Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


January 29, 1993


The opinion of the court was delivered by: MICHAEL B. MUKASEY


 Plaintiff seeks a declaratory judgment that it has no liability under the insurance policy it issued in 1982 to cover, among other hazards associated with production of a motion picture, the risk of damage to negative film. Certain negatives of the film, a 3-D rock musical epic that was to be entitled "Rock 'N Roll Hotel," were lost or destroyed at a processing facility, apparently in California.

 The case is now before the court pursuant to a March 3, 1992 order that divided the issues between those triable to the bench and those triable to a jury. That order also provided that certain questions, including whether timeliness of notice of loss under the policy was raised as an issue by the pleadings, and whether notice could be untimely under the subject policy, would be tried based on papers submitted to the court. Since March 3, 1992 a dispute has arisen between the parties as to whether New York or California law controls, and that issue has been briefed as well.

 For the reasons set forth below, it appears that timeliness of notice of loss was an issue raised by the pleadings, that New York law controls, and that notice can be untimely under the subject policy even absent a clause requiring timely notice. Further, although the reasonableness or not of notice was described in the March 3 order as a jury issue, this delay -- 16 months after defendant learned of the loss, which itself apparently occurred some two or three years before -- was so lengthy that notice cannot be considered reasonable. Accordingly, judgment will be entered for plaintiff declaring that it has no liability for the subject loss, and dismissing defendant's counterclaims.


 To the extent now relevant, the underlying facts either are not disputed or, if disputed, may be assumed in defendant's favor. In October 1982 plaintiff issued a three-part policy that included, as Section IIIA, coverage for loss of negative film. (Pl. Ex. 2, Sec. IIIA) That policy was issued in California based on an application submitted to a California insurance broker by a New York corporation styled Rock Fantasy Corp., apparently a predecessor of defendant and located at the same address as defendant. (Mann 5/22/92 Aff. Ex. 3; compare Def. Ex. 88, showing same address for defendant) The application disclosed that the motion picture, a "story about 3 kids who want to be rock stars," would be filmed during six weeks in Richmond, Virginia and at unspecified "Locations," and that the "laboratory to be used," presumably to process the film, would be "Movielab - LA," meaning the Movielab facility in Los Angeles. (Mann 5/22/92 Aff. Ex. 3) Among its general conditions, applicable to all sections, the policy included the following:


 This policy applies to productions filmed anywhere in the world subject to additional premium with rates to be agreed upon with respect to all productions filmed outside of the United States or Canada.


 . . . . Where any limitation of time for . . . notices of any matter by the Insured is set forth in this policy, but such limitation of time is prohibited by the laws of the state wherein this policy is issued then and in that event, the time for suit or the time for notice shall be limited to the shortest period permitted under the laws of such state.

 (Def. Ex. 2)

 Section IIIA, which contained the coverage for the disputed loss, included no provision specifying the time for notice to plaintiff that a loss had occurred, or indeed requiring notice at all. That section was the only one extended to be in effect at the time the footage in question apparently was lost. Nor does the policy contain a choice of law clause.

 Principal photography began in October 1982 and continued into January 1983, when the producers ran out of money and ceased production until they could raise additional funds. By then, about 140,000 feet of film had been shot, of which some 38,000 were processed and stored at Movielab in or about December 1982, and the remaining 102,000 at Technicolor in New York. (Mann 5/22/92 Aff. PP 3, 4, 6, 7; Def. Ex. 90) Although defendant argues that the film in Movielab's custody was processed and stored in California, the contract with Movielab discloses that that company had offices in New York as well and the contract called for the application of New York law; some testimonial evidence suggests, albeit tentatively at most, that the missing footage may have been stored and lost in New York. (Def. Ex. 88; Def. Ex. 96 at p. 205) The producers raised additional funds in 1985, and continued filming in December 1985 and January 1986. (Mann 5/22/92 Aff. P 5)

 In or about February 1986, when those involved in the project sought to assemble and edit the footage that had been shot, and thereby to create a motion picture, they discovered that Movielab had lost or destroyed the 38,000 feet of film that had been processed and stored there. (Mann 5/22/92 Aff. P 7) Defendant first notified plaintiff of the loss in a letter from its counsel dated June 23, 1987. That letter stated that the loss had occurred "in or about June 1983." (Def. Ex. 43) Defendant's president, Howard Schuster, testified as follows about the cause of the approximately 16-month delay between the discovery of the loss and the notice to plaintiff:

 Q. Why did you wait so long?

 A. I didn't want to wait, but the attorney that I was using at the time did not focus on the problem. I owed him money, and he just did not really get into it until I eventually, in frustration, contacted Howard Mann, and he got involved in the project at another law firm, and he started to see what he could do for us.

 (Def. Ex. 76)


 Defendant claims that promptness of notice of loss was not an issue raised by the pleadings, and therefore cannot be raised by plaintiff at this time. Paragraph SEVENTH of the complaint herein reads as follows:

 The complaint itself, as mentioned, seeks a declaration that plaintiff has no obligation to insure the loss. In its answer, defendant denied the ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.