Opinion
2355/09.
Decided July 19, 2010.
SPENTREV REALTY CORP., MICHAEL SAPIO, ESQ., NEW YORK, NEW YORK, Attorney for Plaintiff.
UNITED NATIONAL SPECIALTY INSURANCE COMPANY, MIRANDA SAMBURSKY SLONE, SKLARIN VERVENIOTIS LLP, THE ESPOSITO BUILDING, MINEOLA, NEW YORK, Attorneys for Defendants.
DECOLATOR, COHEN DIPRISCO, LLP, JOSEPH L. DECOLATOR, ESQ., GARDEN CITY, NEW YORK, Attorneys for Defendant Angel Martinez.
The primary issue presented in this insurance coverage declaratory judgment action motion is whether the notice provision in the insurer's liability policy requiring prompt notice of an occurrence, claim and lawsuit has been breached by the insured and the injured party when the insurer receives notice of the lawsuit and occurrence only from the insured more than six months after service of process on the insured, thereby vitiating coverage to both the insured and the injured party?
Plaintiff, Spentrev Realty Corp. ("Spentrev"), commenced this insurance coverage declaratory judgment action for judgment declaring that defendant, United National Specialty Insurance Company ("United"), is obligated to defend and indemnify Spentrev in an underlying personal injury action commenced by defendant Angel Martinez(" Martinez") against Spentrev. Martinez moves pursuant to CPLR § 3212 for an order of summary judgment declaring that United is obligated to defend and indemnify its insured, Spentrev, in the underlying personal injury action. United cross-moves pursuant to CPLR § 3212 for summary judgment dismissing the complaint and all cross-claims and declaring that United is not obligated to defend and indemnify its insured, Spentrev, in the underlying personal injury action.
Background
On March 2, 2007, Martinez alleges that he was injured when he slipped and fell on an accumulation of snow and ice in front of 188 Parkside Avenue, Brooklyn, New York, a building owned by Spentrev.
Spentrev was insured for liabiltiy by United.
By letter dated March 12, 2007, Martinez's counsel wrote Spentrev at the 188 Parkside Avenue address, that:
"This office has been retained in connection with the accident which occurred on your premises on March 2, 2007, and in which our client sustained serious injury.
Please forward this letter to your liability insurance carrier and/or broker at the earliest opportunity.
It is imperative that you give this matter your immediate attention."
On March 29, 2007, Martinez commenced the underlying personal injury action, Martinez v. Spentrev Realty Corp., under Index Number 12479/2007. Martinez's affidavits of service of the summons and complaint in the underlying personal injury action allege that Spenterev was personally served on May 18, 2007 at 188 Parkside Avenue, Brooklyn, NY when the process was delivered to "Thomas" "Boe" whom the process server knew to be the Managing Agent of the corporation and authorized to accept service." The affidavits of service also indicate that the Secretary of State was served on behalf of Spentrev on May 22, 2007.
Orleane Williams Brooks, secretary of Spentrev, in her affidavit avers in pertinent part, that Spentrev's "sole office and mailing address is located at 730 Nostrand Avenue, Brooklyn, NY 11216."
The Secretary of State by certified mail sent the summons and complaint to "Samuel Kolatch, Esq., 29 Broadway, New York, NY 10006" who on August 19, 1980 had been designated by Spentrev as its "Registered Agent."
The envelope containing the process was returned to the Post Office with the notation, "Attempted Unknown/Not Known."
On or about November 20, 2007, Spentrev received a call from Derek Noel, one of its commercial tenants at 188 Parkside Avenue. Mr. Noel informed Spentrev that he had received an envelope addressed to Spentrev. The envelope contained an Affirmation in Support of a Motion for a Default Judgment in the underlying personal injury action which he faxed to Spentrev.
Patrick A. Greely, claims manager for United avers in his affidavit in pertinent part that:
"10. On December 5, 2007 United National received notice of the occurrence claim and suit from its insured, Spentrev".
United in its disclaimer letter of December 11, 2007 to Spentrev and to Martinez's attorneys states in pertinent part that:
"The purpose of this letter to advise you that we are disclaiming coverage for your failure to comply with the Conditions precedent to coverage by reporting this claim and suit within 30 days and your failure to forward the suit papers to us immediately
. . .
By a copy of this letter to the claimant's attorney, we are also disclaiming directly to claimant's attorney as he also failed to comply with the conditions set forth above by failing to notify us of the "occurrence" and or claim as soon as practicable."
In response to United's disclaimer letter Martinez's attorneys in their letter of December 17, 2007 to United informs United that,
"United's disclaimer is not effective against our client . . ."
"United clearly cannot disclaim as against our client."
On May 20, 2008 Spentrev by its retained attorney, Edward Harold King, Esq., served its answer to the underlying personal injury action.
On January 30, 2009 Spentrev commenced this declaratory judgment action.
Discussion
The drastic remedy of summary judgment should be granted only where there are no triable issues of fact (Pearson v Dix McBride, LLC 63 AD3d 895 (2d Dept. 2009).
The party moving for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law, offering sufficient evidence to demonstrate the absence of a triable issue of fact (CPLR Section 3212(b); Alverez v Prospect Hosp., 68 NY2d 320; Zuckerman v City of New York, 49 NY2d 557; Megafu v. Tower Ins. Co. of New York , 73 AD3d 713 [2d Dept 2010]). However, once the moving party has satisfied this obligation, the burden then shifts; "the party opposing the motion must demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action" ( Zuckerman v. City of New York, supra) "Mere conclusory assertions, devoid of evidentiary facts, are insufficient for this purpose, as is reliance upon surmise, conjecture, or speculation" ( Morgan v. New York Telephone, 220 AD2d 728, 729 [2d Dept 1995]).
United cross-moves for summary judgment against Spentrev. The insurance policy required Spentrev to notify United "as soon as practicable" of an occurrence. By demonstrating that it was not notified of the subject accident for over six months, United has met its prima facie burden of showing that it is entitled to summary judgment as a matter of law. Spentrev may defeat summary judgment if it can establish that its delay was "reasonable under the circumstances" ( Chimenti v. Allstate Ins. Co., 253 AD2d 534 [2d Dept 1998]).
Spentrev asserts that, because it does not maintain an office or receive mail at 188 Parkside Avenue, its first notice of the incident was on or about November 20, 2007. Spentrev argues that this is sufficient to create an issue of fact that precludes liability.
In Briggs Ave. LLC v. Insurance Corp. of Hannover ( 11 NY3d 377 , 380), the Court of Appeals held that "a liability insurer is entitled to disclaim coverage when the insured, because of its own error in failing to update the address it had listed with the Secretary of State, did not comply with a policy condition requiring timely notice of a lawsuit." United has established that the Secretary of State received process on Spentrev's behalf on May 22, 2007. The process was forwarded to Spentrev's registered agent and was subsequently returned with the notation "Attempted Unknown/Not Known." Spentrev has not offered any explanation and, therefore, the sole conclusion is that Spentrev did not update the "Registered Agent" information it had on file with the Secretary of State.
Thus, the delay in timely notifying United arose from Spentrev not meeting its own obligations. Thus, Spentrev has failed to raise any triable issues of fact and United's cross-motion for summary judgment must be granted as against Spentrev.
Martinez moves for summary judgment declaring that United is obligated to indemnify and defend Spentrev.
As a threshold issue, United argues that Martinez lacks standing to pursue its declaratory judgment claim. At common law, an injured party could not pursue a direct cause of action against the tortfeasor's insurer because there is no privity of contract between them ( Lang v. Hanover Ins. Co. , 3 NY3d 350 , 353). Insurance Law § 3420 provides a statutory right to proceed against an insurer, but only after the injured party obtains a judgment against the insured. In the instant case, Martinez has not obtained a judgment against Spentrev. Accordingly, Martinez cannot proceed pursuant to Insurance Law § 3420.
However, where the insurer seeks a declaration of its rights, as United did in this case by asserting a counterclaim Martinez as a named defendant and injured party may also pursue a declaratory judgment of the coverage issues ( Maroney v. New York Cent. Mut. Fire Ins. Co. , 5 NY3d 467 ). Thus, Martinez's cross claim is properly before the Court.
Martinez argues that United is estopped from disclaiming on the basis of late notice because it based its December 11, 2007 disclaimer exclusively on the grounds that Spentrev provided late notice. A "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, 264). Once a disclaimer has been issued, the "insurer's justification for denying coverage is strictly limited to the ground stated in the notice of disclaimer" ( Shell v. Fireman's Fund Ins. Co. , 17 AD3d 444 , 446). "Thus, an insurer waives any ground for denying coverage that is not specifically asserted in its notice of disclaimer, even if that ground would otherwise have merit" ( Adames v. Nationwide Mut. Fire Ins. Co. , 55 AD3d 513 [2d Dept. 2008]).
Accordingly, where both an insured and the injured party give notice of a claim and the insurer disclaims on the basis of late notice by the insured, it is estopped from subsequently disclaiming on the basis of late notice by the injured party ( Gross v. New York Cent. Mut. Fire Ins. Co. 2002 WL 31914673 [N.Y.Sup.App.Term 2002]).
In the instant case, United's disclaimer letter dated December 11, 2007, "disclaimed directly to claimant's attorney" on the grounds that the attorney failed to notify United of the accident as soon as practicable. United is not, therefore, estopped from asserting late notice on the part of Martinez.
Although United is not estopped from disclaiming coverage against Martinez, its disclaimer must be evaluated with respect to the standards for notice by an injured party. In Malik v. Charter Oak Fire Ins. Co., the Second Department summarized the law regarding late notice by an injured party as follows:
"As this Court stated in Becker v. Colonial Cooperative Insurance Company, 24 AD3d 702, 806 NYS2d 720:
"Insurance Law § 3420(a)(3), in effect, requires insurance companies to accept notice of claims from injured parties. As was made clear more than 40 years ago, '[t]he statute having granted the injured person an independent right to give notice and to recover thereafter, he is not to be charged vicariously with the insured's delay' [ Lauritano v. American Fid.Fire Ins.Co., 3 AD2d 564, 568 [ 162 NYS2d 553], affd. 4 NY2d 1028 [ 177 NYS2d 530, 152 NE2d 546]]. 'The injured person's rights must be judged by the prospects for giving notice that were afforded him, not by those available to the insured. What is reasonably possible for the insured may not be reasonably possible for the person he has injured. The passage of time does not of itself make delay unreasonable' (id.). 'When the injured party has pursued his rights with as much diligence 'as was reasonably possible' the statute shifts the risk of the insured's delay to the compensated risk-taker' (id.). Thus, the pertinent inquiry is whether the plaintiff pursued his rights with 'as much diligence as was reasonably possible' (id.).'
"In determining the reasonableness of an injured party's notice, the notice required is measured less rigidly than that required of the insureds ( see GA Ins. Co. of NY v. Simmes, 270 AD2d 664 [ 704 NYS2d 700]). 'The sufficiency of notice by an injured party is governed not by mere passage of time but by means available for such notice' ( Appel v. Allstate Ins. Co. , 20 AD3d 367 , 369 [ 799 NYS2d 467])" ( 24 AD3d at 704-705, 806 NYS2d 720; see also Ringel v. Blue Ridge Ins. Co., 293 AD2d 460, 740 NYS2d 109)."
( 60 AD3d 1013, 117-18 [2d Dept 2009]).
Applying this standard to Martinez's motion for summary judgment mandates that the motion be denied. Martinez's moving papers do not state when he first learned the identity, or even the existence of the insurer or when, if ever, he notified United of his accident prior to the receipt of the disclaimer letter of December 11, 2007. Accordingly, Martinez has failed to meet his initial prima facie burden of establishing entitlement to summary judgment as a matter of law.
This standard also applies to United's cross-motion for summary judgment against Martinez. As a threshold matter, United has met its prima facie burden by establishing entitlement to summary judgment as a matter of law as it is uncontroverted that United's first notice of the accident was from Spentrev on December 5, 2007, more than six months after accident. Thus, the burden shifts to Martinez to raise a triable issue of fact regarding whether or not his efforts to notify United were reasonable under the circumstances.
In McCabe v. St. Paul Fire and Marine Ins. Co. ( 25 Misc 3d 726 [Erie County, 2009]), the Court found that the efforts of the injured parties were sufficient to excuse a three-month delay in notifying the insurer. Those efforts included four certified letters and an unspecified number of phone calls to the insured asking him to reveal the identity of his insurer, as well as an order to show cause directing the insured to reveal the insurer's identity.
In Lauritano v American Fid. Fire Ins. Co., ( 3 AD2d 564), a delay of almost thirteen months was excused where the injured party's attorneys "constantly and aggressively pressed the search for the necessary information, following up their letters with telephone calls, personal visits, and inquiries directed to the Motor Vehicle Bureaus of New York and Alabama, the Police Department, the Public Service Commission and the Interstate Commerce Commission" ( id. at 569).
On the other hand, In Eveready Ins. Co. v. Chavis, 150 AD2d 332 [2d Dept 1989]), Bucco, the plaintiff in the underlying action, first obtained the identity of the defendant Chavis and Eveready, Chavis' insurer, on December 4, 1984. Bucco commenced an action against Chavis on February 20, 1985 and, when Chavis failed to answer, notified Eveready by letter dated July 18, 1985. The Second Department held that the injured party's notice was "untimely as a matter of law" ( id at 334).
In the case at bar, Martinez did not make any attempt to independently ascertain the identity of the insurer. In fact, Martinez's pre-action letter to Spentrev only requested that Spentrev notify its insurer. It did not request Spentrev to notify Martinez of the identity of the insurer. Martinez's diligent pursuit of his personal injury action, while laudable, does not, as demonstrated by Eveready, satisfy the due diligence requirement for independent notice pursuant to Insurance Law § 3420. Thus, Martinez has failed to raise a triable issue of fact regarding the validity of United's disclaimer.
Conclusion
In sum, Martinez's motion for summary judgment is denied and United's cross-motion for summary judgment is in all respects granted.
This constitutes the Decision and Order of the Court.