United States District Court, Southern District of New York
February 26, 1990
OGDEN CORPORATION, AVONDALE INDUSTRIES, INC. AND CONNELL LIMITED PARTNERSHIP, PLAINTIFFS,
THE TRAVELERS INDEMNITY COMPANY AND AMERICAN MOTORISTS INSURANCE COMPANY, DEFENDANTS. THE TRAVELERS INDEMNITY COMPANY, THIRD-PARTY PLAINTIFF, V. EMPLOYERS INSURANCE OF WAUSAU, A MUTUAL COMPANY AND NATIONAL UNION FIRE INSURANCE COMPANY, THIRD-PARTY DEFENDANTS.
The opinion of the court was delivered by: Robert P. Patterson, Jr., District Judge.
Plaintiffs have moved this Court, pursuant to Rule 59 or, in
the alternative, Rule 60(b) of the Federal Rules of Civil
Procedure, for a rehearing and reconsideration of this Court's
Opinion and Order of September 22, 1989 ("September 22 Opinion"),
denying plaintiffs' motion for partial summary judgment as to
defendants' duty to defend plaintiffs under their respective
insurance policies and granting defendants' cross-motions for
summary judgment. Plaintiffs raise two issues.
1. The Pollution Exclusion
In light of the recent decision in Avondale Industries, Inc. v.
The Travelers Indemnity Co., 887 F.2d 1200 (2d Cir. 1989), and
the denial of the petition for rehearing in the same case,
Avondale Industries, Inc. v. The Travelers Indemnity Co.,
894 F.2d 498 (2d Cir. 1990), the parties are ordered to appear on
March 7, 1990 at 4:00 p.m. for reargument of the issue of the
applicability of the "sudden and accidental" exception to the
pollution exclusion clauses. No written submissions will be
accepted unless ordered by the Court.
2. The Notice to AMICO
To the extent plaintiffs' motion asks the Court to reconsider
that portion of the September 22 Opinion granting summary
judgment to defendant American Motorists Insurance Company
("AMICO") on the grounds that AMICO was not timely notified of
the occurrence which triggered AMICO's policy, the motion is
Plaintiffs argue that the Court overlooked Autotronic Systems
v. Aetna Life & Gas., 89 A.D.2d 401, 456 N.Y.S.2d 504 (3d Dep't
1982) in granting summary judgment to AMICO. Plaintiffs assert
that Autotronic requires this Court to hold that the notice to
AMICO was adequate, given that a second insurer, Travelers, had
received timely notice in 1985 and it was not "readily apparent"
that the AMICO policy period would be implicated.
In Autotronic, the underlying suit was commenced against the
insured by service of a summons in December 1977, at which time
the then current insurer was notified of the suit. A second,
prior carrier was not notified of the suit until after the
complaint was served in June 1978. The court held the latter
notice timely, stating that "only when the complaint in the
[underlying] action was served did it become readily apparent
that defendant Aetna was on the risk during the period when some
or all of the injuries first manifested themselves." Id., 456
N.Y.S.2d at 506.
Autotronic differs from the present case because it involved
the insured's failure to give prompt notice of the underlying
suit, not of the occurrence. Here, AMICO's late notice defense is
based on the notice of occurrence provision in the policies, not
on the notice of suit provisions. Secondly, in Autotronic the
underlying action was commenced by the service of a summons only,
which did not advise the insured of the substance of the claims.
In this case, as was decided in the September 22 Opinion,
plaintiffs were aware before the actual complaint was filed that
a claim was likely with respect to their scrap metal
operations, which were conducted from 1950 through 1983. The July
1985 letter from Bethlehem put plaintiff on notice that Bethlehem
would contend that plaintiff's scrap metal operations were the
cause of the pollution. Moreover, by letter of June 27, 1986
plaintiff's in-house legal counsel took the position that the
pollution could have been caused long before the Travelers
policies were in effect, indicating that he was aware the AMICO
policies might be at issue.
The Second Circuit set forth the rule for notification of
occurrences in Commercial Union Ins. Co. v. International Flavors
& Fragrances, 822 F.2d 267 (2d Cir. 1987) that "[t]he test for
determining whether the notice provision has been triggered is
whether the circumstances known to the insured at that time would
have suggested to a reasonable person the possibility of a
claim." Id. at 272. That is the test to be applied by this Court,
whether two insurers are involved or one. Having applied that
test in the September 22 Opinion, the Court finds no basis for a
rehearing of the matter.
Plaintiffs also cite for the first time Prentice v.
Knickerbocker Life Insurance Co., 77 N.Y. 483 (1879), where a
four month delay by the insurer in disclaiming liability was held
to be a waiver of the defense of untimely notice, in support of
their argument that AMICO waived its right to object to
plaintiffs' untimely notice because of its own 10-week delay in
disclaiming liability. Plaintiffs, however, have not demonstrated
that Prentice, a case which certainly could have been raised on
the initial motion, requires this Court to conclude that AMICO's
disclaimer was not given within a reasonable time.
Lastly, plaintiffs have submitted allegedly new evidence that
AMICO is chronically slow in responding to claims submitted to it
by its insureds. Plaintiffs submit an affidavit of Bert L. Weber,
which states that AMICO took four months to respond to a letter
notifying AMICO of a different environmental insurance matter,
and that when it did respond AMICO said only that a response to
the letter was being processed. Plaintiffs argue that this
demonstrates the futility of giving notice to AMICO. Such
anecdotal evidence, however, does not establish that notice to
AMICO with respect to the present matter would have been futile.
Plaintiffs' remaining arguments are simply restatements of
prior arguments considered and rejected by the Court.
Accordingly, this second prong of plaintiffs' motion must be
denied. Caleb & Co. v. E.I. DuPont De Nemours & Co., 624 F. Supp. 747,
748 (S.D.N.Y. 1985); Nassau-Suffolk Ice Cream, Inc. v.
Integrated Resources, Inc., 683 F. Supp. 452, 454 (S.D.N.Y.
© 1992-2003 VersusLaw Inc.