Country-Wide Insurance Company, Appellant,v.Preferred Trucking Services Corp., et al., Defendants, Filippo Gallina, et al., Respondents.

Brief

N.Y.January 15, 2014

State of New York Court of Appeals REPLY 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 (phone) (212) 481-5851 (fax) Email: ttorto@tortolaw.com Date Completed: September 3, 2013 -i- TABLE OF CONTENTS Page TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii PRELIMINARY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 POINT I THE SUPREME COURT’S LEGAL CONCLUSION, AFFIRMED BY THE APPELLATE DIVISION – THAT THE NOVEMBER 6, 2008 DISCLAIMER WAS UNTIMELY AS TO PREFERRED TRUCKING – IS REVIEWABLE BY THIS COURT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 POINT II COUNTRY-WIDE COULD NOT DISCLAIM AS TO PREFERRED TRUCKING FOR LACK OF COOPERATION UNTIL IT BECAME UNEQUIVOCALLY APPARENT THAT MR. ARIAS WOULD NOT COOPERATE . . . . . . . . . . . . . . . . . . 11 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 -ii- TABLE OF AUTHORITIES Cases: American Sugar Refining Co. of New York v. Waterfront Commission of New York Harbor, 55 N.Y.2d 11, 447 N.Y.S.2d 685 (1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Bingham v. New York City Tr. Auth., 99 N.Y.2d 355, 756 N.Y.S.2d 129 (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Continental Cas. Co. v. Stradford, 11 N.Y.3d 443, 871 N.Y.S.2d 607 (2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 11, 14, 18 Cummins v. County of Onondaga, 84 N.Y.2d 322, 618 N.Y.S.2d 615 (1994) . . . 9 Esa v. New York Property Ins. Underwriting Ass’n, 89 A.D.2d 865, 453 N.Y.S.2d 247 (2d Dep’t 1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 First Financial Ins. Co. v. Jetco Contracting Corp., 1 N.Y.3d 64, 769 N.Y.S.2d 459 (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Harvey v. Mazal Am. Partners, 79 N.Y.2d 218, 581 N.Y.S.2d 639 (1992) . . . . . . 9 Haynes v. Haynes, 83 N.Y.2d 954, 615 N.Y.S.2d 863 (1994) . . . . . . . . . . . . . . . . 9 Matter of Bevona (Superior Maintenance Co.), 204 A.D.2d 136, 611 N.Y.S.2d 193 (1st Dep’t 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Matter of State of New York v. Rashid, 16 N.Y.3d 1, 917 N.Y.S.2d 16 (2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Misicki v. Caradonna, 12 N.Y.3d 511, 525, 882 N.Y.S.2d 375, 385 (2009) . . . 5, 7 Rios v. Smith, 95 N.Y.2d 647, 722 N.Y.S.2d 220 (2001) . . . . . . . . . . . . . . . . . . . 9 Rivera v. Smith, 63 N.Y.2d 501, 483 N.Y.S.2d 187 (1984) . . . . . . . . . . . . . . . . . . 7 -iii- Scannell v. Mt. Sinai Medical Center, 256 A.D.2d 214, 683 N.Y.S.2d 18 (1st Dep’t 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Sena v. Nationwide Mut. Fire Ins. Co., 198 A.D.2d 345, 603 N.Y.S.2d 173 (2d Dep’t 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Telaro v. Telaro, 25 NY2d 433, 306 N.Y.S.2d 920 (1969) . . . . . . . . . . . . . . . . . . 8 Thrasher v. United States Liab. Ins. Co., 19 N.Y.2d 159, 278 N.Y.S.2d 793 (1967) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 11, 13, 14, 18 Wild v. Catholic Health System, 21 N.Y.3d 951, ___ N.Y.S.3d ___ (2013) . . . . . 9 STATE OF NEW YORK COURT OF APPEALS -------------------------------------------------------------x : COUNTRY-WIDE INSURANCE COMPANY, : Plaintiff-Appellant, : - against - : PREFERRED TRUCKING SERVICES New York County CORP., CARLOS ARIAS, THE PORT : Clerk’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 reply brief in further support of its appeal and in opposition to the brief dated July 17, 2013 submitted on behalf of defendants- respondents Filippo Gallina and Sherri Gallina. -2- POINT I THE SUPREME COURT’S LEGAL CONCLUSION, AFFIRMED BY THE APPELLATE DIVISION – THAT THE NOVEMBER 6, 2008 DISCLAIMER WAS UNTIMELY AS TO PREFERRED TRUCKING – IS REVIEWABLE BY THIS COURT In an attempt to avoid the dispositive impact of Countrywide’s showing that it could not effectively disclaim as to Preferred Trucking until it became apparent that Mr. Arias’ refusal to cooperate with the defense of the underlying action had reached the requisite avowed and willful level and that further efforts to secure the his cooperation were fruitless, respondents assert (Respondents’ Br., at 2, 12-14) that Countrywide did not raise this argument below and therefore cannot raise it on appeal before the Court of Appeals. However, respondents’ argument is without merit. The Issue Was Raised Before Supreme Court At the outset, Country-Wide argued (R. 256, 335) in the Supreme Court that its disclaimer dated November 6, 2008 was timely as to Preferred Trucking. The Supreme Court disagreed with Country-Wide’s argument based on its legal conclusion that the disclaimer was untimely as to Preferred Trucking as measured from Mr. Markos’ non-cooperation (R. 19). Consequently, since the timeliness issue was raised before and -3- squarely addressed by the Supreme Court, it has been preserved for review by this Court. Notably, the Appellate Division did not state in its decision that the timeliness issue had not been raised in the Supreme Court but that it was reviewing such issue under its “interest of justice” jurisdiction. Alternatively, this Court May Review the Supreme Court’s Legal Conclusion That The November 6, 2008 Disclaimer Was Untimely As to Preferred Trucking, Since It Was Reached Sua Sponte To the extent that the argument that the timeliness of the November 6, 2008 disclaimer as to Preferred Trucking must be measured from Mr. Arias’ refusal to cooperate, and not Mr. Markos, was not specifically argued before the Supreme Court, this Court may still review the Supreme Court’s legal conclusion on this issue since it was reached sua sponte by the Supreme Court. Thus, the issue was raised and decided in the Supreme Court, reviewed and affirmed by the Appellate Division, and may be properly reviewed by this Court. Contrary to respondents’ argument that “[t]he 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” (Respondents’ Br., at 10), Country- Wide argued that its disclaimer was timely as to Preferred Trucking and Arias as -4- measured from Mr. Arias’ non-cooperation. It is Country-Wide’s position that there was no four month delay because its time to disclaim did not begin to run until it became apparent that Mr. Arias would not cooperate. Respondents, on the other hand, never made the specific argument that the November 6, 2008 disclaimer was untimely as to Preferred Trucking because “[i]t was or should have been clear, as of July 2008 when Country-Wide last attempted to contact Markos, that he would not participate in the defense” of the Gallina Action. Respondents’ arguments before the Supreme Court (R. 22-31) were primarily limited to the threshold issue of whether Country-Wide failed, in the first instance, to undertake the requisite diligent efforts which were reasonably calculated to secure Preferred Trucking’s cooperation, as required under Thrasher v. United States Liab. Ins. Co., 19 N.Y.2d 159, 168-169, 278 N.Y.S.2d 793, 800 (1967) and its progeny. In support of their motion for summary judgment, respondents specifically argued (R. 31) that Country-Wide’s efforts to secure Preferred Trucking’s cooperation through its owner, Mr. Markos, were “misguided, redundant and [a] self-serving series of superficial investigative efforts”. Moreover, respondents took the unequivocal position that there was no proof that Preferred Trucking even failed to cooperate, urging urged that “the -5- paper trail provides not a single instance of actual non-cooperation on the part of Preferred Trucking” (R. 31). Respondents did not make the precise argument that the timeliness of Country-Wide’s November 2008 disclaimer as to Preferred Trucking must be measured from the date of Mr. Markos’ non-cooperation. Respondents’ argument (Respondents’ Br., at 20) that “[h]ad 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 second disclaimer letter” is misplaced. Country-Wide’s position is that there was no delay to be explained because its time to disclaim was not triggered until it became unequivocally apparent that Mr. Arias would not cooperate. Thus, there is no question but that the Supreme Court’s legal conclusion – that the November 6, 2008 disclaimer was untimely as to Preferred Trucking – was rendered sua sponte, and may be reviewed by this Court. See, Sena v. Nationwide Mut. Fire Ins. Co., 198 A.D.2d 345, 346, 603 N.Y.S.2d 173, 174 (2d Dep’t 1993) (granting leave to appeal from a sua sponte order which dismissed the complaint). Since leave to appeal a sua sponte order which makes a legal determination is reviewable, a fortiori an sua sponte order which makes a legal determination, not urged by respondents, is reviewable. See, Misicki v. -6- Caradonna, 12 N.Y.3d 511, 525, 882 N.Y.S.2d 375, 385 (2009)(Smith, J., dissenting) (explaining that the preservation rule, while important, “is not truly jurisdictional, in the sense of being a limitation on our power” and that the Court of Appeals “will review unpreserved questions when common sense and practical necessity dictate that we should”). The posture of the Supreme Court’s sua sponte legal determination is similar to a motion to renew which is based upon new facts submitted in response to a sua sponte determination by a motion court in its original order. See, Scannell v. Mt. Sinai Medical Center, 256 A.D.2d 214, 683 N.Y.S.2d 18, 20 (1st Dep’t 1998)(explaining that the motion court erroneously failed to consider additional information submitted on renewal since it addressed “an issue raised sua sponte by the court in the original decision”); Matter of Bevona (Superior Maintenance Co.), 204 A.D.2d 136, 138-139, 611 N.Y.S.2d 193, 195 (1st Dep’t 1994) (explaining that where additional facts presented on motion to renew relate to an issue “which had not previously been raised by the parties but, rather, had been raised sua sponte by the court in its memorandum. . .it [is] error for the court not to consider these additional facts”); Esa v. New York Property Ins. Underwriting Ass’n, 89 A.D.2d 865, 866, 453 N.Y.S.2d 247, 249 (2d Dep’t 1982) (concluding that it was error for motion court not to consider additional facts on renewal which related to -7- a matter which had not previously been raised by the parties but rather was raised sua sponte by the court). Thus, the Supreme Court’s sua sponte conclusion of law may be reviewed by this Court. Misicki v. Caradonna, supra (dissenting opn). Alternatively, the Timeliness Issue Presents a Question of Law on the Face of the Record Which is Reviewable by This Court Since the Supreme Court’s legal conclusion on the issue of whether the timeliness of the November 6, 2008 disclaimer should be measured from the date of Mr. Arias’ non-cooperation appears on the face of the record and “could not have been obviated or cured by factual showings or legal countersteps” before Supreme Court, the error of that sua sponte conclusion, affirmed by the Appellate Division, may be reviewed by the Court of Appeals. See, Rivera v. Smith, 63 N.Y.2d 501, 516, 483 N.Y.S.2d 187, 195 (1984)(“[a]lthough respondents did not raise this issue in the courts below, a new argument may be raised for the first time in the Court of Appeals if it could not have been obviated or cured by factual showings or legal countersteps in the court of first instance”); American Sugar Refining Co. of New York v. Waterfront Commission of New York Harbor, 55 N.Y.2d 11, 25, 447 N.Y.S.2d 685, 691 (“Were the former argument a new one, it would nonetheless be proper for us to consider it because it is not a contention that -8- could have been “obviated or cured by factual showings or legal countersteps”); Telaro v. Telaro, 25 NY2d 433, 306 N.Y.S.2d 920 (1969) rearg denied, 306 N.Y.S.2d 920, 25 N.Y.2d 433 (1970)(Brietel, J.) (“if a conclusive question is presented on appeal, it does not matter that the question is presented on appeal, it does not matter that the question is a new one not previously suggested. No party [respondents] should prevail on appeal, given an unimpeachable showing that [they] had no case . . .”). Here, Country-Wide’s argument is reviewable by this Court since it does not allege new facts, is limited to a dispositive question of law which appears on the face of the record based on the Supreme Court’s sua sponte conclusion of law, and could not have been avoided by respondents before the Supreme Court. See, Bingham v. New York City Tr. Auth., 99 N.Y.2d 355, 359, 756 N.Y.S.2d 129, 131 (2003)(“A new issue—even a pure law issue—may be reached on appeal only if it could not have been avoided by factual showings or legal countersteps had it been raised below”). Respondents do not argue that Countrywide’s legal argument injects new facts for the first time on appeal. To the contrary, respondents agree that – as Supreme Court found – the record demonstrates the “established failure of both insureds to cooperate” (Respondents’ Br., at 13). Nor do respondents argue that -9- Arias was not an employee of Preferred Trucking at the time of the accident, or that Preferred Trucking’s liability is not vicariously based upon Arias’ conduct. Respondents also do not dispute that Countrywide’s legal argument on appeal regarding the timeliness of disclaimer as to Preferred Trucking based upon Arias’ willful and avowed refusal to cooperate, addresses the Supreme Court’s sua sponte conclusion on that very issue. The cases relied upon by respondents (Respondents’ Br., at 13-14) to support their contention that Country-Wide’s argument has not been preserved for appellate review, are factually distinguishable and not on point. See, Continental Cas. Co. v. Stradford, 11 N.Y.3d 443, 449, 871 N.Y.S.2d 607, 611 ftn 4 (2008) (declining to review argument that a statute’s timeliness standard is inapplicable where the argument “was not presented to the courts below”); Wild v. Catholic Health System, 21 N.Y.3d 951, ___ N.Y.S.3d ___ (2013)(appellate challenges to jury instructions which were unobjected to before the trial court unpreserved for appellate review); Rios v. Smith, 95 N.Y.2d 647, 722 N.Y.S.2d 220 (2001)(same); Cummins v. County of Onondaga, 84 N.Y.2d 322, 618 N.Y.S.2d 615 (1994) (evidentiary arguments not timely raised or advanced before the trial court unpreserved for review); Harvey v. Mazal Am. Partners, 79 N.Y.2d 218, 581 N.Y.S.2d 639 (1992)(same). Neither Haynes v. Haynes, 83 N.Y.2d 954, 615 -10- N.Y.S.2d 863 (1994) nor Matter of State of New York v. Rashid, 16 N.Y.3d 1, 917 N.Y.S.2d 16 (2010) address the Supreme Court’s sua sponte conclusion of law. Accordingly, Countrywide’s argument is reviewable by this Court. -11- POINT II COUNTRY-WIDE COULD NOT DISCLAIM AS TO PREFERRED TRUCKING FOR LACK OF COOPERATION UNTIL IT BECAME UNEQUIVOCALLY APPARENT THAT MR. ARIAS WOULD NOT COOPERATE Respondents do not dispute that under Thrasher v. United States Liab. Ins. Co., supra, Continental Cas. Co. v. Stradford, supra, and the other cases cited in Country-Wide’s main brief (Brief at 27-40), Country-Wide had a heavy burden of undertaking diligent efforts reasonably calculated to secure Preferred Trucking’s cooperation in the defense of the Gallina Action; that it had to exhaust all of those efforts and could not disclaim as to Preferred Trucking for non- cooperation until only after it became clear that the refusal to cooperate amounted to willful and avowed obstruction and further reasonable attempts to elicit its cooperation were futile. Nor do respondents dispute that Country-Wide satisfied its burden under Thrasher and Continental Cas. Co., as found by Supreme Court and the Appellate Division (R. 5, 18-19)), by undertaking diligent efforts to secure the cooperation of Mr. Markos and Mr. Arias in the investigation and defense of the Gallina Action. Indeed, respondents’ recitation of Country-Wide’s efforts to secure the cooperation of Mr. Markos and Mr. Arias (Respondents’ Br., at 3-7), -12- demonstrates the diligence of such efforts. Respondents also do not deny that the refusal of Mr. Markos and Mr. Arias to cooperate amounted to willful and avowed obstruction. In this Court, respondents’ position (Respondents’ Br., at 3, 25) is now based solely upon the unprecedented assertion that Preferred Trucking “could cooperate only through its owner, Markos” (Respondents’ Br., at 15), that Country-Wide was required to notify Preferred Trucking of its disclaimer once it became aware of Mr. Markos’ non-cooperation, and that Country-Wide could not disclaim as to Preferred Trucking based upon Mr. Arias’ non-cooperation. However, respondents’ new position is unsupported by the record, belied by respondents’ own admissions, and without legal and factual merit. As noted by respondents, Country-Wide considered Mr. Markos “an important source of information in his own right” (Respondents’ Br., at 16) and did not view him as “superfluous, with nothing to contribute either to the investigation or defense of the claim” (Respondents’ Br., at 3), nor did it assert that his cooperation would have been “useless” (Respondents’ Br., at 21). Country-Wide diligently sought Mr. Markos’ cooperation as part of its effort to conduct a thorough and complete investigation for the defense of the Gallina Action, as it was required to do. It is undisputed, as found by both the -13- Supreme Court and the Appellate Division (R. 18-19, 5), that Country-Wide’s efforts vis-a-vis Mr. Markos met the standard of diligence required under such circumstances. However, Country-Wide’s actions to secure Mr. Markos’ cooperation did not establish that he was the only person who could cooperate on behalf of Preferred Trucking in the defense of the Gallina Action, as erroneously contended by respondents (Respondents’ Br., at 14-20) or that Country-Wide could effectively disclaim as to Preferred Trucking while Arias was still cooperating. Country-Wide’s active and consistent attempts to reach Mr. Markos on his cell, home and office phone numbers; sending letters to his home and office addresses; and actually visiting his home and office addresses on several occasions, did not ipso facto mean that Mr. Markos was the only person whose cooperation was necessary to defend Preferred Trucking, and whose non-cooperation would provide a proper basis to disclaim as to Preferred Trucking. Manifestly, the Appellate Division’s conclusion that Country-Wide’s “sole concern” was with Mr. Arias’ testimony (R. 5) in effect unfairly punished Country-Wide for seeking to comply with the law, as articulated by this Court in Thrasher and its progeny, by continuing to seek Arias’ cooperation before disclaiming as to Preferred Trucking. Country-Wide’s diligent efforts to secure -14- Mr. Markos’ cooperation simply indicated that it was attempting to comply with its legal obligation under Thrasher and Continental Cas. Co. Indeed, respondents do not dispute that had Country-Wide failed to undertake such diligent efforts as to Mr. Markos – as well as to Mr. Arias – it would not have met its threshold burden under Thrasher and Continental Cas. Co. and therefore would not have been entitled to disclaim as to Preferred Trucking. Respondents’ argument (Respondents’ Br., at 2, 18, 19) that Preferred and Arias were entitled to separate disclaimers based on their reasoning of Country-Wide’s “treatment” of Preferred Trucking and Mr. Arias as “separate insureds” with “separate, potential sources of knowledge and information necessary to the investigation and defense” of the Gallina Action, does not undermine Country-Wide’s legal argument that it could not disclaim as to Preferred Trucking until Mr. Arias’ non-cooperation became apparent. Indeed, the fact that Mr. Arias had crucial information necessary to the defense of Preferred Trucking in the Gallina Action actually bolsters Country-Wide’s sound and well- supported legal position that it could not disclaim as to Preferred Trucking unless and until it became apparent that further efforts to secure his cooperation were futile. As noted above and in POINT I, supra, respondents do not dispute the -15- following core facts: Mr. Arias was Preferred Trucking’s employee and the operator of the truck, Preferred Trucking is vicariously liable for Arias’ conduct, Arias could bind Preferred Trucking by his testimony and Country-Wide could provide a defense to Preferred Trucking in the Gallina Action based upon Arias’ cooperation. Indeed, respondents admit that had Mr. Arias’ cooperated he “might have exonerated himself as well as Preferred” (Respondents’ Br., at 24). Thus, Country-Wide properly continued its diligent efforts to secure the cooperation of Preferred Trucking via Mr. Arias as it was required to do with the result of being punished for doing so. Respondents’ claim that Country-Wide could have disclaimed as to Preferred Trucking based on Mr. Markos’ failure to cooperate “as it attempted to elicit Arias’ cooperation” (Respondents’ Br., at 22), conveniently overlooks the fact that such disclaimer would have been invalid under Thrasher, Continental Cas. Co., as well as First Financial Ins. Co. v. Jetco Contracting Corp., 1 N.Y.3d 64, 66, 769 N.Y.S.2d 459, 461 (2003). At the time Mr. Markos’ refusal to cooperate became apparent, Country-Wide still did not have sufficient knowledge of facts entitling it to disclaim to Preferred Trucking since it was still seeking the cooperation of Mr. Arias and it was not yet apparent that Mr. Arias would not cooperate. Contrary to respondents’ argument (Respondents’ Br., at 23-25), the -16- rule in First Financial Ins. Co. only renders Country-Wide’s November 6, 2008 disclaimer untimely as to Preferred Trucking if Mr. Markos was the only person who could cooperate with Country-Wide in the defense of Preferred Trucking in the Gallina Action. However, as shown above and admitted by respondents, he was not. Indeed, it is undisputed that Mr. Arias could also cooperate on behalf of Preferred Trucking and “exonerate” it (Respondents’ Br., at 24). Respondents’ alternative argument that Country-Wide was not entitled to rely on Mr. Arias’ refusal to cooperate as a basis to disclaim because a completed investigation “might well have revealed that Preferred, through its owner, was affirmatively negligent” (Respondents’ Br., at 21-22), is without merit and, in any event, irrelevant. Country-Wide does not dispute that the complaint in the Gallina Action alleged affirmative negligence on behalf of Preferred Trucking based on the defective door latch. Nor does Country-Wide dispute that an investigation might have revealed that Preferred was actively negligent and not merely “passively or vicariously negligent” (Respondents’ Br., at 21-22). However, the undeniable, undisputed fact is that Mr. Markos refused to cooperate despite Country-Wide’s diligent efforts to secure his cooperation. Therefore, this made Mr. Arias’ cooperation even more important and necessary to the defense of Preferred Trucking in the Gallina Action, both as to Preferred -17- Trucking’s alleged affirmative negligence and alleged vicarious liability. Respondents admit that Mr. Arias may have had important information about the subject door latch (Respondents’ Br., at 21). Consequently, contrary to respondents’ claim (Respondents’ Br., at 25), Country-Wide was indeed entitled to – in fact, required to – wait until Arias’ refusal to cooperate became apparent before it could disclaim as to Preferred Trucking. Respondents’ argument that Country-Wide failed to “limit” its assertion of prejudice to Arias’ refusal to cooperate before Supreme Court (Respondents’ Br., at 19) is really another version of their preservation argument and is not relevant to this appeal. Similarly, respondents’ reliance upon Country-Wide’s statement before the Supreme Court that it “is not imputing Arias’ non-cooperation to Preferred Trucking” (Respondents’ Br., at 19; R. 336), in order to support its claim that only Mr. Markos’ non-cooperation is relevant on the issue of timeliness of the disclaimer, is wholly misplaced. Respondents take that statement out of context. It was made in response to respondents’ position that Country-Wide was not entitled to a “second bite of the apple” in issuing a second disclaimer based upon the insureds’ failure to cooperate with the investigation of the claim, which failure -18- to cooperate formed the basis for the first disclaimer in October 2007. Under applicable law, Country-Wide was required to secure the cooperation of both Mr. Markos and Mr. Arias for the defense of Preferred Trucking in the Gallina Action. Manifestly, the record establishes that Country- Wide undertook diligent efforts as required under Thrasher to secure Mr. Markos and Mr. Arias’ cooperation, and that Country-Wide could not disclaim as to Preferred Trucking until it exhausted its efforts to secure the cooperation of Mr. Arias. Accordingly, Country-Wide’s November 6, 2008 disclaimer was timely as a matter of law as to Preferred Trucking as well as to Mr. Arias. See, Thrasher v. United States Liab. Ins. Co., supra; Continental Cas. Co. v. Stradford, supra. -19- CONCLUSION FOR THE FOREGOING REASONS, AS WELL AS THOSE SET FORTH IN COUNTRY-WIDE’S MAIN BRIEF: (1) THE ORDER OF THE APPELLATE DIVISION APPEALED FROM SHOULD BE REVERSED; (2) DEFENDANT GALLINA’S MOTION FOR SUMMARY JUDGMENT DENIED; (3) COUNTRYWIDE’S CROSS-MOTION FOR SUMMARY JUDGMENT GRANTED; and (4) 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 September 3, 2013 Respectfully submitted, __________________________ 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@aol.com