Country-Wide Insurance Company, Appellant,v.Preferred Trucking Services Corp., et al., Defendants, Filippo Gallina, et al., Respondents.BriefN.Y.January 15, 2014State of New York Court of Appeals BRIEF OF PLAINTIFF-APPELLANT DICK BAILEY SERVICE (212) 608-7666 (718) 522-4363 (516) 222-2470 (914) 682-0848 Fax: (718) 522-4024 1-800-531-2028 - Email: appeals@dickbailey.com -Website: www.dickbailey.com Supreme Court, New York County, Index No. 101844/2009 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. TO BE ARGUED BY: THOMAS TORTO, ESQ. TIME REQUESTED: 15 MINUTES THOMAS TORTO, ESQ. Attorney for Plaintiff-Appellant 419 Park Avenue South, Suite 504 New York, New York 10016 (212) 532-5881 Email: j.levine.esq@gmail.com Date Completed: July 1, 2013 TABLE OF CONTENTS Page TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii PRELIMINARY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 JURISDICTIONAL STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 ISSUE PRESENTED FOR REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 STATEMENT OF FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Country-Wide’s Extensive Efforts to Secure its Insured’s Cooperation . . . 6 The Gallina Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ll Country-Wide’s Continued Efforts to Secure its Insured’s Cooperation . . l2 Defendant Arias’ Willful Failure to Appear for His Deposition . . . . . . . . 21 Country-Wide’s Disclaimer Dated November 6, 2008 . . . . . . . . . . . . . . . 22 The Default Judgment in the Gallina Action . . . . . . . . . . . . . . . . . . . . . . . 22 Country-Wide’s Declaratory Judgment Action . . . . . . . . . . . . . . . . . . . . . 23 The Supreme Court’s Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 The Appellate Division’s Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 ARGUMENT SINCE PREFERRED TRUCKING’S LIABILITY IS VICARIOUS, COUNTRY-WIDE COULD NOT DISCLAIM AS TO IT SO LONG AS ITS DRIVER WAS COOPERATING VVITH THE DEFENSE OF THE UNDERLYING ACTION, REGARDLESS OF WHETHER PREFERRED TRUCKING’S PRESIDENT WAS COOPERATING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 TABLE OF AUTHORITIES CASES 2540 Assoc. v. Assicurazioni Generali, 271 A.D.2d 282, 284, 707 N.Y.S.2d 59 (lst Dep’t 2000) . . . . . . . . . . 28, 36 Aetna Cas. & Sur. Co. v. Brice, 72 A.D.2d 927, 928-929, 422 N.Y.S.2d 203 (4th Dep’t 1979) . . . . . . . . . 29 Allstate Ins. Co. v. Gross, 27 N.Y.2d 263, 266, 317 N.Y.S.2d 309, 311 (1970) . 28 Continental Cas. Co. v. Stradford, 11 N.Y.3d 443, 871 N.Y.S.2d 607 (2008) 30, 31, 32, 34, 35, 37, 38, 39, 40 DeSantis Bros. v. Allstate Ins. Co., 244 A.D.2d 183, 184, 664 N.Y.S.2d 7 (1stDep’t 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 First Financial Ins. Co. v. Jetco Contracting Corg, 1 N.Y.3d 64, 769 N.Y.S.2d 459 (2003) . . . . . . . . . . . . . . . . . . . . . . . 27, 29 Fish King Enterprises v. Countrywide Ins. Co., 88 A.D.3d 639, 930 N.Y.S.2d 256 (2d Dep’t 2011) . . . . . . . . . . . . . . . 29, 30 Hartford Ins. Co. v. Nassau County, 46 N.Y.2d 1028, 416 N.Y.S.2d 539 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 27 Judith M. v. Sisters of Charity Hosg, 93 N.Y.2d 932, 693 N.Y.S.2d 67 (1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Matter ofA11city Ins. Co. [Jimenez], 78 N.Y.2d 1054, 576 N.Y.S.2d 87 (1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 27 Matter ofA11state Ins. Co. v. Cruz, 30 A.D.3d 511, 817 N.Y.S.2d 129 (2d Dep’t 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Mount Vernon Fire Ins. Co. v. 170 East 106th Street Realty Corg, 212 A.D.2d 419, 422, 622 N.Y.S.2d 758, 760 (1stDep’t 1995) . . 32 [ftn 2] New York Cent. Mut. Fire Ins. Co. v. Salomon, 11 A.D.3d 315, 782 N.Y.S.2d 730 (lst Dep’t 2004) . . . . . . . . . . . . 32 [ftn 2] Thrasher v. United States Liab. Ins. Co., 19 N.Y.2d 159, 278 N.Y.S.2d 793 (1967) ... 30, 31, 32, 34, 35, 37, 38, 40 Utica First Ins. Co. v. Arken. Inc., 18 A.D.3d 644, 795 N.Y.S.2d 640 (2d Dep’t 2005) . . . . . . . . . . . . . . . 31,37 STATUTES: Insurance Law § 3420(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Vehicle & Traffic Law § 388 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32, 33, 39 STATE OF NEW YORK COURT OF APPEALS ___________________________________________________________ -._X COUNTRY-WIDE INSURANCE COMPANY, Plaintiff-Appellant, - against - PREFERRED TRUCKING SERVICES CORP., CARLOS ARIAS, THE PORT New York County C1erk’s Index No. AUTHORITY OF NEW YORK AND 101844/09 NEW JERSEY, and EDWARDS AND KELCEY, INC., Defendants, - and - FILIPPO GALLINA and SHERRI GALLINA, Defendants-Respondents. ¢ - _ _ _ _ _ _ _ _ _ - - _ _ _ _ - - _ _ _ _ _ - - _ _ _ _ _ - - _ _ _ _ - - _ _ _ _ _ _ - _ _ _ _ _ - - _ _ _ _ _ - - _ _ .__X BRIEF FOR PLAINTIFF-APPELLANT PRELIMINARY STATEMENT Plaintiff-appellant Country-Wide Insurance Company (“Country- Wide”) respectfully submits this brief in support of its appeal from the final order (R. 4-5)‘ of the Appellate Division, First Department, entered October 18, 2012 1 References to “R. _” are to the pages of the Record on Appeal. (reported at Country-Wide Ins. Co. v. Preferred Trucking Services Corg, 99 A.D.3d 582 , 952 N.Y.S.2d 539 (1S‘ Dep’t 2012)). The Appellate Division’s order affirmed the Decision, Order and Judgment (one paper) (R. 8-20), dated August 18, 2011, of the Supreme Court, New York County (Friedman, J.) which (i) granted the motion by defendants Filippo Gallina and Sherri Gallina for summary judgment to the extent of declaring that Country-Wide is obligated to indemnify defendant Preferred Trucking Services Corp. (“Preferred Trucking”) in the underlying personal injury action up to its policy limit of $500,000; and (ii) denied Country-Wide’s cross-motion for summary judgment declaring that it was not obligated to indemnify Preferred Trucking in such underlying action. 2 JURISDICTIONAL STATEMENT This Court has jurisdiction under CPLR 5602(a)(1) to entertain Country-Wide’s appeal in that the Appellate Division’s Decision and Order dated October 18, 2012 (R. 4-5) appealed from finally determined this action. Additionally, by Order dated May 2, 2013 (R. 3), this Court granted Country- Wide’s motion for leave to appeal to this Court from the Appellate Division’s Order. This Court has jurisdiction to review the issues presented because they raise questions of law. 3 ISSUE PRESENTED FOR REVIEW Whether an insurance carrier is obligated to serve a disclaimer as to the named insured (Preferred Trucking) in a business auto liability policy at the time it became apparent that the president of the named insured refused to cooperate when, at the same time, the carrier was still seeking the cooperation of the permissive driver/employee of the named insured, who has personal knowledge of the underlying accident, and the named insured is vicariously liable for the driver/employee’s negligence under VTL § 388 and the doctrine of respondeat superior‘? The Appellate Division concluded that Country-Wide’s disclaimer of coverage to the named insured twenty-four days after “it became apparent that the operator of the subject truck would not cooperate with the defense of the underlying personal injury action”, was untimely “since such disclaimer was made approximately four months after Country-Wide learned” that the named insured’s president would not cooperate (R. 4-5). 4 STATEMENT OF FACTS Background On September 27, 2006, defendant-respondent Filippo Gallina was injured by a truck operated by defendant Carlos Arias and owned by his employer, Preferred Trucking (R. 96-97). On the date of the accident, Country-Wide insured Preferred Trucking under a business auto liability policy for bodily injuries caused by accidents involving Preferred Trucking’s truck. The policy provided liability limits of $500,000 per accident (R. 48-52). Section II(A)(1)(b) of the policy, entitled “Who is an Insured”, defines an insured as the named insured (Preferred Trucking) and “[a]nyone else using with your permission a covered ‘auto’ you own . . .” (R. 59). Defendant Arias was an insured under Preferred Trucking’s policy in connection with the September 27, 2006 accident. Section IV(A)(2)(b)(3) of Country-Wide’s policy expressly requires that the insured “[c]ooperate with [Country-Wide] in the investigation or settlement of the claim or defense against the ‘suit”’ (R. 64). 5 Country-wide’s Extensive Efforts To Secure its Insured’s Cooperation ‘When Country-Wide first received notice of the underlying accident in or about February 2007, it immediately assigned its Special Investigation Unit (“SIU”) to conduct an investigation of the accident and to contact Mr. Arias and Preferred Trucking (R. 103). Countrywide assigned Armando Pizarro, an SIU investigator, to locate and contact Mr. Arias and Preferred Trucking (R. 257). Mr. Pizarro conducted DMV and Accurint searches and found that Mr. Arias’ last known addresses were in Elmhurst, New York 11373, and . Elmhurst. On March 2 2007, Mr. Pizarro prepared and mailed to Mr. Arias at his two last known addresses two identical letters (R. 119-120), one in English and the other in Spanish (R. 294) in which he requested that Mr. Arias contact Mr. Pizarro within three days to “take a statement” from him and to obtain additional information regarding the September 27, 2006 accident. The letters specifically advised Mr. Arias that Countrywide’s policy required him to cooperate with Countrywide (R. 119-120). On March 5, 2007, Mr. Pizarro obtained the telephone numbers and 6 fax number of Andrew Markos, the president of Preferred Trucking (R. 258). Mr. Pizarro called Mr. Markos’ cell phone number (917- . and left a message in which he requested that Mr. Markos contact him regarding the September 27, 2006 accident (R. 258). The voice mail for the business telephone number (631 was not activated (R. 258). Mr. Pizarro also faxed a letter to Mr. Markos in which he requested that he contact him within three days to discuss the accident, and pointed out his duty under the policy to cooperate (R. 258; 121-123). On March 6, 2007, Mr. Pizarro went to Mr. Arias’ apartment at in Elmhurst to interview him (R. 25 8). Since there was no answer at the apartment, Mr. Pizarro left a post card with his name and telephone number on the apartment door (R. 25 8). Mr. Pizarro also spoke with Mr. Stancil, the building superintendent, who stated that Mr. Arias did not live in Apartment but leased it to another family (R. 258). Mr. Pizarro gave his business card to Mr. Stancil and requested that Mr. Stancil ask Mr Arias to contact him if he saw him (R. 25 8). That same day, Mr. Pizarro also went to Mr. Arias’ apartment at in Elmhurst (R. 258). The building directory listed “Mr. Arias” as residing in Apartment (R. 258). Mr. Pizarro knocked on the door of Apartment but there was no answer. He left a postcard with his 7 name and telephone number on the apartment door (R. 25 8). Mr. Pizarro also spoke with Mr. Gonzales, a tenant of Apartment who informed him that Mr. Arias lived in Apartment (R. 25 8). The next day, March 7, 2007, Mr. Pizarro went to Preferred Trucking’s office located at ~ in West Babylon, New York to interview Andrew Markos and/or Mr. Arias and obtain photographs of the truck involved in the accident (R. 259; 113-114). He observed loading machines, tractors and mounds of gravel and sand on a lot which was closed off (R. 296). On March 12, 2007, Mr. Pizarro conducted a corporate search of Preferred Trucking through the Division of Corporations of the New York State Secretary of State (R. 259). The corporate search revealed an address of - r in Hauppauge (R. 259; 134). The next day, Mr. Pizarro traveled to this location and learned that there is no such address (R. 296) Two days later, on March 14, 2007, Richard Palumbo, another SIU investigator who was assisting Mr. Pizarro with his assignment, informed Mr. Pizarro that he, too, was unable to locate Preferred Trucking’s offices (R. 259). On March 19, 2007, Mr. Pizarro conducted an Accurint (a public record database) search for Andrew Markos, which revealed an address of , Dix Hills, New York. Mr. Pizarro confirmed this address through a DMV 8 search of Mr. Markos (R. 259). On March 20, 2007, Mr. Pizarro went to Dix Hills to interview Mr. Markos (R. 260). There was no answer at Mr. Markos’ residence, and Mr. Pizarro left a post card with his contact information on the front door of the premises (R. 260). Later that same day, Mr. Pizarro mailed another letter to Mr. Markos at . in which he requested that Mr. Markos immediately contact him regarding the accident, and reminded him of his obligation to cooperate with Countrywide (R. 260; 132-133). Mr. Pizarro did not receive a response to this letter (R. 260). On April 5, 2007, Mr. Pizarro returned to Mr. Markos’ residence at (R. 135). There was again no answer at the residence and Mr. Pizarro again left at the front door a postcard with his contact information (R. 135-136). On April 11, 2007, SIU Investigator Palumbo went to Preferred Trucking’s office at . in West Babylon (R. 135-136). Mr. Palumbo informed Mr. Pizarro that he did not observe any Preferred Trucking trucks which had entered or exited the premises (R. 135-136). On April 12, 2007, SIU Investigator Palumbo went to and spoke with Joanne Markos, Andrew Markos’ wife (R. 135-136). Apparently, 9 Mr. Markos was either not present at the premises or would not come to the door (R. 135-136). Therefore, SIU Investigator Palumbo asked Mrs. Markos to inform Mr. Markos to contact Mr. Pizarro as soon as possible to discuss the September 27, 2006 accident (R. 135-136). On May 1, 2007, Mr. Pizarro mailed letters, dated April 30, 2007, by certified mail, return receipt requested (R. 139-141), to Mr. Markos and Mr. Arias in which he advised in pertinent part: . . . As your automobile liability carrier for the above date of accident, Country-Wide Insurance Company has tried to contact you on several occasions without success. Your failure to return our telephone calls [and] acknowledge our letters could prejudice the investigation of your policy contract. This violation would result in our disclaiming coverage to your for the loss. You would then be personally responsible for all verdicts, decisions and costs. I call your attention to your policy of insurance with Country-Wide Insurance Company, Page 7, Part E, Section B, which is entitled “DUTIES IN THE EVENT OF AN ACCIDENT OR LOSS” B. A person seeking coverage must 1. Cooperate with us in the investigation, settlement or defense of any claim or suit. Due to your failure to comply with the conditions of your policy contract, Country-Wide Insurance Company 10 wishes to reserve all of its rights under the policy. Neither Mr. Markos nor Mr. Arias responded to these letters (R. 142). Consequently, in view of the failure of Mr. Markos and Mr. Arias to respond to the numerous telephone calls, letters and/or post cards which requested that they contact Countrywide regarding the accident, Mr. Pizarro prepared a final report dated May 18, 2007 in which he requested that the SIU assignment be closed (R. 142). The Gallina Action On March 5, 2007, Filippo Gallina and Sherri Gallina, represented by Roura & Melamed, commenced an action in the Supreme Court, New York County under Index No. 103075/07 against the Port Authority of New York and New Jersey, Preferred Trucking, Carlos Arias, and Edwards and Kelcey, Inc., to recover damages for the personal injuries suffered by Mr. Gallina as a result of the September 27, 2006 accident (“The Gallina M”) (R. 149-160). The amended verified complaint (R. 92-102) in the Glflirg Action specifically alleged that Mr. Arias “opened the rear barn gate type of door and latched it in an open position in order to unload the DGA [sand and gravel] from the truck” and that “[d]uring the delivery of the DGA, the rear barn gate. . . swung from its opened position and struck” Mr. Gallina who was “knocked to the ground 11 and covered by material being dumped” (R. 96-97). There is no dispute that Mr. Markos was not present at the accident scene and did not witness Mr. Gallina’s accident. Country-Wide received its first notice of the _C_}a_lli_ng_1M seven months after it was filed when Roura & Melamed faxed to Country-Wide, on October 4, 2007, a copy of the Gallinas’ motion, returnable on October 12, 2007, for a default judgment against Preferred Trucking and Arias (R. 143-148). Six days later, by letter dated October 10, 2007 (R. 161-165), Country-Wide disclaimed its obligation to indemnify Preferred Trucking and Mr. Arias for the claims asserted against them in the Gallina Action upon the grounds of (i) lack of cooperation; and (ii) untimely notice of the Galhrg Action. Country-Wide’s Continued Efforts To Secure its Insured’s Cooperation Notwithstanding its disclaimer of its obligation to indemnify Preferred Trucking and Arias, Country-Wide retained, under a reservation of rights, the law firm of Cheven, Keely & Hatzis (“CK&H”) to defend Preferred Trucking and Arias in theitAg (R. 163). Upon assuming the defense of Preferred Trucking and Mr. Arias in the QailinaM, Country-Wide resumed its efforts to obtain their cooperation. 12 Shirley Bonner, Countrywide’s claims examiner assigned to the file, requested that an investigator be assigned to “continue investigation and obtain all the outstanding info & data requested in the initial assignment of (February 15, 2007)” and to obtain other information requested by CK&H (R. 168). The field request also noted that Countrywide had been “contacted by the insured [Andrew Markos] who is willing to cooperate with the investigation. The phone # at which he can be easily reached is 917 (R. 168). Countrywide assigned William Butler, another SIU investigator, to this matter. On October 19, 2007, Mr. Butler spoke by telephone with Mr. Markos during which time Mr. Markos informed Butler that “the driver (Mr. Arias) no longer worked for him”, and that Mr. Butler should call back on October 22, 2007 to set up a meeting with Mr. Markos (R. 169-170). On October 22, 24 and 29, 2007, Mr. Butler called Mr. Markos’ cell phone and left messages (R. 169-170). Additionally, on October 29, 2007, Mr. Butler went to Mr. Arias’ apartment at t in Elmhurst and found that no one was home. Mr. Butler left his business card on the door of the apartment. Mr. Butler followed up on October 30, 2007 by sending to Mr. Arias a letter in which he asked that he contact him (R. 169). Mr. Butler again left messages on Mr. Markos’ cell phone on 13 November 5 and 12, 2007. However, Mr. Markos again did not return Mr. Butler’s calls (R. 169). On November 15, 2007, Mr. Butler went to in Bayshore, which was the new business address for Preferred Trucking which Mr. Markos had provided. However, Mr. Markos was not present (R. 169). Mr. Butler left another message on Mr. Markos’ cell phone on November 19, 2007 (R. 169). Mr. Butler also mailed a letter to Mr. Markos at the Bayshore address. However, Mr. Markos did not respond to the phone calls or letter (R. 169). Mr. Butler again left a message on Mr. Markos’ cell phone on November 26, 2007 (R. 169). On November 28, 2007, Theresa McEvoy, an EBT clerk with CK&H, sent the first of many letters (R. 270-305; 268) to Mr. Arias at his address in which she advised him that his deposition was ordered by the Court for January 21, 2008. On December 4, 2007, Ms. McEvoy sent a second letter to Mr. Arias, instructing him, in bold, capital letters, to contact CK&H’s EBT department upon his receipt of the letter, and warned that the letter required his “immediate attention” so that CK&H could “properly defendant [sic] this case on your behalf’ (R. 272-273). A copy of the letter was mailed to Preferred Trucking as well (R. 273). 14 Mr. Butler left another message on Mr. Markos’ cell phone on December 3, 2007 (R. 170). On December 12, 2007, Mr. Butler went to Mr. Arias’ apartment (R. 170). However, no one was home and Mr. Butler left his card at the apartment (R. 170). Mr. Butler then went to Mr. Arias’ apartment (R. 170). No one was home at this apartment and Mr. Butler again left his business card in the door (R. 170). Mr. Butler continued his efforts to contact Mr. Markos. He left messages on Markos’ cell phone on December 12, 19 and 27, 2007. However, Mr Markos did not return any of his calls (R. 170). On January 2, 2008, Shirley Bonner, Countrywide’s claims representative, instructed Mr. Butler to again go to Mr. Markos’ house (R. 170). As set forth in his “Final Report” dated January 11, 2008 (R. 171), Mr. Butler left messages on Mr. Markos’ cell phone on January 7 and 10, 2008. He also visited the r business address in Bayshore on January 10, 2008. No one was present and he again left his card (R. 171). Mr. Butler noted in his final report that “the insured has been uncooperative since answering his cell the first time calling, and then never answering again, nor returning any messages left to ca1l” (R. 171). 15 On January 31, 2008, a compliance conference was held in the Mina _A_c:’tiin. The compliance conference order (R. 306-307) directed the depositions of all parties on or before April 30, 2008. On February 6 and 27, March 13 and April 30, 2008, Ms. McEvoy sent letters to Mr. Arias and Preferred Trucking in which she again advised them of the upcoming depositions and their need to cooperate (R. 274-281; 268). In April 2008, CK&H assigned Daniel Barrett, another SIU investigator, to continue the investigation to locate and secure the cooperation of Preferred Trucking and Arias so that they would appear at their court-ordered depositions (R. 196). On April 22, 2008, Mr. Barrett called the number (631 ') listed on whitepages.com for Preferred Trucking. A recorded message stated that the number was not in service (R. 200; 309-310). Mr. Barrett then traveled to West Babylon, Preferred Trucking’s last known address (R. 200; 309-310). Upon his arrival, Mr Barrett found that a new business, American Sand and Gravel, was now at that location (R. 200; 309-310). Mr. Barrett spoke with a worker who informed him that Preferred Trucking was the prior tenant, and that he did not have an address or phone number for Preferred Trucking (R. 200-201; 310). 16 On April 23, 2008, Mr. Barrett went to Mr. Markos’ home at in Dix Hills. No one answered the door and Mr. Barrett left a business card at the door. However, Mr. Markos did not call Mr. Barrett (R. 201; 207-208; 310) On April 24, 2008, Mr. Barrett sent a fax to Preferred Trucking, to Mr. Markos’ attention, at (631) 243-4366 (R. 177). Mr. Barrett did not receive a response to this fax (R. 310). On April 28, 2008, Barrett called Preferred Trucking’s broker, and was informed that Preferred Trucking was no longer a client (R. 310). On May 4, 2008, Barrett again visited Mr. Markos’ residence in Dix Hills. He spoke with a woman who identified herself as Mr. Markos’ wife (R. 310) and informed her that Countrywide insured a truck owned by Preferred Trucking that was involved in an accident and that he was trying to contact Mr. Markos to discuss the accident (R. 210). Mrs. Markos was “reluctant” to speak with Mr. Barrett and was “tight-lipped” about Mr. Markos’ whereabouts and whether he would contact him. Mrs. Markos did, however, provide Mr. Barrett with her husband’s home phone number (631 , and stated that he would be home at 7:00 p.m (R. 210-211). At 7:00 p.m. that night, Barrett called that number (631 _. and left a message; however, his call was not returned (R. 310). Mr. Barrett’s 17 search on whitepages.com revealed that the aforesaid phone number was a non- published Verizon land line (R. 178-179; 310). On May 5, 2008, Mr. Barrett conducted a search of the records maintained by the Division of Corporations of the New York State Secretary of State for Preferring Trucking. These records revealed that Preferred Trucking was an “active corporation” with an address at Hauppauge (R. 310). Barrett performed a reverse whitepages.com search, which showed that an attorney named Aleza Ross maintained an office at that location (R. 310). Mr. Barrett called Ms. Ross, who informed him that she represented Preferred Trucking at one time but that it was no longer a client and that she was not in contact with anyone from the company (R. 310). On May 13, 2008, Mr. Barrett went to Mr. Arias’ apartment (R. 310-311). Barrett noted that the name “C. Arias” was on the building intercom for apartment (R. 311). He knocked on the door of apartment . but no one answered the door (R. 311). Mr. Barrett left his business card under the door (R. 311). At 12:40 p.m. that same day, Barrett called 718 vhich he believed was Mr. Arias’ home phone (R. 311). There was a recorded message which stated that “messages to this number cannot be accepted” (R. 311). Mr. Barrett then went to the basement of Mr. Arias’ apartment building 18 to speak with the superintendent, who was not present. Mr. Barrett left his business cared under the door (R. 311). On May 29, 2008, the Supreme Court held another compliance conference in the @l_l_i_r_@ On at which the depositions of all parties were scheduled for August 6, 2008. The compliance order (R. 313) provided that the “[f]ailure of any party to submit to a deposition shall preclude the party from offering evidence in support of its claims or defenses”. In an attempt to comply with the compliance order dated May 29, 2008 (R. 350), Ms. McEvoy of CK&H sent another letter to Mr. Arias and Preferred Trucking in which she advised them of the deposition directed by the Court for August 6, 2008, and pointed out once again that the insurance policy required their “cooperation” in the defense of the lawsuit (R. 282-283). Thereafter, Ms. McEvoy mailed additional letters to Preferred Trucking and Arias in which she advised them of the depositions (R. 284-285; 286-287; 288-289; 290-291). On July 7, 2008, Mr. Barrett again went to Mr. Markos’ home in Dix Hills (R. 311). He again met with Mr. Markos’ wife, who told him that her husband was not home (R. 311). Mr. Barrett explained the reason for his visit and asked Ms. Markos to have her husband call him (R. 311). Ms. Markos stated that 19 she would relay the message. However, Mr. Markos did not call Mr. Barrett (R. 311). On July 28, 2008 at 1:35 p.m., Mr. Barrett retumed to Mr. Arias’ apartment on and was again unsuccessful in his efforts to locate him (R. 311). At 8:55 p.m., Mr. Barrett called Mr. Arias on his home phone number and spoke with his daughter Melissa (R. 311). Melissa informed Mr. Barrett that “[her] father doesn’t speak much English”, and provided Mr. Barrett with her father’s cell phone number (347 J . Mr. Barrett advised Melissa that a Spanish speaking representative from Countrywide would call her father (R 311). On August 18, 2008, Rafael Torbibo, a Spanish speaking SIU investigator for Countrywide, was able to speak with Mr. Arias. Mr. Arias informed Mr. Torbibo that he would cooperate with and appear at the scheduled deposition (R. 184). By letter dated August 19, 2008, transcribed in Spanish, Ms. McEvoy informed Mr. Arias that the deposition had been re-scheduled to September 9, 2008 (R. 296-297). Defendants Arias and Preferred Trucking were afforded another opportunity to appear at the court-ordered depositions. Pursuant to a stipulation dated September 25, 2008 (R. 314), the compliance conference was adjourned to 20 October 16, 2008 in order to allow for completion of their depositions (R. 314). Defendant Arias’ Wilful Failure to Appear for His Deposition Since it was critical that defendants Arias/Preferred Trucking appear for their court-ordered depositions prior to October 16, 2008, Mr. Torbibo was directed to contact Mr. Arias (R. 184). On October 3, 2008, Mr. Torbibo attempted to call Mr. Arias but was unsuccessful in reaching him (R. 184). On October 13, 2008, Mr. Torbibo went to Arias’ apartment but he was not home. Mr. Torbibo then spoke by telephone with Mr. Arias who flat-out informed him that he “doesn’t care about the EBT date due to a unknown family situation”. Mr. Arias would not provide Mr. Torbibo with any details (R. 184). On October 14, 2008, Mr. Torbibo again tried contacting Mr. Arias by telephone but to no avail (R. 184). Mr. Torbibo again tried calling Arias on October 15, leaving detailed messages in Spanish about the urgent need to attend the deposition (R. 184). At a compliance conference held on October 16, 2008 in the g @i_on, the Gallinas, as plaintiffs therein, were granted leave to move to strike the answer of Preferred Trucking and Arias based on their wilful failure to appear for depositions in violation of the preclusion order dated May 29, 2008 (R. 315-316). 21 Country-Wide’s Disclaimer Dated November 6. 2008 Twenty-four days after Mr. Arias made crystal clear his avowed refusal to cooperate, Country-Wide, in a letter dated November 6, 2008 (R. 243- 245), disclaimed, upon the ground of lack of cooperation, its obligation to defend and indemnify Preferred Trucking and Mr. Arias with respect to the claims asserted against them in the QLME1 . The disclaimer pointed out that the failure and refusal of Preferred Trucking and Mr. Arias to cooperate with Country- Wide in the defense of theMAiimi was wilful, and noted that as a result they were precluded from offering a defense in the Galhit LW (R. 243-245). CK&H thereafter moved to be relieved as the attorneys of record for Preferred Trucking and Mr. Arias in the underlyingMM. By Order dated March 20, 2009 (R. 317-318), the Supreme Court, New York County (Friedman, J .), granted CK&H’s motion. The Default Judgment in the Gallina Action In an Order dated June 5, 2009 (R. 319-320), the Supreme Court, ii"M struck the answer of defendants Preferred Trucking and Arias for failure to appear at their court-ordered deposition and awarded the Gallinas (as plaintiffs in the _G_all_i_i_i_a M) summary judgment against Preferred Trucking and Arias on 22 the issue of liability. Following an inquest on damages held on October 30, 2009, the Supreme Court, in an order dated March 3, 2010 (R. 324), awarded judgment by default against Preferred Trucking in favor of plaintiff Filippo Gallina in the sum of $2,300,000 and plaintiff Sherri in the sum of $250,000. Country-Wide’s Declaratory Judgment Action On February 10, 2009, Country-Wide commenced the instant declaratory judgment action for a judgment declaring that it is not obligated to indemnify Preferred Trucking and Mr. Arias with respect to the claims asserted and damages sought in the iigM (R. 32-39). By notice of motion dated August 1 1, 2010 (R. 21-22), defendants Gallinas moved for summary judgment dismissing Country-Wide’s complaint upon the ground that Country-Wide’s disclaimer for non-cooperation of its insureds constituted a “misguided, redundant and self-serving series of superficial investigative efforts” (R. 31). The Gallinas also contended that Country-Wide’s disclaimer dated October 10, 2007 (R. 161-165) was untimely as a matter of law (R. 31). However, the Gallinas did not argue that Country-Wide’s disclaimer dated November 6, 2008 was untimely as to either Preferred Trucking or Mr. Arias. 23 Country-Wide cross-moved for summary judgment (R. 251-252) declaring that it was not obligated to indemnify Preferred Trucking and Mr. Arias in theMM and that it was not obligated to satisfy the default judgment entered Preferred Trucking upon the ground of the wilful failure of Country- Wide’s insureds to cooperate in (i) its investigation of the accident; and (ii) the defense of the GM Action. Country-Wide argued that the evidence overwhelmingly established that it met its heavy burden of establishing that (i) it acted diligently in seeking the cooperation of Preferred Trucking and Mr. Arias; (ii) its efforts were reasonably calculated to bring about the insured’s cooperation; and (iii) the insured’s attitude had risen to the requisite level of willful and avowed obstruction (R. 293). Country-Wide also argued that its disclaimers dated October 10, 2007 and November 6, 2008 were timely as a matter of law. Alternatively, Country-Wide argued that in the event Country-Wide’s disclaimers were held invalid, then its liability under Insurance Law §3420(a)(2) was limited to its policy limit of $500,000 (R. 256). The Supreme Court’s Decision In its Decision, Order and Judgment dated August 10, 2011 (R. 8-20), the Supreme Court granted Country-Wide’s cross-motion to the extent of declaring that its disclaimer dated November 6, 2008, was timely as to Mr. Arias. 24 The Court concluded in pertinent part the: . . . evidence demonstrates that Countrywide’s efforts were reasonably calculated to obtain Arias’ cooperation, and that he engaged in willful and avowed obstruction as a matter of law. (See Srare Farm Indem. Co. v Moore, 58 AD3d 429 [lst Dept 2009]; Preferred Mut. Ins. Co. v SAV Carpentry, Inc., 44 AD3d 921 [2d Dept 2007].) The court further finds that Countiywide’s second disclaimer, made 24 days after he said he would not cooperate with the deposition, and 21 days after Gallina was given leave to move to strike defendants’ answer, was timely. Accordingly, Countrywide is not obligated to defend or indemnify Arias in the Gallina action (R. 18). However, the Court granted the Gallinas’ motion to the extent of declaring that Country-Wide’s same disclaimer, dated November 6, 2008 was untimely as to Preferred Trucking: . . . The undisputed evidence is that after Countrywide reached Markos in October 2007, he failed to respond to any of Countrywide’s attempts to obtain his cooperation in defense of the action. It was or should have been clear, as of July 2008 when Countrywide last attempted to contact Markos, that he 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 disclaimer. The court accordingly holds as a matter of law that Countywide’s November 6, 2008 disclaimer was invalid as to Preferred (R. 19). 25 The Appellate Division’s Decision In affirming the Supreme Court’s order, the Appellate Division explained in pertinent part that: . . . Plaintiff’ s argument that the disclaimer was timely because it had no basis for disclaiming coverage until it became apparent that the operator of the subject truck would not cooperate with the defense of the underlying personal injury action, is unavailing. Plaintiff’ s diligent conduct prior to the disclaimer, in attempting to secure the cooperation of both Prefeired’s owner and the operator of the truck, shows that plaintiff believed both had knowledge or information pertaining to the accident and the underlying litigation, and belies plaintiff’ s representation that its sole concern was with the testimony of the operator of the truck. (R. 5; 99 A.D.3d at 582-583, 952 N.Y.S.2d at 540). 26 ARGUMENT 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 WHETHER PREFERRED TRUCKING’S PRESIDENT WAS COOPERATING The requirement of Insurance Law § 3420(d) of a written disclaimer “as soon as is reasonably possible” has been construed to mean that “once 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”. First Financial Ins. Co. v. Jetco Contracting Corp, 1 N.Y.3d 64, 66, 769 N.Y.S.2d 459, 461 (2003); accord: Matter of Allcity Ins. Co. |Jimenez|, 78 N.Y.2d 1054, 1056, 576 N.Y.S.2d 87, 88 (l99l)(“The timeliness of an insurer’s disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage”); Ql Ins. Co. v. Nassau County, 46 N.Y.2d 1028, 1029, 416 N.Y.S.2d 539, 540 (1979)(“A failure by the insurer to give such notice as soon as is reasonably possible after it first learns of the . . . grounds for disclaimer of liability or denial of coverage, precludes effective disclaimer of denial”). Since Insurance Law § 3420(d) speaks only of giving notice of 27 disclaimer “as soon as is reasonably possible”, the facts and circumstances of each case must be examined in order to determine if the delay in question is justified. See, Allstate Ins. Co. v. Gross, 27 N.Y.2d 263, 266, 317 N.Y.S.2d 309, 311 (1970)(“The statute lays down an unconditional rule. It requires, however, as a foundation, unreasonableness as a standard for delay, which means simply that no particular time is deemed undue delay. Rather the question of unreasonableness becomes a question of fact, or if extreme, of law, depending upon the circumstances of the case which make it reasonable for the insurer to take more or less time to make, complete and act diligently on its investigation of its coverage or breach of conditions in its policy”). Thus, delay in issuing a disclaimer may be excused by the carrier’s need to investigate issues which may affect its decision whether to disclaim coverage. See, e.g., 2540 Assoc. v. Assicurazioni Generali, 271 A.D.2d 282, 284, 707 N.Y.S.2d 59 (lst Dep’t 2000) (delay in issuing disclaimer one month after insurer interviewed the named insured’s president was reasonable because of the insurer’s need to interview other employees of the named insured in furtherance of its “prompt, diligent and good faith investigation of the claim”); DeSantis Bros. v. Allstate Ins. Co., 244 A.D.2d 183, 184, 664 N.Y.S.2d 7 (1stDep’t 1997) (delay reasonable because of the need to review a 500~page file and conduct legal 28 research); Aetna Cas. & Sur. Co. v. Brice, 72 A.D.2d 927, 928-929, 422 N.Y.S.2d 203 (4th Dep’t 1979) (delay reasonable because all those involved in accident had been killed which led to the insurer’s difficulty gathering evidence). The burden is on the insurer to explain the reasonableness of a delay in disclaiming coverage, especially where the reason for the disclaimer was or should have been readily apparent to the insurer prior to the onset of the delay. First Financial Ins. Co. v. Jetco Contracting Corp, supra 1 N.Y.3d at 70, 769 N.Y.S.2d at 464 (“One thing is clear: that it is the responsibility of the insurer to explain its delay”); Fish King Enterprises v. Countrywide Ins. Co., 88 A.D.3d 639 642, 930 N.Y.S.2d 256, 259 (2d Dep’t 2011) (concluding that a delay of 49 days in issuing a disclaimer after the carrier’s receipt of the summons and complaint was not excused by the carrier’s need to conduct an investigation to evaluate the full extent of the various underlying actions and identity of all relevant parties, since the proffered basis for the disclaimer — that the plaintiff in the underlying action was an employee of the insured — was “readily ascertainable from the face of the complaint in the underlying action”). However, where, as here, the ground for disclaimer is predicated on an insured’s non-cooperation, the above time constraints which are generally applicable to fact patterns in which the reason to disclaim is “immediately 29 7 apparent” upon receipt of the claim, Matter of Allstate Ins. Co. v. Cruz, 30 A.D.3d 511, 513, 817 N.Y.S.2d 129, 131 (2d Dep’t 2006), or “readily ascertainable from the face of the complaint”, Fish King Enterprises v. Countrywide Ins. Co., supra, are not necessarily applicable. Rather, in order to further the State’s public policy of providing full compensation to injured accident victims who are unable to control the actions of an uncooperative insured, an insurer may not disclaim for non-cooperation until “only after it is clear that further reasonable attempts to elicit their insured’s cooperation will be futile”. Continental Cas. Co. v. Stradford, 11 N.Y.3d 443, 449-450, 871 N.Y.S.2d 607, 611-612 (2008). This Court articulated this well- settled legal principle over forty years ago in Thrasher v. United States Liab. Ins. Q, 19 N.Y.2d 159, 168-169, 278 N.Y.S.2d 793, 800 (1967) as follows: . . . Since the defense of lack of co-operation penalizes the plaintiff for the action of the insured over whom he has no control, and since the defense frustrates the policy of this State that innocent victims of motor vehicle accidents be recompensed for the injuries inflicted upon them (citations omitted), the courts have consistently held that the burden of proving the lack of co-operation is a heavy one indeed. Thus, the insurer must demonstrate that it acted diligently in seeking to bring about the insured’s co-operation (citations omitted); that the efforts employed by the insurer were reasonably calculated to obtain the insurer’s co-operation (citations omitted); and that the attitude of the insured, after his co- 30 operation was sought, was one of “willful and avowed obstruction” (citations omitted). . . Under Thrasher, even where the insured’s non-cooperation is apparent, the insurer still has a “heavy” burden of continuing to “diligently” seek to bring about the insured’s cooperation, and may not issue a disclaimer for non- cooperation unless and until the insured’s non-cooperation has risen to the level of “willful and avowed obstruction”. 19 N.Y.2d at 168-169, 278 N.Y.S.2d at 800; see also, Continental Cas. Co. v. Stradford, supra 11 N.Y.3d at 450, 871 N.Y.S.2d at 611-612 (“. . . where an insured has punctuated periods of noncompliance with sporadic cooperation or promises to cooperate, some reasonably longer period for analysis may be warranted”, but insurer would be entitled to disclaim where insured had a “history of non-compliance, evasion and broken commitments”); Utica First Ins. Co. v. Arken. Inc., 18 A.D.3d 644, 645, 795 N.Y.S.2d 640, 641 (2d Dep’t 2005) (correspondence and numerous telephone calls reasonably calculated to bring about the insured’s cooperation demonstrated that the insured willfully obstructed the carrier’s defense of the underlying litigation). Here, the Appellate Division erroneously concluded that Country- Wide’s disclaimer dated November 6, 2008 (R. 243-245) was untimely as to Preferred Trucking because Country-Wide knew or should have known, four 31 months prior to its disclaimer, that Mr. Markos would not cooperate. To the contrary, since Mr. Arias as well as Mr. Markos was an agent of Preferred Trucking, a corporation, Country-Wide could not disclaim as to Preferred Trucking under the law as articulated in Thrasher and its progeny 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”. Continental Cas. Co. v. Stradford, supra. Therefore, since Preferred Trucking’s liability in the QgtlipaM was vicarious under VTL § 388 as well as the doctrine of respondent-superior, 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 with the defense of the MinaM, regardless of whether Mr. Markos was cooperating’. 2 Mr. Markos was merely an officer of Preferred Trucking and was not an eye witness to the underlying accident. Mr. Arias was a permissive driver/employee of Preferred Trucking and was personally involved in the accident when he opened the rear gate of the truck (R. 96-97). Although Mr. Markos as well as Mr. Arias was an agent of Preferred Trucking, it is doubtful under First Department authority whether Country-Wide could even disclaim as to Preferred Trucking predicated on Mr. Markos’ non-cooperation, since he did not have personal knowledge of the accident. See, Mount Vernon Fire Ins. Co. v. 170 East 106th Street Realty Corp, 212 A.D.2d 419, 422, 622 N.Y.S.2d 758, 760 (1stDep’t 1995) (pointing out that since the president of the corporate insured “had little or no personal knowledge relevant to the defense, he could justifiably have believed that his further cooperation was not required and his testimony would be useless”); New York Cent. Mut. Fire Ins. Co. v. Salomon, 11 A.D.3d 315, 317-318, 782 N.Y.S.2d 730, 733 (1“ Dep’t 2004) (“Since Marin was not present at the time of the accident, she had ‘no personal knowledge relevant to the defense’ and could have believed that her cooperation 32 In finding that the November 6, 2008 disclaimer was untimely as to Preferred Trucking, the Appellate Division in effect concluded that the only way Preferred Trucking could cooperate with the defense of the QMMwas through its president, Mr. Markos. This conclusion, however, was patently erroneous since Preferred Trucking could equally cooperate through its permissive driver/employee, Mr. Arias. As the permissive driver/employee of the Preferred truck involved in the accident, Mr. Arias had personal knowledge of the accident and was potentially able to provide a meaningful defense for Preferred Trucking as well as himself in the QaflillM. Since Mr. Markos was not a witness to the accident, he did not have such personal knowledge. But even if Mr. Markos did have personal knowledge that was relevant to the defense of the accident, his failure to cooperate did not provide a legal basis to support a disclaimer as to Preferred Trucking so long as Country-Wide was still seeking in good faith Mr. Arias’ cooperation, as it was. As the permissive driver/employee of the truck owned by his employer, Mr. Arias was an agent/representative of and could speak on behalf of and bind Preferred Trucking which is vicariously liable under VTL § 388 and the doctrine of respondeatsi for his negligence in causing the accident. See, Judith M. v. was not required since her testimony would be useless”). 33 Sisters of Charity Hosp_., 93 N.Y.2d 932, 933, 693 N.Y.S.2d 67, 68 (1999)(“The doctrine of respondeat superior renders an employer vicariously liable for torts committed by an employee acting within the scope of the employment). Indeed, Mr. Markos was not named a defendant in the underlying action and his acts or omissions did not form the basis for vicarious liability against Preferred Trucking as did Mr. Arias’. Therefore, whether and the time at which Country-Wide could issue a disclaimer for the non-cooperation of Preferred Trucking required that Country- Wide analyze and consider the status of Mr. Arias’ cooperation. Unless and until Mr. Arias’s non-cooperation rose to the level of “willful and avowed obstruction”, Thrasher v. United States Liab. Ins. Co., supra, 19 N.Y.2d at 167-168, 278 N.Y.S.2d at 800, and that “further reasonable attempts to elicit [his] cooperation will be futile”, Continental Cas. Co. v. Stradford, supra, 11 N.Y.3d at 450, 871 N.Y.S.2d at 611, Country-Wide had no legal basis on which to disclaim as to Preferred Trucking — regardless of whether it was or should have been apparent to Countrywide four months prior to its disclaimer that Mr. Markos would not cooperate. The Appellate Division’s conclusion that Country-Wide’s attempts prior to its November 6, 2008 disclaimer to secure the cooperation of Mr. Markos 34 showed that Country-Wide believed he had knowledge or information pertaining to the accident, “and belies [Country-Wide’s] representation that its sole concern was with the testimony of the operator of the truck”, stood the Thrasher rule on its head by effectively punishing Country-Wide for doing what it was required to do under Thrasher and Continental Cas. Co. v. Stradford, in order to protect innocent accident victims, such as the Gallinas from uncooperative insureds. Thus, Country-Wide properly continued its Herculean efforts to secure the cooperation of Preferred Trucking via Mr. Arias (which, would have served the interests of the Gallinas who had no control over the insured’s conduct), and yet has been improperly penalized by the Appellate Division for doing so. The Appellate Division’s conclusion that Country-Wide should have disclaimed as to Preferred Trucking due to the non-cooperation of Mr. Markos as of July 2008 disregarded Country-Wide’s efforts to properly continue to seek the cooperation of Preferred Trucking via Mr. Arias who indeed did agree, in August 2008, to cooperate by appearing for his court-ordered deposition (R. 184). The Appellate Division also overlooked the uncontroverted showing that notwithstanding Mr. Markos’ non-cooperation, Preferred Trucking remained vicariously liable for Mr. Arias’ negligence in swinging open and allowing the rear barn gate door of the truck to hit Mr. Gallina, knock him down to the ground 35 and become covered with the sand and gravel being dumped (R. 96-97). Clearly, 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 premature, precipitous and improper given Country-Wide’s continued efforts to secure the cooperation of Mr. Arias after July 7, 2008 (R. 345). Had Mr. Arias appeared for a deposition within thirty days or so after July 7, 2008, a disclaimer as to Preferred Trucking issued within thirty days thereof would have been patently invalid. Yet, under the Appellate Division’s reasoning, Country-Wide was required to disclaim as to Preferred Trucking within thirty days of July 7, 2008 for Mr. Markos’ non-cooperation, and then disclaim again, within thirty days of October 16, 2008 for Mr. Arias’ non-cooperation. This type of piecemeal disclaimer practice, which is not favored in the law, see, 2_54_0 Assoc. v. Assicurazioni Generali, supra, 271 A.D.2d at 284, 707 N.Y.S.2d at 61 (explaining that “as a matter of policy, reasonable investigation is preferable to piecemeal disclaimers”), would have been contrary to Country-Wide’s duties under Thrasher and Continental v. Stradford, supra. The Appellate Division disregarded the uncontroverted showing in the record that (a) Country-Wide would have been potentially able to defend Preferred Trucking, as well as Mr. Arias, by relying on Mr. Arias’ cooperation in 36 appearing for his court-ordered deposition; and (b) Country-Wide’s legal duty to continue its efforts to secure Mr. Arias’ cooperation and to not disclaim until such efforts were “futile”. Continental Cas. Co. v. Stradford, 11 N.Y.3d at 449-450; Thrasher v. United States Liab. Ins. Co., supra; Utica First Ins. Co. v. Arken. Inc., supra. Since it was not apparent to Country-Wide that Mr. Arias would not cooperate, and Country-Wide was continuing to seek his cooperation in July 2008 it follows that Mr. Markos’ refusal to cooperate in July 2008 did not ipg faotp mean that Preferred Trucking was not cooperating. So long as Country-Wide was continuing in good faith to diligently seek Mr. Arias’ cooperation, Preferred Trucking was necessarily cooperating, regardless of whether Mr. Markos was cooperating. It is undisputed that (i) Country-Wide was in good faith seeking the cooperation of Mr. Arias after July 7, 2008; and (ii) Mr. Arias informed Country- Wide’s SIU investigator on August 18, 2008 that he, Arias, would appear for his deposition in the @@M (R. 184). Given Mr. Arias’ affirmative statement on August 18, 2008 that he would cooperate (R. 184), Country-Wide had no factual or legal basis to serve a disclaimer as to Preferred Trucking regardless of whether it knew or should have been known in July 2008 that Mr. Markos would not cooperate. Country-Wide 37 would have been able to potentially defend Preferred Trucking as well as Mr. Arias by relying on Mr. Arias’ deposition testimony. It was not until October 13, 2008 — when Mr. Arias unequivocally refused to cooperate and appear for his court-ordered deposition (R. 184) — that Country-Wide’s defense of the (illlllfiMwas fatally compromised, thereby warranting a disclaimer for non-cooperation as to both Mr. Arias and Preferred Trucking. Therefore, Country-Wide’s November 6, 2008 disclaimer (R. 243-245) was timely as a matter of law as to Preferred Trucking as well as to Mr. Arias. See, Continental Cas. Co. v. Stradford, supra; Thrasher, supra. The Appellate Division’s ostensible conclusion that a carrier’s obligation to promptly disclaim trumps its obligation to continue to secure the insured’s cooperation, presents the Court with the opportunity to provide guidance by articulating the priority between the statutory requirement that an insurer issue a disclaimer as soon as reasonably possible, and the case law requirement that an insurer exhaust all reasonable efforts to secure the insured’s cooperation before disclaiming for non-cooperation. Country-Wide should not have been penalized for continuing to seek Preferred Trucking’s cooperation via defendant Arias and providing coverage for Preferred Trucking in the meantime. Upon information and belief, there are thousands of motor vehicles 38 insured under business auto liability policies for which coverage is invoked for the alleged negligence of the insured’s driver/employee, as in the case at bar. Insurance carriers need to know the parameters of their disclaimer obligations where, as here, an officer of the named insured who does not have personal knowledge does not cooperate but the permissive driver/employee of the named insured, who does have personal knowledge of the accident, is still ostensibly cooperating. Clearly, an insurance carrier should not be obligated to serve a piecemeal disclaimer as to the named insured merely because it should have been apparent that the president of the named insured refuses to cooperate when, at the same time, the carrier continues to seek the cooperation of the permissive driver/employee of the named insured who has personal knowledge of the underlying accident and can bind the named insured which is vicariously liable for the driver/employee’s negligence under VTL § 388 and/or the doctrine of respondeat superior. In Continental Cas. Co. v. Stradford, supra, 11 N.Y.3d at 450, 871 N.Y.S.2d at 611, this Court pointed out that ‘[t]o further this State's policy in favor of providing full compensation to injured victims, who are unable to control the actions of an uncooperative insured, insurers must be encouraged to disclaim for 39 noncooperation only after it is clear that further reasonable attempts to elicit their insured’s cooperation will be futile. The Appellate Division’s decision, however, penalizes insurance carriers such as Country-Wide for seeking in good faith to adhere to the law of this State, as articulated in Stradford and Thrasher, by diligently continuing “further reasonable attempts to elicit [its] insured’s cooperation” through the driver/employee of the name insured who has personal knowledge of the underlying accident. 40 CONCLUSION FOR THE FOREGOING REASONS: (1) (2) (3) (4) THE ORDER OF THE APPELLATE DIVISION APPEALED FROM SHOULD BE REVERSED; DEFENDANT GALLINA’S MOTION FOR SUMMARY JUDGMENT DENIED; COUNTRYWIDE’S CROSS-MOTION FOR SUMMARY JUDGMENT GRANTED; and THE MATTER REMANDED FOR ENTRY OF A JUDGMENT DECLARING THAT COUNTRY- WIDE’S DISCLAIMER DATED NOVEMBER 6, 2008 TO PREFERRED TRUCKING WAS TIMELY AND THAT COUNTRY-WIDE IS NOT OBLIGATED TO INDEMNIFY DEFENDANTS PREFERRED TRUCKING IN THE GALLINA ACTION Dated: New York, New York July 1,2013 Respectfully submitted, /J 7/1/1» , THOMAS TORTO, ESQ. Attorney for Plaintiff-Appellant 419 Park Avenue South New York, New York 10016 (212) 532-5881 (212)481-5851 (Fax) E-mail: tomtorto@ao1.com 41