Appeal from a judgment of the United States District Court for the Southern District of New York (Young, J.) declaring that NGM Insurance Company ("NGM") is obligated to defend and indemnify Blakely Pumping, Inc. ("Blakely Pumping"), against liability arising out of an auto accident involving one of Blakely Pumping's officers. On appeal, NGM argues that the insurance policy in question did not cover the officer's auto under any circumstances and, therefore, the district court erred in finding that New York Insurance Law § 3420(d)(2) required NGM to timely disclaim coverage. We agree.
Argued: December 10, 2009
Before: McLAUGHLIN, KATZMANN, LYNCH, Circuit Judges.
NGM Insurance Company ("NGM") appeals from a judgment of the United States District Court for the Southern District of New York (Young, J.) declaring that NGM is obligated to defend and indemnify Blakely Pumping, Inc. ("Blakely Pumping"), against liability arising out of an auto accident involving Brian Blakely ("Blakely"), an officer and employee of Blakely Pumping. Blakely Pumping had purchased an insurance policy and endorsement from NGM that covered liability arising out of the use of a "Hired Auto" or "Non-Owned Auto" -- terms defined so as not to include an auto owned by an executive officer or employee of Blakely Pumping. The determinative question is whether these definitions constitute "exclusions" of coverage. If they do, NGM was required under New York Insurance Law § 3420(d)(2) to timely notify Blakely Pumping that it was disclaiming coverage based on a policy exclusion. On appeal, NGM argues that the district court erred in finding that the definitions were exclusions since Blakely's auto could not qualify as a "Hired Auto" or "Non-Owned Auto" under any circumstances. For the reasons stated herein, we agree and reverse the district court's judgment.
On November 3, 2005, Blakely crashed his pickup truck into Peter Slingerland's car in Kingston, New York. Blakely was driving the truck in the course of his work for Blakely Pumping, as he frequently did. Slingerland and his wife brought a personal injury action against both Blakely and Blakely Pumping.
In a letter dated March 18, 2006, Blakely Pumping requested that NGM defend the action pursuant to an insurance policy for "Businessowners Liability Coverage" (the "Policy") that Blakely Pumping had purchased from NGM. The Policy generally covered liability for personal injuries but contained a section entitled "Exclusions" that expressly disclaimed coverage for damages "arising out of the ownership, maintenance, use or entrustment to others of any . . . 'auto' . . . owned or operated by or rented or loaned to any insured." Blakely Pumping, however, had also purchased an endorsement (the "Endorsement") from NGM that modified the Policy; the Endorsement extended coverage to bodily injury arising from the use of a "Hired Auto" or a "Non-Owned Auto" by the company or one of its employees. The Endorsement defined these terms as follows:
"Hired Auto" means any "auto" you lease, hire or borrow. This does not include any "auto" you lease, hire or borrow from any of your "employees" or members of their households, or from any partner or "executive officer" of yours. "Non-Owned Auto" means any "auto" you do not own, lease, hire or borrow which is used in connection with your business.
On March 23, 2006, NGM disclaimed coverage, based on the Policy's exclusion for autos. In a letter dated July 24, 2006, counsel for the Slingerlands called NGM's attention to the Endorsement's extension of coverage for bodily injuries arising out of the use of a "Hired Auto" or "Non-Owned Auto." Two weeks later, NGM again disclaimed coverage, this time on the ground that Blakely was an executive officer of Blakely Pumping and therefore his pickup truck was neither a "Hired Auto" nor "Non-Owned Auto" as defined in the Endorsement.
On July 19, 2007, NGM sued Blakely Pumping, Blakely, and the Slingerlands, seeking a declaratory judgment that it was under no obligation to defend or indemnify Blakely Pumping. On March 24, 2009, after the parties cross-moved for summary judgment, the district court entered a judgment declaring that NGM was indeed obligated to defend and indemnify Blakely Pumping.*fn2 Although the court concluded that Blakely Pumping had borrowed the auto of one of its officers and that the accident was therefore not covered under the terms of the Policy as modified by the Endorsement, this did not end the analysis. The court turned to New York Insurance Law § 3420(d)(2), requiring insurers to provide written notice when they disclaim coverage pursuant to a policy exclusion. According to the court, since the Endorsement "generally covered auto accidents," the definitions of "Hired Auto" and "Non-Owned Auto" constituted exclusions of that general coverage. NGM was therefore required to provide written notice that it was disclaiming coverage on the ground that Blakely's pickup truck was neither a "Hired Auto" nor "Non-Owned Auto"; but because NGM originally disclaimed coverage pursuant to the Policy's exclusion for autos, it had waived its right to disclaim coverage on other grounds. Thus, NGM's subsequent notice of disclaimer was ineffective, meaning NGM could not now rely on those exclusions.
We review de novo the district court's conclusions of law. BrandAid Mktg. Corp. v. Biss, 462 ...