The opinion of the court was delivered by: Seybert, District Judge:
Plaintiff Homestead Village Associates, LP ("Homestead") sued Defendants Diamond State Insurance Company ("Diamond"), and the Chubb Insurance Company of New Jersey ("Chubb") seeking a declaratory judgment that Diamond and Chubb must defend and indemnify Homestead in connection with a personal injury action pending in Suffolk County. Homestead also sued its insurance broker, Defendant Capacity Coverage Company of New Jersey ("Capacity") for breach of contract and negligence. Diamond filed a counter-claim seeking a declaration that its policy provides no coverage in connection with the underlying action. See Docket Entry 15.
All parties cross-moved for summary judgment. For the following reasons, Homestead's and Capacity's motions are DENIED. Diamond's motion is GRANTED. Chubb's motion is GRANTED IN PART AND DENIED IN PART.
Plaintiff Homestead owns an apartment complex in Coram, New York (the "Apartments"). Homestead has no employees, and it relies on Sterling Management Corporation ("Sterling") to act as its property manager. (Diamond 56.1 Cntr-Stmt. ¶¶ 2-3.) Capacity, an insurance broker licensed in New Jersey, has been Sterling's insurance broker for approximately twenty years. (Id. at ¶ 7.) On Homestead and Sterling's behalf, Capacity procured the two insurance policies in this case: a general liability policy from Diamond (the "Diamond Policy") and an excess insurance policy from Chubb (the "Chubb Policy").
On October 22, 2007, Frank Olmeda, a Sterling employee, was injured while performing maintenance work at the Apartments (the "Accident"). Another Sterling employee prepared an incident report stating that a piece of wood fell across Olmeda's shoulders and that Olmeda complained of pain to his neck, back and jaw. (Miranda Decl., Ex. I.) Co-workers called 911, and an ambulance brought Olmeda to the hospital.*fn1 (Id.)
The same day, Sterling notified Capacity of the Accident via fax. (Homestead 56.1 Stmt. ¶ 31.) As will be discussed later, the content of that notice is disputed, but Capacity admits receiving at least a "C-2" workers' compensation claim form that described the Accident but did not mention an ambulance. (See Capacity 56.1 Cntr-Stmt. ¶ 31.) On the day after the Accident, Barbara Weronko, the Capacity claims manager who handled the Olmeda paperwork, forwarded a notice of claim to Homestead's workers' compensation insurer, AIG. (Homestead 56.1 Stmt. ¶ 45.) Neither Weronko nor anyone else at Capacity notified Diamond or Chubb of the Accident at the time. (Capacity 56.1 Cntr-Stmt. ¶ 47.)
Neither Homestead nor Sterling nor Capacity believed the Accident would result in anything more than a workers' compensation claim, but Olmeda's injuries were allegedly more serious than Homestead, Sterling or Capacity realized at the time. The Workers' Compensation Board declared Olmeda temporarily partially disabled (see Homestead Br. 7), and Olmeda eventually sued Homestead in state court. (Id.) The underlying suit, Olmeda v. Homestead Village, Index No. 03194/09 (the "Olmeda Action"), alleges that Olmeda suffered permanent personal injuries and great pain and anguish. (See Homestead Br. 7.)
Homestead was served with the Olmeda Action on March 12, 2009. That day, Homestead forwarded the summons and complaint to Capacity, (Homestead 56.1 Stmt. ¶¶ 59-59) and Capacity in turn forwarded them to Diamond's claims administrator and to Chubb (id. ¶¶ 61-62). Diamond disclaimed coverage on late notice grounds on April 22, 2009 (Id. ¶ 72), and Chubb disclaimed coverage for the same reasons on May 26, 2009 (id. ¶ 80).
Homestead seeks a declaratory judgment that Diamond and Chubb have a duty to defend and indemnify it in connection with the Olmeda Action. In the alternative, it argues that Capacity, by virtue of its failure to notify the appropriate insurers, must reimburse Homestead its legal costs and any damages it has to pay Olmeda as a result of his personal injury suit. All parties moved for summary judgment. After discussing the legal standard and a choice of law issue, the Court addresses the pending motions in the following order: as between Homestead and Diamond, as between Homestead and Chubb, and as between Homestead and Capacity.
I. Legal Standard on a Summary Judgment Motion Summary judgment is only appropriate where the moving party can demonstrate that there is "no genuine dispute as to any material fact" and that the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(a). In considering this question, the Court considers "the pleadings, depositions, answers to interrogatories and admissions on file, together any other firsthand information including but not limited to affidavits." Nnebe v. Daus, __ F.3d __, 2011 WL 2149924, at *6 (2d Cir. May 31, 2011); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265, 273 (1986); McLee v. Chrysler Corp., 109 F.3d 130, 134 (2d Cir. 1997); see also FED. R. CIV. P. 56(c). "In assessing the record to determine whether there is a genuine issue to be tried . . . the court is required to resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought." McLee, 109 F.3d at 134. The burden of proving that there is no genuine issue of material fact rests with the moving party. Gallo v. Prudential Residential Servs., L.P., 22 F.3d 1219, 1223 (2d Cir. 1994) (citing Heyman v. Com. & Indus. Ins. Co., 524 F.2d 1317, 1320 (2d Cir. 1975)). Once that burden is met, the non-moving party must "come forward with specific facts," LaBounty v. Coughlin, 137 F.3d 68, 73 (2d Cir. 1998), to demonstrate that "the evidence is such that a reasonable jury could return a verdict for the nonmoving party," Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). "Mere conclusory allegations or denials will not suffice." Williams v. Smith, 781 F.2d 319, 323 (2d Cir. 1986). And "unsupported allegations do not create a material issue of fact." Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d Cir. 2000).
II. New York Law Governs This Action
For apparently the first time in this litigation,
Homestead and Capacity argue that New Jersey law, not New York law, applies to the contract claims in this case. (See Diamond Reply 12) (complaining that the choice-of-law issue was not raised at an earlier stage.) Based on the discussion that follows, the Court concludes that New York law applies to Homestead's contract-based claims against Diamond and Chubb.
Federal Courts sitting in diversity apply the choice-of-law analysis of the forum state. See, e.g., GlobalNet Financial.Com, Inc. v. Frank Crystal & Co., Inc., 449 F.3d 377, 382 (2d Cir. 2006); Maryland Cas. Co. v. Continental Cas. Co., 332 F.3d 145, 151 (2d Cir. 2003). Under New York's two-step choice of law framework, the first issue is whether an actual conflict exists between the laws of the competing jurisdictions. See GlobalNet, 449 F.3d at 382. New Jersey law requires insurers asserting a late notice defense to show that they were prejudiced by the untimely notice. See, e.g., Travelers Cas. and Sur. Co. v. Dormitory Auth., No. 07-CV-6915, 2008 WL 4861910, at *2 (S.D.N.Y. Nov. 5, 2008). New York law does not, id. at *2, at least for insurers seeking to disclaim coverage under policies enacted prior to January 17, 2009.*fn2 This difference will affect the outcome of this case and is thus an actual conflict for the purposes of a choice-of-law analysis. See Dormitory Auth., 2008 WL 4861910, at *2.
For contract claims, the second step is to determine "which State has the most significant relationship to the transaction and the parties." Schwartz v. Liberty Mut. Ins. Co., 539 F.3d 135, 151 (2d Cir. 2008) (quoting Zurich Ins. Co. v. Shearson Lehman Hutton, Inc., 84 N.Y.2d 309, 317, 618 N.Y.S.2d 609, 642 N.E.2d 1065 (1994)). In this analysis, commonly known as the "center of gravity" or "grouping of contacts" test, New York courts look to "the location of the insured risk; the insured's principal place of business; where the policy was issued and delivered; the location of the broker or agent placing the policy; where the premiums were paid; and the insurer's place of business." Olin Corp. v. Ins. Co. of N. Am., 743 F. Supp. 1044, 1049 (S.D.N.Y. 1990). Of these factors, the location of the insured risk is given the greatest weight. Schwartz, 539 F.3d at 152 ("New York recognizes the precept that a court should apply 'the local law of the state which the parties understood was to be the principal location of the insured risk . . . unless with respect to the particular issue, some other state has a more significant relationship . . . to the transaction and the parties.'") (quoting Restatement (Second) of Conflict of Laws § 193 (1971)); Md. Cas. Co. v. Cont'l Cas. Co., 332 F.3d 145, 152-53 (2d Cir. 2003); Zurich Ins. Co. v. Shearson Lehman Hutton, Inc., 84 N.Y.2d 309, 642 N.E.2d 1065, 1069 (1994). Additionally, courts have held that actions to determine an insurer's duties vis- a -vis events that occurred in New York are governed by New York law. Ill. Nat. Ins. Co. v. Banc One Acceptance Corp., No. 05-CV-1260, 2008 WL 5423262, at *10 (N.D.N.Y. Dec. 29, 2008); N.Y. State Ins. Fund v. Mount Vernon Fire Ins. Co., No. 03-CV-6652, 2005 WL 82036, at *3 n.1 (S.D.N.Y. Jan. 13, 2005) (quoting U.S. Underwriters Ins. Co. v. Congregation Kollel Tisereth, Tsvi, No. 99-CV-7398, 2004 WL 2191051, at *4 (S.D.N.Y. Sept. 30, 2004)).
Applying this analysis, the Court concludes that New York law governs the contract claims in this case. Although some factors favor New Jersey, including that the policies were negotiated and delivered there (see Capacity Br. at 6), the insured risks were in New York. All ten of the premises listed on the Diamond Policy's "Declarations of the Policy" are in New York. See Dormitory Auth., 2008 WL 4861910, at *3-4. Further, the thrust of this case is to determine Diamond's and Chubb's duties to Homestead, if any, relating to an accident that occurred in New York and to a personal injury lawsuit being litigated in New York. Congregation Kollel Tisereth, Tsvi, 2004 WL 2191051, at *4 (explaining that if "the underlying incident took place in New York, New York law applies to [that] action"). Also, as Diamond points out, the Diamond Policy's endorsement titled "New York Changes--Legal Actions Against Us" evidences the parties' understanding that New York law would govern the contract. See Dormitory Auth., 2008 WL 4861910, at *4 ("[T]he many New Jersey-specific endorsements contained in the policy indicate that Harleysville expected New Jersey law to supply the rules of decision for disputes over the policy.")
Diamond, Homestead's primary liability insurer,
disclaimed coverage because it did not receive prompt notice of the Accident. Homestead responds that the delay was excusable under the circumstances, which included an accident-prone victim who had never before filed a lawsuit despite numerous job-site accidents. The undisputed evidence ...