United States District Court, S.D. New York
September 22, 2004.
UNITED STATES LIABILITY INSURANCE COMPANY, Plaintiff,
WINCHESTER FINE ARTS SERVICES, INC., UTICA NATIONAL INSURANCE GROUP, CITI CAPITAL COMMERCIAL LEASING CORP., JASON DENNY, LINDON F. McKENZIE and MICHAEL D. PETROVICH, Defendants.
The opinion of the court was delivered by: VICTOR MARRERO, District Judge
DECISION AND ORDER
Plaintiff United States Liability Insurance Company ("U.S.
Liability") brings this diversity action against its insured,
Winchester Fine Art Services, Inc. ("Winchester"); and Jason
Denny and Lindon F. McKenzie (the "Claimants"). Also named as
defendants are Winchester's primary insurer, Utica National
Insurance Group ("Utica"); Citi Capital Commercial Leasing Corp.;
and Winchester employee Michael D. Petrovich ("Petrovich"). U.S.
Liability seeks a declaratory judgment to disclaim coverage for
an underlying personal injury action now being litigated in New
York State court that the Claimants brought against Winchester.
U.S. Liability has moved for summary judgment with respect to
all of the claims and counterclaims at issue. Winchester and the Claimants oppose this motion and have
responded with their respective cross-motions for summary
judgment on all the claims. The crux of the parties' dispute
centers on whether Winchester provided U.S. Liability with timely
notice of the underlying personal injury action in accordance
with the terms of Winchester's excess liability insurance policy
with U.S. Liability (the "Excess Policy"). U.S. Liability asserts
that notice was untimely under New York law and under the terms
of the Excess Policy, and as such, it is entitled to disclaim
coverage. Winchester responds that it did not provide notice
sooner because it never formed a good-faith belief that the
personal injury action would implicate the Excess Policy.
Winchester argues that U.S. Liability was itself untimely in
disclaiming coverage and should be precluded from so doing. The
Claimants assert that U.S. Liability may not disclaim coverage
because they (the Claimants) notified U.S. Liability of the claim
after diligent efforts to discover the existence of the Excess
As discussed in greater detail below, the Court holds as a
matter of law that: (1) Winchester failed to timely notify U.S.
Liability of the underlying personal injury action in compliance
with the terms of the Excess Policy and applicable New York law; (2) the Claimants did not cure
Winchester's delay in notifying U.S. Liability; and (3) U.S.
Liability properly denied coverage to both Winchester and the
Claimants, and thus, did not waive its right to do so.
Accordingly, the Court grants U.S. Liability's motion for summary
judgment in its entirety and denies Winchester's and the
Claimants' cross-motions for summary judgment in their entirety.
The facts of this case are not materially in dispute. On April
9, 2001, Petrovich was driving an automobile for Winchester when
he was involved in an automobile accident with the Claimants. At
the time of the accident, Winchester was insured by a primary
liability insurance policy issued by Utica that provided
liability coverage up to $750,000. Winchester also was insured by
the Excess Policy with U.S. Liability. The Excess Policy provided
coverage for liability in excess of the primary policy limit, up
to a maximum of $4 million. The notice provision of the Excess
Policy provides as follows: Notice of Occurrence, Claim, offense, or Suit
Whenever it appears that an occurrence, claim,
offense, or suit is likely to involve payment under
this policy, written notice shall be given to us or
our authorized representative by you or your
designated representative as soon as practicable.
(Affidavit of Mark Shockley, dated May 19, 2004, at Ex. A.) The
Excess Policy also provides that U.S. Liability has the right to
participate in the defense of any claim that may involve payment
under the policy and that both Winchester and Utica must
cooperate with U.S. Liability with regard to any such defense.
By letter dated April 17, 2001, the Claimants notified Utica of
the automobile accident and stated that they had incurred serious
injuries therefrom. The letter also requested information on
whether Winchester carried any excess or umbrella insurance. In a
subsequent letter dated January 29, 2002, the Claimants informed
Utica that they had undergone surgery for their injuries and
requested that Utica produce a sworn statement with regard to
whether Winchester carried excess liability insurance. The
January 29 letter also provided information on a verdict in an
unrelated case with similar injuries and noted that the amount of
the jury's damage in the unrelated case exceeded Utica's coverage
amount in this case. The letter further stated that the Claimants' injuries were serious, that Winchester
was entirely liable for those injuries, and that the property
damage arising from the accident was extensive.
On March 27, 2002, the Claimants initiated a personal injury
action against Winchester, Citi Capital, and Petrovich in New
York State Supreme Court, Bronx County for the injuries sustained
in the accident (the "state court action"). In their complaint,
the Claimants demanded $5 million each in compensation for their
injuries.*fn2 Utica is undertaking Winchester's defense in
the state court action and has retained counsel in the matter
(hereinafter "Winchester's trial counsel").
By letter dated April 17, 2002, the Claimants forwarded copies
of their medical records to Utica. These records indicated that
the Claimants had undergone surgery and described additional
injuries sustained from the accident. For a third time, the
Claimants requested that Utica provide information regarding
excess insurance coverage and that if there were no such
coverage, that Winchester provide a sworn statement to that
effect. The letter further notified Utica of the commencement of
the state court action and included a copy of the complaint. The
record reflects that Utica did not respond to the Claimants' repeated requests for information
regarding excess insurance coverage.
As part of discovery in the state court action, the Claimants
issued a Notice To Produce to Winchester's trial counsel, dated
November 13, 2002, that requested all information regarding any
excess or umbrella coverage in effect at the time of the accident
that may be available to satisfy all or part of any judgment that
may be entered in the state court action. The Claimants also
submitted a Bill of Particulars to Winchester's trial counsel on
or about November 13, 2002 detailing the injuries they sustained
in the accident and the concomitant surgeries that would be
required.*fn3 On or about January 24, 2003, the Claimants
submitted a Supplemental Bill of Particulars that indicated that
one of the Claimants' injuries would lead to osteoarthritis
necessitating a knee replacement, and estimated that future
medical costs for this Claimant alone would reach between
$351,695 and $453,745, not including adjustments for inflation. Following a preliminary conference in the state court action
held on January 9, 2003, the state court issued a Preliminary
Conference Order that erroneously indicated that Winchester had
$1 million in primary insurance coverage. The Order did not
indicate that Winchester owned an excess insurance policy. In
response to this Order, Winchester's trial counsel later
corrected the information regarding the coverage limit by
indicating that the limit of its primary coverage with Utica was,
in fact, $750,000. Again, Winchester's trial counsel did not
mention that Winchester had an excess policy in place at the time
of the accident.
By letter dated February 11, 2003, the Claimants again
requested information regarding any excess insurance coverage
from Winchester's trial counsel, including an affidavit if no
such coverage existed. This request, like the previous requests,
went unanswered. The February 11 letter also made reference to a
telephone conversation the previous day between counsel for the
Claimants and Winchester's trial counsel where they discussed
The correspondence regarding excess insurance coverage would
not end there. By letter dated February 28, 2003, Frederick C.
Aranki ("Aranki"), the principal trial attorney defending Winchester in the state court action, provided Utica
with the last of several case status reports. In the February 28
report, Aranki stated that he was not aware of any applicable
excess insurance policy carried by Winchester, and that he was in
the process of preparing an affidavit from Winchester's president
to so attest.*fn4 No such affidavit is in the record. This
representation regarding excess coverage was confirmed in a March
7, 2003 letter from the Claimants to Utica (with a copy to
Aranki), which indicated that Aranki had informed counsel for the
Claimants in a telephone conversation that there was no excess
coverage in effect at the time of the accident and that an
affidavit to that effect was forthcoming.*fn5 The March 7,
2003 letter also described the extensiveness of the Claimants'
injuries and the significant property damage to the vehicle.
By letter dated March 5, 2003, Winchester, through its general
corporate counsel (hereinafter "Winchester's corporate counsel"),
informed U.S. Liability of the state court action and forwarded
copies of the Complaint and Summons.*fn6 In this notice, Winchester indicated that it
had only recently been advised that the Claimants had stated that
the claim would exceed the primary coverage amount, and thus,
U.S. Liability was being notified "as a precaution."
Approximately one week later, U.S. Liability requested relevant
documents pertaining to the state court action, including the
pleadings, Bills of Particulars, and the various status reports
that Winchester's trial counsel prepared for Utica as part of its
defense of Winchester. U.S. Liability received these documents
from Winchester's trial counsel on or about April 2, 2003. The
cover letter to U.S. Liability suggested that Winchester was
construing U.S. Liability's request for these documents as a
tacit acknowledgment from U.S. Liability that it would be
providing excess insurance coverage in the state court action. By
letter dated April 1, 2003, Winchester first informed the
Claimants of the existence of the Excess Policy.
On or about April 14, 2003, approximately two weeks after
receiving the documents, U.S. Liability informed Winchester and
the Claimants' counsel by letter (with copies to all the other
parties in the state court action) that it was disclaiming coverage for Winchester's failure to comply with
the notice provision of the Excess Policy.*fn7 This notice
further informed the Claimants that they had failed to cure
Winchester's untimely notice because the Claimants were not the
first to notify U.S. Liability of the state court action.
Notwithstanding U.S. Liability's disclaimer, the Claimants
notified U.S. Liability by letter dated May 20, 2003, of their
intent to avail themselves of the excess coverage.
U.S. Liability thereafter initiated the instant action seeking
a declaration by this Court that it is not obligated to defend or
indemnify Winchester for the state court action due to
Winchester's untimely notice. Pending before the Court is U.S.
Liability's motion for summary judgment on this claim pursuant to
Federal Rule of Civil Procedure 56. Both Winchester and the
Claimants oppose U.S. Liability's motion and have each
cross-moved for summary judgment asserting that U.S. Liability
received timely notice of the state court action and did not
timely disclaim coverage. Thus, Winchester and the Claimants
claim that U.S. Liability is required to defend and indemnify
Winchester under the terms of the Excess Policy. II. DISCUSSION
A. STANDARD FOR SUMMARY JUDGMENT
The Court may grant summary judgment only "if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law." Fed.R. Civ. P.
56(c). The Court ascertains which facts are material by
considering the substantive law of the action, for only those
"facts that might affect the outcome of the suit under the
governing law will properly preclude the entry of summary
judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). Even if a dispute of the material facts exists, summary
judgment will be granted unless the dispute is "genuine," i.e.,
"there is sufficient evidence favoring the nonmoving party for a
jury to return a verdict for that party." Id. at 249.
The initial burden rests with the moving party to demonstrate
the absence of any genuine issues of material fact. See
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the
moving party satisfies its burden, the non-moving party must
provide "specific facts showing that there is a genuine issue for trial" in order to survive the motion for
summary judgment. Fed.R. Civ. P. 56(e); see also Matsushita
Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986); Shannon v. New York City Transit Auth., 332 F.3d 95,
98-99 (2d Cir. 2003). The Second Circuit has granted summary
judgment where a party failed to show any dispute over the facts
that would entitle her to equitable tolling of the time
requirements for her Title VII claim. See Boos v. Runyon,
201 F.3d 178, 185 (2d Cir. 2000). In considering a motion for summary
judgment, the Court must view the evidence in a light that is
favorable to the non-moving party and draw all reasonable
inferences in favor of that party. See Williams v. R.H.
Donnelley, Corp., 368 F.3d 123, 126 (2d Cir. 2004). However, the
Court must refrain from weighing the evidence and restrict its
inquiry to whether there are triable issues of material fact.
See Anderson, 477 U.S. at 249. Against this standard, the Court
considers the issues raised by the parties' arguments in their
respective moving papers.
B. WINCHESTER'S NOTICE OF THE CLAIM
The first question raised by the pending motions for summary
judgment is whether as a matter of law, Winchester provided
timely notice of the state court action to U.S. Liability under the terms of the Excess Policy. U.S. Liability
argues that Winchester's notice was untimely and thus, Winchester
did not fulfill a condition precedent to coverage. On this issue,
U.S. Liability asserts that Winchester had mounting indications
that damages in the state court action were "likely to involve
payment" under the Excess Policy well before March 5, 2003, the
date it ultimately provided notice of the action. First, U.S.
Liability points to the ad damnum clause of the complaint in
the state court action, which alleges $5 million in damages for
each of the two Claimants.
Second, U.S. Liability cites to the earlier status reports, in
particular, to the reports dated September 9, 2002 and December
9, 2002; and to the Bills of Particulars, all of which discussed
the extent of the Claimants' injuries and expressed the opinion
that Winchester would likely be liable for those injuries. U.S.
Liability claims that these documents, and other documents
exchanged during discovery, provided Winchester with a clear
basis upon which to conclude that the Excess Policy would likely
be implicated months before Winchester actually provided notice
of the potential claim. In response, Winchester argues that it never formed a
good-faith belief that the damages in the state court action
would exceed the primary coverage amount, and thus, it was not
required to provide notice to U.S. Liability under the Excess
Policy. Winchester's President, Frank Sapeinza ("Sapeinza"),
attests that although he received notice of the accident the day
it occurred, he did not believe that the resulting injuries were
serious based on Petrovich's account. (See Affidavit of Frank
Sapeinza, dated June 8, 2004, at ¶¶ 4-8.) Sapeinza further
attests that Winchester first received actual notice of the state
court action in or about May 2002, about two months after the
action was filed. (See id. at ¶ 9.)
Winchester places heavy reliance on the advice of its trial
counsel during the progression of the state court action.
Specifically, Winchester cites to other portions of the status
reports where its trial counsel opined that the Claimants'
injuries were not serious and were likely not extensive in terms
of monetary damages. According to Winchester, the first time it
had any indication that the Claimants' counsel believed that the
damages in the state court action would exceed $750,000 was after
receipt of the last of these status reports. This report, dated
February 28, 2003, discussed the Supplemental Bill of Particulars received
by Winchester's trial counsel about a month earlier. Based on the
revised Bill of Particulars, the report approximated the upper
limit of the damages for one of the two Claimants to be in excess
of $450,000. Nevertheless, Winchester's trial counsel opined in
the February 28 report (as he did in the previous reports) that
the damages would not exceed the primary coverage limit.
According to Winchester, it nevertheless provided U.S. Liability
with notice on March 5, 2003 shortly after the February 28, 2003
status report "as a precaution" so that U.S. Liability could
participate in further discovery and in any settlement
discussions. (Affidavit of Paul M. Schindler, dated June 10, 2004
("Schindler Aff.") at ¶¶ 5-6.)
To substantiate its contention that the Claimants' injuries
were not serious, Winchester points out that both Claimants were
wearing their seatbelts during the accident and that neither
incurred any broken bones, required hospitalization, or was
bleeding following the accident. Winchester notes that the
Claimants only visited the hospital at the insistence of
individuals at the scene. Upon careful consideration of the parties' arguments in light
of the evidence in the record and after viewing the evidence in a
light most favorable to Winchester, the Court holds that no
rational factfinder could conclude that Winchester acted
reasonably and diligently in waiting until March 5, 2003 to
notify U.S. Liability of the state court action.*fn8 As
discussed in greater detail below, the totality of the
circumstances simply do not support Winchester's purported belief
that the damages in the state court action would not exceed
$750,000 or that its actions were reasonable under the
Under New York law, the failure to provide timely notice of a
claim under a notice provision in an insurance contract does not
invalidate a claim if the insured can demonstrate that it was not
"reasonably possible to give such notice within the prescribed
time and that notice was given as soon as was reasonably
possible." N.Y. Ins. Law § 3420 (a) (4) (Consol. 2004). In these
circumstances, "[w]hen the duty to provide such notice commences
requires an objective evaluation of the facts known to the
insured." Christiania Gen. Ins. Corp. v. Great Am. Ins. Co.,
979 F.2d 268, 275 (2d Cir. 1992). In Christiana, the Second
Circuit elaborated on the insured's duty to provide notice to the insurer
The objective standard is one of reasonableness.
While the duty to provide notice therefore does not
begin on the basis of mere speculation, rumor, or
remote contingencies far removed from the particular
policy in question, . . . when an insured complying
with its duty to use due diligence in investigating
potential claims against it would believe from the
information available that its policy would be
involved, the notice obligation arises.
Id. at 275-76 (citations omitted). The Second Circuit in
Christiana further noted that the duty to notify may arise
after an objective evaluation of all available information "even
though there are some factors that tend to suggest the opposite."
Id. at 276.
Because compliance with the notice provision is generally
regarded as a condition precedent to the insurer's duty to
indemnify the insured, the "failure to satisfy the notice
requirement vitiates the policy." Security Mut. Ins. Co. v.
Acker-Fitzsimons Corp., 293 N.E.2d 76, 78 (N.Y. 1972); see
also White v. City of New York, 615 N.E.2d 216, 217 (N.Y.
1993). Accordingly, non-compliance with the notice provision is
grounds for disclaiming coverage even where the insurer has not
demonstrated prejudice. See American Home Assurance Co. v.
International Ins. Co., 684 N.E.2d 14, 18 (N.Y. 1997); see also Olin Corp. v. Insurance
Co. of N. Am., 966 F.2d 718, 723 (2d Cir. 1992).
New York courts have interpreted the phrase "as soon as
practicable" in connection with notice provisions in insurance
contracts to require that notice be given within a reasonable
amount of time under the circumstances. See Eveready Ins. Co. v.
Chavis, 540 N.Y.S.2d 860, 861 (App. Div. 2d Dep't 1989)
(citation omitted). Because the insured bears the burden of
proving that its notice was timely under the circumstances, an
insured may present evidence to excuse its delay. See White,
615 N.E.2d at 217-18 (stating that "where a reasonable person
could envision liability," and given the severity of the
claimant's injury, the insured's failure to investigate the claim
fully did not support its purported "reasonable belief of
The issue of whether a delay in notifying an insurance company
regarding a potential claim is reasonable under the circumstances
is generally determined by the factfinder. See Hartford Fire
Ins. Co. v. Masternak, 390 N.Y.S.2d 949, 952 (N.Y.App. Div. 4th
Dep't 1977). However, where no excuse is proffered or when there
is no credible evidence to support a proffered excuse, an undue
delay may render notice to the insurer untimely as a matter of law. See id. As the
New York Court of Appeals has explained,
a good-faith belief of nonliability may excuse or
explain a seeming failure to give timely
notice. . . . But the insured's belief must be
reasonable under all the circumstances, and it may be
relevant on the issue of reasonableness, whether and
to what extent, the insured has inquired into the
circumstances of the accident or occurrence.
Security Mut. Ins. Co., 293 N.E.2d at 78. In Security Mutual,
the Court of Appeals held that an insured's 19-month delay in
notifying the insurer was unreasonable as a matter of law and
could not be excused by a purported "`lack of knowledge' or a
`belief of nonliability'" where the insured failed to properly
investigate and evaluate its potential liability. Id. at 80.
Thus, summary judgment against the insured may be granted where
there was a delay in providing notice without a good faith belief
in non-liability or that excess coverage would not be implicated.
See 319 McKibben St. Corp. v. General Star Nat'l Ins. Co.,
664 N.Y.S.2d 785, 788 (App. Div. 1st Dep't 1997) (finding that
the insured's delay in notifying the excess insurance carrier of
a potential claim was unreasonable as a matter of law); Zadrima
v. PSM Ins. Cos., 616 N.Y.S.2d 817, 818 (App. Div. 2d Dep't
1994) (holding that the insurer's cross-motion for summary judgment should have been granted in light of a four-month delay
in notification during which time the insured possessed
contemporaneous knowledge of potential liability). Moreover,
without a reasonable explanation, "even relatively short periods
of delay . . . [can] be unreasonable as a matter of law." Kamyr,
Inc. v. St. Paul Surplus Lines Ins. Co., 547 N.Y.S.2d 964, 967
(App. Div. 3d Dep't 1989) (citation omitted).
Viewing the evidence in a light most favorable to Winchester,
the Court finds that a reasonable insured in Winchester's
position would have believed that the state court action would
likely involve payment under the Excess Policy. In this case,
Winchester does not attempt to proffer an explanation for the
delay in notifying U.S. Liability of the state court action.
Rather, Winchester argues vehemently that it had a good-faith
belief that the damages in the case would not exceed the primary
coverage amount, and thus, it did not need to notify U.S.
Liability of the state court action under the terms of the Excess
Policy. Winchester notes that discovery was ongoing at the time
that it provided notice.
In this regard, Winchester makes much ado about the differences
in the precise wording between the notice provision of the Excess Policy and the notice provisions at issue
in the numerous cases that U.S. Liability cites. According to
Winchester, the requirement under the Excess Policy that notice
be provided when an occurrence is "likely to involve payment"
under the policy materially distinguishes this case from others
where different language was employed, for example, where an
occurrence is "likely to involve the policy" or "may result in a
claim." Winchester urges this Court to refrain from re-writing
the notice provision of the Excess Policy and to construe it
favorably for its position. Winchester reminds the Court that it
did not negotiate the notice provision at issue and that under
the contra proferentem doctrine, any ambiguity should be
resolved against the party that drafted the contract (in this
case, U.S. Liability).
The Court finds that it is unnecessary to delve into a
comprehensive analysis of the particular contractual language at
issue here. The Court is persuaded that even under a construction
of the notice provision most favorable to Winchester, the record
before the Court clearly indicates that it was unreasonable as a
matter of law for Winchester to not have notified U.S. Liability
of the state court action well before March 5, 2003. Accordingly,
summary judgment is proper in this case because no rational factfinder
could conclude that Winchester acted reasonably under the
First, it is undisputed that Winchester received actual notice
of the accident from Petrovich on the day that it occurred. The
record indicates that the Claimants' counsel contacted Utica,
Winchester's primary insurance carrier, about a week later to
inform them that the accident had occurred and that the injuries
were serious. A subsequent communication between Claimants'
counsel and Utica in January 2002 further detailed the severity
of the Claimants' injuries; indicated extensive property damage;
and opined that Winchester was liable for these damages. While
these communications were not directly with Winchester, the Court
simply cannot countenance that Utica corresponded with the
Claimants' counsel for months without ever notifying Winchester
of these communications, particularly when the Claimants were
persistently requesting information regarding excess insurance
Second, the commencement of the state court action in March
2002, involving distinct injuries to the two Claimants, was a
significant indicator that the damages stemming from the accident
conceivably could exceed $750,000. The complaint demanded $10 million in total damages.
While the Court is mindful that the amount demanded is not always
the best indicator of what the ultimate damages may be, this
damages figure, coupled with the allegations of the Claimants'
injuries, should have put Winchester on further notice that the
Excess Policy may be implicated. See 319 McKibben St.,
664 N.Y.S.2d at 787 (imputing awareness of the extent of potential
liability, in part, from the amount of damages alleged in the
The Court cannot credit Winchester's unsubstantiated assertion
that it did not receive actual notice of the state court action
until May 2002 two months after the action was commenced. Even
assuming Winchester did not receive the actual complaint until
May 2002, the Court cannot fathom that Utica, a well-established
and presumably reputable insurance company, would undertake
Winchester's defense in the state court action and not contact
Winchester almost immediately to, at the very least, obtain its
account of the accident and to inform Winchester of the status of
Moreover, once Utica undertook Winchester's defense in the
state court action, Utica, in essence, assumed the role of
Winchester's agent for that purpose. See 70A N.Y. Jur. Ins. § 1946 (stating that in carrying out an insurer's duty to
act in good faith during the defense of the insured, "the insurer
acts as the agent of the insured"); see also Graci v.
Denaro, 413 N.Y.S.2d 607, 608 (Sup. Ct. 1979). Thus, notice to
Utica can be imputed to Winchester, absent a compelling reason to
the contrary. See Martinson v. Massachusetts Bay Ins. Co.,
947 F. Supp. 124, 129 (S.D.N.Y. 1996) ("Under New York law, `[i]t
is well-settled that the principal is bound by notice to or
knowledge of his agent in all matters within the scope of his
agency although in fact the information may never actually have
been communicated to the principal'") (quoting Farr v. Newman,
199 N.E.2d 369 (N.Y. 1964)).
The Court is mindful that Winchester did not expressly
authorize Utica to act as its agent in the state court action.
Nonetheless, "[n]otice to the agent . . . is notice to the
principal, unless the person giving notice has reason to know
that the agent has no duty to or will not transmit the message to
the principal." Corporacion de Mercadeo Agricola v. Mellon Bank
Int'l, 608 F.2d 43, 46 (2d Cir. 1979). There is nothing in the
record to suggest that the Claimants had any reason to expect
that Utica would not contact Winchester to report on the status
of the pending action or to obtain further information. Indeed, the Claimants'
several requests for information from Utica regarding excess
coverage would suggest to the contrary. Accordingly, Winchester's
attempts to employ Utica as an excuse for its purported lack of
knowledge of the pertinent facts falls well short of the
Conspicuously absent in the record is any plausible explanation
as to why the Claimants' repeated requests for information on
excess insurance coverage went unanswered. The Court counts at
least five occasions where the Claimants expressly inquired as to
whether Winchester carried any excess insurance coverage and
where no response was provided. To add insult to injury, when the
Claimants finally received a response, it was not
correct.*fn10 While these inquiries regarding excess
coverage were made directly to Utica and to Winchester's trial
counsel, only Winchester could competently answer this question,
and there is no basis upon which to infer that either Utica or Winchester's trial
counsel could not or did not obtain the answer from Winchester.
Nor was it unreasonable for the Claimants' counsel to seek
information directly from Utica and Winchester's trial counsel,
as these parties were clearly acting as representatives of
Winchester in the state court action.
In light of the absence of sufficient evidence in the record
for what appears to be blatant evasiveness on Winchester's part,
Winchester's unsubstantiated explanation that it was unaware of
these requests because they were directed to other parties is
nothing short of disingenuous. As discussed above, Winchester may
not claim ignorance amidst the barrage of activities that
transpired in the months preceding and following the commencement
of the state court action and that would have put any reasonable
person on notice at least suggesting further inquiry. Indeed,
based on the record as a whole, the Court surmises that the lack
of responsiveness to the Claimants' requests for information was
a conscious tactical decision on Winchester's part, borne out of
a possible concern that disclosing the existence of the Excess
Policy would adversely affect the prospects for a favorable settlement of the
Although the Court is persuaded that Winchester had sufficient
knowledge of the state court action as of May 2002 from which it
reasonably should have concluded that payment was possible under
the Excess Policy, the materials produced in discovery further
provided Winchester with reason to anticipate that the state
court action likely would involve payment under the Excess
Policy. Specifically, the first Bill of Particulars, submitted on
or about November 13, 2002, provided more detail with regard to
the Claimants' injuries, including a description of the surgery
that each Claimant had undergone and the continuing pain each was
suffering. In Aranki's December 9, 2002 status report, he
evaluated the Bill of Particulars and opined that Winchester
would likely be liable for the Claimants' damages.*fn11
Although Aranki characterized the Claimants' injuries as "not
overly severe," he also acknowledged that they were significant
because both Claimants underwent surgery. Finally, the January
24, 2003 Supplemental Bill of Particulars described additional injuries and estimated significant future medical costs for one
of the Claimants arising from the accident.
Viewing this evidence in a light most favorable to Winchester,
the Court finds Winchester's arguments that it reasonably did not
believe that the Claimants' injuries would likely involve payment
under the Excess Policy would be unpersuasive to any rational
trier of fact.*fn12 While no single piece of evidence is
dispositive, the Court finds that when all the evidence in the
record is considered in the aggregate, there is no genuine issue
of material fact as to whether Winchester acted reasonably in
withholding notification until March 5, 2003. Thus, Winchester's
suggestion that there was insufficient discovery as of March 2003
upon which to form a reasonable belief that the damages under the
Excess Policy would likely exceed $750,000 is unavailing in light
of the significant contrary evidence demonstrating the potential
for liability to exceed that amount.
Winchester attempts to counter this evidence by citing to the
portions of the status reports where its trial counsel opines that the Claimants' injuries were not severe. This
argument is similarly unpersuasive because Winchester was under a
duty to act reasonably under the totality of all the information
it had (or should have had) available to it in determining
whether payment under the Excess Policy was likely. Winchester's
decision to rely almost exclusively on its trial counsel does not
alter its duty to consider all the available information and to
conduct itself as a reasonable insured would have in similar
Contrary to Winchester's assertion, prompt notice to U.S.
Liability in the face of Winchester's trial counsel's opinion
regarding the value of the state court action does not amount to
"second-guessing" the advice of its counsel. Winchester had an
independent duty to investigate and consider the totality of the
evidence and cannot simply delegate this duty to counsel when
there were other significant indications to the
contrary.*fn13 See Christiania, 979 F.2d at 276 (stating
that a reasonable possibility that a claim could implicate a
policy "may exist even though there are some factors that tend to
suggest the opposite"). While it is not unreasonable for Winchester to have considered
the advice of its counsel under these circumstances, Winchester
also was required to consider all the other available
information, as discussed above. The Court notes that Winchester
is a corporate entity, presumably with individuals possessing
business acumen, including competent corporate counsel in
addition to its trial counsel. Thus, this is not a case where a
party is an individual with unequal bargaining power and less
In sum, the Court finds that there is no genuine issue of
material fact as to whether Winchester provided timely notice to
U.S. Liability of the state court action. The record supports a
finding that Winchester should have provided notice as early as
March 2002, when the action was filed, and certainly by January
2003, when the Supplemental Bill of Particulars was produced.
Thus, the Court concludes that no reasonable factfinder could
find that Winchester's notice on March 5, 2003 was timely under
the notice provision of the Excess Policy.
C. THE CLAIMANTS' NOTICE
Having determined that Winchester's delay in notifying U.S.
Liability of the state court action was unreasonable as a matter of law, the Court now turns to the Claimants' argument
that they cured Winchester's untimely notice. According to the
Claimants, they cured any untimely notice by Winchester by
informing U.S. Liability of the state court action pursuant to
New York Insurance Law § 3420(a)(3) ("§ 3420(a)(3)").*fn14
Under § 3420(a)(3), an injured party has an independent right to
notify any licensed agent of the insurer in the state of a
potential claim and any such notice constitutes notice to the
insurer. See N.Y. Ins. Law § 3420(a)(3) (Consol. 2004). Such
notice, however, must be made "as soon as . . . reasonably
possible" once the injured party learns of the insurance. Id. §
3420(a)(4). The Claimants seek to invoke § 3420(a)(3) to overcome
Winchester's untimely notice, and as such, proffer their diligent
efforts to discover the existence of Excess Policy as a
mitigating circumstance to excuse Winchester's delay in providing
notice to U.S. Liability. In particular, the Claimants highlight
Winchester's and its agents' repeated failure to respond to their
inquiries regarding excess coverage and their ultimate
misrepresentation that Winchester lacked such coverage. The
Claimants assert that they timely notified U.S. Liability of
their claim on May 20, 2003 after receiving U.S. Liability's disclaimer letter on
April 21, 2003.
U.S. Liability responds that the Claimants did not cure
Winchester's untimely notice because they (the Claimants) were
not the first to notify U.S. Liability of the state court action.
Although there is no statutory requirement that the injured
party's notice must occur prior to any notice by the insured,
several courts applying § 3420(a)(3) have so held.*fn15
See, e.g., Ringel v. Blue Ridge Ins. Co., 740 N.Y.S.2d 109,
111 (App. Div. 2d Dep't 2002) (stating that "where the insured is
the first to notify the carrier, even if that notice is untimely,
any subsequent information provided by the injured party is
superfluous for notice purposes"); Massachusetts Bay Ins. Co. v.
Flood, 513 N.Y.S.2d 182, 183 (App. Div. 2d Dep't 1987) (noting
that where the insured had already notified the insurer, the
injured party's subsequent notice was "superfluous"); Mount Vernon Fire Ins. Co. v. Orange Intercept, Ltd., No. CV-92-1986,
1992 WL 368085, at *3 (E.D.N.Y. Nov. 19, 1992) (stating that
"once the insured gives late notice to the insurer an injured
party cannot give timely notice under section 3420(a)(4) because
`any subsequent information provided by the injured party [is]
. . ., for notice purposes, superfluous. . . .'") (citation
The Court agrees with the rationale of these courts. Once an
insurer has received notice from the insured, whatever notice
requirements may be applicable are prima facie satisfied
(subject to any challenge by the insurer). Thus, the ability of
an injured party to provide notice to the insurer in lieu of the
insured under § 3420(a)(3) is moot once notice has been
accomplished by the insured.*fn16
In this case, the Claimants do not dispute that Winchester was
the first to inform U.S. Liability of the state court action.
Thus, because the Claimants were not the first to provide such
notice, the Court rejects the Claimants' and Winchester's
arguments that the Claimants' notice cured Winchester's untimely
notice. Winchester thus removed the Claimants' practical ability to cure Winchester's
untimely notice when it notified U.S. Liability on March 5, 2003.
Aside from a "first notice" requirement, the Court also rejects
the Claimants' argument that their May 20, 2003 notice
constituted timely notice of the state court action to U.S.
Liability on the additional grounds that, based on the evidence
in the record, such notice was untimely as a matter of law.
Section 3420(a)(4) of the New York Insurance Law requires that
the Claimants (and Winchester) provide notice "as soon as was
reasonably possible" under the circumstances. N.Y. Ins. Law §
3420(a)(4) (Consol. 2004). With regard to the Claimants, the
applicable standard is reasonable diligence based on all the
information they knew or should have known. See Eveready Ins.
Co. v. Chavis, 540 N.Y.S.2d 860, 861 (App. Div. 2d Dep't 1989)
(stating that courts should evaluate the reasonableness of notice
by the injured party according to the circumstances rather than
by the mere passage of time) (citations omitted). The injured
party bears the burden of showing that any delay was reasonable.
The Court agrees with the Claimants that they should not be
vicariously charged with Winchester's dilatory practices. The record is clear that the Claimants diligently
sought information on excess coverage from Utica and Winchester's
trial counsel during the period from April 2001 through March
2003. The Claimants, however, received notice of the Excess
Policy on or about April 1, 2003 and waited approximately 50 days
to formally provide notice to U.S. Liability. Moreover, the
Claimants' May 20, 2003 notice was sent approximately 29 days
after the Claimants received U.S. Liability's disclaimer on April
Neither the Claimants nor Winchester offer any explanation as
to why the Claimants prior diligence suddenly terminated once the
existence of the Excess Policy was revealed. As discussed above,
unexplained delays, even if brief, can be unreasonable as a
matter of law. See Kamyr, 547 N.Y.S.2d 964, 967 (citation
omitted). While the Court is mindful that a notice provision
should not be applied as strictly to an injured party as it would
to the insured, see Elmuccio v. Allstate Ins. Co.,
540 N.Y.S.2d 465, 467 (App. Div. 2d Dep't 1989), the Court finds that the
Claimants' unexplained 50-day delay in notifying U.S. Liability
of the state court action is untimely as a matter of law.
Accordingly, the Court rejects the Claimants' attempts to use their May 20, 2003 notice of the state court action to cure
Winchester's untimely notice.*fn17
D. U.S. LIABILITY'S DISCLAIMER OF COVERAGE
Finally, Winchester contends that U.S. Liability should not be
permitted to disclaim coverage in this case because it did not
timely provide its disclaimer notice pursuant to section 3420(d)
of the New York Insurance Law. According to Winchester, U.S.
Liability lost its right to disclaim based on its conduct.
Specifically, Winchester contends that U.S. Liability had
sufficient information from which to disclaim coverage as of
March 6, 2003, the day it received the complaint, yet waited
until April 14, 2003 to disclaim coverage.
Winchester further argues that U.S. Liability waived its right
to disclaim coverage through its conduct after it was notified of
the state court action. Specifically, Winchester points to its
April 1, 2003 cover letter to U.S. Liability where Winchester
states that it was interpreting U.S. Liability's request for
documents relating to the state court action as an acknowledgment
of coverage. According to Winchester, U.S. Liability failed to
contradict this statement until it ultimately disclaimed coverage two weeks
later. Finally, Winchester asserts that U.S. Liability's request
for privileged documents and its failure to issue a reservation
of rights letter is consistent with an acceptance of coverage.
For these reasons, Winchester asks this Court to find that U.S.
Liability waived its right to disclaim and should be equitably
estopped from so doing. For the reasons discussed below, the
Court concludes that Winchester's arguments on this issue are
Generally, an insured is entitled to assert a defense of
non-compliance with a notice provision as a basis to deny
coverage and indemnification. See Allcity Ins. Co. v.
Jimenez, 581 N.E.2d 1342, 1343 (N.Y. 1991). Under New York Law,
an insurer seeking to disclaim liability must provide written
notice of its intent to disclaim "as soon as is reasonably
possible . . . to the insured and the injured person or any other
claimant." N.Y. Ins. Law § 3420(d) (Consol. 2004) ("§ 3420(d)").
An insurer can, however, waive this affirmative defense if it is
unreasonably late in disclaiming liability. See New York Univ.
v. First Fin. Ins. Co., 322 F.3d 750, 753 n. 3 (2d Cir. 2003)
(citation omitted). Moreover, an insured must provide timely
notice of disclaimer under the circumstances even if, as in this case, the insured's notice was untimely. See First Fin. Ins.
Co. v. Jetco Contracting Corp., 801 N.E.2d 835, 837 (N.Y. 2003).
As with the question of whether an insured provided timely
notice of a possible claim, the question of whether an insurer
timely disclaimed liability is determined in light of the
surrounding circumstances. See New York Univ.,
322 F.3d at 754 (citation omitted). When considering a disclaimer, the
"timeliness . . . is measured from the point in time when the
insurer first learns of the grounds for disclaimer of liability
or denial of coverage." First Financial, 801 N.E.2d 835, 838-39
(citation omitted). Generally, it is reasonable for an insurer to
conduct an investigation in order to determine whether there are
grounds for disclaiming. See id. at 839 ("investigation into
issues affecting an insurer's decision whether to disclaim
coverage obviously may excuse delay in notifying the policyholder
of a disclaimer. . . .") (citation omitted); Public Serv. Mut.
Ins. Co. v. Harlen Hous. Assocs., 777 N.Y.S.2d 438, 440 (App.
Div. 1st Dep't 2004) (stating that it is reasonable for an
insurer to investigate prior to disclaiming coverage so that the
disclaimer is based on "concrete evidence" and does not result in "piecemeal
disclaimers") (internal quotations and citations omitted).
Nonetheless, delaying disclaimer for investigative purposes is
unreasonable "where the basis for denying coverage was or should
have been readily apparent before the onset of the delay." First
Financial, 801 N.E.2d at 839 (citation omitted); see also
New York Univ., 322 F.3d at 756 (stating that the investigation
must be related to the insurer's purported reason for
disclaiming); Mount Vernon Fire Ins. Co.,
193 F. Supp. 2d at 677-78 (holding that a 50-day delay to conduct an
investigation was reasonable as a matter of law and noting that there is
"no point in discouraging insurers from conducting thorough
investigations before disclaiming coverage, as long as they are
not used as a dilatory tactic").
Winchester asserts that U.S. Liability's disclaimer was
improper under § 3420(d) because 39 days lapsed before it
provided notification of its disclaimer. The operative date,
however, is not when U.S. Liability received initial notice of
the complaint in the state court action. Rather, it is the date
that U.S. Liability received the documents it requested related
to the state court action. See Allcity Ins. Co,
581 N.E.2d at 1343 (stating that the "timeliness of an insurer's disclaimer is measured from the point in time when
the insurer first learns of the grounds for disclaimer of
liability or denial of coverage") (citation omitted). The record
in this case is clear that U.S. Liability disclaimed coverage
against Winchester on April 14, 2003, just two weeks after it
received the state court action documents on April 2, 2003
documents that included numerous status reports and two detailed
Bills of Particulars. The Court finds that under the
circumstances it was reasonable as a matter of law for U.S.
Liability to disclaim 14 days after it received these documents.
In this regard, the Court disagrees with Winchester that U.S.
Liability has taken inconsistent positions with respect to its
arguments relating to the effect of the ad damnum clause in the
complaint. Winchester asserts that U.S. Liability cannot argue on
the one hand that Winchester should have determined, based solely
on the $10 million demand in the complaint, that payment under
the Excess Policy would be likely while on the other hand argue
that it was reasonable for it (U.S. Liability) to request
additional information beyond the complaint in order to disclaim
coverage. This argument is unpersuasive. A more accurate reading
of U.S. Liability's position is that Winchester should have determined that notification was required based upon
the complaint and all the other available materials and all the
events that occurred before and after the filing of the state
court action, as discussed above. U.S. Liability, in contrast,
requested documents related to the state court action in order to
confirm whether Winchester had in fact acted reasonably in
waiting until March 2003 to provide notification pursuant to the
Excess Policy. Thus, the Court rejects Winchester's argument that
U.S. Liability has taken inconsistent positions in this action.
Moreover, this is not a case where the insurer's delay is
unexplained. U.S. Liability has proffered a reasonable
explanation to excuse its brief delay, namely, to investigate
whether Winchester possessed sufficient information from which to
reasonably conclude that the state court action would not likely
involve payment under the Excess Policy, and to make an
appropriate decision regarding coverage. In light of this
explanation, the Court concludes that a two-week period to
disclaim coverage under § 3420(d) was reasonable as a matter of
The Court also concludes that U.S. Liability's April 14, 2003
disclaimer against Winchester was equally effective as against
the Claimants. Under New York law, if the insurer disclaims coverage of the insured when the injured party
has not provided notice under section 3420(a)(3), the insurer's
disclaimer operates equally against the injured parties as well.
See Webster v. Mount Vernon Fire Ins. Co., 368 F.3d 209,
217-18 & n. 6 (2d Cir. 2004); In re First Cen. Ins. Co.,
771 N.Y.S.2d 141, 141 (App. Div. 2d Dep't 2004).
In this case, it is undisputed that U.S. Liability disclaimed
coverage on April 14, 2003, well before the Claimants attempted
to provide their notice to U.S. Liability on May 20, 2003. Where
the insurer does not raise a particular ground for disclaiming
coverage in its disclaimer letter, such ground is considered
waived. See General Accident Ins. Group v. Cirucci,
387 N.E.2d 223, 224-25 (N.Y. 1979); Abreu v. Chiung Huang,
751 N.Y.S.2d 583, 584 (App. Div. 2d Dep't 2002). Such is not the case here,
however, because a copy of U.S. Liability's disclaimer was sent
to the Claimants' counsel at the same time it was sent to
Winchester and the disclaimer expressly stated: "Thus, we also
specifically disclaim coverage to the claimants, by copy of this
letter to claimants' counsel, . . ., for failure to provide
timely notice of the occurrence, . . ." (Declaration of Steven
Verveniotis, dated May 19, 2004, at Ex. B.) Thus, the Court finds
that U.S. Liability's April 14, 2003 disclaimer was effective as to both Winchester and the
Claimants because U.S. Liability's intent to disclaim and its
grounds for so doing were clearly communicated to the Claimants.
Turning to Winchester's arguments for the application of the
equitable doctrines of estoppel and waiver against U.S.
Liability, the Court finds no basis to grant Winchester such
relief. Winchester asserts that U.S. Liability's conduct gave it
a clear indication that it would be providing coverage in the
state court action, and thus, U.S. Liability waived its right to
disclaim and should be equitably estopped from so doing.
Winchester argues that U.S. Liability's failure to issue a
reservation-of-rights letter; its request for privileged status
reports prepared by Winchester's trial counsel; and its failure
to contradict Winchester's statement that U.S. Liability would be
providing coverage all evince a clear intention to accept
coverage for the state court action. Winchester seeks to estop
U.S. Liability from disclaiming based on Winchester's alleged
detrimental reliance on this indication.
Generally, even if an insured did not timely notify its insurer
of potential liability, the insured may still propound the
equitable defenses of waiver and estoppel. See Albert J. Schiff Assocs., Inc. v. Flack, 417 N.E.2d 84, 87
(N.Y. 1980). Under New York law, however, an insurer's failure to
provide a timely disclaimer may serve as grounds for equitable
estoppel only upon a showing of prejudice. See Vecchiarelli v.
Continental Ins. Co., 716 N.Y.S.2d 524, 526 (App. Div. 4th Dep't
2000) (citations omitted). Waiver occurs when a party
intentionally relinquishes a known right. See Goudie v. State
of New York, 737 N.Y.S.2d 539, 540 (App. Div. 2d Dep't 2002). In
the context of insurance coverage, waiver typically applies where
there is circumstantial evidence that demonstrates that an
insurer intended to abandon the defense of the insured. See
Flack, 417 N.E.2d at 87. However, an insured is not entitled to
an equitable defense where its insurer did not convey "clear
notice that neither a defense nor an indemnification could be
assured." Travelers Prop. Cas. v. Weiner, 666 N.Y.S.2d 392, 394
(Sup. Ct. 1997).
In the present case, U.S. Liability did not undertake
Winchester's defense as it was unaware of the action until March
5, 2003. U.S. Liability neither made any statements regarding
coverage until its disclaimer, nor did it give any other
indication to Winchester that it intended to provide a defense or
indemnify Winchester. There is nothing in the record to suggest that U.S. Liability knowingly relinquished its
right to disclaim coverage. Accordingly, Winchester cannot in
good faith claim that it detrimentally relied upon U.S. Liability
to provide a defense when it is clear that U.S. Liability took no
action to that effect and where Utica was providing presumably
Under New York law, as discussed above, (and under the terms of
the Excess Policy) U.S. Liability was entitled to conduct an
investigation to determine whether grounds exist to disclaim
liability. Thus, U.S. Liability's request for privileged status
reports did not act as a waiver of its right to disclaim under
the Excess Policy. Nor did the receipt of these reports, standing
alone, unduly prejudice Winchester. In United States Fidelity &
Guaranty Co. v. New York Susquehanna & Western Railway. Corp.,
713 N.Y.S.2d 624, 625-26 (App. Div. 4th Dep't 2000), the court
found that the insurer was equitably estopped from disclaiming
coverage on the eve of a settlement conference after not only
having received privileged status reports, but also after having
participated in the insured's defense, having exchanged
information with attorneys, and after having approved of
depositions and settlement discussions. See id. at 625-26.
Such significant involvement with Winchester's defense is not present in this case. Rather, the Court finds that U.S.
Liability's request for these documents was a valid exercise of
its rights to perform an investigation prior to disclaiming
With regard to the absence of a reservation-of-rights letter,
Winchester does not allege that U.S. Liability was under any
statutory or contractual obligation to provide such a letter.
Accordingly, the record does not support a finding that U.S.
Liability's failure to issue a reservation-of-rights letter
affects its rights to disclaim coverage. In any event, the lack
of a reservation-of-rights letter is not a basis upon which to
presume coverage when the insurer has not undertaken the defense
of the insured. See K. Bell & Assocs., Inc. v. Lloyd's
Underwriters, No. 92 Civ. 5249, 1997 WL 96551, at *8 (S.D.N.Y.
Mar. 5, 1997) ("If . . . the insurer does not begin to provide
the insured benefits under the Policy, there is not sufficient
reason for the insured to assume that the absence of a
reservation of rights letter is indicative of the existence of
coverage.") (quoting 1 Allan Windt, Insurance Claims & Disputes §
2.20 at pp. 72-74 (3d ed. 1995)).
Contrary to Winchester's contention, U.S. Liability's silence
regarding the April 1, 2003 cover letter from Aranki does not represent a clear indication that U.S. Liability would
accept coverage and indemnification of Winchester. It is evidence
that U.S. Liability first needed to obtain the relevant documents
in order to make its determination as to whether there was a
valid basis to disclaim coverage. As discussed above, such
investigation is encouraged to prevent premature or piecemeal
disclaimers and Winchester has not demonstrated any prejudice
therefrom. See Harlen Housing Assocs., 777 N.Y.S.2d at 440.
Indeed, the Court finds that the balance of the equities in
this case tips in U.S. Liability's favor. Due to Winchester's
late notice, U.S. Liability did not have the opportunity to
participate in any settlement discussions or preliminary
litigation strategy. Nor could U.S. Liability extensively
investigate the underlying claim because Winchester notified it
almost a full year after the filing of the state court action. In
short, U.S. Liability was denied its "bargained-for contractual
right to decide for itself whether and how extensively to
investigate." American Home Assurance Co. v. International Ins.
Co, 684 N.E.2d 14, 18 (N.Y. 1997). Accordingly, the Court denies
Winchester's requests for the application of equitable estoppel
and waiver. Finally, the Court notes that parties seeking to invoke this
Court's powers in equity must come with "clean hands." Precision
Instrument Mfg. Co. v. Automotive Maint. Mach. Co.,
324 U.S. 806, 814 (1945) ("[H]e who comes into equity must come with clean
hands.") (internal quotations omitted). As discussed above, the
record in this case casts serious doubt on Winchester's
good-faith conduct with respect to disclosing the existence of
the Excess Policy. The record strongly suggests that Winchester
was unexplainably evasive and perhaps even ultimately deceptive
when faced with repeated clear and express requests from the
Claimants for information regarding its excess coverage. With no
compelling explanation in the record for this conduct, Winchester
is in no position to seek equitable relief.
Accordingly, the Court grants U.S. Liability's motion for
summary judgment in all respects and denies Winchester's and the
Claimants' cross-motions for summary judgement in their entirety.
For the reasons set forth above, it is hereby
ORDERED that the motion of plaintiff U.S. Liability Insurance
Company ("U.S. Liability") for summary judgment is GRANTED in its
entirety. The Court declares that U.S. Liability is not required to defend and indemnify defendant
Winchester Fine Art Services ("Winchester") under Winchester's
excess insurance policy number CUP 1003061 in the action pending
in New York State Supreme Court, Bronx County, Index No. 14711/02
brought by defendants Lindon F. McKenzie and Jason Denny (the
"Claimants") against Winchester; and it is further;
ORDERED that the cross-motions of Winchester and the
Claimants for summary judgment are DENIED in their entirety. All
the counterclaims of Winchester and the Claimants are dismissed
The Clerk of the Court is directed to close this case.