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Magen v. Hartford Fire Insurance Co.

May 14, 2009

JT MAGEN, PLAINTIFF-RESPONDENT,
v.
HARTFORD FIRE INSURANCE COMPANY, ET AL., DEFENDANTS-APPELLANTS,
RICHARD SEIFERT, ET AL., DEFENDANTS.



Defendants Hartford Fire Insurance Company and William Erath and Son appeal from an order of the Supreme Court, New York County (Marylin G. Diamond, J.), entered January 10, 2008, which denied their motion for summary judgment and granted plaintiff's cross motion for summary judgment declaring that Hartford's policy is primary to any other policy covering plaintiff, thus obligating Hartford to defend and indemnify plaintiff and nonparties IDA and Magen David Yeshiva in the underlying personal injury action.

The opinion of the court was delivered by: Renwick, 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.

Luis A. Gonzalez, P.J., Peter Tom, Eugene Nardelli, Karla Moskowitz and Dianne T. Renwick, JJ.

113095/06

The issue before us is whether the prompt disclaimer requirement of the Insurance Law is triggered when an insurance carrier receives the notice of claim from another insurance carrier on behalf of a mutual insured asking that the insured be provided a defense and indemnity. In light of the apparent confusion on this issue, we take the opportunity to reiterate and clarify our holding in Bovis Lend Lease LMB, Inc. v Royal Surplus Lines Ins. Co. (27 AD3d 84 [2005]), which is dispositive.

Background

This insurance dispute arose out of injuries allegedly sustained by Richard Seifert when he tripped and fell on July 4, 2004, at a construction site owned by the New York City Industrial Development Agency (IDA) and Magen David Yeshiva. The owners hired plaintiff JT Magen as their construction manager. Plaintiff, in turn, hired defendant William Erath & Son as one of its subcontractors on the job. The injured worker was employed by Erath.

In the contract between plaintiff and Erath, the latter agreed to indemnify and hold the former harmless for personal injuries arising out of Erath's work. The contract also called for Erath to provide liability coverage of no less than $4 million, naming plaintiff, the Yeshiva and IDA as additional insureds. To fulfill its obligations, Erath secured such a policy from defendant Hartford. At the time of the accident, plaintiff was the named insured under a commercial liability policy issued by St. Paul Travelers Insurance (Travelers).

On May 7, 2005, worker Seifert commenced a personal injury action against various defendants, including plaintiff herein, the Yeshiva and IDA. Plaintiff notified its insurance carrier, Travelers, of the occurrence. By letter dated June 24, 2005, Travelers advised Hartford of the underlying action and requested that Hartford defend and indemnify plaintiff, IDA and the Yeshiva as additional insureds under the policy Hartford had issued to Erath. By letter dated August 10, 2005, Hartford contended that Travelers' tender letter had failed to include a copy of the summons and complaint in the underlying action. Although it claimed a copy of the summons and complaint had been included in its tender letter, Travelers nonetheless mailed Hartford another set of the pleadings on August 16, 2005. Fifty-one days later, by letter dated October 6, 2005, Hartford informed Travelers that it was disclaiming coverage on the ground that plaintiff, IDA and the Yeshiva had failed to comply with the policy requirement that they provide notice "as soon as practical" of any "occurrence" that might result in damages covered under the policy, even if no demand has been made against them. A copy of the disclaimer letter was also sent to the additional insureds.

Plaintiff commenced this action against Hartford, among others, seeking a declaration that Hartford owes it, and nonparties IDA and the Yeshiva, a defense and indemnification with respect to the underlying personal injury action brought against them by the injured worker. Hartford then brought the instant summary judgment motion to dismiss the complaint on the ground that plaintiff had failed to comply with the insurance contract's notification provision. Plaintiff cross moved for a declaration that as an additional insured under the policy, it was entitled to a defense by Hartford, which, it argued, was estopped from disclaiming coverage pursuant to Insurance Law § 3420(d). Hartford countered that the provision does not apply as between insurers. Because Travelers' tender was made on behalf of plaintiff, the insured, Supreme Court found the case law making Insurance Law § 3420(d) inapplicable to insurers to be inapposite. Accordingly, the court granted plaintiff's cross motion, concluding that Hartford was precluded from disclaiming coverage on the ground of late notice.

Discussion

Under Insurance Law § 3420(d), an insurer wishing to disclaim liability or deny coverage for death or bodily injury must "give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage." A failure to give such prompt notice precludes an effective disclaimer or denial (Matter of Firemen's Fund Ins. Co. of Newark v Hopkins, 88 NY2d 836, 837 [1996]). However, an insurance carrier's duty to timely disclaim is not triggered until an insured satisfies a notice of claim provision in an insurance contract, because that provision is a condition precedent to coverage, and absent a valid excuse, the failure to satisfy the notice requirement vitiates the policy (Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 440 [1972]; Paramount Ins. Co. v Rosedale Gardens, 293 AD2d 235, 239 [2002]; Town of Smithtown v National Union Fire Ins. Co., 191 AD2d 426, 427 [1993]).

We hold that the tender letter insurer Travelers wrote on behalf of plaintiff and others to insurance carrier Hartford - asking that their mutual insureds be provided with a defense and indemnity, as additional insureds under the policy issued to Erath - fulfills the policy's notice-of-claim requirements so as to trigger the insurer's obligation to issue a timely disclaimer pursuant to Insurance Law ยง 3420(d). Indeed, as Supreme Court properly pointed out, this is precisely the implication of our ruling in Bovis, where we held that only the tendering carrier did not get ...


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