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December 6, 1996

RUSSELL MARTINSON and JOSEPHINE MARTINSON, Individually and Formerly Doing Business As Apple Valley Norgetown, A/K/A Apple Valley Norgetown Laundromat, A/K/A Apple Valley Laundromat, Plaintiffs, against MASSACHUSETTS BAY INSURANCE COMPANY, Defendant.

The opinion of the court was delivered by: CHIN



 In this insurance coverage case, plaintiffs Russell and Josephine Martinson (the "Martinsons") allege that defendant Massachusetts Bay Insurance Company ("MBIC") is obligated to defend them in an action entitled Klein v. Grand Union Co. et al., No. 91 Civ. 8495 (S.D.N.Y. Dec. 1991) (the "Klein action"). The Martinsons seek this coverage pursuant to several Comprehensive General Liability ("CGL") policies sold to the Martinsons and issued by MBIC (the "MBIC policies"). The Martinsons have now moved for partial summary judgment on the issue of whether MBIC has a duty to defend them in the Klein action. For the following reasons, the Martinsons' motion for partial summary judgment is denied. Additionally, because the undisputed facts in this case establish that, as a matter of law, the Martinsons failed to give timely notice of the Klein action to MBIC as required under the policy language, I hold that MBIC properly denied coverage. Accordingly, summary judgment is granted in favor of MBIC and the complaint is dismissed.


 The Martinsons were the owners of the Apple Valley Norgetown Laundromat (the "Laundromat") located at the Apple Valley Shopping Center (the "Shopping Center") in LaGrange, New York from 1981 until 1995. (Mura Aff. P 15 & Ex. D). The Shopping Center is a small strip mall owned by James Klein Enterprises ("Klein"). From 1981 until 1993, the Martinsons were covered for liability arising out of the operation of the Laundromat by several CGL policies issued by three different insurance companies. From 1983 to 1988, the CGL policies covering the Martinsons were issued by MBIC. (Mura Aff. Ex. M). From 1988 to 1989, and again from 1990 to 1993, the policies were issued by Mid-Hudson Cooperative Insurance Company ("Mid-Hudson"). (Id.). Finally, from 1989 to 1990, the Martinsons were covered by a CGL policy issued by the Warwick Insurance Company ("WardLick"). (Id.).

 The Laundromat had one self-service dry cleaning machine for use by its customers in which the chemical perchlorethylene ("PCE") was used. (Mura Aff. Ex. F). Beginning in 1981, the Martinsons disposed of filters from the self-service machine containing PCE by wrapping them in garbage bags and placing them in a dumpster outside of the Shopping Center. (Id.). This practice was carried on for approximately ten years. However, on March 13, 1991, pursuant to an agreement with the EPA, the Martinsons ceased this practice and retained a professional waste disposal company to dispose of the PCE. (Id.).

 During early 1991, the United States Environmental Protection Agency (the "EPA") undertook an investigation of the property at the Shopping Center in response to concerns that pollutants had been leaked into the water supply at that location. In March 1991, the EPA wrote to the Martinsons explaining the nature of its investigation and requesting certain information about the operations of the Laundromat. (Mura Aff. Ex. E). On May 13, 1991, the EPA again wrote to the Martinsons, this time putting them on notice that they were considered "Potentially Responsible Parties" and might be liable for the cost of the investigation and cleanup at the Shopping Center (the "EPA claim"). (Mura Aff. Ex. G). In the letter, the EPA stated that it believes the Martinsons were the owners of the Laundromat "at the time of the release of hazardous substances there." (Id.). The only hazardous substance the Martinsons had at the laundromat was PCE. (Martinson Aff. Ex. 1).

 On May 16, 1991, the Martinsons received a letter from Klein's attorney, David Engel, putting them on notice that Klein also intended to hold the Martinsons (as well as others) liable for the contamination at the Shopping Center and for any costs incurred by Klein as a result of that contamination (the "Klein claim"). (Mura Aff. Ex. H). In the letter, Engel stated that environmental experts hired by Klein had determined that dry cleaning solvents had been released at the Shopping Center and that these were in fact the "hazardous substances" the EPA had found in the drinking water at the location. (Id.).

 On May 29, 1991, in response to the EPA and Klein letters, the Martinsons' attorney, Jay Rolison, wrote to Michael Mangi, of Michael Mangi & Son Agency, Inc. ("Mangi"), the insurance agent through whom the Martinsons had obtained insurance coverage for the Laundromat. (Mura Aff. Ex. B). In the letter, Rolison directed Mangi to put the Martinsons' then-current insurance carrier, Mid-Hudson, on notice of the claims by the EPA and Klein. (Rolison Aff. Ex. 2). The letter, however, did not ask Mangi to notify either MBIC or Warwick. Moreover, Rolison has admitted that he only intended for Mangi to notify Mid-Hudson and did not intend to put MBIC on notice by the letter. (Mura Aff. Ex. B).

 In December 1991, Klein commenced an action against the Martinsons and others seeking to recover cleanup costs that Klein allegedly incurred and expected to incur as a result of the release of hazardous substances, including PCE, at the Shopping Center. (Rolison Aff. Ex. 1). That action is currently pending in the Southern District of New York before Judge Brieant. On January 3, 1992, Rolison again wrote to Mangi directing it to put Mid-Hudson on notice of the Klein action. (Rolison Aff. Ex. 3). As with the May 29, 1991 notice letter, this letter also did not direct Mangi to put MBIC or Warwick on notice and Rolison did not intend that it do so. (Mura Aff. Ex. B)

 On January 29, 1993, during the course of discovery in the Klein action, the Martinsons' attorney sent a letter to Mangi and for the first time requested that Mangi notify MBIC of the Klein action. (Mura Aff. Ex. N). This letter came almost fourteen months after the Klein action was commenced. The Martinsons allege that this was the first time it became apparent that the MBIC policies might be implicated. (Pl. Mem. at 7). On April 14, 1993, MBIC issued a denial and disclaimer of coverage letter and refused to pay for or provide a defense for the Klein action. (Mura Aff. Ex. O). The basis for the denial and disclaimer was, inter alia, late notice of the EPA claim and the Klein action. (Id.).

 After MBIC denied coverage, the Martinsons instituted this action. In their first claim for relief, the Martinsons seek damages resulting from MBIC's alleged breach of contract. In their second claim, they seek a declaration that MBIC must defend them in the Klein action. The Martinsons now move for summary judgment on their second claim for relief.


 A. Standards for Summary ...

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