timely notice of the accident to Mount Vernon "as soon as [was]
practicable." Lowe implicitly argues that Harris became aware of the fire
when she read the December 5, 1997 letter, and that, therefore, Mount
Vernon could have assumed she knew a few days after December 5, 1997,
when the letter presumably arrived at the listed address. Nevertheless,
Mount Vernon had no way of knowing whether Harris, in fact, read the
letter at that time or was even present at that address when it arrived.
As a result, the Court accepts plaintiff's contention that it needed to
independently investigate the facts surrounding Harris's knowledge of the
fire. It is perfectly reasonable that the insurer verify the surrounding
facts so that, if it chooses to disclaim, it does so on the basis of
concrete evidence. See Norfolk & Dedham Mut. Fire Ins. Co. v.
Petrizzi, 121 A.D.2d 276, 278, 503 N.Y.S.2d 51 (1st Dep't 1986) (stating
that, as a general matter, it 15 reasonable for insurers to investigate
claims). In this case, Galsan was able to secure a written statement
signed by Harris stating that she knew of the accident on the date it
occurred. See Reale Aff., Ex. C. When plaintiff received this statement
as part of the Galsan report submitted on March 27, 1998, it had
sufficient facts to disclaim.
The Court sees no point in discouraging insurers from conducting
thorough investigations before disclaiming coverage, as long as they are
not used as a dilatory tactic. See Congregation B'Nai Israel, 900 F.
Supp. at 649. Moreover, simply because a plaintiff may be able to
disclaim on a particular ground does not mean that other grounds,
discoverable through investigation, do not exist. As several courts have
pointed out, forcing an insurer to issue "piecemeal denials of coverage
would frustrate [the insurer's] right to investigate claims." Wilczak v.
Ruda & Capozzi, Inc., 203 A.D.2d 944, 945, 611 N.Y.S.2d 73 (4th Dep't
1994); Congregation B'Nai Israel, 900 F. Supp. at 649 (quoting Wilczak).
For these reasons, the Court finds that plaintiff's prompt investigation
into Lowe's claim is an adequate justification for the fifty-day delay
from March 4, 1998 to April 23, 1998, and that such delay was reasonable
as a matter of law.*fn1
B. Effectiveness of Plaintiff's Disclaimer
Under New York law, even if the insured failed to give the insurance
carrier timely notice of the accident, a third party claimant, such as
Lowe, has an independent right to notify and seek recovery from an
insurer, which is unaffected by any delay on the part of the insured.
General Accident Ins. Group v. Cirucci, 46 N.Y.2d 862, 863-64,
414 N.Y.S.2d 512, 387 N.E.2d 223 (1979); Aetna Cas. & Sur. Co. v.
Rodriguez, 115 A.D.2d 418, 418, 496 N.Y.S.2d 956 (1st Dep't 1985)
(Ellerin, J., concurring); Lauritano v. Am. Fidelity Fire Ins. Co.,
3 A.D.2d 564, 570-71, 162 N.Y.S.2d 553 (1st Dep't 1957). Thus, if the
third party has exercised this right and the insurer's notice of
disclaimer only addresses grounds for disclaimer against the insured,
such a disclaimer is effective only against the insurer and not against
the third party. General Accident Ins. Group, 46 N.Y.2d at 863-64,
414 N.Y.S.2d 512, 387 N.E.2d 223;
Aetna Cas. & Sur., 115 A.D.2d at 418, 496 N.Y.S.2d 956; Utica Mut. Ins. Co.
v. Gath, 265 A.D.2d 805, 806, 695 N.Y.S.2d 839 (4th Dep't 1999). Moreover,
the insurer will be estopped from later raising a defense that it did not
mention in the notice of disclaimer. General Accident Ins. Group, 46 N.Y.2d
at 864, 414 N.Y.S.2d 512, 387 N.E.2d 223.
Lowe argues that he gave notice to plaintiff by his letter dated
December 5, 1997. The letter was first sent to Harris, who then gave it
to her insurance broker, the People's Choice Agency. The People's Choice
Agency then transmitted it to The Morstan Agency, Mount Vernon's general
agent, who, in turn, faxed it to Mount Vernon on March 4, 1998. According
to Vernon, this chain of custody establishes that it was he who notified
plaintiff of the accident, rather than the insured. Lowe attempts to
bolster this argument by pointing out that on March 10, 1998, right after
it received the fax, plaintiff wrote Andrea & Towsky asking for
details about the claim and referring to Cassandra Lowe as the
"claimant." Andrea Affirmation, Ex. F. According to Lowe, this indicates
that plaintiff treated the claim as if it had been received from the
claimant, Cassandra Lowe. Finally, Lowe asserts that section §
3420(a)(3) of the New York State Insurance Law controverts plaintiff's
argument that it must receive notice of the claim directly from Lowe.
Lowe's arguments are unpersuasive. Plaintiff correctly points out that
each of the cases cited by Lowe in support of his argument involve
situations where the injured party supplied direct written or oral notice
of his or her claim to the insurer. See General Accident Ins. Group, 46
N.Y.2d at 863, 414 N.Y.S.2d 512, 387 N.E.2d 223; Utica Mut. Ins., 265
A.D.2d at 806, 695 N.Y.S.2d 839; Aetna Cas. & Sur., 115 A.D.2d at
419, 496 N.Y.S.2d 956; Legion Ins. Co. v. Weiss, 282 A.D.2d 576, 577,
723 N.Y.S.2d 235. 282 A.D.2d 576, 723 N.Y.S.2d 235 (2d Dep't 2001); Eagle
Ins. Co. v. Ortega, 251 A.D.2d 282, 282, 674 N.Y.S.2d 56 (2d Dep't
1998); United States Liab. Ins. Co. v. Young, 186 A.D.2d 644, 645,
588 N.Y.S.2d 640 (2d Dep't 1992). As these cases explain, under such
circumstances, an insurer must disclaim specifically against the injured
party; disclaiming against the insured will not suffice.
These are not the circumstances of this case, however. Lowe's letter of
December 5, 1997, did not notify the plaintiff of the claim. The fact
that a copy of the letter eventually found its way to Mount Vernon does
not mean that it was Lowe who notified plaintiff. Quite the contrary, it
would seem that the insured, Harris, was the one who notified plaintiff
by sending the letter to her broker, who then forwarded it to Mount
Vernon. Where an injured party does not assert its own right to notify
the insurance carrier, but rather relies upon the insured to provide
notice, "its rights vis-a-vis the insurer remain derivative" such that
disclaimer against the insured for untimely notice is sufficient to
disclaim against the injured party as well. United States Liab. Ins. Co.
v. Albertell, No. 92 Civ. 301, 1992 WL 380024, at *5 (S.D.N.Y. Dec. 7,
1992); see also Agway Ins. v. Alvarez, 258 A.D.2d 487, 488,
684 N.Y.S.2d 635 (2d Dep't 1999) (the fact that the insured forwarded a
copy of the injured party's counterclaim to its insurance carrier did not
mean that the injured party had independently notified the carrier of its
None of the cases cited by Lowe refute this point. Lowe places
particular reliance on Utica Mutual, asserting that it is "on all fours"
with the instant case. Def. Lowe's Mem. of Law in Supp. of Mot. for
Summ. J at 13. It is not. In that case, the injured party notified the
insured by letter of her intention to file a claim. Utica
Mut. Ins. Co., 265 A.D.2d at 806, 695 N.Y.S.2d 839. The insured then
notified the insurance carrier of the claim and forwarded the injured
party's letter. Id. However, unlike the instant case, the injured party in
Utica Mutual provided her own written and oral notice to a representative
of the plaintiff in addition to the notice provided by the insured. Id.
Thus, plaintiff's disclaimer against the insured was not effective
against the injured party, who had exercised her independent right to
submit notice of her claim. See id. At no time did Lowe provide
independent notification of his claim to plaintiff.
Nor is the Court persuaded that plaintiff's March 10, 1998 letter to
Andrea & Towsky indicates that it was handling the claim as if it
were given notice by Lowe. As plaintiff points out, it is often the case
that insurance carriers learn about a claim by a letter from the injured
party to the insured, which is then forwarded to the insurer. Contacting
the claimant is part and parcel of conducting an investigation into the
claim. It does not mean that plaintiff was acknowledging that it was Lowe
who had notified it of the accident, and the Court declines to so hold.
The fact that it referred to Cassandra Lowe as the "claimant" in this
letter is of no moment. Lowe was, indeed, a claimant, but again that does
not mean that she, or Willie Lowe, was the one who notified the plaintiff
of the accident.
Finally, Lowe's assertion that section 3420(a)(3) controverts
plaintiff's argument that the injured party's notification must be made
directly to the insurer is unavailing. Section 3420(a)(3) provides that
"notice given by or on behalf of the insured, or written notice by or on
behalf of the injured person . . . to any licensed agent of the insurer
in this state . . . shall be deemed notice to the insurer." N.Y. Ins. Law
§ 3420(a)(3) (McKinney 2000). Lowe maintains that because notice can
be made "on behalf of the injured person" that direct notification is
unnecessary. While it may be true that notification of this kind may
suffice, there is no indication that the insured, or any other party to
this case, provided notice to Mount Vernon on behalf of Lowe. The
six-page fax containing Lowe's letter was sent to Mount Vernon by its
general agent to provide Mount Vernon with the materials relating to this
claim. There is nothing to suggest that the letter was included to take
action on behalf of Lowe. The Court finds, therefore, that because Lowe
did not assert an independent claim against plaintiff, plaintiff's
disclaimer against Harris also served as a disclaimer against Lowe.
For the foregoing reasons, defendant's motion for summary judgment is
denied and plaintiff's cross-motion for summary judgment is granted.