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Cgu Ins. Co. v. Nardelli

Other Lower Courts

July 10, 2001

In the Matter of CGU Insurance Company, Petitioner,
v.
Cindy Nardelli, Respondent.

COUNSEL

Gambeski & Ambrose, White Plains, for petitioner.

Brophy & Laub, White Plains, for respondent.

OPINION

Joan B. Lefkowitz, J.

Petitioner insurer moves to stay arbitration of an underinsurance

Page 561

claim.O n December 19, 1997, the respondent insured was operating her motor vehicle when it was struck by an automobile driven by Maureen Dulak, owned by Kevin Dulak. The respondent retained counsel in April 1998. On December 19, 1997, the petitioner received notice of a no-fault claim and assigned a claim number. Petitioner had issued a motor vehicle liability insurance policy to respondent. The record reveals that the liability bodily limits coverage and the supplementary motorist insurance (SUM or underinsurance) coverage are both $250,000/500,000.

Respondent's counsel attempted orally and in writing (on May 8, 1998) to ascertain the Dulaks' insurance coverage but received no response. On July 2, 1998, respondent commenced an action in the Supreme Court, Rockland County, against the Dulaks to recover damages for her personal injuries.

The Dulaks appeared in the action by counsel. Respondent's attorneys served a discovery notice on October 6, 1998, which sought the insurance policy coverage and limits. In December 1998, respondent's counsel requested a preliminary conference. A preliminary conference order was issued February 11, 1999 which,inter alia, directed responses to discovery demands within 45 days. On April 16, 1999, respondent's counsel wrote to defense counsel advising him that he was in violation of the discovery order and again requested responses to the discovery demands. On April 20, 1999, the Dulaks' insurer advised respondent's counsel in writing that the policy limits were $100,000/300,000. Clearly, the $100,000 per person coverage is below the liability bodily limits coverage respondent has with petitioner.

Rather than give notice of intention to make an underinsurance claim, respondent's counsel on May 13, 1999 again wrote to defense counsel seeking responses to the discovery demands. Six days later defense counsel responded and said that as to insurance policies and coverage same will be provided by the Dulaks' insurer.

The underlying action was scheduled for trial on October 2, 2000. Respondent's counsel wrote to the Dulaks' insurer on September 11, 2000 requesting written confirmation of the $100,000/300,000 liability coverage (previously given in writing on April 20, 1999) and " excess coverage." Respondent's counsel again requested the excess coverage information from the Dulaks' insurer on September 13, 2000. On the same date, respondent's counsel wrote to the petitioner, enclosed copies of the pleadings in the underlying action, noted the Dulaks' liability

Page 562

coverage of $100,000 and the potential for an underinsurance claim which awaited a response concerning excess insurance.

On September 15, 2000, the Dulaks' insurer offered to settle respondent's claim for the policy limit of $100,000. Four days later, petitioner denied the potential underinsurance claim for failure to give notice as soon as practicable. Again, on September 26, 2000, respondent's counsel wrote to the Dulaks' insurer for information concerning excess coverage. On that day, respondent's counsel also wrote to petitioner explaining the circumstances concerning the underinsurance claim and also requesting petitioner's consent to the $100,000 settlement without prejudice to petitioner's position on the underinsurance claim. On October 4, 2000, petitioner wrote to respondent's counsel confirming denial of the underinsurance claim and consenting to the settlement without prejudice to its defenses on the underinsurance claim.

On October 12, 2000, defense counsel sent respondent's attorney two affidavits from the Dulaks which revealed that no excess coverage existed. Thereafter, respondent served a demand for arbitration on the underinsurance claim. Petitioner has commenced this special proceeding to stay arbitration.

Petitioner contends that a stay must be granted on one or two grounds: (1) the failure to make an underinsurance claim " as soon as practicable" as required by condition 2 of the SUM endorsement and (2) the failure to timely notify it of the underlying lawsuit. Respondent argues that her counsel was diligent in the attempt to ascertain the tortfeasor's coverage and gave notice of the claim as soon as was practicable under the circumstances. The opposing papers do not address petitioner's second argument.

Taking the arguments in inverse order, it is clear that respondent did not comply with the policy provisions to advise the petitioner of her lawsuit and to forward relevant papers " immediately" to the insurer (SUM endorsement [11 NYCRR 60-2.3 (f)], condition 4.) Nevertheless, this ground is not available to the petitioner who failed to cite it as a basis in the denial letter. (General Acc. Ins. Group v Cirucci,46 ...


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