The opinion of the court was delivered by: Sand, District Judge.
This case comes before the Court on four motions by the
defendant-insurers. The facts underlying these motions are set
forth at length in two prior Opinions of this Court,
familiarity with which is assumed. See Olin v. Insurance Co. of
N. Am. (INA), 762 F. Supp. 548, 550-55 (S.D.N.Y. 1991)
(hereinafter "Olin II") (Huntsville claims); Olin v. INA,
743 F. Supp. 1044, 1046-48 (S.D.N.Y. 1990) (hereinafter "Olin I")
(Saltville claims), aff'd, 929 F.2d 62 (2d Cir. 1991).
1. Falcon/Commercial Union's Motion for Partial Summary
Falcon/Commercial Union moves for summary judgment dismissing
Olin's claims for indemnity arising out of the Huntsville
occurrence, on the ground that Olin's notice to
Falcon/Commercial Union was unreasonably late as a matter of
law. The Falcon/Commercial Union policies are excess policies
which provided coverage for liabilities in excess of certain
amounts. Those amounts varied from year to year, the lowest
trigger amount being $300,000 and the highest $30,300,000.
See Affidavit of Kathryn Underhill (6/4/91) ("Underhill Aff."),
The parties agree that New York law governs the late notice
issue with regard to Falcon/Commercial Union. Under New York
law, an insured has a duty to give notice to an excess insurer
when the circumstances known to the insured "would have
suggested a reasonable possibility of a claim that would
trigger the excess insurer's coverage." Olin I, 743 F. Supp. at
1054. This Court has held previously that Olin's duty to give
notice of the Huntsville occurrence to its primary insurer
accrued, at the latest, on July 9, 1979, when the first of the
underlying DDT lawsuits was filed. Olin II, 762 F. Supp. at 566.
That class action suit advanced ten theories of liability and
sought $50,000,000 in damages on each claim. See Underhill Aff.
at ¶¶ 24-25.
The damages sought in the first DDT lawsuit were well in
excess of even the highest trigger amount of the
Falcon/Commercial Union policies. Moreover, Olin had been on
notice since at least the mid-1960s that large amounts of
DDT-laden effluent were being discharged from the Huntsville
plant and that DDT was potentially toxic to wildlife and
humans. See Olin II, 762 F. Supp. at 552-54. Based upon these
circumstances, this Court concludes that the filing of the
first lawsuit should have suggested to Olin that there was a
reasonable possibility that the Falcon/Commercial Union
policies would be triggered. Accordingly, we hold that Olin's
duty to give notice to Falcon/Commercial Union accrued, at the
latest, on July 9, 1979.
Olin did not provide notice to Falcon/Commercial Union until
mid-August, 1980. Under New York law, even relatively short
periods of delay in notification are unreasonable unless a
valid excuse is given. See, e.g., Utica Mut. Ins. Co. v.
Fireman's Fund Ins. Cos., 748 F.2d 118, 121 (2d Cir. 1984) (six
months); Power Auth. of New York v. Westinghouse Elec. Corp.,
117 A.D.2d 336, 343, 502 N.Y.S.2d 420, 423 (1986) (fifty-three
days). Olin argues that it failed to give earlier notice
because it believed that the underlying DDT claims were
meritless, and because it did not believe that its liability
would reach the levels necessary to invoke the
Falcon/Commercial Union policies. Given the long history of
knowing DDT pollution at Huntsville and Olin's awareness of the
potentially harmful effects of DDT, this Court finds the
proffered excuse to be unpersuasive. Accordingly, we hold that
as a matter of law Olin provided unreasonably late notice to
Falcon/Commercial Union. As a result, Falcon/Commercial Union
is absolved of any duty to indemnify Olin with respect to the
2. Wausau's Motion for Partial Summary Judgment
Wausau moves for partial summary judgment, seeking a
declaration that it has no duty to defend or indemnify Olin
with respect to the Saltville occurrence on the ground of late
notice. The Wausau policies at issue covered the period
January, 1974 to March, 1977.
Wausau argues that New York law applies, and that because New
York law provides that unreasonably late notice absolves an
insurer of any duty to defend or indemnify the insured, its
motion for partial summary judgment should be granted. Olin
contends that Connecticut law applies, and that under
Connecticut law the giving of late notice does not absolve an
insurer of liability unless the insurer is prejudiced by the
delay. See Aetna Casualty & Sur. Co. v. Murphy, 206 Conn. 409,
538 A.2d 219 (1988).
Federal courts sitting in diversity jurisdiction must apply
the choice of law rules of the forum state. Klaxon v. Stentor
Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85
L.Ed. 1477 (1941). New York law requires courts to apply the
law of the jurisdiction "which has the most significant
contacts with the matter in dispute." Auten v. Auten, 308 N.Y. 155,
160, 124 N.E.2d 99 (1954).
Applying the New York choice of law rule in Olin I, this
Court determined that all of the insurance policies at issue
were governed by New York law. See Olin I, 743 F. Supp. at
1048-49. Some of the policies examined in Olin I were
indistinguishable, from a choice of law perspective, from the
Wausau policies at issue here. ...