injuries, see Ex. O to Ritter Aff. (list of sixty-six lawsuits commenced against Asbeka from July 1982 until June 1986); Ex. A to Shelley Aff. in Opp'n (list of forty-one lawsuits commenced against Asbeka from July 1980 until September 1984), yet it concedes that it never notified its insurers directly. This lack of compliance with the notice of suit provision of the policy discharged the obligations of the defendant insurers, who were certainly prejudiced by Asbeka's flagrant disregard of the retirements of the policy and who could not exercise control over those actions from the outset.
Asbeka states that it sent copies of the summons and complaint in some of the actions to either its insurance agents, see Shelley Aff. in Opp'n at PP 87-88 ("[Asbeka] gave prompt notice of all of the [pending] claims [listed in Exhibit A to the Shelley Aff.] to either PAYNE, NATIONAL or CAM [Asbeka's insurance brokers]" and Ex. B to id., or to the law firm of Sweeney, Sheehan & Spencer (formerly McWillaims & Sweeney) (the "Sweeney firm"), which had been hired by Asbeka to represent it in the pending personal injury actions. The record is devoid of any facts indicating that Asbeka's insurance brokers, Malcolm T. Payne Agency, National Coverage, and C.A.M. Associates, were authorized by the defendant insurers to receive notices of claims, notices of pending lawsuits, or copies of summonses and complaints on their behalf. See, e.g., Acker-Fitzsimons, 31 N.Y.2d at 442 n.3, 340 N.Y.S.2d at 907 n.3, 293 N.E.2d at 79 n.3 (notice supplied by insured to its insurance broker does not ordinarily constitute notice to the insurance carrier); Kamyr, Inc. v. St. Paul Surplus Lines Ins. Co., 152 A.D.2d 62, 65-66, 547 N.Y.S.2d 964, 966 (3d Dep't 1989); Todd v. Bankers Life & Cas. Co., 135 A.D.2d 1066, 1067-68, 523 N.Y.S.2d 206, 207 (3d Dep't 1987).
Asbeka contends that it timely notified the defendant insurers by forwarding copies of summonses and complaints to the Sweeney firm because defendant Royal (and the other defendant insurers, except for defendant Travelers) had hired that firm to represent Asbeka in earlier asbestos-related lawsuits in 1980 and 1983. Shelley Aff. at PP 6(b), 84-85, 89-91, 103, 176; see also Exs. C, E, I to Truzzolino Aff. (Royal refers three actions involving Asbeka to the Sweeney firm in 1980 and 1983). This argument necessarily fails because Asbeka could not conceivably provide timely notice of any pending lawsuits to its insurers by unilaterally hiring the Sweeney firm to represent it in the subsequent personal injury actions. The record reveals that in July 1984, Joseph P. Shelley, Asbeka's President, stated to defendant North River that he had forwarded copies of all pending cases to the Sweeney firm, and that he had "agreed to pay for defending" those actions until such time as medical evidence would establish the manifestation dates of the asbestos-related injuries." Letter of Joseph Shelley to James McMahon, dated July 3, 1984 (Ex. D to Prickett Aff.); see also Letter of Joseph Shelley to James McMahon, dated August 29, 1986 ("[Asbeka] had . . . engaged Walter Jenkins [of the Sweeney firm] as a private matter to determine [the] dates of [medical] diagnosis on all our cases. . . . I [Shelley] further recommended to you that it would be in [North River's] best interest to engage Walter Jenkins . . . since he is familiar with all of our cases.") (Ex. C to Shelley Aff. in Opp'n); Shelley Aff. in Opp'n at P 122 ("It was for that reason that I continued to engage the SWEENEY firm and in particular [Walter] JENKINS [of that firm] to defend the cases not otherwise defended by the [defendant insurance] Carriers."); see also [Supplemental] Decl. of Michael Reilley, dated May 27, 1992 (defendant Hartford never hired the Sweeney firm). Therefore, it is clear that Asbeka, and not the defendant insurers, hired the Sweeney firm to defend it in the later filed, personal injury actions and, accordingly, Asbeka failed to comply with its duty to forward immediately to its insurers all process which it received in pending lawsuits. See Russo by Russo v. Rochford, 123 Misc. 2d 55, 66, 472 N.Y.S.2d 954, 963 (Supm. Ct. 1984) (notice to law office that was not hired by the insurer to defend insured in negligence action was not proper notice of claim to the insurer).
In addition, Asbeka argues that it provided timely notice to all of its insurers as to those few claims which its insurance agent timely notified the carrier whose policy was currently in force (i.e., Federal or North River) because asbestos-related injuries occur over an extended period and many insurers have provided coverage to Asbeka for different years. Shelley Aff. at P 94 ("PAYNE [the insurance broker] advised me that the current Carrier should be put on notice and normal procedure was that it would notify the prior Carrier."); id. at P 24 ("I was in constant contact with representatives of FEDERAL/CHUBB and NORTH RIVER/C&F from 1981 forward.").
This argument must be rejected.
In Autotronics Sys., Inc. v. Aetna Life & Cas., 89 A.D.2d 401, 404-05, 456 N.Y.S.2d 504, 506 (3d Dep't 1982), the court held that an insured timely forwarded copies of the summons and complaint to a second insurer within a reasonable time of its receipt of a complaint which evidenced that the claim may have arisen during that insurer's policy period. It was only upon receipt of the complaint that the insured was required to notify its earlier insurer of the underlying suit and to forward a copy of the summons and complaint because only then "did it become readily apparent that defendant [insurer] was on the risk during the period when some or all of the injuries first manifested themselves." Id.; see also Ogden Corp. v. Travelers Indem. Co., 924 F.2d 39, 42-43 (2d Cir. 1991) (distinguishing Autotronics on the ground that it deals with late notice of underlying suit).
This case, however, is clearly distinguishable from Autotronics because Asbeka was unsure from the start which insurance carrier would be responsible to defend and, if necessary, indemnify it in any particular personal injury action. See Letter of Joseph Shelley to James McMahon, representative of defendant North River, dated July 3, 1984 (Ex. D to Prickett Aff.) ("Once [manifestation dates are] determined, we will then be able to determine who provides coverage and defense. . . . From preliminary information, it is my present opinion that this will involve carriers prior to your firm); see also Letter from Joseph Shelley to Donald Barb of Chubb/Federal, dated February 14, 1986 (Ex. H to Shelley Aff. in Opp'n) (stating that Shelley was criticized by Asbeka's Board of Directors for trying to determine which insurer should provide a defense in the personal injury actions commenced against Asbeka); Shelley Aff. in Opp'n at PP 6(b), 8, 27, 36, 44, 143, 172 (stating that Asbeka never knew which carrier would be responsible to provide a defense).
At that point in time, Asbeka was under a duty to provide notice of occurrence and notice of claim to each of its insurers who might possibly be obligated to provide coverage and to forward a copy of the summons and complaint to each of those insurers. Asbeka clearly failed to do so.
In his lengthy affirmation, Shelley confirms that Asbeka's insurers generally provided coverage and defended Asbeka when they were timely notified of earlier pending lawsuits. See Shelley Aff. in Opp'n at PP 85, 89, 97, 98, 126, 127 (defendants Royal, Globe, Hartford, North River and Federal provided coverage, defended Asbeka, and agreed to pay for legal fees incurred by Asbeka in those few actions in which Asbeka provided proper notice); see also Truzzolino Aff. at PP 26-29; Reilley Aff. at PP 8-14; Prickett Aff. at PP 3, 4; and Aff. of Donald Barb, dated November 25, 1991, at PP 4-6. Asbeka predicates its state law claims on the defendant insurers' failure to provide coverage in subsequent lawsuits. The state law claims of negligent misrepresentation, intentional misrepresentation, common law fraud and breach of contract necessarily fail because Asbeka has adduced no evidence that it ever notified its insurers of those additional lawsuits. Based on Asbeka's glaring failure to comply with the express provisions of its insurance policies, this Court is driven to conclude, as a matter of law, that the defendant insurers were not obligated to defend Asbeka in the subsequent lawsuits and, accordingly, they have not acted in any way which would subject them to liability under the state law claims mentioned above.
As a final attempt to salvage its state law claims, Asbeka argues that the defendants have waived a late notice defense by failing to issue a timely notice of disclaimer. Shelley Aff. at PP 96 (Royal and Globe); 104 (Hartford); 123 (North River); 147 (Federal); 157-58 (Travelers).
See, e.g., Hartford Ins. Co. v. County of Nassau, 46 N.Y.2d 1028, 1029-30, 416 N.Y.S.2d 539, 540-41, 389 N.E.2d 1061, 1062 (1979) (insurer's unexplained two month delay in disclaiming liability is unreasonable as a matter of law); In re Hartford Accident & Indem. Co., 74 A.D.2d 924, 924, 426 N.Y.S.2d 88, 89 (2d Dep't 1980) (unexplained two month delay precludes effective notice of disclaimer by insurer). Cf. N.Y. Ins. Law § 3420(d) (McKinney 1985) (current statute regarding timely notices of disclaimer). A waiver occurs when an insurer's conduct or statements evidence "a voluntary and intentional relinquishment of a known right" to disclaim coverage on a particular ground. Albert J. Schiff Assocs., Inc., v. Flack, 51 N.Y.2d 692, 698, 435 N.Y.S.2d 972, 974-75, 417 N.E.2d 84, 86-87 (1980).
Since Asbeka never provided its insurers with timely and sufficient notice of claim or of the underlying suit, the insurers could not disclaim coverage based on late notice until they learned of the pending lawsuits or received copies of the summonses and complaints filed in those action. Asbeka concedes that each of its insurers included an affirmative defense of late notice in its Answer filed in 1988, shortly after Asbeka filed its Complaint in the Declaratory Judgment action in the Bankruptcy Court on August 15, 1988. [Pl.s'] Mem. of Law in Opp'n at 11-13. This information was promptly provided to Asbeka after the defendant insurers learned the full extent of the number of lawsuits pending against Asbeka through the Complaint filed in the bankruptcy proceeding. Prior to that time, the insurers had been informally informed in a May 6, 1988 letter from Asbeka's counsel that "approximately seventy (70) asbestos health claim litigation cases [were] pending [against Asbeka] in state and federal courts in the Philadelphia area."
In State of New York v. Amro Realty Corp., 936 F.2d 1420, 1429-30 (2d Cir. 1991), the court stated:
While it may not be possible for an insurer acting in good faith to assert certain defenses to coverage before a complaint is filed -- including a late-notice-of-claim defense -- we see nothing that would prevent an insurer from waiving certain other defenses -- including late-notice-of-occurrence -- at a much earlier stage. We see nothing irrational or impossible in the conclusion that an insurer might choose to waive a defense or defenses at any time after it had knowledge that the defense might be applicable; one can waive a privilege in advance of a need for its exercise.
In that case, the insurers did not argue that the insureds failed to comply with the notice of claim or suit provisions of the policy because the insureds timely forwarded copies of the summons and complaint to them. See State of New York v. Amro Realty Corp., 697 F. Supp. 99, 103 n.7 (N.D.N.Y. 1988), aff'd in part and rev'd in part, 936 F.2d 1420 (2d Cir. 1991). However, the Second Circuit noted in dicta that an insurer might not be required to disclaim based on late notice of claim or suit until after it receives a copy of a summons and a complaint from its insured. See 936 F.2d at 1429-30. Accordingly, this Court has no hesitation in concluding that the defendant insurers never waived their right to disclaim coverage based on Asbeka's late notice of suit and that, in fact, they disclaimed timely by including a late notice defense in the answers filed in the bankruptcy proceeding.
5. General Business Law § 349 Claim
Asbeka also seeks to recover actual and treble damages against the defendants on the theory that their failure to defend and indemnify it in the pending lawsuits constituted deceptive acts and practices in violation of section 349 of the General Business Law of New York. That section provides:
[Any] person who has been injured by reason of any violation of this section [i.e., through a deceptive act or practice in the conduct of any business, trade or commerce or in the furnishing of any service in New York] may bring an action in his own name to enjoin such unlawful conduct or practice, an action to recover his actual damages or fifty dollars, whichever is greater, or both such actions. The court may in its discretion, increase an amount of damages to an amount not to exceed three times the actual damages up to one thousand dollars, if the court finds the defendant willfully or knowingly violated this section. The court may award reasonable attorney's fees to a prevailing plaintiff.