Tuesday, November 24, 2009

In DJ Action Plaintiff Cannot Recover Costs of Defendant's Appeal. Appeal does not Cast Plaintiff in "Defensive Posture"

Thomas Johnson, Inc. v. State Ins. Fund
--- N.Y.S.2d ----, 2009 WL 3790596
N.Y.A.D. 4 Dept.,2009.

This case involved whether the trial court erred in granting the plaintiff judgment declaring that defendant was obligated to pay all costs and fees incurred by plaintiff in the defense of an appeal taken by defendant in connection with a declaratory judgment action. The State Fund argued that the trial court erred in ordering reimbursement of plaintiff’s costs and attorneys fees given that it was plaintiff who commenced the declaratory judgment action citing the well settled rule that “an insured may not be awarded attorney fees incurred in the prosecution of a declaratory [judgment] action against the insurer to determine coverage” ( Penn Aluminum v. Aetna Cas. & Sur. Co., 61 A.D.2d 1119, 1120, 402 N.Y.S.2d 877), unless the insured was “cast in a defensive posture by the legal steps an insurer takes in an effort to free itself from its policy obligations” (Mighty Midgets v. Centennial Ins. Co., 47 N.Y.2d 12, 21, 416 N.Y.S.2d 559, 389 N.E.2d 1080). The Fourth Department was not swayed by appellant’s argument that it was cast in a defensive posture by defendant’s appeal (see generally Crouse W. Holding Corp. v. Sphere Drake Ins. Co., 248 A.D.2d 932, 670 N.Y.S.2d 640, affd. 92 N.Y.2d 1017, 684 N.Y.S.2d 480, 707 N.E.2d 435).

Tuesday, November 10, 2009

Despite Custom in the Industy, Insured Who Gives Notice of an Occurrence to his Broker Does so at his Peril

American Safety Indem. Co. v. 612 Realty LLC,
Slip Copy, 2009 WL 2407822 (N.Y.Sup., J. Marcy Friedman 2009)

This declaratory judgment action dealt with the question whether an assured who provides first notice of occurrence and/or suit papers to his broker has fulfilled his obligation to provide the carrier with timely notice of the claim. In American Safety, the commercial umbrella carrier moved for summary judgment on its disclaimer for the insured’s failure to provide timely notice of the underlying action.

The infant plaintiff was first diagnosed with lead poisoning on August 27, 2003. The complaint was filed on or about September 25, 2003. The verified bill of particulars plead $40 million in damages. In opposition to the motion, the insured’s argued that its managing agent provided notice to their broker “with the expectation that he would ‘take whatever steps [were] necessary’.” The American Safety court however, held that “this assertion is insufficient to raise a triable issue of fact” based on Security Mut. Ins. Co., 31 N.Y.2d at 442 n 3. The court further commented:

Notwithstanding that it is a “common practice” for insureds to notify their brokers rather than their carriers of claims, an insured who notifies only its insurance broker does so at its own peril, as “the policy requirement that the notice must be provided to the carrier trumps any informal arrangement or practice” between the insured and its broker. (Gershow Recycling Corp. v. Transcontinental Ins. Co., 22 AD3d 460, 462 [2nd Dept 2005].)

Incredibly, I currently have a case with the identical facts. It even involves a lead case with the same insurance carrier. Can we depend on stare decisis? We shall find out.