Country-Wide Insurance Company, Appellant,v.Preferred Trucking Services Corp., et al., Defendants, Filippo Gallina, et al., Respondents.BriefN.Y.January 15, 2014ALEXANDER J. WULWICK 233 Broadway, Suite 2700 New York, New York 10279 (212) 732-6566 lawman1010@aol.com Appellate Counsel to: ROURA & MELAMED Attorneys for Defendants-Respondents BRIEF OF DEFENDANTS-RESPONDENTS New York County Clerk’s Index No. 101844/2009 FRANKLIN COURT PRESS, INC. 212-594-7902 (225-13) Reproduced on Recycled Paper Plaintiff-Appellant, COUNTRY-WIDE INSURANCE COMPANY, against FILIPPO GALLINA and SHERRI GALLINA, Defendants-Respondents. Court of Appeals STATE OF NEW YORK Date Completed: July 17, 2013 PREFERRED TRUCKING SERVICES CORP., CARLOS ARIAS, THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, and EDWARDS and KELCEY, INC., Defendants, APL-2013-00101 To be argued by: ALEXANDER J. WULWICK (10 minutes) TABLE OF CONTENTS PRELIMINARY STATEMENT STATEMENT OF FACTS Chronology of Events THE DECISIONS BELOW POINT I Plaintiffs Sole Argument On Appeal Was Not Presented To The Supreme Court And Was Raised For The First Time In The Appellate Division. Accordingly, It Should Be Rejected As Not Having Been Properly Preserved For The Court's Review. POINT II In The Alternative, Plaintiffs Argument Should Be Rejected On The Merits, Since It Finds No Factual Support In The Record. CONCLUSION Page 1 3 3 8 12 14 26 TABLE OF CASES Page Continental Cas. Co. v. Stradford, 11 NY3d 443 (2008) 13 Cummins v. County of Onondaga, 84 NY2d 322 (1994) 13 First Financial Insurance Co. v. Jetco Contracting Corp., 1 NY3d 64 (2003) 23,25 George Campbell Painting v. National Union Fire Ins. Co. of Pittsburgh, Pa., 92 AD3d 104 (1st Dept. 2012) 23 Harvey v. MazalAmer. Partners, 79 NY2d 218 (1992) 14 Haynes v. Haynes, 83 NY2d 954 (1994) 13 Matter of State of New York v. Rashid, 16 NY3d 1 (2010) 13 Rios v. Smith, 95 NY2d 647 (2001) 13 Wild v. Catholic Health System, _ NY3d _, 2013 Slip Op. 04043 13 2540 Associates, Inc. v. Assicurazioni Generali, S.p.A., 271 AD2d 282 (1st Dept. 2000) 23 COURT OF APPEALS STATE OF NEW YORK COUNTRY -WIDE INSURANCE COMPANY, Plaintiff-Appellant, -against- PREFERRED TRUCKING SERVICES CORP., CARLOS ARIAS, THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY and EDWARDS AND KELCEY, INC., Defendants, FILIPPO GALLINA and SHERRI GALLINA, Defendants-Respondents. BRIEF OF DEFENDANTS-RESPONDENTS PRELIMINARY STATEMENT The order of the Appellate Division should be affirmed for two, alternative reasons. The first is that the sole argument being made by plaintiff-appellant, Country-Wide Insurance Co. (" Country- Wide"), in its brief to this Court was not presented to the Supreme Court and was raised for the first time in the Appellate Division. The second reason is that the argument is without merit in any event. As to the failure to preserve, Country-Wide argued before the Supreme Court, insofar as is relevant here, only that it satisfactori- ly established its entitlement to disclaim due to the insureds' fail- ure to cooperate and that the delays in disclaiming were timely as a matter of law. Neither of these general arguments contained the quite specific -- and only L_ argument being raised here: that an insurer is not obligated to disclaim as to a vicariously liable policy- holder for failure to cooperate in investigating and defending a claim unless and until the insurer has first exhausted all reason- able efforts to secure the cooperation of the policyholder's employ- ee, who is an insured under the policy and has personal knowledge of the accident. The Court will search in vain for this theory in the record. Accordingly, it should not be considered, and the order appealed from should be affirmed on that ground alone. Turning to the merits, or lack thereof, of Country-Wide's ar- gument, the Appellate Division properly rejected it because it is "be- lied" by the record, which is replete with evidence of Country-Wide's treatment of Preferred and Arias as separate insureds and as sepa- rate, potential sources of information, each "essential" to the invest- 1 We note that Country-Wide does not argue that its delays in disclaiming, re- gardless of the reason, were timely as a matter of law. 2 igation and defense of the underlying action. There was not the slightest hint in the record, however, that Country-Wide viewed Preferred's owner as superfluous, with nothing to contribute either to the investigation or defense of the claim. Therefore, once Country-Wide was aware that the owner's non-cooperation entitled it to disclaim as to Preferred, it was required to notify Preferred, as the policyholder, in writing as soon as was reasonably possible, regardless of whether it would continue to pursue the cooperation of the insured employee. Instead, Coun- try-Wide waited five months before issuing the first disclaimer for failure to cooperate with the investigation of the accident and four months before issuing the second disclaimer for failing to cooperate with the defense of the action. For this reason as well, the order appealed from should be affirmed. In view of the present posture of this appeal, in which the facts are not in dispute, we deemed it sufficient to present the basic facts in chronological fashion. STATEMENT OF FACTS Chronology of Events September 27-28, 2006: Defendant Filippo Gallina was in- volved in a construction accident, at around midnight (154). Galli- 3 na was employed by a construction company that had contracted to perform certain work on a runway at the Teterboro Airport in Te- terboro, New Jersey (152, 154-55). Defendant Preferred employed defendant Carlos Arias as a truck driver to deliver sand and gravel to the site (153, 155). Preferred owned the truck (155). At the time of the accident, Gallina was working on the run- way, awaiting a delivery of sand and gravel (154-55). Arias opened the rear door of the truck to unload the material and latched the door to the truck (155). As Gallina was working behind the truck, the door became unlatched and struck Gallina, knocking him to the ground and injuring him (156). February 15, 2007: Country-Wide assigned a special investi- gator to obtain photographs of the truck and of the scene, signed statements from witnesses and from Arias, the facts surrounding the accident, and information as to whether there was permissive use of the truck (103). March 2-May 1,2007: Country-Wide attempted, without suc- cess, to contact Preferred's owner, Andrew Markos, and employee, Arias, to obtain their cooperation in the investigation, pursuant to Preferred's insurance contract with Country-Wide (120-42). 4 March 5,2007: Gallina and his wife, suing derivatively, com- menced suit against Preferred and Arias, among others (149). They alleged violations of sections 200 and 241 (6) of the Labor Law and failure to warn of the defective condition of the latch, among other allegations (157-58). May 18, 2007: Country-Wide's investigator recommended that the investigation be closed because "[t]o this date there has been no response from" Markos or Arias (142). September 21, 2007: The Gallinas moved for a defaultjudg- ment against Preferred and Arias (144), which was withdrawn by stipulation dated November 12, 2007 (167). October 4, 2007: Country-Wide received its first notice of the underlying suit from the Gallinas' attorneys (163). October 10, 2007: Nearly five months after closing the file, Country-Wide issued a disclaimer letter to Preferred and Arias (161), stating as one of the grounds their "failure to cooperate with us in investigating this matter" (163). October 19, 2007: Country-Wide resumed its attempts to se- cure signed statements from "the driver", Arias (169), and from Pre- ferred's owner, Markos, (168), who spoke to the investigator and 5 "supposedly was willing to cooperate now" (169). Country-Wide al- so sought "maintenance records for the truck" (171). January 11,2008: Country-Wide issued a final status report, stating that "[t]he Insured [Markos] has been uncooperative since answering his cell the first time calling [October 19, 2007 (169)], and then never answering again, nor returning any messages left to call. Copy of certified mail sent to insured returned as unclaimed. Have also visited addresses for the driver [Arias], leaving cards and sending mail, with no response" (171). The file was closed a second time as a result (see 170). January 31, 2008: A compliance conference order was issued in the underlying Gallina action, directing depositions by April 30, 2008 (306, 307). This prompted Country-Wide to make further at- tempts to contact Markos and Arias (see 309-11). May 29,2008: Another compliance conference order was is- sued in the Gallina action, directing depositions be held by August 6,2008 (314), again prompting Country-Wide to make further at- tempts to contact Markos and Arias (see 311-12). July 7,2008: Country-Wide's last, and unsuccessful, attempt to contact Preferred's owner, Markos (311). 6 August 18,2008: Arias informed Country-Wide's investigator that he would cooperate and appear for a deposition (184). October 13,2008: Arias reneged and made no further respon- ses to Country-Wide's inquiries (184). October 16, 2008: The court granted the Gallinas leave to move to strike the answers of Preferred and of Arias for their failure to appear for depositions, in violation of a prior order of preclusion (315-16). November 6,2008: More than four months after last attempt- ing to contact Markos in July and more than a year since Markos declared his intention to cooperate, Country-Wide wrote to Prefer- red and to Arias, disclaiming its obligation to defend and indemnify them in the Gallina action on the ground that "you have still will- fully refused to cooperate with us in the defense of this lawsuit" (243, 245). February 10,2009: Country-Wide brought a declaratory judg- ment action seeking a judgment declaring it not obligated to defend and indemnify Preferred and Arias in the Gallina action (32). June 5, 2009: The court in the Gallina action struck the an- swer of Preferred and Arias, awarded the Gallinas judgment against them, and directed an assessment of damages (322-23). 7 March 3,2010: The court awarded damages to the Gallinas in the amount of $2.3 million to Filippo Gallina for past and future pain and suffering and $250,000 to Sherri Gallina for loss of ser- vices (324). August 11, 2010: The Gallinas moved for summary judgment in the present declaratory judgment action (21), arguing, among other things, that the disclaimer for non-cooperation was "untimely as a matter of law and should be disregarded accordingly" (31). Country-Wide cross-moved for summary judgment (251), arguing that it was not obligated to satisfy the judgment in the underlying action on the grounds that it acted diligently and effectively to seek the cooperation of Preferred and Arias, which efforts were rebuffed, and that its two disclaimers, dated October 10, 2007, and Novem- ber 6, 2008, respectively, "were timely as a matter of law" (256). Country-Wide further argued in the alternative that if its dis- claimers be held invalid, its "liability under Insurance Law §3420(a)(2) is limited to its policy limit of $500,000" (256). THE DECISIONS BELOW The Supreme Court granted the Gallinas' motion for summary judgment dismissing the complaint as to Preferred and granted Country-Wide's motion only to the extent it "is not obligated to in- 8 demnify Carlos Arias in the ... personal injury action" (19). It other- wise held "that Countrywide [sic] is obligated to indemnify Preferred Trucking ... up to its policy limit of $500,000" (19). The court noted that Country-Wide had "twice disclaimed coverage in the Gallina action" in two letters, dated October 10, 2007, and November 6, 2008, respectively (10). The court found the "first disclaimer untimely to the extent that it is based on Pre- ferred's and Arias' non-cooperation" with the investigation, as op- posed to the defense, of the Gallina action (14), in view of the in- surance policy's requirement of cooperation "with us in the investi- gation or settlement of the claim or defense against the 'suit'" (162). The court pointed to the five-month period "between May 18, 2007, when [Country-Wide] closed its file due to the insureds' lack of cooperation with the investigation, and October 10, 2007, when it issued the first disclaimer" (14-15). By May 18, 2007, "[t]he in- sureds' lack of cooperation with the investigation was readily ap- parent. ... The court accordingly holds that it was unreasonable as a matter of law for Countrywide to wait five months, until October 2007, to issue the disclaimer based on non-cooperation" (15, 17). With respect to the second disclaimer of November 6, 2008, after Country-Wide had resumed its efforts to obtain the coopera- 9 tion of Preferred and Arias in the defense of the action, the court held it effective as to Arias only, in view of his assurances on Au- gust 18, 2008, that he would cooperate and his having reneged on them two months later, on October 13 (17-18). The November 6, 2008, disclaimer letter, therefore, was timely as to Arias. As to Preferred, the court pointed to Markos's failure "to re- spond or communicate with Countrywide after" October 19, 2007, and to Country-Wide's last attempt to communicate with him on July 7,2008 (18-19). Thus, "[i]t was or should have been clear, as of July 2008, ... that [Markos] would not participate in the defense. However, Countrywide does not offer any explanation for its delay of four months, until November 2008, in issuing the second dis- claimer", which, therefore, "was invalid as to Preferred" as a matter of law (19). The Supreme Court made no mention of an argument by Country-Wide that it had a reasonable excuse for the four-month delay, such as that it had to await the definite non-cooperation of Arias before it could disclaim as to Preferred. The Appellate Division affirmed, finding that Country-Wide's "disclaimer of coverage was untimely [as to Preferred], since it came 10 approximately four months after it learned of the ground for the disclaimer" (4-5). The court rejected Country-Wide's argument, made for the first time only on appeal, "that the disclaimer was timely because it had no basis for declaiming coverage until it became apparent that ... [Arias] would not cooperate with the defense of the under- lying ... action" (5).2 The court reasoned that Country-Wide's "dili- gent conduct prior to the disclaimer, in attempting to secure the cooperation of both Preferred's owner and the operator of the truck, shows that [Country-Wide] believed both had knowledge or infor- mation pertaining to the accident and the underlying litigation, and belies [Country-Wide's] representation that its sole concern was with the testimony of the operator of the truck" (5). The Appellate Division's order should be affirmed. 2 The Appellate Division did not address respondents' argument that Country- Wide's claim that it need not have disclaimed as to Preferred until Arias's re- fusal to cooperate was assured had been raised for the fIrst time on appeal. 11 POINT I PlaintitTs Sole Argument On Appeal Was Not Presented To The Supreme Court And Was Raised For The First Time In The Appellate Division. Accordingly, It Should Be Rejected As Not Having Been Properly Preserved For The Court's Review. Country-Wide argued to the Supreme Court that it was "not obligated to indemnify Preferred and Arias in the underlying Gallina Action" or to satisfy the judgment against them "by reason of: (a) The failure of Countrywide's insureds to cooperate in Countrywide's investigation of the accident and the defense of the Gallina action .... ; (b) Countrywide's disclaimers dated October 10, 2007 and November 6, 2008 were timely as a matter of law; and (c) Alternatively, in the event Countrywide's disclaimers are somehow held invalid, then Countrywide's liability under In- surance Law §3420(a)(2) is limited to its policy limit of $500,000" [256]. Nowhere in these arguments is there a contention, as sum- marized in the point heading of Country-Wide's argument, that, "SINCE PREFERRED TRUCKING'S LIABILITY IS VICARIOUS, COUNTRY-WIDE COULD NOT DISCLAIM AS TO IT SO LONG AS ITS DRIVER WAS COOPERATING WITH THE DEFENSE OF THE UNDERLYING ACTION, REGARDLESS OF WHETH- 12 ER PREFERRED TRUCKING'S PRESIDENT WAS COOPER- ATING" [App. Brief, p. 27]. This argument, which, as we shall demonstrate in Point II, is without merit, was not presented to the Supreme Court and was raised for the first time in the Appellate Division. Accordingly, it has not been properly preserved for this Court's review, notwith- standing that the appellate court considered it (see Wild v. Catholic Health System, _ NY3d _,2013 Slip Op. 04043; Continental Cas. Co. v. Stradford, 11 NY3d 443, 449, fn. 4 [2008]; Rios v. Smith, 95 NY2d 647,654 [2001]; Cummins v. County of Onondaga, 84 NY2d 322,326 [1994]; Haynes v. Haynes, 83 NY2d 954,957 [1994]; cf Matter of State of New York v. Rashid, 16 NY3d 1, 13 [2010)). Nor may it be maintained that Country-Wide's present, quite specific, argument was necessarily raised within the larger, more general argument of non-cooperation. The established failure of both insureds to cooperate hardly encompasses the argument that because of the vicarious liability of the motor vehicle owner/em- ployer' the cooperation of the operator/employee precluded a dis- claimer as to the owner until such time as the non-cooperation of the operator be determined. 13 This particular argument was not articulated before the Su- preme Court and, therefore, was not properly preserved for review (see Rios, supra, 95 NY2d at 654; Cummins, supra, 84 NY2d at 326; Haynes, supra, 83 NY2d at 957; Harvey v. Mazal Amer. Partners, 79 NY2d 218, 225 [1992]). Accordingly, the order appealed from should be affirmed. POINT II In The Alternative, Plaintiffs Argument Should Be Rejected On The Merits, Since It Finds No Factual Support In The Record. As the Appellate Division wrote, Country-Wide's argument is unavailing, because its "diligent conduct prior to the disclaimer, in attempting to secure the cooperation of both Preferred's owner and the operator of the truck, shows that plaintiff believed both had knowledge or information pertaining to the accident and the under- lying litigation, and belies plaintiffs representation that its sole concern was with the testimony of the operator of the truck" (5). In other words, not only is Country-Wide's argument unpreserved, it is without factual support in the record. We begin by pointing out that the insurance policy at issue here required Preferred, as the policyholder and named insured, to "[c]ooperate with [County-Wide] in the investigation or settlement of 14 the claim or defense ... " (64). Preferred could cooperate only through its owner, Markos. Preferred's employee, Arias, was also an insured under the policy because he was a permissive user of the truck in question (59), and he, too, was obligated to cooperate as a condition of coverage. Country-Wide, therefore, appropriately treated both Preferred and Arias as separate insureds and sought the cooperation of each. From the outset of the investigation in February 2007, Coun- try-Wide attempted to obtain signed statements from Markos and Arias as well as photographs of the truck (103), which presumably would have been in Markos's possession or its whereabouts known to him. Photographs would have been relevant to investigating the happening of the accident, which occurred due to an allegedly de- fective door latch. A signed statement from Markos, of course, would have been helpful in that regard. Later, in January 2008, after having issued its first disclaimer letter in October 2007 and after resuming its investigation, Coun- try-Wide again sought, without success, signed statements from Markos and Arias, as well as "maintenance records for the truck" (171). Here, again, obtaining Markos's cooperation was important because it was reasonable to suppose that he had possession of the 15 truck or at least knew its location. Maintenance records might have revealed useful information concerning the door latch. That Country-Wide considered Markos an important source of information in his own right was expressly affirmed by one of Country-Wide's investigators, Daniel Barrett. Barrett testified at his examination before trial that he initially tried to convey to Mar- kos's wife, whom he was able to contact, that "there was an acci- dent, there was a lawsuit that Preferred was named as a defendant in the suit and it was essential we speak to him" (220) (italics ad- ded). There was no indication from Mr. Barrett's testimony that speaking to Markos could have awaited first speaking to Arias or that, since Preferred's liability was only vicarious, whatever infor- mation Markos might have possessed was not essential or would not be helpful. Country-Wide's treatment of Markos as an "essential" source of information is further borne out by its complaint in the present action. There, Country-Wide referred to "its [rebuffed] efforts over several months to secure the cooperation of Preferred Trucking and Arias ... and that their cooperation with defense counsel was requi- red ... " (36-37) (emphasis added). The insureds' non-cooperation led 16 to Country-Wide's first disclaimer letter, dated October 10, 2007, in which it referred to its continuing efforts "to secure the cooperation of both Preferred Trucking Service Corp. and Carlos Arias for seve- ral months" (163) (emphasis added). The letter further referred to the "willful failure of' both par- ties "to cooperate with us in investigating this matter [a]s prejudi- cial to our ability to defend and evaluate this matter" (163). The non -cooperation of each insured could only have been deemed pre- judicial because Country-Wide had no way of knowing what know- ledge or information each of them may have possessed regarding the happening of the accident. Country-Wide's second disclaimer letter, dated November 6, 2008, was, like the first, addressed to Preferred at its last known address, to Markos, c/o Preferred, at Markos's residence, and to Arias at his residence. The second disclaimer recounted the history of Markos's and Arias's prior failures to cooperate, including the is- suance of the first disclaimer letter, and emphatically stated that, because of "your continued prejudicial willful avowed noncoopera- tion, Countywide hereby exercises its right to disclaim coverage in its entirety and therefore will no longer provide a defense for you in 17 this matter. We reiterate there will be no indemnification for this loss as well" (245). As can be seen, the record on appeal is replete with evidence of Country-Wide's treatment of Preferred and Arias not only as sep- arate insureds under the policy but as separate, potential sources of knowledge and information necessary to the investigation and defense of the Gallina action. A further telling instance of this treatment is found in Coun- try-Wide's reply affirmation in support of its cross-motion for sum- mary judgment in the instant action (333): "Upon receipt of its first notice of the Gallina Action, Coun- trywide immediately resumed its efforts to secure the in- sureds' cooperation. Over the course of over one year, Coun- trywide assigned three different SIU investigators to locate and secure the insureds' cooperation with the defense of the Gallina Action. Countrywide's efforts to secure the insureds' cooperation to appear for court -ordered depositions were thus not without purpose. The insureds' deposition and coopera- tion was necessary to defend the Gallina Action" [365] [em- phasis added]. The repeated use of the plural "insureds" clearly reflected Country-Wide's view that both Preferred and Arias were essential to 18 its investigation and defense of the underlying action, thus war- ranting disclaimers addressed to both of them. Later in the reply affirmation, Country-Wide referred to the obstructive conduct by both "insureds" and to "the egregious re- fusal of Mr. Markos and Mr. Arias to cooperate with Countrywide", which refusals "compromised and prejudiced" Country-Wide's de- fense of the underlying action (335) (italics added). Country-Wide did not attempt to limit the cause of it claimed prejUdice to Arias alone. In the penultimate paragraph of the affirmation, Country- Wide wrote (336): "Countrywide's November 6, 2008 disclaimer was based upon the failure of both Preferred Trucking and Arias to co- operate in the defense of the Gallina Action .... Countrywide is not imputing Arias' non-cooperation to Preferred Trucking" (emphasis added). This last sentence underscores Country-Wide's view of Pre- ferred and Arias as independently necessary to the defense of the underlying action, not, as is being advanced for the first time on ap- peal, that "a disclaimer as to Preferred Trucking issued within 30 days or so of July 7, 2008 (the date on which it became apparent that Mr. Markos would not cooperate (R. 19), would have been pre- mature, precipitous and improper given Country-Wide's continued 19 efforts to secure the cooperation of Mr. Arias after July 7, 2008 (R. 345)" (App. Brief, p. 36). Furthermore, there is not even the hint of an argument before the Supreme Court that, "since Mr. Arias as well as Mr. Markos was an agent of Preferred Trucking, ... Country-Wide could not dis- claim as to Preferred Trucking under the law ... unless and until it had first exhausted all reasonable efforts to secure defendant Arias' cooperation and it became clear that further reasonable attempts to elicit their insured's cooperation will be futile" (App. Brief, p. 32) (internal quotation marks and citation omitted). The same absence applies to Country-Wide's argument that, "since Preferred Trucking's liability in the Gallina Action was vicari- ous under VTL § 388 as well as the doctrine of respondent [sic]-su- perior, it follows that as a matter of law, Country-Wide did not have a legal basis on which to disclaim as to Preferred Trucking so long as it was still seeking in good faith Mr. Arias' cooperation, ... regard- less of whether Mr. Markos was cooperating" (id.). Had these arguments been raised, they might at least have been put forth as an attempt at an explanation for Country-Wide's four-month delay, from July to November 2008, in issuing the sec- ond disclaimer letter. They were not. 20 Although the doctrine of respondeat superior applied to the Gallinas' action against Preferred, the action at that early stage was not restricted to that theory of recovery. The complaint alleged af- firmative negligent conduct by Preferred itself, such as failing to warn of the dangerous condition, failing to provide a safe place to work, and failing to inspect the truck and its latching mechanism (156-57). How, then, can Country-Wide now be certain that Mar- kos's cooperation would have been "useless'" (App. Brief, p. 32, fn. 2), or that "he did not have personal knowledge of the accident" (id., p. 32, fn. 2, and see pp. 33, 39), or that "his acts or omissions did not form the basis for vicarious liability against Preferred Trucking" (id., p. 34)? Markos may not have been an eyewitness to the acci- dent, but that does not mean he had no personal knowledge touch- ing upon the alleged cause of the accident, to wit, the defective door latch. Country-Wide had no way of knowing that Arias had not complained about it to Markos on numerous occasions. Investigation of the accident and discovery in the Gallina ac- tion might well have revealed that Preferred, through its owner, was affirmatively negligent. Having never actually conducted a success- ful investigation of the accident, however, Country-Wide was not in 21 a position to know or believe that Preferred's liability was, or would remain, vicarious only. Country-Wide, to be sure, did not act on any knowledge or belief that Preferred, through Markos, was only passively or vicari- ously negligent, else it would not have thought it advisable to pho- tograph the truck and obtain its maintenance records or repeatedly to have sought signed statements from Markos and Arias. Country-Wide argues that "Preferred Trucking could equally cooperate through its permissive driver/employee, Mr. Arias", as through its owner, Mr. Markos (App. Brief, p. 33). This argument is without merit on its face, because both Preferred and Arias were in- sureds under the policy with the obligation to cooperate. As such, there was nothing to have prevented Country-Wide from individual- ly disclaiming as to Preferred, even as it attempted to elicit Arias's cooperation. There is no support, therefore, in the facts or in the law for Country-Wide's argument that it "had no legal basis on which to disclaim as to Preferred Trucking -- regardless of whether it was or should have been apparent to Countrywide [sic] four months prior to its disclaimer that Mr. Markos would not cooper- ate" (App. Brief, p. 34). 22 It is no answer for Country-Wide to say that separate dis- claimers to Preferred and Arias, as required by the Appellate Divi- sion's decision, would have amounted to "piecemeal disclaimer practice, which is not favored in the law" (App. Brief, p. 36), citing 2540 Associates, Inc. v. Assicurazioni Generali, S.p.A. (271 AD2d 282 [1st Dept. 2000]). The kind of piecemeal disclaimers men- tioned in passing in 2540 Associates dealt with disclaiming cover- age on different grounds at different times, rather than disclaiming once on all available grounds after conducting a "reasonable invest- igation" (id., at 284). Country-Wide's piecemeal-disclaimer argument is without merit for the additional reason that it is at odds with this Court's holding in First Financial Insurance Co. v. Jetco Contracting Corp. (1 NY3d 64, 66 [2003]): "[O]nce the insurer has sufficient knowledge of facts entitling it to disclaim, or knows that it will disclaim coverage, it must notify the policyholder in writing as soon as is reasonably possible" (emphasis added) (see George Campbell Painting v. National Union Fire Ins. Co. of Pittsburgh, Pa., 92 AD3d 104, 116 [1st Dept. 2012]). The italicized language is from Insurance Law § 3420(d)(2)], which requires that a policyholder about to be denied coverage is entitled to be informed of the denial "as soon as is reas- 23 onably possible." The statute applies equally to Preferred and to Arias as insureds under the policy. Here, Country-Wide issued its first (October 10, 2007) dis- claimer as to both insureds on account of their failure to cooperate with the investigation, which disclaimer the Supreme Court held was untimely. Country-Wide then issued the second (November 6, 2008) non-cooperation disclaimer predicated on the insureds' fail- ure to cooperate with the defense. It was only because of Arias's short-lived change of heart on August 18, 2008, which he reneged upon on October 13, 2008, that the Supreme Court held that the November 6 disclaimer was timely as to him. As to Preferred, how- ever, where Country-Wide's last, unsuccessful attempt to contact Markos was on July 7, 2008, four months earlier, the court held that the disclaimer, on the same non-cooperation ground, was un- timely. It is conceivable that had Arias cooperate with Country-Wide in defending the underlying action and that had Preferred, through Markos, continued to resist, Arias might have exonerated himself as well as Preferred. At that point, however, Preferred still would have forfeited its right to a defense and indemnification, regardless 24 of Arias's change of heart, and the disclaimer as to Preferred four months later still would have been just as untimely. Country-Wide was not entitled to wait until Arias's refusal to cooperate had "fatally compromised" its defense of the Gallina ac- tion (App. Brief, p. 38) before it was obligated to disclaim as to Pre- ferred (see First Financial Ins. Co. v. Jetco Cant. Corp., supra, 1 NY3d at 66). Taking Country-Wide's argument to its logical ex- treme would mean that an insurer conceivably could wait years be- fore disclaiming as to a perceived "vicarious-only" insured, so long as the active-tortfeasor-insured continued to string the carrier a- long. This is a far cry from the statute's mandate of denying cov- erage "as soon as is reasonably possible." Inasmuch as (i) the last time an investigator for Country-Wide had been informed by Markos that he would cooperate was in Octo- ber 2007 and (ii) the last time the investigator had sought, without success, to contact Markos was nine months later in July 2008, Country-Wide should have realized in July 2008 that it had "ex- haust[ed] all reasonable efforts to secure the insured's cooperation before disclaiming for non-cooperation" (App. Brief, p. 38). The courts below properly held that Country-Wide's four-month delay 25 in disclaiming, until November 2008, was untimely as a matter of law. CONCLUSION The order appealed from should be affirmed, with costs. Dated: New York, N.Y. July 17, 2013 Respectfully submitted, ALEXANDER J. WULWICK Appellate Counsel to: ROURA & MELAMED Attorneys for Defendants-Respondents 26