United States District Court, E.D. New York
September 30, 2004.
U.S. UNDERWRITERS INSURANCE COMPANY, Plaintiff,
CONGREGATION KOLLEL TISERETH, TZVI and DEMETRIO MENESES, Defendants.
The opinion of the court was delivered by: DAVID TRAGER, District Judge
MEMORANDUM AND ORDER
Plaintiff U.S. Underwriters Insurance Company ("U.S.
Underwriters" or "plaintiff") brought this diversity action
against defendants Congregation Kollel Tisereth Tzvi ("the
Congregation") and Demetrio Meneses ("Meneses") (collectively
"defendants"), seeking a declaration that U.S. Underwriters is
not obligated to defend and indemnify the Congregation with
respect to a personal injury suit brought by Meneses in state
Pending before the court are cross-motions for summary judgment
by U.S. Underwriters and the Congregation.*fn1 For the
following reasons, U.S. Underwriters' motion is granted, and the
Congregation's cross-motion is denied.
The following facts are undisputed unless otherwise indicated.
At all times relevant to this case, the Congregation was the
owner of land and property located at 4706 14th Avenue, Brooklyn,
New York. (See Declaration of Kirk A. Tzanides ("Tzanides
Decl."), Ex. D, ¶ 6.)
On May 7, 1998, Underwriters issued to the Congregation a
commercial liability policy for that property covering the period
May 7, 1998 through May 7, 1999. (See Tzanides Decl., Ex. B.)
The policy contains four provisions which are of particular
relevance to this case.
First, the policy contains an "Exclusion of Injury to
Employees, Contractors and Employees of Contractors," which
provides in pertinent part:
This insurance does not apply to:
(i) bodily injury to any employee of any insured, to
any contractor hired or retained by or for any
insured or to any employee of such contractor, if
such claim for bodily injury arises out of and in the
course of his employment or retention of such
contractor by or for any insured, for which any
insured may become liable in any capacity;
(ii) any obligation of any insured to indemnify or
contribute with another because of damages arising
out of the bodily injury;
. . . .
This exclusion applies to all claims and suits by any
person or organization for damages because of such
bodily injury, including damages for care and loss of
Second, the policy contains an "Independent Contractors
Exclusion" which provides:
It is agreed that this policy shall not apply to
Bodily Injury, Personal Injury or Property Damage
arising out of operations performed for any insured
by independent contractors or acts or omissions of
any insured in connection with his general
supervision of such operations.
(Id.) According to U.S. Underwriters, the difference between
the first "employee exclusion" and the second "independent
contractors" exclusion is that the employee exclusion disallows
coverage for injuries sustained by contractors and their
employees, and the independent contractors exclusion denies
coverage for injuries or damage "arising out of" operations
performed for the insured by independent contractors, regardless
of who is injured or damaged. (See Plaintiff's Memorandum of
Law in Support of Its Motion for Summary Judgment ("Pl.'s Mem.")
at 14 n. 3.)
Third, the policy also contains a provision which obligates the
insured to notify U.S. Underwriters promptly in the event of an
"occurrence, claim or suit." Specifically, the provision states:
2. Duties in the Event of Occurrence, Offense, Claim
a. You must see to it that we are notified as soon as
practicable of an "occurrence" or an offense which
may result in a claim. To the extent possible, notice
(1) How, when and where the "occurrence" or offense
(2) The names and addresses of any injured persons
and witnesses; and
(3) The nature and location of any injury or damage
arising out of the `occurrence' or offense.
b. If a claim is made or "suit" is brought against
any insured, you must:
(1) Immediately record the specifics of the claim or
"suit" and the date received; and
(2) Notify us as soon as practicable.
You must see to it that we receive written notice of
the claim or "suit" as soon as practicable.
c. You and any other involved insured must:
(1) Immediately send us copies of any demands,
notices, summonses or legal papers received in
connection with the claim or "suit";
(2) Authorize us to obtain records and other
(3) Cooperate with us in the investigation or
settlement of the claim or defense against the
(4) Assist us, upon our request, in the enforcement
of any right against any person or organization which
may be liable to the insured because of injury or
damage to which this insurance may also apply.
(Tzanides Decl., Ex. B.)
Fourth, the policy provides that coverage under the policy is
limited to the classification codes listed in the policy.
Specifically, this Classification Limitation Endorsement
provides, in relevant part:
Coverage under this contract is specifically limited
to those classification codes listed in the policy.
No coverage is provided for any classification code
or operation performed by the Named Insured not
specifically listed in the Declarations of this
(Id.) The policy contains the sole classification: "Vacant
On the Declarations page,
"Vacant Building" is defined as "a building not occupied for its
intended use." (Id.)
On the Congregation's property at 4712 14th Avenue was a
building that was also owned by the Congregation. The building
had once been used for storage purposes but was no longer used
for storage at the time of the accident. (Sklar Decl., Ex. E at
10-11.) Since pieces of the building were falling down, the
Congregation convened an emergency meeting at an unspecified date
and decided that it had to be demolished. (Id.)
The Congregation retained Empire Concrete & Construction
("Empire"), an independent contractor, to perform certain
demolition work and/or renovation work at the premises. (Sklar
Decl., Ex. E at 15, Ex. F at 11.) *fn3 On June 3, 1998,
Empire issued a handwritten Contractor's Invoice which specified
the work to be performed:
(1) remove old building at 4712 14th Avenue to
ground level fill basement with bricks.
(2) close off sidewalk with plywood fence and
backyard side yard plywood.
(3) New side wall 3,500 PSI with wire mesh concrete
to be 6" inches thick with driveway opening 75 x 23 x
(See Tzanides Decl. Ex. G.)
Empire retained an individual named Ramon Acosta ("Acosta") to
do the demolition work for the premises. (Id., Ex. H at 21.)
Although Acosta was self-employed,*fn4 he had a crew of
approximately five or six men, including Meneses, who regularly
worked under him for an average of three or four days a week
during the year. (Sklar Decl., Ex. H at 6, 12-13, 18, 43.)
Meneses was a member of the crew performing demolition work on
the Congregation's property. (Id. at 25, 27-29)
On September 23, 1998, while Meneses working at the premises, a
wall collapsed and injured him. Alexander Gross and Mendy Gluck,
members of the Congregation, testified in their depositions that
they were unaware of the accident at or around that time, as the
Congregation did not supervise or generally direct the work that
was being performed. At most, the Congregation alleges, their
members noticed the progress of the work when they visited the
synagogue next door to the site. (See Sklar Decl., Ex. E at 21,
23, 39 & Ex. F at 14.) Gluck himself guessed he was on the
property only once or twice while the work was performed over a
two-week period. (Id., Ex. F at 14, 20.)
On November 4, 1998, Meneses brought suit against the
Congregation in the Supreme Court of the State of New York, Kings
County, with the filing of a summons and verified complaint.
(Id., Ex. B.) On January 6, 1999, Meneses again served the
Congregation with a copy of an amended summons and an amended
verified complaint. (Id.) Meneses' amended verified complaint
alleged that, while he "was actually engaged in the course of his
employment as a construction laborer by the defendant
CONGREGATION KOLLEL'S contractor," a wall collapsed on the
Congregation's property and injured him. (Tzanides Decl., Ex. C
¶¶ 9, 11). The complaint further alleged, inter alia, that the
Congregation negligently failed to prevent the allegedly
dangerous condition and to properly supervise the work done at
the site. (Id. ¶ 13.)
The certificate of service for the amended summons and amended
verified complaint indicated that both filings were left
personally with a "Rabbi Weiss (Managing Agent)" at 4712 14th
Avenue, Brooklyn, NY 11219. (Sklar Decl., Ex. B.) Meneses'
attorney also followed up with a letter to the Congregation dated
January 20, 1999 informing it of the suit. (Id.) However, the
Congregation failed to answer or otherwise respond to the
complaint. Meneses then filed a motion for default judgment on
February 25, 1999 which was granted on April 7, 1999. (Id.)
After the entry of judgment on July 14, 1999, the Congregation
was served by mail with the judgment and bill of costs with
notice of entry on July 21, 1999. (Id.) Alexander Gross, a
member of the Congregation, testified at his deposition that on
an unspecified date, he received an envelope containing "legal
papers" purportedly the judgment and bill of costs and gave
the papers to "the insurance broker." (Id., Ex. E at 29.)
Following this notification, Underwriters issued a letter to the
Congregation on October 27, 1999 stating that the independent
contractors exclusion, the classification limitation, and the
Congregation's alleged failure to notify the company of the
underlying incident or the lawsuit "as quickly as practicable"
precluded coverage for the incident. (Id., Ex. C.)
The Congregation, through defense counsel assigned by U.S.
Underwriters, then filed an application to vacate default. In an
affidavit submitted by Rabbi Simcha Waldman ("Rabbi Waldman"), a
member of the Congregation's board of directors, the Congregation
asserted that no one knew of Meneses' accident, none of the
Congregation's members was ever served with the summons and
complaint and, in sum, the Congregation never knew about Meneses'
suit prior to the entry of default. (Tzanides Decl., Ex. D ¶¶
3-4.) Rabbi Waldman's affidavit further argued that service of
the amended summons and amended verified complaint was likely to
have been improper because the building delineated on the
affidavit of service did not exist on the date of service, there
was no "Rabbi Weiss" with the title of "managing agent" for the
Congregation, and the individual who was allegedly served could
have been any one of the male worshipers who attended the
synagogue daily. (Id.) On an unspecified date, the state court
vacated the default order, and on November 15, 1999, U.S.
Underwriters commenced the instant suit in federal court.
Choice of Law
This court's subject matter jurisdiction is predicated on
diversity of citizenship between plaintiff U.S. Underwriters, a
North Dakota corporation, and defendants the Congregation, a New
York domestic religious corporation, and Meneses, a New York
resident. A federal district court deciding a diversity case must
apply the choice of law rules of the state in which the district
court sits. Klaxon Co. v. Stentor Electric Mfg. Co.,
313 U.S. 487, 496 (1941). Under New York law, "an action requesting the
determination of an insurer's duties respecting events that took
place in New York is governed by New York law." U.S.
Underwriters Ins. Co. v. Congregation B'Nai Israel,
900 F. Supp. 641, 644 (E.D.N.Y. 1995) (citing Mount Vernon Fire Ins. Co. v.
Creative Hous. Ltd., 797 F. Supp. 176, 179 (E.D.N.Y. 1992));
Snyder v. Nat'l Union Fire Ins. Co., 688 F. Supp. 932, 934-35
(S.D.N.Y. 1988). Because the underlying incident took place in
New York, New York law applies to this action.
Policy Provisions and Timely Notice
U.S. Underwriters contends it is not obligated to defend or
indemnify the Congregation because: (1) the policy excludes
coverage for injuries "to employees, contractors and employees of
contractors"; (2) the policy excludes coverage for injuries
arising out of operations performed by an independent contractor;
(3) the policy excludes coverage for work performed outside the
"Vacant Building" classification in the policy; and (4) the
Congregation gave untimely notice of Meneses' accident and thus
violated its obligations under the policy. The Congregation
claims that the policy exclusions apply to Meneses and that they
gave timely notice of his state court action. These arguments
will be considered in turn.
A. Policy Exclusions
An insurer seeking a determination that it is not obligated to
defend an insured based upon an exclusion has the heavy burden of
demonstrating that "there is no reasonable possibility of
coverage under the policy." U.S. Underwriters Ins. Co. v.
Beckford, No. 93-CV-4272, 1998 WL 23754, at *2 (E.D.N.Y. Jan.
20, 1998) (quoting State of New York v. Blank, 27 F.3d 783, 789
(2d Cir. 1994)). "To negate coverage by virtue of an exclusion,
an insurer must establish that the exclusion is stated in clear
and unmistakable language, is subject to no other reasonable
interpretation, and applies in the particular case." Mount
Vernon Fire Ins. Co. v. Future Tech Constr. Corp., No. 94 Civ.
1362, 1997 WL 419997, at *2 (S.D.N.Y. July 28, 1997) (quoting
Continental Casualty Co. v. Rapid-American Corp.,
80 N.Y.2d 740, 752, 593 N.Y.S.2d 966, 972, 609 N.E.2d 506, 512 (1993));
see also Seaboard Surety Co. v. Gillette, 64 N.Y.2d 304, 311,
486 N.Y.S.2d 873, 876, 476 N.E.2d 272, 275 (1984)). Courts cannot
permit terms to be "extended by interpretation or implication."
Mount Vernon Fire Ins. Co. v. Creative Hous. Ltd.,
797 F. Supp. 176, 180 (E.D.N.Y. 1992) (quoting Seaboard Surety,
64 N.Y.2d at 311, 486 N.Y.S.2d at 876, 476 N.E.2d at 275)).
Courts in this circuit have interpreted the language of similar
"employee injury" and "independent contractor" exclusions to be
"clear and unambiguous," and the parties have not argued
otherwise. U.S. Underwriters Ins. Co. v. Roka LLC, No. 99 Civ.
10136, 2000 WL 1473607, at *4 (S.D.N.Y. Sept. 29, 2000)
("plaintiff has met its burden of demonstrating that the
[employee injury] provision is clear and unambiguous."); Mount
Vernon Fire Ins.,1997 WL 419997, at *2 ("The language of the
`independent contractors exclusion' contained in the insurance
policy involved in this litigation has consistently been
interpreted to be `clear and unambiguous'. . . .) (citations
omitted). Having determined that the language of these exclusions
is clear and unambiguous, the next question is whether the
exclusions apply to the facts of Meneses' complaint.
1. Employee Injury Exclusion
U.S. Underwriters contends that Meneses' claim unambiguously
falls under the "Exclusion of Injury to Employees, Contractors
and Employees of Contractors" because: the Congregation retained
Empire Concrete to perform demolition work on their property,
which was an operation performed for the Congregation's benefit;
Empire Concrete hired Ramon Acosta to perform the actual
demolition; and one of Acosta's employees, Meneses, who was hired
for that project, injured himself and became the underlying
claimant. (See Pl.'s Mem. at 11.) Thus, the argument goes,
since Meneses was employed by Acosta to perform the work at the
premises, was subject to orders by Acosta and was paid by Acosta,
Meneses was an employee of a contractor performing services for
the benefit of the Congregation. (Id. at 12-13.)
The Congregation, on the other hand, argues that Meneses was
not an employee of a contractor at the time of the accident and
as such, falls outside the employee injury exclusion.
Specifically, the Congregation points out that the fifth
paragraph of Section V, the definitions section of the policy,
defines "employee" to include a "leased worker" but also states
than the definition of an "employee" does not include a
"temporary worker." (See Defendant's Memorandum of Law in
Opposition to Motion and In Support of Cross-Motion For Summary
Judgment ("Def.'s Mem.") at 7; Tzanides Decl., Ex. B.) A
"temporary worker," in turn, is defined in Section V as "a person
who is furnished to you to substitute for a permanent `employee'
on leave or to meet seasonal or short-term workload conditions."
(Tzanides Decl., Ex. B.) Given that the project was short-term
and that Meneses was not a permanent employee of the contractors
who were retained to perform the demolition work, the
Congregation argues that Meneses' employment status was that of a
"temporary worker" on the day of the accident, thereby placing
him outside the scope of that exclusion. (Def.'s Mem. at 7-8.)
The Congregation's argument that "temporary workers" are not
"employees" and therefore remain outside the scope of the
policy's exclusionary language is not persuasive for several
reasons. First, the policy specifically provides that "words and
phrases that appear in quotation marks have special meaning," and
refers the reader to the Definitions Section ("Section V") for
definitions of those words and phrases with "special meaning."
(Tzanides Decl., Ex. B.) However, in the employee injury
exclusion, the word employee is not enclosed in quotation
marks, capitalized, or otherwise distinguished in a manner which
directs the reader to Section V of the policy. (Id.) As such,
the term "temporary worker" is not encompassed by the term
employee as it appears in the exclusion. Furthermore, the term
"temporary worker" appears nowhere in the exclusion itself. We
are thus left with the task of applying to the present record
"the plain, ordinary, and common meaning" of the word employee.
See S.E.C. v. Credit Bancorp Ltd., 147 F. Supp. 2d 238, 261
(S.D.N.Y. 2001). In doing so, we find that Meneses was clearly
employed by Acosta in exchange for monetary compensation, and
that Acosta was sub-contracted to perform demolition work by
Empire, an independent contractor who was retained by the
Second, even if the definitions of "employee" in Section V
referring to "temporary worker" were imported into the employee
injury exclusion, Meneses' incident would still be excluded from
coverage. The definition of "temporary worker" states: "a person
who is furnished to you to substitute for a permanent
`employee' on leave or to meet seasonal or short-term workload
conditions." (Tzanides Decl., Ex. B) (emphasis added). The policy
makes it clear from the outset that "the words `you' and `your'
refer to the Named Insured shown in the Declarations. . . ."
(Id.) The record shows that Meneses was not furnished to the
Congregation to substitute for a permanent employee on leave or
to meet the Congregation's seasonal or short-term workload
conditions; rather, Meneses was employed by Acosta, who in turn
was retained by Empire Concrete to perform the demolition work on
the Congregation's property.
Meneses' claim for personal injury is therefore excluded from
coverage under plaintiff's policy since he incurred his alleged
injuries in the course of his employment with a contractor of the
Congregation, the insured entity.
2. Independent Contractors Exclusion
Even if, somehow, the "temporary worker" definition does apply
to the employee injury exclusion and Meneses can be deemed a
temporary worker under the circumstances, coverage is still
excluded under the second "independent contractors" exclusion.
U.S. Underwriters argues that Meneses' accident "arose out of"
the Congregation's retention of an independent contractor,
thereby precluding coverage for bodily or personal injuries he
sustained from that accident. (Pl.'s Mem. at 14.) The
Congregation responds that the exclusion is inapplicable because:
(1) Meneses was not an independent contractor with the discretion
to make decisions on the work to be performed; and (2) the
Congregation did not supervise the work to be performed by the
contractors, Empire Concrete and Acosta. (Def.'s Mem. at 8.)
Neither of the Congregation's arguments are persuasive or
relevant. The independent contractors exclusion states: "It is
agreed that this policy shall not apply to Bodily Injury,
Personal Injury or Property Damage arising out of operations
performed for any insured by independent contractors or acts or
omissions of any insured in connection with his general
supervision of such operations." (Tzanides Decl., Ex. B)
(emphasis added). Although the record shows that the Congregation
did not generally supervise the demolition work on the premises,
thus rendering the second clause inapplicable, the first clause
of the exclusion ("arising out of operations performed for any
insured by independent contractors") still applies. In a policy
exclusion, the words "arising out of" are "deemed to be `broad,
general, comprehensive terms ordinarily understood to mean
originating from, incident to, or having connection with' the
operations performed by an independent contractor for the
insured." U.S. Underwriters Ins. Co. v. Zeugma Corp., No. 97
CIV. 8031, 1998 WL 633679, at * 3 (S.D.N.Y. Sept. 15, 1998)
(quoting New Hampshire Ins. Co. v. Jefferson Ins. Co. of New
York, 213 A.D.2d 325, 330, 624 N.Y.S.2d 392, 395 (1st Dep't
1995)). The Court of Appeals has also held that the "arising out
of" phrase must be "applied broadly in the form of a `but-for'
test in determining coverage." Id. (quoting Mount Vernon Fire
Ins. Co. v. Creative Hous. Ltd., 88 N.Y.2d 347, 350,
645 N.Y.S.2d 433, 434, 668 N.E.2d 404, 405 (1996)). The provision
thus "excludes a loss that is incurred `but for' the operations
performed by the independent contractor for the insured." U.S.
Underwriters Ins. Co. v. Falcon Constr. Corp., No. 02 CV 4179,
2004 WL 1497563, at *5 (S.D.N.Y. July 1, 2004) (quoting U.S.
Underwriters Ins. Co. v. 203-211 West 145th Realty Corp., No. 99
CIV. 8880, 2001 WL 604060, at *6 (S.D.N.Y. May 31, 2001)).
Here, Meneses' amended verified complaint alleges the
[O]n or about September 23, 1998, while [Meneses] was
engaged in the course of his employment as a
construction/demolition laborer, working in the
course of his employment for the defendant's
contractor . . . and was performing certain
construction work, labor and services, involving
and/or relating to the demolition, renovation, repair
and/or alteration of all or part of that building
located at 4712 14th Avenue . . . a wall thereat
collapsed . . . causing him to sustain grievous
personal injury and attendant damage."
(Tzanides Decl., Ex. C ¶ 11.) Based on these allegations,
Meneses' personal injury action would not have arisen "but for"
certain on-site dangers related to operations performed by an
independent contractor. Because Meneses alleges that he sustained
bodily injuries while performing demolition work for a contractor
retained by the Congregation, the independent contractors
exclusion applies and U.S. Underwriters is not obligated to
defend or indemnify the Congregation. See, e.g., U.S.
Underwriters Ins. Co. v. Congregation B'Nai Israel,
900 F. Supp. 641, 645 (E.D.N.Y. 1995) (holding that identical independent
contractors exclusion precluded coverage for claims against an
insured, where plaintiff's alleged injuries arose out of
operations that a contractor performed on the insured's
premises); West 145th Street Realty Corp., 2001 WL 604060, at
*5 (holding that identical independent contractors exclusion
precluded coverage for claims against insured, where plaintiff
sustained bodily injuries while performing operations for an
independent contractor retained by the insured).
The Congregation also advances the argument that Meneses and
his supervisor Acosta may not qualify as independent contractors
because they were temporary laborers performing freelance work,
but this is also without merit. Although "independent contractor"
is not defined by the policy, courts relying on the ordinary
meaning of the term have defined it as: "one who contracts to do
certain work according to his own methods, and without being
subject to the control of his employer except as to the product
or result of his work." Future Tech Constr. Corp., 1997 WL
419997, at *2; Mount Vernon Fire Ins. Co. v. William Monier
Constr. Co., No. 95 Civ. 645, 1996 WL 447447, at *4 (S.D.N.Y.
Aug. 7, 1996); G.D. Searle & Co. v. Medicore Communications,
Inc., 843 F. Supp. 895, 904-05 (S.D.N.Y. 1994). Moreover, the
ordinary meaning of the term "subcontractor" has been stated as:
"one who takes [a] portion of a contract from the principal
contractor or another subcontractor," or "one who has entered
into a contract, express or implied, for the performance of an
act with the person who has already contracted for its
performance." U.S. Underwriters Ins. Co. v. Beckford, No.
93-CV-4272, 1998 WL 23754, at *4 (E.D.N.Y. Jan. 20, 1998).
Applying these definitions to the facts, it is apparent that
Empire Concrete was an independent contractor retained by the
Congregation to perform work on the subject premises, and that
Empire subcontracted the work to Acosta, who, in turn, employed
Meneses. At his deposition, Acosta testified that Empire provided
him and his crew with a "bobcat" (a machine that picked up
garbage at the site), dumpsters and hand tools, and also directed
the work at the subject premises. (See Sklar Decl., Ex. H at
39-42.) The fact that Acosta and Meneses were subcontractors of
Empire does not preclude the application of the exclusion, as the
term "contractor" has been held to be a "generic one,
encompassing both general contractors and subcontractors."
Beckford, 1998 WL 23754, at *4. As a result, without any
authority or policy language to support the Congregation's
contention that Acosta and Meneses are not independent
contractors, the exclusion absolves U.S. Underwriters of any duty
to defend the Congregation in the underlying suit.
B. Classification Limitation
U.S. Underwriters argues it does not have to defend or
indemnify the Congregation policy limits coverage to the
classification codes specified in the policy, namely, the "Vacant
Building-Not Factory" classification. The "Vacant Building"
classification is defined in the policy as "a building not
occupied for its intended use." U.S. Underwriters further argues
that the "Vacant Building" classification applies only to a
building which is "wholly vacant," and not to a building "under
demolition and/or repair." (See Plaintiff's Rule 56.1 Statement
("Pl.'s Rule 56.1 Stmt") ¶ 35.) Under these circumstances,
plaintiff argues, a different classification, "Real Estate
Development Property" would have been used for that building.
(See Sklar Reply Declaration ("Sklar Reply") ¶¶ 42-46.)
To determine whether U.S. Underwriters is obligated to defend
the Congregation, the allegations in the complaint must be
examined, for "[i]f the complaint contains any facts or
allegations which bring the claim even potentially within the
protection purchased, the insurer is obligated to defend."
Falcon Constr. Corp., 2003 WL 22019429, at *7 (quoting
Incorporated Village of Cedarhurst v. Hanover Ins. Co.,
89 N.Y.2d 293, 298, 653 N.Y.S.2d 68, 70, 675 N.E.2d 822, 824
(1996)). In addition, the insurer has the burden of demonstrating
that "the exclusion is stated in clear and unmistakable language,
is subject to no other reasonable interpretation, and applies in
the particular case." Id.
U.S. Underwriters has not shown that the Congregation's claim
for defense and indemnification unambiguously falls outside the
"Vacant Building" classification. The classification definition
("a building not occupied for its intended use") is not so clear
and unambiguous as to exclude a building that had once been used
for storage purposes, but was no longer being used for that
purpose. Morever, accepting U.S. Underwriters' unsubstantiated
assertion that the "Vacant Building" classification applies only
to a building which is "wholly vacant," and not to a building
"under demolition and/or repair," U.S. Underwriters has failed to
provide any evidence showing that the subject building was not
"wholly vacant" and had not been occupied for its intended use
when it was demolished in September 1998. Although U.S.
Underwriters urges that a different classification would have
been used had the company known that the Congregation would be
undertaking demolition work at its premises, there is no evidence
on the record as to what was understood between the parties at
the time of contract. See Mount Vernon Fire Ins. Co. v. Belize
N.Y., Inc., 277 F.3d 232, 237 (2d Cir. 2002) (dismissing
insurance company's argument that there was an `obvious meeting
of the minds' as to the scope of risk undertaken by virtue of
certain policy classifications, where there was no "substantial
support in the evidentiary material submitted by the parties and,
more importantly [were] contradicted by the absence of any
limiting language in the insurance policy.") Since the court's
review is limited to the language of the classification and its
applicability to the facts alleged in the complaint, and a fair
and reasonable interpretation of "Vacant Building" does, on its
face, include the subject property on which Meneses was injured,
U.S. Underwriters' motion for summary judgment on this ground
C. Timely Notice of Suit
U.S. Underwriters also contends that it has no duty to defend
or indemnify the Congregation because the Congregation failed to
provide timely notice of the underlying incident. Specifically,
U.S. Underwriters argues that numerous members of the
Congregation were present at the synagogue adjacent to the
demolition area and therefore should have been aware of the
incident when it occurred, and that the Congregation never
informed U.S. Underwriters of the suit until it received the
default judgment. (Pl.'s Mem. at 17-19.)
An insurer's duty to cover the losses of its insured is not
triggered "unless the insured gives timely notice of loss in
accordance with the terms of the insurance contract. A notice
provision in an insurance policy is a condition precedent to
coverage and, absent a valid excuse, the failure to satisfy the
notice requirement vitiates the policy." Falcon Constr. Corp.,
2003 WL 2201942, at *5 (quoting Travelers Ins. Co. v. Volmar
Constr. Co., 300 A.D.2d 40, 42, 752 N.Y.S.2d 286, 288 (1st Dep't
2002)). This timely notice requirement gives the insurer the
opportunity to "promptly investigate the occurrence so as to
protect itself from fraud and to provide an adequate reserve
fund." U.S. Underwriters Ins. Co. v. A & D Maja Constr., Inc.,
160 F. Supp. 2d 565, 568 (S.D.N.Y. 2001) (citing Power Auth. v.
Westinghouse Elec. Corp., 117 A.D. 336, 339, 502 N.Y.S.2d 420,
422 (1st Dept. 1986)).
New York courts have held that the question of whether notice
was given within a reasonable time may be decided as a matter of
law when (1) the facts bearing on the delay in providing notice
are undisputed and (2) the insured has not offered a valid excuse
for the delay. State of New York v. Blank, 27 F.3d 783, 795 (2d
Cir. 1994). See, e.g., Gresham v. American Gen. Life. Ins.
Co., 135 A.D.2d 1121, 1122, 523 N.Y.S.2d 282, 282 (4th Dept.
1987) ("While ordinarily it is a question of fact whether an
insured gave timely notice of loss, summary judgment is warranted
where the insured has not offered a credible excuse for the delay
in notification and where the underlying facts are not in
dispute."); Jenkins v. Burgos, 99 A.D.2d 217, 220,
472 N.Y.S.2d 373, 375-76 (1st Dept. 1984); Hartford Fire Ins. Co. v.
Masternak, 55 A.D.2d 472, 474, 390 N.Y.S.2d 949, 952 (4th Dept.
1977) ("It is only when no excuse is offered for delay, or when
no credible evidence supports the proffered excuse, that notice
will be held untimely as a matter of law.").
In this case, the Congregation has proffered two excuses for
the delay in notifying U.S. Underwriters. First, the Congregation
claims it had no knowledge of the accident at the time it
occurred, and second, the Congregation claims it never received
the summons and complaint since service was improper. As to the
Congregation's awareness of the incident at or around the time it
occurred, U.S. Underwriters has pointed to deposition testimony
suggesting that the Congregation was "keeping an eye" on the
demolition area.*fn5 In response, however, the Congregation
has also presented testimony from several members who contend
that neither they nor anyone else had knowledge of the incident.
As to the Congregation's knowledge of the underlying suit, U.S.
Underwriters argues that service of the summons and complaint was
properly executed and that Meneses' attorney had sent a letter
informing the Congregation of the suit, but the Congregation's
successful motion to vacate default judgment, at a minimum,
suggests that the court credited its claims of ineffective
service and lack of notice. These discrepancies raise questions
of fact with respect to the Congregation's timely notice of suit,
and U.S. Underwriters' motion on this ground is denied.
Accordingly, all the claims in Meneses' state court complaint
fall within the employee injury exclusion and the independent
contractors exclusion, and plaintiff U.S. Underwriters has no
duty to defend or indemnify Meneses in the underlying action. For
the aforementioned reasons, U.S. Underwriters' motion is granted,
and the Congregation's cross-motion is denied. The Clerk of the
Court is directed to close the case.