Plaintiff appeals from an order of the Supreme Court, New York County (Carol R. Edmead, J.), entered December 12, 2006, which granted defendants' motion for summary judgment dismissing the complaint, and denied plaintiff's motion for summary judgment on its third and fourth causes of action and its cross motion to dismiss defendants' defense of untimely notice.
The opinion of the court was delivered by: McGUIRE, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Peter Tom, J.P., David B. Saxe, David Friedman, Luis A. Gonzalez & James M. McGuire, JJ.
This breach of contract and declaratory judgment action commenced by plaintiff Estee Lauder Inc. against its insurer, defendant OneBeacon Insurance Group, LLC and its affiliates, arises from OneBeacon's refusal to defend and indemnify certain environmental claims asserted against plaintiff. The resolution of this appeal turns on whether OneBeacon waived its right to disclaim coverage on the ground that plaintiff failed to give it timely notice of certain claims against plaintiff.
By a letter to counsel for Lauder dated July 24, 2002, OneBeacon rejected Lauder's claim for defense and indemnity with respect to claims against Lauder relating to the Huntington and Blydenburgh landfills. Specifically, OneBeacon advised that it was "terminating its investigation of this matter and closing its file." The sole ground stated for this decision was that OneBeacon "cannot locate any further evidence" of the policy under which Lauder sought coverage, a policy that Lauder could not locate, although it identified the policy, which assertedly ran from September 19, 1968 to September 19, 1971, by its policy number. Thereafter, by a letter dated November 1, 2002, OneBeacon denied Lauder a defense to another action, the Hickey's Carting claim, relating to the Blydenburgh landfill. The stated ground for this decision was the same ground stated in the July 24 letter, i.e., that "OneBeacon has been unable to find any other evidence to confirm the existence and terms of th[e] . . . policy" that Lauder contended OneBeacon's predecessor had issued. Referencing its July 24 letter and other correspondence, OneBeacon stated that it "stands by its prior disclaimers of coverage." Neither in the July 24 nor the November 1 letter did OneBeacon ever assert that Lauder had failed to give timely notice of a claim or occurrence, let alone disclaim coverage on the ground of such a failure by Lauder.
An insurer's "notice of disclaimer must promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated" (General Acc. Ins. Group v Cirucci, 46 NY2d 862, 864 ). Of course, an insurer may reserve the right to disclaim on such different or alternative grounds as it may later find to be applicable (National Rests. Mgt. v Executive Risk Indem., 304 AD2d 387, 388 ). However, "[a]n insurer must give written notice of disclaimer on the ground of late notice as soon as is reasonably possible after it learns of the accident or of grounds for disclaimer of liability, and failure to do so precludes effective disclaimer" (Matter of Firemen's Fund Ins. Co. of New York v Hopkins, 88 NY2d 836, 837  [internal quotation marks omitted]). Because of the insurer's duties to disclaim promptly and with specificity, "New York law establishes that an insurer is deemed, as a matter of law, to have intended to waive a defense to coverage where other defenses are asserted, and where the insurer possesses sufficient knowledge (actual or constructive) of the circumstances regarding the unasserted defense" (State of New York v Amro Realty Corp., 936 F2d 1420, 1431 ).*fn1
As the duties to disclaim promptly and specifically are imposed by law (see Hotel Des Artistes, Inc. v General Acc. Ins. Co. of Am., 9 AD3d 181, 193 , lv dismissed 4 NY3d 739 ), an insurer cannot unilaterally absolve itself of these duties. Thus, an insurer cannot avoid a waiver of a defense of which it has actual or constructive knowledge (i.e., avoid its duties to disclaim promptly and with specificity on the basis of that defense), by a unilateral assertion in a disclaimer notice that it is reserving or not waiving a right to disclaim on other, unstated grounds (id. at 185, 193 [despite statement by insurer in its disclaimer letter that it was not waiving any rights or defenses under the policy not mentioned in the letter, insurer waived defense of late notice both because it failed to disclaim on this ground in the letter and because it failed to raise a defense of late notice in its answer]; see also Allstate Ins. Co. v Moon, 89 AD2d 804, 806 ).*fn2
On the basis of, among other things, a tolling agreement between Lauder and the Attorney General relating to the Blydenburgh landfill claim that Lauder produced to OneBeacon in April 2000 (familiarity with which OneBeacon acknowledged on July 6, 2000), a notice of potential claim relating to the Huntington landfill that Lauder provided to OneBeacon in 1987 and a notification made by Lauder to OneBeacon and other carriers in May 1999 that the Attorney General had identified it as a "potentially responsible party" in connection with the Huntington landfill, it is clear that long before its July 2002 and November 2002 letters OneBeacon had sufficient knowledge of the circumstances relating to its defense of untimely notice. Indeed, OneBeacon does not argue otherwise in its brief.
Nor did Supreme Court conclude otherwise. Rather, Supreme Court reasoned that in light of the sweeping reservation of all of its rights, "that OneBeacon possessed sufficient knowledge to assert a late-notice defense by virtue of its receipt of the [tolling agreement] . . . is inconsequential." Thus, an erroneous conclusion of law - namely, that as long as an insurer claims or reserves the right to do so, it may disclaim coverage on one ground and thereafter disclaim coverage on another ground even though it had actual or constructive knowledge of the latter ground at the time of the initial disclaimer - was the basis for Supreme Court's conclusion that OneBeacon had not waived its right to assert a defense of late notice.*fn3
OneBeacon is not persuasive in contending that it did not disclaim coverage in its July 2002 and November 2002 letters. As noted, in the July 2002 letter OneBeacon informed Lauder that it was "terminating its investigation of this matter and closing its file" with respect to Lauder's tender under the disputed pre-1971 policy (Policy No. E-16-40036-27) with regard to the Huntington and Blydenburg landfills. With respect to the Hickey's Carting claim, OneBeacon expressly referenced in its November 2002 letter the earlier decision to close its file and went on to state, "[p]lease be advised that OneBeacon had determined, at this time, it will not revisit its prior determination." Even assuming that OneBeacon did not state in either letter that it was "disclaiming" coverage, both letters made clear that OneBeacon was denying coverage.*fn4
No case cited by OneBeacon supports the proposition that an insurer disclaims coverage only if it uses a form of the word "disclaim" in the course of denying coverage. The cases that are on point are to the contrary (see e.g. Commercial Union Ins. Co. v International Flavors & Fragrances, Inc., 822 F2d 267, 270, 274 [2d Cir 1987] [construing New York law]). Moreover, to accept OneBeacon's position would exalt form over substance and invite gamesmanship. Because we conclude that OneBeacon did disclaim coverage in the July 2002 and November 2002 letters, we need not address Lauder's independent contentions that OneBeacon constructively waived its untimely notice defenses by failing to assert them within a reasonable time (see e.g. 151 E. 26th St. Assoc. v QBE Ins. Co., 33 AD3d 452 ), and by failing to assert them with specificity in its answer to Lauder's complaint (see e.g. Hotel des Artistes, 9 AD3d at 193).
With respect to constructive waiver, one final contention by OneBeacon should be addressed. It argues that "where, as here, the existence of coverage has not been established because the insurance policy is missing, . . . an insurer cannot waive its right to disclaim coverage." To be sure, as noted above, "where the issue is the existence or nonexistence of coverage (e.g., the insuring clause and exclusions), the doctrine of waiver is simply inapplicable" (Albert J. Schiff, 51 NY2d at 698). Thus, where the putative insured fails to establish coverage, it is not created by the insurer's failure timely to disclaim coverage (id.). It does not ...