MEMORANDUM & ORDER
This is an insurance coverage dispute. Plaintiff ("Garfield" hereinafter) owns and manages two, cooperative apartment buildings. In September 1991, Garfield decided to install new carpet in the hallways of both buildings. At the time, Garfield's board of directors, which makes all management and maintenance decisions for Garfield, was headed by Rhonda Zwillinger, who owned an apartment in one of the buildings, 162 Garfield Place. Zwillinger warned the board that new carpet released chemical fumes that posed certain health risks for persons like her, who are "chemically sensitive." The board nonetheless decided to proceed with the carpeting project, although it acceded to Zwillinger's request to have the installer use a special type of adhesive to contain the new-carpet fumes.
The carpet was installed on or about October 10, 1991. Carella Aff. P7. At the next board meeting on October 13, 1991, Zwillinger complained about the effect the new-carpet fumes were having on her, she requested removal of the carpet, and she resigned from her post as president of the board. Zwillinger sent a handwritten letter to Garfield's shareholders, dated October 29, 1991, which asked for the immediate removal of the carpet and offered to contribute $ 600.00 to replace it with linoleum. Lalande Aff. Exh. J. She also threatened a lawsuit for "quiet enjoyment" if Garfield did not remove the carpet by November 10, 1991. Id. Garfield subsequently had the carpet removed from Zwillinger's building before that date.
Zwillinger did not mention the matter again. The following year, she sold her apartment and ultimately relocated to Arizona. In August 1994, some two years and nine months after the carpet was removed, Zwillinger filed suit against Garfield and the carpet's manufacturer, installer, distributor, etc., alleging a variety of negligence claims and asserting that she developed "Multiple Chemical Sensitivity" as a result of her 1991 exposure to the carpet fumes at 162 Garfield Place. See Zwillinger v. Garfield Slope Housing Corp., et al., No. 94-CV-4009 (removed to the Eastern District from Supreme Court of New York, Kings County, on August 24, 1994). When Garfield received the complaint and summons for this action, it immediately forwarded the papers to its insurance broker, who promptly forwarded them to defendant ("Public Service" hereinafter), Garfield's general liability insurer for the period June 15, 1991 through June 15, 1992. See Carella Aff. P11; Goldman Aff. Exh. E.
On September 13, 1994, Public Service notified Garfield that it was disclaiming coverage under the 1991 liability policy. Goldman Aff. Exh. H. Garfield then filed the instant third-party complaint, seeking a declaratory judgment that Public Service is obligated to defend and indemnify Garfield with respect to the Zwillinger action. Public Service now moves for dismissal of Garfield's action on jurisdictional grounds, or, in the alternative, for summary judgment in its favor. Garfield opposes this motion and cross-moves to implead Public Service into the Zwillinger action.
Public Service correctly observes that the parties here are not diverse; thus subject matter jurisdiction has not been independently established for Garfield's declaratory judgment action pursuant to 28 U.S.C. § 1332 (1996). Contrary to Public Service's contentions, however, the absence of diversity jurisdiction does not compel dismissal of Garfield's action, for ancillary jurisdiction over this third-party complaint has been established pursuant to 28 U.S.C. § 1367(b) (1996). A third-party complainant, such as Garfield, is not required to establish an independent jurisdictional basis for its action in order to implead a third-party defendant, such as Public Service, into another action for which jurisdiction has already been established. See Agrashell, Inc. v. Bernard Sirotta Co., 344 F.2d 583, 585 (2d Cir. 1965)("Even without diversity of citizenship between the [third] parties, Sirotta [the third-party plaintiff] would have been permitted to implead Hammons [a non-diverse, third-party defendant] in the federal courts, so long as there was subject matter jurisdiction of Agrashell's [original plaintiff's] suit against Sirotta [original defendant]."); 6 Charles Alan Wright, Arthur R. Miller, & Mark Kay Kane, Federal Practice and Procedure § 1444, at 321-22 (2d ed. 1990)("It is well settled that there need be no independent jurisdictional basis for such a [third-party] claim if diversity of citizenship exists between the original parties.").
2. Timely Notice of "Occurrences"
Public Service contends that the 1991 Zwillinger incident was an "occurrence" and that Garfield's failure timely to notify Public Service of this incident entitles Public Service to summary judgment. The liability policy defines an "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Goldman Aff. Exh. E, Commercial General Liability Form § V ("Definitions"), P9, at 8. Pursuant to this policy, Garfield "must see to it that we [Public Service] are notified as soon as practicable of an 'occurrence' or offense which may result in a claim." Id. at § IV, P2(a), at 6.
"Compliance with the notice provisions in an insurance contract is a condition precedent to an insurer's liability." American Ins. Co. v. Fairchild Indus., Inc., 56 F.3d 435, 438 (2d Cir. 1995); accord Sparacino v. Pawtucket Mut. Ins. Co., 50 F.3d 141, 143 (2d Cir. 1995). The reasons for this are several:
[These provisions] enable insurers to make a timely investigation of relevant events and exercise early control over a claim. Early control may lead to a settlement before litigation and enable insurers to take steps to eliminate the risk of similar occurrences in the future. When insurers have timely notice of relevant occurrences, they can establish more accurate renewal premiums and maintain adequate reserves.
Commercial Union Ins. Co. v. International Flavors & Fragrances, Inc., 822 F.2d 267, 271 (2d Cir. 1987). Thus, failure timely to notify an insurer of an "occurrence" can "constitute a complete defense to a third-party complaint by the insured to compel the insurer to bear the costs of defense in the underlying action." State of New York v. Blank, 27 F.3d 783, 793 (2d Cir. 1994). A finding of prejudice to the insurer, resulting from unreasonable delay in notifying it of an "occurrence," is not required for an insurer to successfully assert this defense. See AXA Marine & Aviation Ins. Ltd. v. Seajet Indus., Inc., 84 F.3d 622, 624 (2d Cir. 1996)(holding that no-prejudice rule applies to untimely notice of both an "occurrence" and "claim"), Blank, 27 F.3d at 797; Sparacino, 50 F.3d at 143 (citing for support Security Mut. Ins. Co. v. Acker-Fitzsimons Corp., 31 N.Y.2d 436, 340 N.Y.S.2d 902, 905, 293 N.E.2d 76 (Ct. App. 1972)).
In fixing the date upon which an insured becomes obligated to notify its insurer of an "occurrence," all relevant facts known to the insured on the date in question must be evaluated. Christiania Gen. Ins. v. Great Am. Ins., 979 F.2d 268, 275 (2d Cir. 1992). The standard is one of objective reasonableness:
The insured's knowledge of events that create only a very distant possibility of a claim may not trigger a notice of occurrence provision so long as the insured has a good faith and reasonable belief that no liability covered by the policy will result. . . . A notice of occurrence provision thus focuses on the insured's knowledge of events and reasonable conclusions based on that knowledge. . . . As we noted in Blank, "if insureds were required to notify insurers of every incident that poses even a remote possibility of liability, insurers would soon be swamped with notice of minor incidents that pose little danger [of liability]."
American Ins., 56 F.3d at 439 (quoting Blank, 27 F.3d at 795)(citations omitted); accord Christiana Gen. Ins., 979 F.2d at 275-76. The burden of demonstrating the reasonableness of an insured's good faith belief that a particular incident is either not covered by its liability policy or could not reasonably be expected to give rise to liability on its part rests with the insured, White v. City of New York, 81 N.Y.2d 955, 598 N.Y.S.2d 759, 760, 615 N.E.2d 216 (Ct. App. 1993). "The existence of . . . [such] a 'good-faith belief', as well as the question of whether the belief was reasonable, are ordinarily questions of fact for the factfinder[.]" Argentina v. Otsego Mut. Fire Ins. Co., 86 N.Y.2d 748, 631 N.Y.S.2d 125, 126, 655 N.E.2d 166 (Ct. App. 1995).
Garfield plausibly contends that bodily injury resulting from exposure to malodorous carpet was plainly a "remote contingency far removed from the particular [liability] policy in question," Christiana Gen. Ins., 979 F.2d at 275, and thus under the policy, Garfield was not obligated to notify Public Service "as soon as practicable" of Zwillinger's 1991 grumblings. See Merchants Mut. Ins. Co. v. Hoffman, 56 N.Y.2d 799, 452 N.Y.S.2d 398, 399, 437 N.E.2d 1155 (Ct. App. 1982)("When the facts of an occurrence are such that the insured acting in good faith would not reasonably believe that liability on his part will result, notice of occurrence given by the insured to the insurer is given 'as soon as practicable' if given promptly after the insured receives notice that a claim against him will in fact be made."); Sparacino, 50 F.3d at 143 (delay in notifying an insurer of an "occurrence" may be excused "by proof that the insured either lacked knowledge of the occurrence or had a reasonable belief of nonliability."). Indeed, it is arguable whether the brief period in which Zwillinger was exposed to malodorous carpet fumes constitutes "an accident, including continuous or repeated exposure to substantially the same general harmful conditions" -- which is the definition of the term "occurrence" contained in the liability policy. See Goldman Aff. Exh. E, Commercial General Liability Form § V ("Definitions"), P9, at 8.
Garfield also alleges that it did not believe the 1991 Zwillinger incident implicated its liability policy. Carella Aff. P10. This allegation is consistent with the fact that Garfield apparently did not seek to recover carpet removal costs from any of its liability insurers. Moreover, the kind of injuries to which a reasonable insured might expect smelly carpet to give rise -- i.e., aggravation, inconvenience, annoyance, etc. -- are plainly not those that would typically implicate a liability policy. Thus, Garfield also contends that its reasonable, good faith belief that Zwillinger's 1991 complaints were not covered by its Public Service policy also excuses any delay in reporting the incident to Public Service. See Mighty Midgets v. Centennial Ins. Co., 47 N.Y.2d 12, 416 N.Y.S.2d 559, 389 N.E.2d 1080 (Ct. App. 1979)(holding that good faith, reasonable belief that incident was not covered by liability policy could excuse delay in reporting occurrence); Avondale Indus., Inc. v. Travelers Indem. Co., 774 F. Supp. 1416, 1431 (S.D.N.Y. 1991)("Late notice to a particular insurer might be excused by an insured's reasonable and good faith belief that an occurrence could lead to no liability that would be indemnifiable under that insurer's policies.")(emphasis original).
Garfield's nonliability and noncoverage allegations are at least sufficient to defeat Public Service's motion for summary judgment. See G.L.G. Contracting Corp. v. Aetna Cas. & Sur. Co., 215 A.D.2d 821, 626 N.Y.S.2d 307, 309 (App. Div. 3d Dep't 1995)(holding that it was a jury question as to whether general contractor's belief in nonliability for injury sustained by subcontractor's employee injured on common work site was reasonable in light of circumstances and general contractor's belief that any liability would be covered by workers' compensation); Kreger Truck Renting Co., Inc. v. American Guar. & Liability Ins. Co., 213 A.D.2d 453, 623 N.Y.S.2d 623, 624 (App. Div. 2d Dep't 1995)(holding that it was question for jury as to whether commercial landlord's belief in nonliability for damages tenant claimed were due to faulty maintenance of the building was reasonable in light of all the relevant circumstances); U.S. Underwriters Ins. Co. v. Congregation B'nai Israel, 900 F. Supp. 641, 646 (E.D.N.Y. 1995)("It is generally only where the insured offers no excuse for the delay that a court may find, as a matter of law, that the delay was unreasonable."), aff'd 101 F.3d 685 (2d Cir. 1996).
In opposition, Public Service argues that "no reasonable person in Garfield's place would have believed that it had completely 'eliminated' any possibility of liability arising from the Zwillinger Occurrence given the litany of serious health complaints made by Zwillinger[.]" Def. Mem. in Supp. Summ. J. at 32. Yet such a belief in the "complete elimination" of possible liability is not the relevant standard here; a remote possibility of liability may not even give rise to a duty to notify an insurer. See American Ins., 56 F.3d at 439. Moreover, even though a severe injury may be enough to make unreasonable, as a matter of law, an insured's belief in nonliability, the two cases Public Service cites for support are readily distinguishable from this one.
Specifically, in White v. City of New York, 81 N.Y.2d 955, 598 N.Y.S.2d 759, 760, 615 N.E.2d 216 (Ct. App. 1993), the injured party suffered a fractured skull for which she required six days' hospitalization, and the incident giving rise to the injury was the object of a police incident report. In Winstead v. Uniondale Union Free School Dist., 201 A.D.2d 721, 608 N.Y.S.2d 487, 488-89 (App. Div. 2d Dep't 1994), the injured party was also hospitalized and the aggression that caused the injury was investigated by the police. By way of contrast, this case is more closely analogous to those cases that hold that where the concerned injuries are latent, or where other circumstances diminish the possibility of a claim, notice is timely given when it is provided upon the receipt of a summons and complaint. See Argentina, 631 N.Y.S.2d at 126 (holding that while slip-and-fall accident required emergency room treatment, because there was nothing to suggest permanent ongoing injuries, because the post-accident investigation suggested no possibility of a tort claim, and because the accident victim and insured had a close relationship that reasonably led the insured to believe it would have been apprised by the victim of any serious threat of suit, the insured's delay in reporting the incident was excused); Briggs v. Nationwide Mut. Ins. Co., 176 A.D.2d 1113, 575 N.Y.S.2d 413, 414 (App. Div. 3d Dep't 1991)(holding that where victim's back injury occurred in unusual circumstances -- i.e., while being jounced in her seat during pleasure boat ride -- and where victim was taken to emergency room for x-rays and discharged with instructions to take Tylenol for her back pain, learning the full extent of her injury only 30 months after incident, then insured's delay in reporting incident to insurer would be excused).
Nor would the "Consumer Alert" that Zwillinger attached to her October 29, 1991 letter necessarily prompt a reasonable insured to undertake an elaborate investigation into its potential tort liability for new-carpet fumes. See Lalande Aff. Exh. K. That "Alert" merely indicates that the long-term consequences of exposure to chemicals "off-gassed" by new carpet are largely unknown and that some consumers had experienced health problems that may or may not have been associated with such "off-gassed" chemicals. Id. However, in this case, the smelly carpet was removed within a month of its installation and within two weeks of Zwillinger's letter, and thus Garfield reasonably could not have expected that Zwillinger's grousing was the harbinger of maladies such as those alluded to in the "Consumer Alert," which speculated about injuries that might result from long-term exposure to "off-gassing" carpet. Thus, contrary to Public Service's suggestions, this "Alert" is hardly the type of document that would be likely to induce Garfield or other reasonable insureds to investigate potential tort liability for injuries caused by "off-gassing" carpet. See Mount Vernon Fire Ins. Co. v. East Side Renaissance Assocs., 893 F. Supp. 242, 248-49 (S.D.N.Y. 1995)(holding that Order from the New York City Health Department, Bureau of Lead Poisoning, apprising building manager that tenant had been found to have elevated "blood-lead" level, did not constitute "occurrence" that had to be reported to insurer promptly).
Public Service also argues that Garfield's conduct in 1991 indicates that it actually believed that it might be liable for injuries caused by carpet fumes. The evidence on this score is insufficient to support Public Service's motion for summary judgment. The fact that Garfield attempted to accommodate Zwillinger by selecting a special carpet adhesive, by seeking to have incorporated into the carpeting contract certain provisions that she requested, and by ultimately removing the carpet does not compel the conclusion that Garfield believed it might be liable to Zwillinger if it did not undertake these actions. Indeed, Garfield has indicated that its decisions to remove the carpet and use a special adhesive stemmed from a neighborly concern for Zwillinger's irritation. Garfield may also have removed the carpet because it accepted Zwillinger's view that it would ultimately be forced to do so anyway and it would incur the costs of defending against Zwillinger's threatened suit for "quiet enjoyment."
Public Service's final assertion, that it was "severely prejudiced" by Garfield's actions, is not a relevant consideration in assessing the timeliness of a notice of an "occurrence." See Briggs, 575 N.Y.S.2d at 414-15 (holding that it was error to consider the issue of prejudice in evaluating an excuse for untimely notification). Even if it was a relevant consideration, Public Service's conclusory assertions here fail to establish that it suffered any prejudice as a result of the delay in receiving notification of the 1991 Zwillinger incident. Public Service's contention, that Garfield's actions deprived it of an opportunity to examine the "off-gassing" carpet, is exaggerated: the same carpet remains in Garfield's other building. Public Service's complaint, that it was not given the opportunity to take appropriate protective measures, is also overdrawn; it is difficult to conceive of a more effective protective measure than that which Garfield took -- i.e., removal of the malodorous carpet.
3. Timely Notice of "Claims"
Public Service also contends that the October 29, 1991 letter Zwillinger sent to Garfield's shareholders was a "claim" and that failure timely to forward a copy of that letter to Public Service entitles the latter to summary judgment. In relevant part, Zwillinger's October 29, 1991 letter stated the following:
So there are two choices to be made here: (1) remove the carpet immediately -- I promised to put in $ 600 -- personally for lineoleum [sic] which is the safest way to go. (2) you can do nothing and I will initiate a lawsuit. You are obligated to provide "Quiet Enjoyment" for all shareholders as per instructions from my attorney. Legal costs will be high for everyone [and] you will be obligated to remove the carpet anyway and also pay my medical bills which will be @ $ 3,000.00 - $ 5,000.00 for my treatment.
So its up to you. I've been patient but no longer. You have until Nov. 10th to have the building made habitable for me. Also after that date I will no longer pay $ 600.00 for new lineoleum [sic] as I will have to pay rent where I am staying now.
I am very disappointed and angry with you -- as friends and neighbors for so long -- I expected better MORAL treatment. So now we have a legal issue.