts

A. The Contract between Tishman and Petrillo Stone

According to the terms of the contract between Tishman and Petrillo Stone, Petrillo Stone agreed, to the fullest extent permitted by law, to defend and indemnify Tishman and NY-1095 from and against all claims arising out of or resulting from the work or operations of Petrillo Stone or its subcontractors, or the condition of the site (¶ 7). Under the insurance provisions of the contract, Petrillo Stone and its subcontractors were obligated to procure commercial general liability insurance with limits of liability of at least $5 million per occurrence, with contractual liability coverage and additional insured coverage, under endorsement CG2010 or its equivalent, naming Tishman and NY-1095 as additional insureds on a primary basis (¶ 8 and Insurance Rider, ¶¶ 2 [a], [g] and [h], 5, and 12).

B. The Subcontract between Petrillo Stone and Petrillo Setting

Petrillo Stone subcontracted with Petrillo Setting to complete the stone installation for the project. The agreement between the parties consisted of a Master Subcontract Agreement dated January 1, 2006, the Agreement between the parties (Exhibit A), and the job-specific Award Letter (Exhibit B). Under the Master Subcontract Agreement, Petrillo Stone is referenced as the contractor and Petrillo Setting is referenced as the subcontractor. The Master Subcontract Agreement specifies the significance of the Award Letter, as defining various terms of the specific job, including the name of the general contractor and owner of the project and the scope of work to be performed by [*5]Petrillo Setting. The Award Letter for the project located at 1095 Avenue of the Americas lists Tishman as the construction manager and NY-1095 as the owner. The Master Subcontract Agreement also incorporates by reference and obligates Petrillo Setting to all of the terms and conditions of Petrillo Stone's contract with the owner or "superior contractor," as well as to the terms and conditions of the Agreement between Petrillo Stone and Petrillo Setting (¶ 2).

The Agreement between Petrillo Stone and Petrillo Setting (Exhibit A to Master Subcontract Agreement) incorporates by reference all the terms and conditions of the contract between Tishman and Petrillo Stone and makes them fully a part of the Agreement between Petrillo Stone and Petrillo Setting. Petrillo Setting also agreed to assume all liabilities incurred and obligations assumed by Petrillo Stone under its contract with the owner and to be responsible to Petrillo Stone to the same extent Petrillo Stone is responsible to the owner under its contract (Article 1 - The Subcontract Documents).

Under the Agreement, Petrillo Setting agreed, to the fullest extent permitted by law, to defend and indemnify Petrillo Stone from all claims for injuries by Petrillo Setting employees from any cause, while on or near the project, or for claims of any person caused in whole or in part by any act or omission of Petrillo Setting (Article 18 - Indemnity and Hold Harmless - Insurance). Petrillo Setting also agreed to procure broad form comprehensive liability insurance with limits of liability of at least $11 million per occurrence naming the contractor, and the general contractor, owner, and Petrillo Stone as additional insureds, and to procure any other insurance and in such amounts as required by the contract documents (Rider B, Subcontractor Insurance Requirements, ¶¶ 3, 5, 6, 10, 11).

III. The Insurance Policies

A. The Selective Commercial General Liability Policy issued to Petrillo Stone

Petrillo Stone procured a commercial general liability policy from Selective for the policy period February 27, 2007 through February 27, 2008 with limits of liability of $1 million per occurrence. Under the "Other Insurance" clause, the insurance coverage is primary for the insured, except where other primary coverage is available to the insured for liability arising out of the operations for which it has been added as an additional insured by endorsement (Selective Commercial General Liability Coverage Form [CG 00 01 10 01], Section IV Commercial General Liability Conditions, ¶4). Under "Method of Sharing," if all other insurance permits contribution by equal shares, then each policy will contribute equally to the loss until each policy has paid its applicable limits (Selective Commercial General Liability Coverage Form [CG 00 01 10 01], Section IV Commercial General Liability Conditions, ¶4 [c]).

The Selective policy contained a General Liability Extension that included a broad form blanket additional insured endorsement, which covered as an additional insured any person or organization with whom the named insured has agreed by written contract to include as an additional insured with respect to liability "caused, in whole or in part, by [the named insured's] ongoing [*6]operations for the [additional insured]" (Elite Pac General Liability Extension , Blanket Additional Insureds - Broad Form Vendors - As Required by Contract, ¶ 1 [CG 72 02 07 05]). Under the endorsement, the coverage afforded the additional insured under the Selective policy is to be considered excess unless the contract required the additional insured coverage to be primary and not contributory.

The policy also included a separate additional insured endorsement entitled "Additional Insured—Owners Lessees or Contractors—Completed Operations—Automatic Status When Required in Construction Agreement With You" (CG 79 21 01 05), which includes as an additional insured, any person or organization with whom the named insured has agreed by written contract to include as an additional insured with respect to liability caused, in whole or in part, by the named insured's work performed for that additional insured and included in the "products-completed operations hazard" (¶ A). The coverage afforded the additional insured under this endorsement is to be considered excess unless the contract required the additional insured coverage to be primary and not contributory (¶ B).

B. The QBE Commercial General Liability Policy issued to Petrillo Setting

Petrillo Setting procured a commercial general liability policy from QBE for the policy period February 27, 2007 through February 27, 2008 with limits of liability of $1 million per occurrence. Under the "Other Insurance" clause, the insurance coverage is primary for the insured, except where other primary coverage is available to the insured for liability arising out of the operations for which it has been added as an additional insured by endorsement (QBE Commercial General Liability Coverage Form [CG 00 01 07 98], Section IV Commercial General Liability Conditions, ¶ 4). Under "Method of Sharing," if all other insurance permits contribution by equal shares, then each policy will contribute equally to the loss until each policy has paid its applicable limits (QBE Commercial General Liability Coverage Form [CG 00 01 10 01], Section IV Commercial General Liability Conditions, ¶ 4 [c]).

The QBE policy contains an additional insured endorsement that includes as an additional insured, any person or organization with whom the named insured has agreed by written contract to include as an additional insured with respect to liability "arising out of [the named insured's] work performed for that [additional insured] by or for [the named insured]." If required by the agreement, the coverage under this additional insured endorsement is to be considered primary for the additional insured, except if anyone other than the additional insured provided similar coverage for the additional insured, then the "Other Insurance" and "Method of Sharing" clauses would apply. (QBCG-0102 [11-99]).

The QBE policy also contains an endorsement modifying the "Other Insurance" clause by providing that the coverage under the QBE policy is excess over any other insurance available to [the named insured] under a policy issued to a contractor performing work for [the named insured]" (QBCG-0105 [11-99], ¶ 2[a]). [*7]

The QBE policy includes as a condition to coverage that the insured provide QBE or its agent with notice, as soon as practicable, of any occurrence that "may result in a claim" as well as any claim or suit (QBE Commercial General Liability Coverage Form [CG 00 01 07 98], Section IV Commercial General Liability Conditions, ¶ 2; New York Changes Commercial General Liability Coverage Form [CG 01 63 09 99], Section IV Commercial General Liability Conditions, ¶ 2).

IV. Notice to QBE and Selective, Reservations of Rights/Disclaimers, Reasonable Excuse for Delay in Notice, Good Faith Belief of Non-Liability

Tishman maintains that it first received notice of the Lombardo claim and suit on December 9, 2009 when it was served with the summons and complaint. By letter dated December 9, 2009, Tishman's claims administrator, Chartis, tendered the defense and indemnification of Tishman and NY-1095 to Selective, and requested coverage as additional insureds on its commercial general liability insurance policy issued to Petrillo Stone and pursuant to the terms of the contract between Tishman and Petrillo Stone. According to Tishman and NY-1095, since the accident report and the complaint both indicated that Lombardo was employed by Petrillo Stone, and Tishman and NY-1095 had no knowledge of the subcontract agreement between Petrillo Stone and Petrillo Setting, they gave prompt written notice to the only entity from whom they believed they were entitled to additional insured coverage—Selective.

A second tender letter was sent to Selective on December 15, 2009, which referenced the lawsuit filed by Lombardo on December 9, 2009 against Tishman.

An e-mail from Selective to USI, who is either Petrillo Setting or Petrillo Stone's broker or agent, indicates that on December 22, 2009, Petrillo Setting received notice of the Lombardo claim and suit, and tender of defense and indemnification on behalf of Tishman and NY-1095.

A fax cover sheet and an "Acord General Liability Notice of Claim" form from USI indicates that on December 23, 2009 QBE's third-party administrator, Rockville Risk Management received notice of the Lombardo claim and lawsuit and tender of defense and indemnification on behalf of Tishman and NY-1095 and Petrillo Stone. The QBE claims file indicates that it opened a file and began a late notice investigation by January 2, 2010. The claim file indicates that on January 2, 2010, it was aware of the late notice issues and that, but for a potential late notice issue, Tishman would likely be owed coverage under the QBE policy.

QBE's third-party administrator sent a letter to Tishman's claims administrator dated January 5, 2010 acknowledging receipt of the December 9, 2009 letter sent on behalf of Tishman and NY-1095 tendering their defense and indemnification to QBE. Specifically, the letter stated: "We are in receipt of your letter dated December 9, 2009, tendering to us a lawsuit entitled Peter Lombardo v. Verizon New York and Tishman Interiors Corporation" (emphasis added). In its letter, QBE called Tishman's attention to the notice provisions in the QBE policy, and reserved its rights under the policy. [*8]

QBE's third-party administrator sent letters to Petrillo Stone and Petrillo Setting, dated January 18, 2010, 27 days after receiving notice of the claim, disclaiming coverage to them for the Lombardo action based upon late notice. In its letter to Petrillo Stone, QBE disclaims coverage even though it maintained that Petrillo Stone had yet to make a claim.

Selective sent a letter to Petrillo Setting, dated January 22, 2010, with a copy to QBE's third-party administrator tendering the defense and indemnification of Petrillo Stone, Tishman, and NY-1095 to QBE and Petrillo Setting.

QBE's third-party administrator sent letters to Petrillo Setting and Petrillo Stone dated February 17, 2010, adhering to its prior declination of coverage based upon late notice.

By letter dated February 23, 2010, 77 days after receiving notice of the claim on behalf of Tishman and NY-1095, Selective responded to the tender letter of Tishman's claims administrator by denying coverage on the ground that Lombardo was not injured as the result of Petrillo Stone's ongoing operations. Selective explained that Petrillo Stone only secured the contracts for the job and subcontracted all the work to Petrillo Setting, who employed Lombardo. In its letter, Selective also indicated that it tendered the defense of Petrillo Stone and Tishman to Petrillo Setting and its insurer, QBE.

By letter dated February 25, 2010, counsel for Tishman and NY-1095 forwarded the newly filed Lombardo action to QBE's third-party administrator and supplemented their prior tender of defense and indemnification to QBE.

QBE's third-party administrator sent a letter to counsel for Tishman and NY-1095 dated March 1, 2010, denying their request for a defense and indemnification on the ground that no coverage existed for Tishman and NY-1095 under the QBE policy because the subcontract between Petrillo Stone and Petrillo Setting did not require Petrillo Setting to defend and indemnify Tishman or to name it as an additional insured under its commerical general liability policy. QBE also asserted that it never received any tender from Tishman and therefore, the tender was late and in violation of the notice provisions of the QBE policy. Although QBE acknowledged that Tishman sent a tender to Selective, as the carrier for Petrillo Stone, since Petrillo Stone and Petrillo Setting are two separate entities insured by separate liability carriers, QBE asserted that notice to Selective could not be imputed to QBE.

By letter dated March 24, 2010, counsel for Tishman and NY-1095 forwarded the newly filed Lombardo action to Selective and supplemented their prior tender of defense and indemnification to Selective.

By letter dated May 26, 2010, QBE's third-party administrator responded to letters sent by Petrillo Setting to QBE dated January 18, 2010 and February 17, 2010, which requested a defense and indemnification in connection with the third-party action, by disclaiming coverage to Petrillo Setting based upon late notice.

QBE's third-party administrator sent a letter to Selective dated January 12, 2011, with a copy to Petrillo Setting, adhering to its declination of coverage to Petrillo Stone for the Lombardo claim based upon late notice.

V. The Motions

A. Tishman and NY-1095's Motion for a Declaratory Judgment and Summary Judgment

In this declaratory judgment action, Tishman and NY-1095 move pursuant to CPLR 3212 for summary judgment and pursuant to CPLR 3001 for a declaratory judgment declaring that they are entitled to primary coverage as additional insureds on the commercial general liability insurance policies issued by Selective to Petrillo Stone and by QBE to Petrillo Setting to cover the Lombardo claim and suit for personal injuries that occurred on December 28, 2007, or alternatively, in the event the coverages are deemed not to be in effect, that Petrillo Stone and Petrillo Setting are in breach of contract to Tishman and NY-1095.

Petrillo Setting opposes Tishman and NY-1095's motion contending that Petrillo Setting procured the necessary insurance required by the contracts and therefore, it cannot be found liable for breach of contract. Petrillo Setting further contends that there are questions of fact as to whether the plaintiff was solely at fault for the accident and whether Tishman was responsible for the happening of the accident and therefore, Petrillo Setting's insurance policy would not be implicated.

Petrillo Stone opposes Tishman and NY-1095's motion contending that it procured the necessary insurance required by the contracts and therefore, it cannot be found liable for breach of contract. Petrillo Stone further contends that the accident did not arise out of its operations, as it was not working at the premises on the date of the accident and Lombardo was an employee of Petrillo Setting, not Petrillo Stone. Although Petrillo Stone prepared the shop drawings and provided the materials to be used in the lobby of the building, Petrillo Setting installed the marble. Petrillo Stone had no employees at the jobsite, other than to attend weekly job coordination meetings, and it did not supervise, direct, or control the work of Petrillo Setting. Further, Petrillo Stone argues that questions of fact exist as to the cause of the accident and whether Tishman was actively negligent in causing the accident and therefore, Tishman and NY-1095 would not be entitled to a defense or indemnification under the Petrillo Stone contract.

Selective opposes Tishman and NY-1095's motion on the ground that questions of fact exist as to whether Lombardo's injuries were caused by Petrillo Stone's operations, which is required to trigger coverage for Tishman and NY-1095 under Selective's policy of insurance. Selective further contends that it is not estopped from disclaiming coverage, as Insurance Law § 3420 (d) is inapplicable to an insured's assertion of the insuring provision of an additional insured endorsement. B. QBE's Cross Motion for a Declaratory Judgment and Summary Judgment and Opposition to Tishman and NY-1095's Motion[*9]

QBE opposes Tishman and NY-1095's motion and cross-moves pursuant to CPLR 3212 for summary judgment and pursuant to CPLR 3001 for a declaratory judgment declaring that Tishman and NY-1095 are not additional insureds on the QBE policy, or alternatively, that if they are declared additional insureds, their notice was late as a matter of law and the policy issued by Selective is primary to the policy issued by QBE.

QBE contends that the subcontract between Petrillo Stone and Petrillo Setting did not require that Petrillo Setting name Tishman or NY-1095 as additional insureds and therefore, no coverage is provided to them under the QBE policy. However, if it is determined that Tishman and NY-1095 are additional insureds under the QBE policy, QBE contends that Tishman and NY-1095's notice to QBE was late as a matter of law and, since the notice requirement constitutes a condition precedent to coverage, failure to comply vitiates coverage. In the event the Court determines that coverage is afforded to Tishman and NY-1095 as additional insureds under the QBE policy, QBE further contends that, in construing the "Other Insurance" clauses of the QBE and Selective policies, coverage under the QBE policy would be excess to coverage provided to Tishman and NY-1095 under the Selective policy. Finally, QBE argues that summary judgment is premature, as it seeks further substantive responses to its discovery demands.

Selective opposes QBE's cross motion, contending that, notwithstanding Selective's opposition to Tishman and NY-1095's claim that they are owed a defense and indemnification for the Lombardo claim and suit under the Selective commercial general liability policy, if the Court holds otherwise, then the Selective policy would provide co-primary coverage with QBE, with each sharing equally in the obligation owed to Tishman and NY-1095. Selective further contends that the excess insurance provision endorsement contained in the QBE policy (QBCG-0105 [11-99], ¶ 2[a]), which QBE relies upon in support of its argument that its policy is excess to the Selective policy for Tishman and NY-1095, is irrelevant to a determination of primary coverage for any additional insured, as this provision only applies to other insurance available to its named insured, Petrillo Setting. C. Petrillo Stone's Cross Motion for a Declaratory Judgment and Summary Judgment and Opposition to QBE's Cross Motion

Petrillo Stone opposes QBE's cross motion and cross-moves pursuant to CPLR 3212 for summary judgment and pursuant to CPLR 3001 for a declaratory judgment declaring that Petrillo Stone is entitled to primary coverage as an additional insured on the QBE policy issued to Petrillo Setting, or alternatively, that if the coverage is not in effect, that Petrillo Setting is in breach of contract to Petrillo Stone, and for a dismissal of all claims asserted against Petrillo Stone. Petrillo Stone contends that the subcontract between Petrillo Stone and Petrillo Setting required Petrillo Setting to name Tishman, NY-1095, and Petrillo Stone as additional insureds on its policy of insurance and therefore, they are entitled to coverage as additional insureds under the QBE policy.

Petrillo Stone argues that its notice to QBE was timely, as it was given within 13 days of service of the initial summons and complaint. Nevertheless, Petrillo Stone argues that its good faith belief of nonliability would excuse any failure to give timely notice. To support this argument, [*10]Petrillo Stone submits an affidavit from Ralph Petrillo, an owner and director of Petrillo Stone, in which he avers that Petrillo Stone subcontracted the main lobby stone installation to Petrillo Setting pursuant to the agreement that obligated Petrillo Setting to provide general liability and workers' compensation insurance for its employees working at the premises. He further avers that Petrillo Stone did not perform any stone installation at the project, nor did it have any employees on site on a daily basis. According to Mr. Petrillo, Petrillo Stone first became aware of the lawsuit commenced by Lombardo when it received the tender notification on December 9, 2009, at which time it notified its insurance carrier, who in turn notified QBE, Petrillo Setting's insurance carrier. According to Mr. Petrillo, prior to December 9, 2009, Petrillo Stone did not believe that Lombardo would be submitting a claim that would impact Petrillo Stone's general liability policy because it did not supervise, direct or control his work, and it was Petrillo's understanding that Lombardo continued to work until he was laid off due to lack of work on February 5, 2008.

In further support of its argument that it had a good faith belief of non-liability, Petrillo Stone relies upon Lombardo's deposition testimony that he continued to work that same day after the accident, that he continued to work for Petrillo Setting until he was laid off in February 2008, and that he went directly to work for Continental Stone where he worked until sometime in 2009.

Based upon the following factors, as established by the proof submitted with the motions, Petrillo Stone argues that it had a good faith belief of non-liability: Lombardo refused medical attention on the date of the accident and continued to work for Petrillo Setting for months after the accident until he was laid off in February of 2008; Lombardo was employed by Petrillo Setting, not Petrillo Stone, and it did not supervise, direct, or control his work; Petrillo Stone was not present at the jobsite on the date of the accident; Petrillo Stone provided the shop drawings and the materials for the project and attended weekly progress meetings at the project, but it did not install any stone or purchase or use any angle irons at this project; and Petrillo Stone did not cause or create any defective or hazardous condition involved in Lombardo's accident, nor did it have notice of any such condition.

QBE opposes Petrillo Stone's cross motion contending that, while Petrillo Stone and Petrillo Setting may be separate corporations, they are related entities with significant overlap in ownership and employees, which conclusively establishes that both entities had notice of the Lombardo claim on the date of the occurrence, December 28, 2007. QBE points out that Petrillo Stone and Petrillo Setting maintain the same offices, share the same address for service of process, and share a common employee, Teresa Ryan, who serves as the insurance coordinator for both companies. Since Teresa Ryan, as an employee or agent of Petrillo Stone, had knowledge of the occurrence on December 28, 2007, this knowledge is imputed to Petrillo Stone, as the principal. QBE further argues that an additional insured has an implied duty independent of the named insured to provide the insurer with timely notice of both the occurrence and of any claim or suit arising therefrom, and its failure to do so vitiates coverage. Although QBE received notice of the Lombardo claim on December 23, 2009, this original notice was sent from the claims administrator for Tishman and NY-1095 to Selective, who forwarded it to QBE. Thus, Petrillo Stone never placed QBE on notice of the Lombardo occurrence, claim, or suit. Despite this, QBE sent a disclaimer to Petrillo Stone on January 18, 2010. [*11]QBE further contends that Petrillo Stone's asserted belief of nonliability is unreasonable, as the C-2 indicates that Lombardo had injured his lower back and leg and "continued working but was unable to lift anything."

D. Tishman and NY-1095's Opposition to the Cross Motions of Selective and QBE

Tishman and NY-1095 oppose the cross motions of Selective and QBE contending that Tishman and NY-1095 had no knowledge that Lombardo was employed by Petrillo Setting or that it was insured by QBE until sometime after the litigation was underway. According to the complaint, Lombardo alleged that he was employed by Petrillo Stone, and no mention is made of Petrillo Setting. Furthermore, the accident report indicates that Lombardo was an employee of Petrillo Stone. Tishman and NY-1095 contend that they were not made aware that Petrillo Stone had subcontracted its work to Petrillo Setting until sometime after January 5, 2010, when it received a letter from QBE's third-party claims administrator responding to the tender made by Selective on Tishman and NY-1095's behalf, in which QBE reserved its rights to disclaim coverage to Tishman and NY-1095.

Tishman and NY-1095 further contend that they had no independent obligation to notify QBE of the claim because notice by its named insured, Petrillo Setting, constituted notice by the additional insured, as their interests were not adverse at the time notice was given.

Tishman and NY-1095 also argue that Selective's wrongful late disclaimer precludes it from denying a defense and indemnification to Tishman and NY-1095. Since Tishman and NY-1095 qualify as additional insureds under both the Selective and QBE policies, they are owed a defense and indemnification in the Lombardo action.

LEGAL ANALYSIS/DISCUSSION

I. Additional Insured Coverage and Priority of Coverage

A. Tishman and NY-1095 are entitled to coverage as additional insureds on the Selective and QBE commercial general liability policies on a co-primary basis.

The Selective commercial general liability policy issued to Petrillo Stone includes a broad form blanket additional insured endorsement, which covers as an additional insured any person or organization with whom Petrillo Stone, as the named insured, had agreed by written contract to include as an additional insured with respect to liability "caused, in whole or in part, by [Petrillo Stone's] ongoing operations for the [additional insured]" (Elite Pac General Liability Extension, Blanket Additional Insureds - Broad Form Vendors - As Required by Contract, ¶ 1 [CG 72 02 07 05][emphasis added]). Under this endorsement, the coverage afforded the additional insureds was to be considered excess unless the contract required the additional insured coverage to be primary [*12]and not contributory (id.).[FN2]

The phrase "caused by" does not materially differ from the phrase "arising out of," used in other additional insured endorsements, which focuses "not on the precise cause of the accident but the general nature of the operation in the course of which the injury was sustained" (National Union Fire Ins. Co. of Pittsburgh, PA, 103 AD3d 473, 474 [1st Dept 2013], citing Regal Constr. Corp. v National Union Fire Ins. Co. of Pittsburgh, PA, 15 NY3d 34, 38 [2010]). The language contained in the Selective additional insured endorsement is very broad and would provide coverage for the additional insured even in the absence of a negligent act or omission of the subcontractor, provided that the claim arises from the contracted-for services for the additional insured (see Consolidated Edison Co. of New York, Inc. v Hartford Ins. Co., 203 AD2d 83[2d Dept 1994]; cf. Kruger v. CNA Insurance Company, 242 AD2d 566, 567 [2d Dept 1997] [additional insured endorsement that provided coverage to general contractor only for its vicarious liability for the work of its subcontractor performed by or on its behalf, was narrower in its coverage than an additional insured endorsement that provided coverage for liability "arising out of" the subcontractor's work for or on behalf of the general contractor]). The Selective additional insured endorsement would also cover the situation where an employee of a subcontractor was injured during the course of his employment while doing work for the additional insured, even where the injuries were the result of the negligence of the additional insured, another subcontractor at the scene, or the plaintiff's own fault (see id.; Chelsea Associates, LLC v Laquila-Pinnacle, 21 AD3d 739, 740 [1st Dept 2005]). Thus, whether Tishman was negligent or partially at fault for the Lombardo injury is of no consequence in determining the coverage issues presented here (see Regal Constr. Corp. v National Union Fire Ins. Co. of Pittsburgh, PA, 15 NY3d at 39 ["That the underlying complaint alleges negligence on the part of [the additional insured] and not [the named insured] is of no consequence, as [the additional insured's] potential liability for [the plaintiff's] injury ar[ose] out of' [the named insured's] operation and, thus, [the additional insured] is entitled to a defense and indemnification according to the terms of the CGL policy"]).

According to the contract between Tishman and Petrillo Stone, Petrillo Stone agreed, to the fullest extent permitted by law, to defend and indemnify Tishman and NY-1095 from and against all claims arising out of or resulting from the work or operations of Petrillo Stone or its subcontractors, or the condition of the site (¶ 7), and to procure commercial general liability insurance containing contractual liability and additional insured coverage naming Tishman and NY-1095 as additional insureds on a primary basis (¶ 8 and Insurance Rider, ¶¶ 2 [a], [g]and [h], 5, and 12). Since Lombardo was injured while performing stone work that Petrillo Stone was contractually obligated to perform for Tishman, the injury was caused by Petrillo Stone's ongoing operations for Tishman so as to trigger the coverage provided in the Selective policy (see Tishman Interiors Corp. v Fireman's Fund Insurance Company, 236 AD2d 385, 386 [2d Dept 1997] [since [*13]the plaintiff, an employee of Industrial's subcontractor, "was injured while performing sheetmetal work which Industrial was contractually obligated to perform for Tishman, it must be concluded that [plaintiff's] injury arose from Industrial's work for Tishman so as to trigger the coverage provided in the [commercial general liability policy issued by Royal for Industrial] ]). Since the contract also required that the additional insured coverage for Tishman and NY-1095 be primary, the coverage afforded to them under the Selective policy is primary (see Pecker Iron Works of New York v Travelers Insurance Company, 99 NY2d 391, 393-394 [2003] .

The QBE commercial general liability policy issued to Petrillo Setting contains an additional insured endorsement that included as an additional insured, any person or organization with whom Petrillo Setting had agreed by written contract to include as an additional insured with respect to liability "arising out of [Petrillo Setting's] work performed for that [additional insured] by or for [Petrillo Setting]." If required by the agreement, the coverage under this additional insured endorsement was to be considered primary for the additional insured, except if anyone other than the additional insured provided similar coverage for the additional insured, then the "Other Insurance" and "Method of Sharing" clauses would apply (QBCG-0102 [11-99]).

The agreement between Petrillo Stone and Petrillo Setting, which included the Master Subcontract Agreement, the Agreement, and the Award Letter, incorporates by reference and obligates Petrillo Setting to all of the terms and conditions of Petrillo Stone's contract with Tishman, and makes them fully a part of the Agreement between Petrillo Stone and Petrillo Setting. Petrillo Setting also agreed to assume all liabilities incurred and obligations assumed by Petrillo Stone under its contract with Tishman and to be responsible to Petrillo Stone to the same extent Petrillo Stone is responsible to Tishman and NY-1095 under its contract (Master Subcontract Agreement, ¶ 2; Article 1 - The Subcontract Documents).

Under the Agreement, Petrillo Setting agreed, to the fullest extent permitted by law, to defend and indemnify Petrillo Stone from all claims for injuries by Petrillo Setting employees from any cause, while on or near the project, or for claims of any person caused in whole or in part by any act or omission of Petrillo Setting (Agreement, Article 18 - Indemnity and Hold Harmless - Insurance). The agreement also obligated Petrillo Setting to procure broad form comprehensive liability insurance naming Petrillo Stone, Tishman and NY-1095 as additional insureds (Agreement, Rider B, Subcontractor Insurance Requirements, ¶¶ 3, 5, 6, 10, 11).

Since Lombardo was injured while performing stone work as an employee of Petrillo Setting, coverage is triggered for Petrillo Stone, Tishman and NY-1095 under the QBE policy (see Tishman Interiors Corp. v Fireman's Fund Insurance Company, 236 AD2d at 386).

Although the agreement between Petrillo Stone and Petrillo Setting contained no requirement that the coverage afforded the additional insureds be primary, the agreement between Tishman and Petrillo Stone, which is incorporated by reference and made fully a part of the agreement between Petrillo Stone and Petrillo Setting, contained such a requirement. Thus, Tishman and NY-1095 are also entitled to primary coverage under the additional insured endorsement of the QBE policy. [*14]

Moreover, an "[a]dditional insured is a recognized term in insurance contracts," meaning "an entity enjoying the same protection as the named insured" and, thus, where an agreement obligates a subcontractor to procure additional insured coverage for another contractor or party, this signifies that the coverage afforded the additional insured is to be primary for the risk (Pecker Iron Works of New York v Travelers Insurance Company, 99 NY2d at 393-394 [internal quotation marks and citations omitted] [an agreement to provide additional insured coverage alone signifies that the additional insured coverage is the same as the coverage provided to the named insured]; U.S. Fire Ins. Co. v Knoller Companies, Inc., 80 AD3d 692, 694-695 [2d Dept 2011] ["The subcontract agreement between [the general contractor] and [the subcontractor] constituted an agreement by [the subcontractor] to procure liability insurance providing primary coverage to the [owner and general contractor], as additional insureds"]).

"Where the same risk is covered by two or more policies, each of which was sold to provide the same level of coverage (as is the case here), priority of coverage (or, alternatively, allocation of coverage) among the policies is determined by comparison of their respective other insurance' clauses" (Sport Rock Intern., Inc. v American Cas. Co. of Reading, Pa., 65 AD3d 12, 18 [1st Dept 2009]). Since Tishman and NY-1095 are entitled to additional insured coverage on both the Selective and QBE policies, the priority of coverage must be determined by reviewing the applicable "other insurance" clauses of each policy. Here, since the excess clauses in the applicable "other insurance" provisions of the Selective and QBE policies mirror each other and cover the same risk on the same level, they "cancel each other out and each carrier is required to contribute ratably in such proportion as its policy limit bears to the total of all policy limits" (Bovis Lend Lease LMB, Inc. v Great American Insurance Co., 53 AD3d 140, 156 [1st Dept 2008]; see State Farm Fire & Cas. Co. v LiMauro, 65 NY2d 369, 375-376 [1985] [The rule "is that an insurance policy which purports to be excess coverage but contemplates contribution with other excess policies or does not by the language used negate that possibility must contribute ratably with a similar policy, but must be exhausted before a policy which expressly negates contribution with other carriers, or otherwise manifests that it is intended to be excess over other excess policies"]).

Moreover, the endorsement in the QBE policy that modifies the "Other Insurance" clause (QBCG-0105 [11-99], ¶ 2[a]), only makes its coverage excess to other coverage available to its named insured, Petrillo Setting, under a policy issued to a contractor performing work for Petrillo Setting. Contrary to QBE's claim, this endorsement does not apply to coverage it provides to Tishman and NY-1095, as additional insureds. B. Petrillo Stone qualifies as an additional insured on the QBE commercial general liability policy on a primary basis.

The QBE commercial general liability policy issued to Petrillo Setting contains an additional insured endorsement that included as an additional insured, any person or organization with whom Petrillo Setting had agreed by written contract to include as an additional insured with respect to liability "arising out of [Petrillo Setting's] work performed for that [additional insured] by or for [Petrillo Setting]." If required by the agreement, the coverage under this additional insured [*15]endorsement was to be considered primary for the additional insured, except if anyone other than the additional insured provided similar coverage for the additional insured, then the "Other Insurance" and "Method of Sharing" clauses would apply (QBCG-0102 [11-99]).

Under the Agreement between Petrillo Stone and Petrillo Setting, Petrillo Setting agreed, to the fullest extent permitted by law, to defend and indemnify Petrillo Stone from all claims for injuries by Petrillo Setting employees from any cause, while on or near the project, or for claims of any person caused in whole or in part by any act or omission of Petrillo Setting (Agreement, Article 18 - Indemnity and Hold Harmless - Insurance). The agreement also obligated Petrillo Setting to procure broad form comprehensive liability insurance naming Petrillo Stone as an additional insured (Agreement, Rider B, Subcontractor Insurance Requirements, ¶¶ 3, 5, 6, 10, 11).

Since Lombardo was injured while performing stone work as an employee of Petrillo Setting, coverage is triggered for Petrillo Stone under the QBE policy (see Tishman Interiors Corp. v Fireman's Fund Insurance Company, 236 AD2d at 386).

Moreover, the coverage afforded to Petrillo Stone as an additional insured under the QBE policy qualifies as primary coverage. Although the subcontract agreement between Petrillo Stone and Petrillo Setting contained no specific requirement that the coverage afforded the additional insureds be primary, as an additional insured, Petrillo Stone is entitled to "the same protection as [a] named insured" and, their agreement, which obligated Petrillo Setting to procure additional insured coverage for Petrillo Stone, signifies that the coverage is to be primary for the risk (see Pecker Iron Works of New York v Travelers Insurance Company, 99 NY2d at 393-394; U.S. Fire Ins. Co. v Knoller Companies, Inc., 80 AD3d at 694-695).

II. Validity and Timeliness of Notices and Disclaimers

A. Selective's denial of coverage to Tishman and NY-1095 is without merit and late as a matter of law.

"Under Insurance Law § 3420(d), an insurer wishing to disclaim liability or deny coverage for death or bodily injury must give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage.' A failure to give such prompt notice precludes an effective disclaimer or denial" (JT Magen v Hartford Fire Ins. Co., 64 AD3d 266, 268-269 [1st Dept 2009], citing Matter of Firemen's Fund Ins. Co. of Newark v Hopkins, 88 NY2d 836, 837 [1996] ). Here, Tishman and NY-1095 placed Selective on notice of the Lombardo claim and suit on December 9, 2009. Thereafter, Selective disclaimed coverage to Tishman and NY-1095 on February 23, 2010, 77 days later. The reason given for the denial of coverage was that Lombardo was not injured as the result of Petrillo Stone's ongoing operations. While "[t]he failure to timely disclaim coverage pursuant to Insurance Law § 3420(d) cannot create insurance which was never in effect, . . . or which could not have covered the liability in question under any circumstances" (American Ref-Fuel Co. of Hempstead v Employers Ins. Co. of Wausau, 265 AD2d 49, 51 [2d Dept 2000], quoting Zappone v Home Ins. Co., 55 NY2d 131, 134, 137-138 [1982] [internal quotation marks [*16]omitted]), the discaimer is without merit, as Tishman and NY-1095 are afforded coverage as additional insureds under the Selective policy. Therefore, Selective's late disclaimer, which is substantively baseless, precludes effective disclaimer or denial of coverage to Tishman and NY-1095" (see generally Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1029 [1979]).

B. Tishman and NY-1095 have presented a reasonable excuse for their delay in notifying

QBE of the Lombardo claim and suit and in tendering to it their defense and indemnification.

The QBE policy includes as a condition to coverage that the insured provide QBE or its agent with notice, as soon as practicable, of any occurrence that "may result in a claim" as well as any claim or suit (QBE Commercial General Liability Coverage Form [CG 00 01 07 98], Section IV Commercial General Liability Conditions, ¶ 2; New York Changes Commercial General Liability Coverage Form [CG 01 63 09 99], Section IV Commercial General Liability Conditions, ¶ 2). For policies of insurance issued before January 17, 2009, such as the policies at issue here, an insurer could disclaim coverage when the insured failed to satisfy the notice condition, without regard to whether the insurer was prejudiced by the insured's failure to satisfy such condition (see Insurance Law § 3420 [c] [2] [A]).

"Where an insurance policy requires an insured to provide notice as soon as practicable' of an occurrence, such notice must be provided within a reasonable time under all circumstances" (Donovan v Empire Insurance Group, 49 AD3d 589, 590-591 [2d Dept 2008]). "Providing the required notice is a condition to the insurance carrier's liability and absent a valid excuse, a failure to satisfy the notice requirement vitiates the policy" (id. at 591). "[T]he insurer need not show prejudice before it can assert the defense of noncompliance" (Security Mut. Ins. Co. of NY v Acker—Fitzsimons Corp., 31 NY2d 436, 440 [1972]) "The burden of demonstrating the reasonableness of the excuse lies with the insured" (Courduff's Oakwood Road Gardens & Landscaping Co., Inc. v Merchant's Mutual Ins. Co., 84 AD3d 717, 718 [2d Dept 2011]).

Here, Tishman and NY-1095 had a reasonable excuse for their two-year delay in notifying QBE of the Lombardo claim. Tishman and NY-1095 had a good faith belief that Lombardo was employed by Petrillo Stone since the accident report that they received, dated December 28, 2007, and the two complaints all alleged this as a fact and there is no proof in the record that Tishman and NY-1095 knew about the subcontract agreement between Petrillo Stone and Petrillo Setting. When Tishman and NY-1095 received notice of the suit, they promptly placed Selective on notice and tendered their defense and indemnification to it seeking coverage as additional insureds under its policy issued to Petrillo Stone. Selective has not raised any late notice as against Tishman and NY-1095. In turn, Tishman and NY-1095's tender of defense and indemnification was promptly forwarded to QBE. Since there is no proof in the record that Tishman and NY-1095 knew of Petrillo Setting or of a potential for coverage under the QBE policy, they have presented a reasonable excuse for failing to promptly notify QBE.

C. Alternatively, QBE's denial of coverage to Tishman and NY-1095 based upon late notice is late as a matter of law and precludes an effective disclaimer under Insurance Law § 3420 [*17](d).

"Under Insurance Law § 3420(d), an insurer wishing to disclaim liability or deny coverage for death or bodily injury must give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage.' A failure to give such prompt notice precludes an effective disclaimer or denial" (JT Magen v Hartford Fire Ins. Co., 64 AD3d 266, 268-269 [1st Dept 2009], citing Matter of Firemen's Fund Ins. Co. of Newark v Hopkins, 88 NY2d 836, 837 [1996]; Okumus v National Specialty Ins. Co., __AD3d __, 2013 NY Slip Op 08417 [2d Dept December 18, 2013]). "An insurer's time to give written notice of disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage'" (Country-Wide Ins. Co. v Ramirez, 104 AD3d 850, 851 [2d Dept 2013], quoting First Fin. Ins. Co. v. Jetco Contr. Corp., 1 NY3d 64, 68—69 [2003]).

Here, QBE was placed on notice of the Lombardo claim and suit and received the tender of defense and indemnification on behalf of Tishman, NY-1095, and Petrillo Stone on December 23, 2009. QBE did not disclaim coverage to Tishman and NY-1095 until March 1, 2010, 69 days later, and provides no reason for the delay. In its disclaimer, QBE's third-party administrator denied Tishman and NY-1095's request for a defense and indemnification on the ground that no coverage existed for them under the QBE policy and also based upon late notice. Even if some investigation was warranted before a disclaimer could be issued, QBE's 69-day delay, is untimely as a matter of law (see Country-Wide Ins. Co. v Ramirez, 104 AD3d at 851 ["Since Country—Wide merely made a conclusory statement that the delay was occasioned by its investigation, and provided no details with regard to the specific efforts undertaken in conducting that investigation, it failed to sustain its burden of demonstrating that the [two-month] delay was excusable, and the disclaimer was untimely as a matter of law"]; City of New York v Northern Ins. Co. of New York, 284 AD2d 291, 292 [2d Dept 2001] ["Northern's two-month delay in disclaiming coverage was unreasonable as a matter of law, as the ground for the disclaimer was obvious on the face of the City's notice of claim"]; George Campbell Painting v National Union Fire Ins. Co. of Pittsburgh, PA, 92 AD3d 104, 106 [1st Dept 2012] ["[W]here the record establishes that the insurer had sufficient information to disclaim coverage on the ground of late notice no later than January 19, 2006, a disclaimer issued on that ground nearly four months later, on May 17, 2006, was ineffective as a matter of law"]; Uptown Whole Foods, Inc. v Liberty Mut. Fire Ins. Co., 302 AD2d 592 [2d Dept 2003] [57-day delay in disclaiming coverage was unreasonable as a matter of law, as the basis alleged for the disclaimer was obvious on the face of the summons and complaint]).

Although in its disclaimer letter dated March 1, 2010, QBE denied receiving any tender from Tishman and NY-1095 and asserted that their notice was late and in violation of the notice provisions of the QBE policy, the tender letter issued by USI to QBE on behalf of Tishman and NY-1095 and Petrillo Stone requesting a defense and indemnification as additional insureds under the QBE policy, fulfilled the notice of claim requirement and triggered QBE's obligation to timely disclaim pursuant to Insurance Law § 3420(d) (JT Magen v Hartford Fire Ins. Co., 64 AD3d at 268-269 ["We hold that the tender letter insurer Travelers wrote on behalf of plaintiff and others to insurance carrier Hartford—asking that their mutual insureds be provided with a defense and [*18]indemnity, as additional insureds under the policy issued to Erath—fulfills the policy's notice of claim requirements so as to trigger the insurer's obligation to issue a timely disclaimer pursuant to Insurance Law § 3420 (d)]; Sierra v 4401 Sunset Park, LLC, 101 AD3d 983, 985 [2d Dept 2012] ["Where a primary insurer . . . tenders a claim for a defense and indemnification to an insurer, . . . which issued a certificate of insurance to the parties, indicating that they are additional insureds, that insurer must comply with the disclaimer requirements of Insurance Law § 3420 (d) (2) by providing written notice of disclaimer of coverage to the additional insureds. The fact that the tendering insurer provided untimely notice of the accident does not excuse the insurer's unreasonable delay in disclaiming coverage"] [internal quotation omitted]).

Furthermore, QBE's claim that it never received notice on behalf of Tishman and NY-1095 is belied by its own reservation of rights letter dated January 5, 2010, in which it acknowledged receipt of the December 9, 2009 letter sent on behalf of Tishman and NY-1095 tendering their defense and indemnification to QBE. Specifically, the reservation of rights letter to the claims administrator for Tishman and NY-1095 stated: "We are in receipt of your letter dated December 9, 2009, tendering to us a lawsuit entitled Peter Lombardo v. Verizon New York and Tishman Interiors Corporation" (emphasis added).

In any event, the notice and tender letter sent to QBE on December 23, 2009 satisfied the notice requirements for Tishman, NY-1095, and Petrillo Stone, as their interests were not adverse at the time the summons and complaint were served (see New York Telephone Company v Travelers Casualty and Surety Company of America, 280 AD2d 268 [1st Dept 2001] ["Inasmuch as Time Warner's interests were not adverse to those of New York Telephone at the time the summons and complaint were forwarded to Travelers, the notice provided by Time Warner's forwarding of the summons and complaint sufficed to defeat the carrier's affirmative defense of late notice"]; Ambrosio v Newburgh Enlarged Central School District, 5 AD3d 410 [2d Dept 2004]).

Nor can QBE rely on its letter to Tishman's claims administrator dated January 5, 2010, in which QBE called Tishman's attention to the notice provisions in the QBE policy and reserved its rights under the policy, as an earlier disclaimer, as a reservation of rights letter is insufficient to serve as a valid disclaimer (see Hartford Ins. Co. v Nassau County, 46 NY2d 1028, 1029 [1979] ["A reservation of rights letter has no relevance to the question whether the insurer has timely sent a notice of disclaimer of liability or denial of coverage"]; Strauss Painting, Inc. v Mt. Hawley Ins. Co., 105 AD3d 512, 513 [1st Dept 2013] [reservation of rights letter was insufficient to actually disclaim coverage]; Zappone v Home Ins. Co., 55 NY2d 131, 135 [1982]) .

Since QBE's disclaimer letter to Tishman and NY-1095 was late as a matter of law, QBE is precluded from disclaiming coverage under Insurance Law § 3420 (d). D. A question of fact exists as to Petrillo Stone's good faith belief of non-liability to warrant a denial of the cross motions for summary judgment

Although compliance with an insurance policy's notice provision is a condition precedent to [*19]coverage, "[a]n 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" (United Talmudical Academy of Kiryas Joel v Cigna Prop. & Cas. Co., 253 AD2d 423, 424 [2d Dept 1998]). "When the facts of an occurrence are such that an insured acting in good faith would not reasonably believe that liability on his part will result, notice of the occurrence given by the insured to the insurer is given 'as soon as practicable' if given promptly after the insured receives notice that a claim against him will in fact be made" (id., quoting Merchants Mut. Ins. Co. v Hoffman,56 NY2d 799, 801 [1982][emphasis added]). The burden is on the insured to show the reasonableness of its belief and whether that belief is reasonable is ordinarily a question of fact for the jury (id.). "The insured's belief must be reasonable under all the circumstances, and it may be relevant on the issue of reasonableness, whether and to what extent, the insured has inquired into the circumstances of the accident or occurrence" (Security Mut. Ins. Co. of NY v Acker—Fitzsimons Corp., 31 NY2d 436, 441 [1972]).

Petrillo Stone contends that its notice to QBE was timely, as it was given within 13 days of service of the initial summons and complaint, and any delay in notifying QBE is excused based upon its good faith belief of nonliability. To support this argument, Petrillo Stone submits an affidavit from Ralph Petrillo, an owner and director of Petrillo Stone, in which he avers that Petrillo Stone subcontracted the main lobby stone installation to Petrillo Setting pursuant to the agreement that obligated Petrillo Setting to provide general liability and workers' compensation insurance for its employees working at the premises. He further avers that Petrillo Stone did not perform any stone installation at the project, nor did it have any employees on site on a daily basis. According to Mr. Petrillo, Petrillo Stone first became aware of the lawsuit commenced by Lombardo when it received the tender notification on December 9, 2009, at which time it notified its insurance carrier, who in turn notified QBE, Petrillo Setting's insurance carrier. According to Mr. Petrillo, prior to December 9, 2009, Petrillo Stone did not believe that Lombardo would be submitting a claim that would impact Petrillo Stone's general liability policy because it did not supervise, direct or control his work, and it was Petrillo's understanding that Lombardo continued to work until he was laid off due to lack of work on February 5, 2008.

In further support of its argument that it had a good faith belief of non-liability, Petrillo Stone relies upon Lombardo's deposition testimony that he continued to work that same day after the accident, that he continued to work for Petrillo Setting until he was laid off in February 2008, and that he went directly to work for Continental Stone where he worked until sometime in 2009.

Based upon the following factors, as established by the proof submitted with the motions, Petrillo Stone contends that it had a good faith belief of non-liability: Lombardo refused medical attention on the date of the accident and continued to work for Petrillo Setting for months after the accident until he was laid off in February of 2008; Lombardo was employed by Petrillo Setting, not Petrillo Stone, and it did not supervise, direct, or control his work; Petrillo Stone was not present at the jobsite on the date of the accident; Petrillo Stone provided the shop drawings and the materials for the project and attended weekly progress meetings at the project, but it did not install any stone or purchase or use any angle irons at this project; and Petrillo Stone did not cause or create any [*20]defective or hazardous condition involved in Lombardo's accident, nor did it have notice of any such condition.

Here, QBE made a prima facie showing of entitlement to judgment as a matter of law based on Petrillo Stone's approximate two-year delay in notifying QBE of the underlying incident (see Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, [2005]). However, in opposition, Petrillo Stone raised a triable issue of fact as to whether the delay was reasonably based on a good-faith belief of nonliability (see Columbia University Press, Inc. v Travelers Indem. Co. Of America, 89 AD3d 667, 668 [2d Dept 2011]; 25th Ave., LLC v Delos Ins. Co., 84 AD3d 781, 784 [2d Dept 2011] ["[A]lthough the plaintiffs were aware on the date of the incident that Jaramillo had been injured and had obtained medical care, other evidence they submitted in opposition to the insurer's summary judgment motion raises a triable issue as to their reasonable, good-faith belief of nonliability excusing their delay in notifying the insurer, including statements by the subcontractor that Jaramillo was fine and had returned to work, the subcontractor's proof prior to commencement of the work of its own liability and Worker's Compensation insurance, the subcontractor's entry into a hold-harmless' agreement with the general contractor, the owner's and general contractor's lack of supervision or control over the work done by the subcontractor's employees, . . . raised a triable issue of fact as to the reasonableness of their belief of nonliability"]; see also Utica First Ins. Co. v Vazquez, 92 AD3d 886, 887 [2d Dept 2012] [the defendants raised a triable issue of fact as to whether their nearly two-year delay in providing notice to the insurer was reasonably based on their lack of knowledge of the accident or on a good faith belief in the nonliability]; Tower Ins. Co. of New York v Alvarado, 84 AD3d 1354, 1355 [2d Dept 2011] ["[C]onstruing all inferences in favor of the Alvarados, they raised a triable issue of fact as to whether their [two-year] delay in giving notice was reasonably based on a good faith belief in nonliability"]).

Based upon the foregoing, it is hereby

ORDERED that the branches of the motion of the defendants/third-party plaintiffs NY-1095 Avenue of the Americas, LLC and Tishman Interiors Corporation which are for summary judgment declaring that the defendant/third-party defendant QBE Insurance Corp. and the third-party defendant Selective Way Insurance Company are obligated to defend and indemnify them on a co-primary basis in an underlying action entitled Lombardo v NY-1095 Avenue of the Americas, L.L.C., et al., pending in the Supreme Court, New York County, under Index No. 101392/2010, are granted; and it is further

ORDERED that the branches of the motion of the defendants/third-party plaintiffs NY-1095 Avenue of the Americas, LLC and Tishman Interiors Corporation which are for summary judgment declaring that the plaintiff/third-party defendant Petrillo Stone Corporation and the defendant/third-party defendant Petrillo Setting Corporation are in breach of their contractual obligations are denied; and it is further

ORDERED that the defendant/third-party defendant QBE Insurance Corp.'s motion for summary judgment declaring that it is not obligated to defend and indemnify NY-1095 Avenue of [*21]the Americas, LLC and Tishman Interiors Corporation in the underlying action, or, in the alternative, that a policy of insurance issued by the third-party defendant Selective Way Insurance Company is primary to its policy is denied; and it is further

ORDERED that the motion of the plaintiff/third-party defendant Petrillo Stone Corporation for summary judgment declaring that the defendant/third-party defendant QBE Insurance Corp. is obligated to defend it in the underlying action, or, in the alternative, for summary judgment declaring that the defendant/third-party defendant Petrillo Setting Corporation is in breach of its contractual obligations is denied; and it is further

ORDERED that entry of a judgment declaring the parties' respective rights and obligations to each other is held in abeyance pending resolution of the remaining causes of action (see CPLR 3212 [e] [2]); and it is further

ORDERED that all parties shall appear in the Preliminary Conference Part on February 3, 2014 at 9:30 a.m. in Room 811 of the Westchester County Supreme Court, 111 Dr. Martin Luther King, Jr., Boulevard, White Plains, New York 10601; and it is further

ORDERED that all other relief requested and not decided herein is denied.

This constitutes the decision and order of the Court.

Dated:White Plains, New York

January 3, 2014

HON. FRANCESCA E. CONNOLLY, J.S.C.

Footnotes

Footnote 1: Peter Lombardo is named as a defendant in this action solely for notice purposes. No relief is sought against him.

Footnote 2: The endorsement entitled "Additional Insured—Owners Lessees or Contractors—Completed Operations—Automatic Status When Required in Construction Agreement With You" (CG 79 21 01 05), which applies to completed operations, does not apply here since the operations were ongoing at the time of Lombardo's accident (see Travelers Property Casualty Company of America v Selective Insurance Company of New York, 41 Misc 3d 1201[A] [Sup Ct, NY Co 2013]).