Insurance Co. v. C.L. Haines Manufacturing Co., Inc., 55 A.D.2d 834, 390 N.Y.S.2d 320, 322 (4th Dep't 1976). If the circumstances of an occurrence known to the insured would have caused a reasonable and prudent person to further investigate the occurrence, the insured may not later assert a reasonable belief of nonliability as an excuse for untimely notice to an insurance carrier. Security Mutual, 31 N.Y.2d at 443.
East Side contends that there was nothing in the Order which notified it of potential liability to the Pichardos. It further argues that, under the circumstances, a reasonable building owner acting in good faith would not believe the Order placed it on notice of the possibility of a lawsuit.
2. East Side's Knowledge of the Occurrence
Goethe had no personal contact with either the victim's mother or grandmother, both tenants of the Apartment, concerning Charles Pichardo's injuries.
In addition, there is no evidence to demonstrate that the victim's family ever spoke to the general manager of East Side or any of its partners concerning the alleged injuries.
Goethe's sole source of information concerning Charles' injuries was the Order. Therefore, in order for the notice provision of the policy to be triggered, the Order alone must have been sufficient to suggest the possibility of a lawsuit.
The policy defines an occurrence as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage." The Order received by Goethe uses technical language in describing both the tenant's blood-lead level and the lead level of the paint.
See Plaintiff's Exhibit 3A. In addition, the Order never states that the blood-lead level of the tenant is due to "exposure to conditions" in the Apartment or that possible danger to a tenant exists. Id. Rather, it states that "it has been found that a person residing at the above dwelling unit has a blood-lead level of 30 micrograms per deciliter. . ." Moreover, the Order did not indicate that it was a child that was affected and also failed to definitively establish who the affected person was. At the top of the Order, the name Charles Pichardo appeared in a space designated for "TENANT."
Furthermore, East Side purchased the Premises in May 1984, just two months before Goethe received the Order. As the Order identified a person with elevated blood levels, the tests were undoubtedly performed sometime prior to the notice. Under the circumstances, it may have been reasonable for East Side to conclude that while it might have been obligated to repair the apartment, it was not responsible for causing injury to the person with elevated blood levels.
3. East Side Had No Notice of Potential Liability
For the foregoing reasons, I find that receipt of this Order in July, 1984, would not place a reasonable owner/landlord, acting in good faith, on notice that a tenant had suffered bodily injury and that it might be sued as a result of such injury. See generally Commercial Union, 822 F.2d 267; D'Aloia, 85 N.Y.2d 825, 623 N.Y.S.2d 837, 647 N.E.2d 1345; Merchants Mutual, 56 N.Y.2d 799, 452 N.Y.S.2d 398, 437 N.E.2d 1155; Security Mutual, 31 N.Y.2d 436, 340 N.Y.S.2d 902, 293 N.E.2d 76; 875 Forest Ave. Corp., 30 N.Y.2d 727. Further, I find that receipt of the Order would not have caused a reasonable and prudent owner to further investigate.
Indeed, if receipt of an "Order to Landlord/Agent" to remove lead from an apartment, without more, was sufficient notice of a personal injury claim, then thousands of landlords in New York have likely failed to provide timely notice of claims to their insurers, thereby effectively depriving owners of coverage and plaintiffs of a reliable deep pocket.
No one factor definitively establishes that it was reasonable for Goethe to conclude that East Side had no liability for an "occurrence" when he received the Order. The following factors, in combination, however, would lead a reasonable person to that conclusion: (a) the Order did not definitively identify the injured party; (b) the victims never notified East Side of any injury or claim; and (c) East Side had only owned the building for two months when it received the Order.
Plaintiff cites Mount Vernon Fire Insurance, Co. v. Arec Bros., Corp., No. 91 Civ. 708 (E.D.N.Y. Jan. 19, 1995), as authority for the proposition that Goethe should have realized when he received the Order that liability would result. In Arec, the Court ruled that defendant had breached the insurance policy by failing to give notice of an occurrence as soon as practicable.
While Arec addresses the same legal issues as those raised here, the facts are quite different. There, the managing agent had a conversation with the victim's mother informing him that her child had been hospitalized due to lead poisoning. This conversation occurred at or about the same time that the City sent a notice that the same child had elevated blood levels. The Order received by the managing agent in Arec was more explicit than the instant Order. It stated that the conditions of the apartment "present a danger to the life or health of the child/children of the above-referenced premises." No such warning was sent to East Side.
Because the Order at issue here does not suggest the possibility of a lawsuit, East Side's obligation to notify Mt. Vernon was not triggered until Goethe received the Pichardos' Summons and Complaint in April 1992. East Side provided Mt. Vernon with timely notice of the Summons and Complaint by forwarding both documents to Mt. Vernon the same day East Side received them. Because East Side complied with the terms of the policy, Mt. Vernon is required to defend and indemnify East Side in the actions brought against it by Juana and Charles Pichardo.
For the reasons set forth above, plaintiff's request for a declaration that it is not obligated to defend and indemnify East Side with regard to the personal injury claim asserted by the Pichardos, is denied. Accordingly, Mt. Vernon is required to defend and indemnify East Side with respect to the underlying claim.
Shira A. Scheindlin
Dated: New York, New York
June 15, 1995