Opinion
11147/04.
Decided July 31, 2006.
The plaintiff Evangelos Car Wash, Inc. is located at 2302 Arthur Kill Road, Staten Island, New York. On April 27, 2002, there was a collision between a motorcycle and a truck in front of 2286 Arthur Kill Road, about 200 feet from the car wash. A witness told the car wash owner, Konstantinos Siozios, that the motorcyclist hit the truck when he went into the opposite lane of traffic in an attempt to pass a slow moving vehicle. In May, 2003, the motorcyclist, Andrew Reyes, commenced an action against the plaintiff by filing a summons and complaint. The complaint alleged that Reyes slid because the street was wet in front of the car wash.
On June 3, 2003, Reyes allegedly effectuated service by leaving a copy of the summons and complaint at the car wash with the Managing Agent, John Loman. However, the plaintiff claimed that it never received the summons and complaint in June, 2003, because no one by the name of John Loman worked at the car wash. In a letter dated December 2, 2003, Reyes' attorney advised the plaintiff that it was in default. On March 5, 2004, the plaintiff was served with motion papers for a default judgment in the underlying action. On March 8, 2004, the plaintiff faxed a copy of the papers to his insurance broker. On March 16, 2004, the broker faxed the defendant a Notice of Claim.
In a letter dated March 18, 2004, the defendant disclaimed coverage due to the late notice of the underlying action. The insurance policy between defendant and the plaintiff provided that "[i]n case of an occurrence, or if an insured becomes aware of anything that indicates that there might be a claim . . ., the insured must promptly give notice to us or our agent." Additionally, the policy provided that "if a claim is made or a suit is brought, the insured must promptly send [Utica First] copies of all legal papers, demands, and notices." The disclaimer set forth that the plaintiff knew of the potential claim at least by June 3, 2003, when it was served with the summons and complaint, if not on the date of the loss. Thus, the defendant was denying coverage due to the plaintiff's failure to notify it in a timely fashion.
In April, 2004, the plaintiff commenced this declaratory judgment action seeking a declaration that the defendant is obligated to defend and indemnify the plaintiff in the underlying action. After issue was joined by service of an answer and discovery was completed, the defendant moved for summary judgment dismissing the complaint or, in the alternative, dismissing the claim for punitive damages. The plaintiff cross-moved for summary judgment for a declaration that the defendant is obligated to defend and indemnify the plaintiff in the underlying action.
When an insurance policy requires that notice of an occurrence or action be given promptly, notice must be given within a reasonable time in view of all of the facts and circumstances ( see, Merchants Mut. Ins. Co. v. Hoffman, 56 NY2d 799, 801-802; Eagle Ins. Co. v. Zuckerman, 301 AD2d 493 [2nd Dept. 2003]). "Providing an insurer with timely notice of a potential claim is a condition precedent, and thus'[a]bsent a valid excuse, a failure to satisfy the notice requirement vitiates the policy'" ( Sayed v. Macari, 296 AD2d 396 [2nd Dept. 2002], quoting, Security Mut. Ins. Co. of NY v. Acker-Ritzsimons Corp., 31 NY2d 436, 440). An insured's reasonable, good-faith belief in non-liability may excuse a delay in notifying the insurer of an accident ( see, Great Canal Realty Corp. v. Seneca Ins. Co., Inc., 5 NY3d 742; Argentina v. Otsego Mut. Fire Ins. Co., 86 NY2d 748; Tri-State Consumer Ins. Co. v. Yaskin, 304 AD2d 560 [2nd Dept. 2003]; Chimenti v. Allstate Ins. Co., 253 AD2d 534 [2nd Dept. 1998]). The issue of reasonableness poses a legal question for the court, rather than an issue for the trier of fact ( see, Paul Developers, LLC v. Maryland Casualty Ins. Co., 28 AD3d 443 [2nd Dept. 2006]).
Insurance Law § 3420(d) provides that an insurer may disclaim coverage by giving a written notice of the disclaimer as soon as reasonably possible. However, when an insurer disclaims coverage, "the notice of disclaimer must promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated" ( General Acc. Ins. Group v. Cirucci, 46 NY2d 862, 864; see, State Farm Mutual Automobile Ins. Co. v. Cooper, 303 AD2d 414 [2nd Dept. 2003]; State Farm Mutual Automobile Ins. Co. v. Joseph, 287 AD2d 724 [2nd Dept. 2001]). This requirement is not unduly burdensome, as the insurer is highly experienced and sophisticated in such matters ( see, General Acc. Ins. Group v. Cirucci, 46 NY2d 862, 864).
In the instant case, the disclaimer stated: "[I]t is well established that you were aware of the potential claim if not on the date of loss, but as early as June 3, 2002, when you were served with a summons and complaint". However, under the circumstances of this case, the plaintiff had a reasonable, good-faith belief in its non-liability ( see, Tri-State Consumer Ins. Co. v. Yaksin, 304 AD2d 560 [2nd Dept. 2003]; Everyready Ins. Co. v. Robinson, 300 AD2d 436 [2nd Dept. 2002]). Neither the manner in which the plaintiff believed that accident occurred — the motorcyclist going into the opposite lane of traffic to pass a slower moving vehicle, nor where the accident occurred — 200 feet down the road from the car wash, would have made a prudent person believe that a personal injury claim would be pursued ( see, Abbey Richmond Ambulance Service, Inc. v. Northbrook Property Casualty Ins. Co., 281 AD2d 501 [2nd Dept. 2001]). Thus, the court finds that it was reasonable for the plaintiff not to notify the defendant of the occurrence on the date of or shortly after the accident.
The only other ground stated in the notice of disclaimer, was that the plaintiff was aware of the underlying action on June 3, 2003. However, the plaintiff explained that it was not served in June, 2003, as no one by the name of John Loman was working at the car wash at that time. In fact, the motion for a default judgment in the underlying action was withdrawn and the plaintiff allowed to assert an answer, without a traverse hearing being held. Accordingly, the court finds that it was reasonable for the plaintiff not to notify the defendant of the claim in June, 2003 ( see, e.g., Gershow Recycling Corp. v. Transcontinental Ins. Co., 22 AD3d 460 [2nd Dept. 2005])
In its papers in opposition to the plaintiff's cross-motion for summary judgment, the defendant now argues that even if the plaintiff was not served with the summons and complaint in June, 2003, the plaintiff became aware of the underlying action in December, 2003, when Reyes' attorney mailed it a letter advising of the default. The defendant contends that the three month delay from December, 2003 until March, 2004, when the plaintiff notified its broker of the underlying action, was unreasonable as a matter of law. Since this ground was not raised in the letter of disclaimer, the defendant is now estopped from raising it in the instant action as a ground for disclaiming coverage ( see, General Accident Ins. Group v. Cirussi, 46 NY2d 862; Hazen v. Otsego Mutual Fire Ins. Co., 286 AD2d 708 [2nd Dept. 2001]).
Additionally, the defendant asserts that the plaintiff did not properly notify it of the underlying claim because it notified its broker, rather than the carrier. While notice to a broker cannot be treated as notice to the insurer since the broker is normally deemed to be the agent of the insured and not the carrier ( see, Security Mut. Ins. Co. v. Acker-Fitzsimons Corp., 31 NY2d 436, 442, n. 3; Matter of First Cent. Ins. Co., 3 AD3d 494 [2nd Dept. 2004]), here, it is uncontroverted that the broker immediately notified the defendant of the claim. Thus, there is no issue in this case as to whether notice to the broker was timely, but notice to the carrier was not ( compare, Paul Developers, LLC v. Maryland Casualty Ins. Co., 28 AD3d 443 [2nd Dept. 2006]; Gershow Recycling Corp. v. Transcontinental Ins. Co.. 22 AD3d 460 [2nd Dept. 2005]). Finally, the defendant moved in the alternative to dismiss the plaintiff's claim for punitive damages. However, the complaint does not assert a cause of action for punitive damages. Thus, the defendant's request is denied. Accordingly, it is ORDERED, that the defendant's motion for summary judgment dismissing the complaint, or, in the alternative, dismissing the plaintiff's claim for punitive damages, is denied; and it is further; ORDERED, that the plaintiff's motion for summary judgment is granted and it is declared that the defendant is obligated to defend and indemnify the plaintiff Evangelos Car Wash, Inc. in the underlying action of Reyes v. Evangelos Car Wash, Inc., Index No. 11635/2003. This is the Decision and Order of the Court.