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American Transit Insurance Co. v. Brown


October 8, 2009


Order, Supreme Court, New York County (Marcy S. Friedman, J.), entered November 10, 2008, which, to the extent appealed from, denied defendant Arthur Brown's motion for summary judgment on his counterclaim and plaintiff's cross motion for summary judgment declaring that it is not obligated to satisfy a default judgment obtained by Brown against defendant Albertano Batista, modified, on the law, to the extent of granting Brown's motion and declaring that plaintiff is obligated to satisfy the said judgment in the amount of $81,830, together with interest from July 19, 2007, and otherwise affirmed, without costs.

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.

Andrias, J.P., Catterson, Renwick, DeGrasse, Freedman, JJ.


On November 12, 2002, Brown was involved in a motor vehicle accident with Batista, ATIC's insured. ATIC acknowledged receipt of Brown's third-party claim by letter dated January 28, 2003. Brown settled his claim for property damage with ATIC and commenced a personal injury action against Batista on November 9, 2005. Brown forwarded copies of the summons and complaint to ATIC on or about January 26, 2006. These copies were mailed to ATIC at the address set forth in its January 2003 letter. Unbeknownst to Brown, however, ATIC had moved its offices in November 2003. Upon Batista's failure to appear in the action, Brown moved for a default judgment and proceeded to inquest on June 21, 2007. The underlying judgment in the amount of $81,830 was entered in favor of Brown against Batista on July 19, 2007. Pursuant to Insurance Law § 3420(a)(2), Brown served copies of the unsatisfied judgment with notices of entry upon ATIC and Batista on August 9, 2007. ATIC promptly issued a letter of disclaimer and commenced this declaratory judgment action on the ground that neither Batista nor Brown gave it timely notice of the underlying lawsuit as required by Batista's insurance policy. Supreme Court denied Brown's motion and ATIC's cross motion for summary judgment on the ground that additional discovery was needed. We find that Brown's motion should have been granted for reasons that follow.

ATIC asserts that Batista and Brown failed to immediately furnish it with copies of the underlying summons and complaint as required by the policy. ATIC does not cite any relevant policy provision in its brief or the affidavits it submitted below. Nevertheless, in its letter of disclaimer, ATIC quotes and relies upon paragraph 11 of the policy's insuring agreements, which provides, in relevant part, that "[i]f any suit is brought against the Insured to recover such damages the Insured shall immediately forward to the Company every summons or other process served upon him." However, paragraph 11 follows paragraph 9, which provides that "[t]he following provisions... shall apply between the Company and the Insured but shall not prejudice the right of any person other than the Insured to recover hereunder." Therefore, under the terms of ATIC's policy, the failure to comply with the notice requirement does not preclude Brown's third-party claim under Batista's policy with ATIC.

In a proper case, the failure to satisfy a notice requirement "may allow an insurer to disclaim its duty to provide coverage" (see American Tr. Ins. Co. v Sartor, 3 NY3d 71, 76 [2004]). In this regard, ATIC asserts that Brown breached the policy's notice requirement by forwarding the summons and complaint to its former address instead of its then current address. A failure to satisfy an insurance policy's notice requirement does not vitiate coverage where there is a valid excuse (cf. Matter of Allcity Ins. Co. [Jimenez], 78 NY2d 1054, 1055 [1991]). Brown has, in any event, demonstrated a valid excuse for forwarding the summons and complaint to ATIC's former address in that he was never notified of its change of address. Prior to the suit, ATIC's last correspondence to Brown set forth the former address. ATIC's allegation that it had "sent out a post card to claimants and attorneys who had filed any claims against us during that time" rings hollow as it does not claim that any specific notification was sent to Brown or his counsel. Equally unavailing is ATIC's assertion that its new address was printed on a check forwarded to Brown's counsel in settlement of an unrelated matter. An address on a check alone does not suffice as notice that it is the address to which notices should be sent (see Kennedy v Mossafa, 100 NY2d 1, 10 [2003]). As noted above, we merely find that Brown has demonstrated a reasonable excuse for his failure to satisfy the policy's notice requirement. We disagree with the dissent's contention that this finding shifts a burden to ATIC. All concur except Andrias, J.P. and Catterson, J. who dissent in a memorandum by Catterson, J. as follows: CATTERSON, J. (dissenting)

I must respectfully dissent because there is no legal obligation for a defendant's insurer to notify a potential plaintiff or plaintiff's counsel of the insurer's change of address. Moreover, to put forth the lack of such notice as a valid excuse for the failure to notify the insurer of pending litigation ignores the reality that American Transit's address could have been verified on the Internet in approximately three-tenths of a second.

The undisputed facts of this case are as follows: On November 12, 2002, Arthur Brown, the plaintiff in the underlying action, was involved in a car accident with a vehicle owned and operated by Albertano Batista. Batista was insured by American Transit Insurance Company (hereinafter referred to as "ATIC"). Brown's counsel notified ATIC of his client's claim against Batista, and ATIC acknowledged Brown's claim in a letter dated January 28, 2003, and assigned a claim number. The letterhead and annexed forms bore an address of 275 Seventh Avenue, New York, NY 10001. Subsequently, ATIC conducted a property damage appraisal and settled the property damage portion of the claim.

Almost three years later, on or about November 9, 2005, Brown commenced an action against Batista in order to recover damages for personal injuries sustained in the accident. On January 26, 2006, Brown's counsel sent a courtesy copy of the summons and complaint to ATIC instructing it to interpose an answer on behalf of its insured. The letter was sent to the Seventh Avenue address.

There was no reply or appearance by ATIC which, in fact, had moved two years earlier in November 2003 to offices on West 34th Street, Manhattan. On June 21, 2007, following an inquest, the court granted a default judgment in favor of Brown for $75,000. Judgment in the total amount of $81,830, including medical liens and interest, was entered against Batista on July 19, 2007. On August 9, 2007, Brown's counsel sent notice of entry of the judgment to ATIC at its current address on West 34th Street.

ATIC disclaimed coverage on the ground that it was not provided with timely notice of the lawsuit. ATIC then brought this declaratory judgment action alleging that neither Brown nor Batista complied with its policy requiring timely notice of commencement of an action against one of its insured. It stated that the first notification of the lawsuit was received after judgment was entered against Batista.

Supreme Court denied Brown's motion and ATIC's cross-motion for summary judgment on the ground that additional discovery was needed. In my opinion, the motion court erred in not granting summary judgment to ATIC.

On appeal, Brown argues that, because he sent the copy of the summons and complaint to ATIC, therefore ATIC must have received it because letters sent through the United States Postal Service are "generally" not destroyed. Brown continues to hypothesize that in cases where a recipient has moved, the post office will return the mail to the sender with the intended recipient's new address. Without citation to any authority whatsoever, Brown then concludes that because he did not receive any such returned mail, there is a "clear presumption" that the mailing was received by ATIC. Wisely, Brown has a fallback position: namely, if ATIC did not receive the letter, it is because Brown sent it to the wrong address because ATIC did not notify him of the change of addresses.

The majority inexplicably accepts this latter position as a valid excuse and so determines that coverage is not vitiated in this case. Thus, without citing to any legal authority, the majority places the burden on the defendant's insurer to notify a potential plaintiff as to the correct address to which to send a copy of a summons and complaint years after it has moved to a different location. Further, the majority rejects ATIC's statements that it sent a mass mailing announcing the change of address at the time of the move, and that it notified the State Insurance Department and the post office of the change of address, and changed its address on its Web site and all phone listings. Instead, the majority makes clear that ATIC should have sent specific notification of the new address to Brown or his counsel.

In my opinion, the majority has placed the burden on the wrong party. There is no legal obligation on ATIC to establish what sufficient efforts it made, if any, to notify a potential plaintiff of a change of address. Certainly, there is no legal authority whatsoever for the majority's demand that ATIC should have sent a specific notification to the counsel of a plaintiff whose property claim had been settled almost a year prior to ATIC's move to a new location.

In the absence of any legal authority for such a position, it appears the majority is willing to accept an attorney's lack of diligence in failing to spend three-tenths of a second to verify an address on the Internet as a valid excuse for the failure to satisfy an insurer's notice requirement. For the foregoing reasons, I believe that the motion court's order should be reversed and ATIC's motion for summary judgment should be granted.



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