Disclaimer Letter Only Effective to Defendant Addressee Even Though Other Insureds Were Located at Same Address

Maughn v. RLI Ins. Co.
--- N.Y.S.2d ----, 2009 WL 4985691
N.Y.A.D. 2 Dept.,2009.

In this Second Department case, the insurance carrier issued a disclaimer letter to the defendant real estate management company. In addition to the management company, the underlying complaint named several other related entities all existing at the same address. The disclaimer letter however, was not specifically addressed to these other defendants. It was unclear whether these entities were referred to in the body of the disclaimer letter or not. The defendants brought a declaratory judgment action and sought summary judgment based on Matter of Eveready Ins. Co. v. Dabach, 176 A.D.2d 879, 575 N.Y.S.2d 347). The trial court granted summary judgment to all the defendants including the management company addressee. On appeal the Second Department reversed the judgment in favor of the management company but affirmed as to the other defendants.

The Court found that the disclaimer letter that was addressed to the management company and sent to the attention of the building manager, within three weeks of receiving notice of the accident, established that the notice provided to it was untimely (see DeFreitas v. TIG Ins. Co., 16 A.D.3d 451, 791 N.Y.S.2d 626; Yarar v. Children's Museum of Manhattan, 4 A.D.3d 420, 421, 772 N.Y.S.2d 85; cf. 875 Forest Ave. Corp. v. Aetna Cas. & Sur. Co., 30 N.Y.2d 726, 332 N.Y.S.2d 896, 283 N.E.2d 768).

11 Month Delay In Giving Notice Vitiated Coverage to Insured and Injured Party

Sputnik Restaurant Corp. v. United Nat. Ins. Co.
878 N.Y.S.2d 428, (2d Dept., May 5, 2009).

In this recently decided case, the Court reviewed the principals behind the requirement that both the insured and injured parties provide timely notice to insurance carriers. It emphasizes that the late notice defense is very much alive and well in New York. While much of the case merely rehashed well-settled principles, it is good to review them from time to time.

The Court noted: “‘[w]here an insurance policy requires that notice of an occurrence be given promptly, notice must be given within a reasonable time in view of all of the facts and circumstances'” (Zeldin v. Interboro Mut. Indem. Ins. Co., 44 A.D.3d 652, 652, 843 N.Y.S.2d 366, quoting Eagle Ins. Co. v. Zuckerman, 301 A.D.2d 493, 495, 753 N.Y.S.2d 128; see Argo Corp. v. Greater N.Y. Mut. Ins. Co., 4 N.Y.3d 332, 339, 794 N.Y.S.2d 704, 827 N.E.2d 762.

The requirement that an insured provide timely notice “operates as a condition precedent to coverage” (see Security Mut. Ins. Co. of N.Y. v. Acker-Fitzsimons Corp., 31 N.Y.2d 436, 440, 340 N.Y.S.2d 902, 293 N.E.2d 76; Quality Inves., Ltd. v. Lloyd's London, England, 11 A.D.3d 443, 782 N.Y.S.2d 761). Absent a valid excuse for a delay in furnishing notice, failure to satisfy the notice requirement vitiates coverage (see Great Canal Realty Corp. v. Seneca Ins. Co., Inc., 5 N.Y.3d 742, 743, 800 N.Y.S.2d 521, 833 N.E.2d 1196; Eagle Ins., 301 A.D.2d at 495.

“ ‘Where an insurance policy requires that notice of an occurrence be given promptly, notice must be given within a reasonable time in view of all of the facts and circumstances' ” (Zeldin, 44 A.D.3d at 652 quoting Eagle Ins., 301 A.D.2d at 495, see Argo Corp., 4 N.Y.3d at 339; White v. City of New York, 81 N.Y.2d 955, 957, 598 N.Y.S.2d 759, 615 N.E.2d 216). Absent a valid excuse for a delay in furnishing notice, failure to satisfy the notice requirement vitiates coverage (see Great Canal, 5 N.Y.3d at 743; Eagle Ins., 301 A.D.2d at 495).

Here, the defendant United National Insurance Co. (hereinafter United) established its prima facie entitlement to judgment as a matter of law by demonstrating that it was not notified of the accident until approximately 11 months had elapsed. Once United established its prima facie entitlement to judgment, the burden shifted to the plaintiffs to raise a triable issue of fact as to whether there existed a reasonable excuse for their delay in notifying United (see Argentina v. Otsego Mut. Fire Ins. Co., 86 N.Y.2d 748, 750, 631 N.Y.S.2d 125, 655 N.E.2d 166).

Moreover, the Court held that the injured party has an independent right to give notice to an insurer, even though it is not to be charged vicariously with an insured's delay (see Insurance Law § 3420[a]; Maldonado v. C.L.-M.I. Props., Inc., 39 A.D.3d 822, 823, 835 N.Y.S.2d 335; Seneca Ins. Co. v. W.S. Distrib., Inc., 40 A.D.3d at 1070, 838 N.Y.S.2d 99; Becker v. Colonial Coop. Ins. Co., 24 A.D.3d 702, 704, 806 N.Y.S.2d 720). The Court found that the injured defendants, failed to notify United of right claims in a timely manner.