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June 15, 1984

HOWARD FUEL, Plaintiff,
LLOYD'S UNDERWRITERS, et al., Respondent.

The opinion of the court was delivered by: SPRIZZO



 Plaintiff, Howard Fuel Corporation ("Howard Fuel"), command this action pursuant to the admiralty and maritime jurisdiction of the United States, 28 U.S.C. ยง 1333 (1982), seeking to recover damages from its cargo insurance underwriters, Lloyd's Underwriters, et al. (hereinafter collectively referred to as "Lloyd's"). The case was tried before this Court, and the parties have submitted post-trial memoranda and proposed findings of fact and conclusions of law.


 In 1972, plaintiff engaged Newport Brokerage Corporation ("Newport"), a domestic insurance broker, to secure marine insurance covering, among other things, cargo risks. Newport, acting on plaitiff's behalf, then contacted a London-based broker, Hinton, Hills and Coles Limited ("Hinton"), which in turn contacted Seascope Insurance Services Limited ("Seascope"), a "Lloyd's broker." *fn1" Seascope placed the cargo risk with Lloyd's. On December 7, 1982, Lloyd's issued an open cargo insurance policy covering, inter alia, plaintiff's fuel oil shipments. Exhibit ("Exh.") 1. The policy took effect on June 15, 1972 and continued until January 1, 1974.

 On November 26, 1973, the M/T "Manuella" suffered a boiler explosion while carrying a cargo of plaintiff's fuel oil from Priolo, Italy to the Port of New York. The vessel was towed to a New York shipyard for repairs on November 28, 1973. The shipowners declared general average on November 30, 1973, and the voyage was terminated.

 Howard Fuel's cargo remained on board until February 1974, when plaintiff began to discharge the fuel oil into barges for delivery to plaintiff's nearby terminal in Bayonne, New Jersey. *fn2" The discharge operation began on February 4, 1974 and continued until March 5, 1974. A survey conducted during the discharge operation revealed an 8,260.75 barrel shortage and water contamination in the fuel oil. *fn3"

 Although Howard Fuel first became aware of the basis for its claim against Lloyd's while the cargo was being discharged in February and March of 1974, it apparently did not notify its United States broker, Newport, of its loss until September 1974, approximately seven months later. See Litvack Deposition at 19-28. Newport then advised Hinton, by letter dated September 11, 1974, that the cargo had been damaged. Exh. 12a. Hinton forwarded Newport's letter to Seascope on September 17, 1974. *fn4" Exh. 24, Appendix B, documents ## 1-2. Lloyd's itself did not have notice until at least two years later. *fn5"

 When presented with plaintiff's claim for cargo shortage and other expenses, *fn6" Lloyd's refused to pay and this action ensued. Lloyd's argues that Howard Fuel may not recover its loss because: (1) it failed to provide immediate notice of the loss; (2) it failed to request that it be "held covered" under the policy after the voyage was terminated; (3) it failed to protect Lloyd's subrogation rights; and (4) it failed to prove its damages.


 Lloyd's argues that Howard Fuel is barred from recovering because it breached the provision of the policy requiring immediate notice of loss. *fn7" Under New York law, *fn8" noncompliance with a notice provision in an insurance policy bars the claim unless the insured can demonstrate that it was not reasonably possible to give notice within the prescribed time and that notice was provided as soon as was reasonably possible. Baltic Shipping Co. v. Maher Terminals, Inc., 1980 A.M.C. 410, 414 (S.D.N.Y. 1979); Deso v. London & Lancashire Indemnity Company of America, 3 N.Y.2d 127, 130, 143 N.E.2d 889, 891, 164 N.Y.S.2d 689, 691 (1957); see Neptune Lines, Inc. v. Hudson Valley Lightweight Aggregate Corp., 1973 A.M.C. 125, 134 (S.D.N.Y. 1972). Moreover, the claim is barred regardless of whether or not the insurer has been prejudiced by the failure to give timely notice. *fn9" Security Mutual Insurance Co. v. Acker-Fitzsimons Corp., 31 N.Y.2d 436, 440, 293 N.E.2d 76, 78, 340 N.Y.S.2d 902, 905 (1972); see Baltic Shipping Co. v. Maher Terminals, Inc., 1980 A.M.C. at 414.

 Howard Fuel has failed to demonstrate that it was not reasonably possible to provide Lloyd's with notice immediately upon learning of its cargo loss, or that notice was provided as soon as was reasonably possible. Indeed, plaintiff learned of its claim in February or March 1974 and Lloyd's was not notified until at least two years later. It follows that plaintiff's claim is and should be barred.

 Plaintiff contends, however, that Lloyd's had actual notice of plaintiff's cargo losses because it knew of the boiler explosion and the subsequent declaration of general average. *fn10" That contention is not supported by the evidence. The fact that an engine room casualty had occurred and that the voyage was being terminated did not afford Lloyd's with actual notice that cargo damage had been sustained.

 Howard Fuel also argues that Lloyd's received notice of its loss under the policy when it was notified, in January 1974, that the fuel oil was a "solid mass" and was being heated to a suitable discharge temperature. That claim is untenable. Nothing in plaintiff's communication to Lloyd's indicated that the cargo was damaged. See Froude Deposition at 24-27. Furthermore, plaintiff's letter was sent prior to the commencement of the discharge operations, before Howard Fuel itself discovered any loss or damage to the fuel oil. It is ludicrous to suggest that Lloyd's was chargeable with actual knowledge of a loss which even the plaintiff did not know had occurred.

 Plaintiff further claims that Lloyd's is somehow estopped from asserting lack of notice as a defense because it allowed the results of the Saybolt survey to be used to reduce its liability for plaintiff's general average contribution. *fn11" Plaintiff, however, has offered no evidence to establish that Lloyd's received the results of the survey at a time when plaintiff was still capable of complying with the notice requirement. *fn12" Therefore, plaintiff has not shown that its failure to give timely notice was in any way based upon Lloyd's use of the survey in connection with the general average adjustment. Since plaintiff did not rely upon Lloyd's conduct in failing to give notice, and since plaintiff has demonstrated no prejudice arising out of any conduct by Lloyd's, there is no basis upon which to estop Lloyd's from asserting the defense of untimely notice.

 The Court likewise rejects plaintiff's argument that Lloyd's waived the defense of ultimely notice becauseit investigated plaintiff's claim for six months before disclaiming liability on that basis. See Plaintiff's Post-Trial Brief at 10-12. Howard Fuel cites no facts indicating that a six month delay in fact occurred. Furthermore, assuming that there was such a delay, plaintiff's waiver defense must fail. First, Howard Fuel has presented no facts showing that Lloyd's delay was unreasonable under the circumstances. See Cohen v. Atlantic National Insurance Co., 24 A.D.2d 896, 896, 264 N.Y.S.2d 807, 809 (2d Dep't 1965). Second, merely proceeding with an investigation of a claim before objecting to untimely notice does not constitute a waiver of an insurer's right to disclaim liability. Standard Accident Insurance Co. v. Cochardo, 1 Misc. 2d 1029, 1031, 152 N.Y.S.2d 645, 647 (Sup. Ct. 1954), aff'd, 2 A.D.2d 631, 152 N.Y.S.2d 648 (3d Dep't 1956). *fn13"

 Howard Fuel next contends that Seascope was Lloyd's "de facto agent" and that, since Seascope's notice in September 1974 constituted constructive notice to Lloyd's, plaintiff did not breach the terms of the policy. Plaintiff's Post-Trial Brief at 2-5. That argument lacks merit for two reasons. First, an insurance broker is the agent of the insured, not the insurance company, and notice to an insurance broker, absent exceptional circumstances not here present, is not notice to the insurer. See Security Mutual Insurance Co. v. Acker-Fitzsimons Corp., 31 N.Y.2d at 442 n.3, 293 N.E.2d at 79 n.3, 340 N.Y.S.2d at 907 n.3; Gabriel v. Attigliato, 60 Misc. 2d 536, 303 N.Y.S.2d 399, 401 (Sup. Ct. 1968); Curreri v. Allstate Insurance Co., 37 Misc. 2d 557, 560, 236 N.Y.S.2d 719, 723 (Sup. Ct. 1963). Furthermore, plaintiff has offered no evidence to support its claim that Seascope was Lloyd's real or apparent agent. *fn14"

 Second, even if Seascope's notice of plaintiff's loss could be imputed to Lloyd's, that notice was itself untimely. Seascope did not receive notice of the alleged cargo damage until September 1974, approximately seven months after plaintiff first learned of it. Plaintiff has offered no explanation for its delay. Since it was reasonably possible for Howard Fuel to have provided notice sooner, this seven month delay in itself violates the requirement of immediate notice under the policy. See Baltic Shipping Co. v. Maher Terminals, 1980 A.M.C. 410, 414 (S.D.N.Y. 1979); Neptune Lines, Inc. v. Hudson Valley Lightweight Aggregate Corp., 1973 A.M.C. 125, 134 (S.D.N.Y. 1973); see also Granite State Minerals, Inc. v. American Insurance Co., 435 F. Supp. 159, 164 (D. Mass. 1977). *fn15"


 The foregoing shall constitute the Court's findings of fact and conclusions of law as required by Fed. R. Civ. P. 52(a). Defendants are directed to submit a final judgment in accordance with the foregoing, on notice, within fifteen (15) days of the date of this decision. Each party shall bear its own attorneys' fees.


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