Appeal from a judgment of the United States District Court for the Eastern District of New York (Carol Bagley Amon, Judge).
United National Insurance Co. v. 515 Ocean Avenue, et al.
Rulings by summary order do not have precedential effect. Citation to a summary order filed on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate Procedure 32.1 and this Court's Local Rule 32.1.1. When citing a summary order in a document filed with this Court, a party must cite either the Federal Appendix or an electronic database (with the notation "summary order"). A party citing a summary order must serve a copy of it on any party not represented by counsel.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Richard C. Lee United States Courthouse, 141 Church Street, in the City of New Haven, on the 1st day of May, two thousand twelve.
PRESENT: RALPH K. WINTER, GUIDO CALABRESI, JOSE A. CABRANES, Circuit Judges
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of the District Court is AFFIRMED.
This is an insurance coverage action, in which plaintiff-appellee United National Insurance Company ("United National") sought a declaration that it is not obligated to defend or indemnify the defendants-appellants, 515 Ocean LP, D/B/A United American Land LLC, 16 Warren Associates LP, and United American Land, LLC (jointly "UAL") for claims brought in state court by Ocean 505 LLC ("Ocean 505"). In the underlying state court action, which has since settled, Ocean 505 sought reimbursement for property damage allegedly caused to its building at 505 Ocean Avenue in Brooklyn as a result of construction work being undertaken at UAL's adjacent building, 515 Ocean Avenue.
United National argues that it is not obliged to indemnify UAL because UAL failed to notify it "as soon as practicable" about the potential property-damage claim, as is required by the "late notice provision" of the applicable Commercial Insurance Policy.*fn1 That provision imposes certain duties on the insured, including that, in the event the insured is notified of an "occurrence" that may result in a claim or suit, the insured must "notify [United National] as soon as practicable."
The underlying state suit alleged that the damage caused by construction at 515 Ocean Avenue occurred "prior to September 4, 2007." As early as December 22, 2005, a complaint was received by the New York City Department of Buildings ("DOB") alleging that construction at 515 Ocean Avenue was "weakening . . . [the] found[ation] of the neighboring building[, 505 Ocean Avenue]." This complaint, and another dated May 24, 2006, were both investigated by the DOB, which found no violation. In July 2007, Yechiel Weinberger, the managing member of Ocean 505, showed cracks in the walls and foundation of 505 Ocean to John Marshall, a construction manager for UAL. Marshall believed that the damage was minor and could easily be repaired. However, Weinberger subsequently called Marshall several times to complain that the damage was worsening. Finally, in a letter dated September 10, 2007, Ocean 505 advised UAL that "as a result of the work performed by your employees, contractors or agents, 505 Ocean Avenue sustained severe structural damage both on the exterior and interior of the premises." The letter "request[ed] that [it] be immediately forwarded directly to the appropriate insurance carrier in order to avoid any disclaimers of coverage based upon late notice provisions that are contained in certain policies."
UAL acknowledges that it did not provide United National notice of the potential claim until either November 29, or November 30, 2007, almost two years after the first complaint to the DOB, approximately four months after Weinberger showed Marshall the damaged walls and foundation, and more than ten weeks after Ocean 505 sent the letter expressly requesting that UAL notify its insurers of the impending claim. However, UAL argues that its delay in notifying United National of the potential claim should be excused, inasmuch as the initial complaints to the DOB were not substantiated, the damage that Weinberger showed to Marshall was minor and easily repairable, and the September 10, 2007, letter was received by Jack Laboz, a UAL principal who tragically died shortly thereafter, in the midst of Jewish holidays. Therefore, UAL claims, it was unable to submit notice of the claim to United National any sooner than they did.
The District Court rejected these arguments and granted summary judgment in favor of United National. We affirm the District Court's judgment for substantially the same reasons stated in its thorough and sound Memorandum & Order of February 22, 2011. See Memorandum & Order, United National Ins. Co. v. 515 Ocean LP, No. 08-cv-2630 (E.D.N.Y. Feb. 22, 2011).
We review orders granting summary judgment de novo and focus on whether the district court properly concluded that there was no genuine issue as to any material fact and the moving party was entitled to judgment as a matter of law. See Miller v. Wolpoff & Abramson, LLP, 321 F.3d 292, 300 (2d Cir. 2003). In determining whether there are genuine issues of material fact, we are "'required to resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought.'" Terry v. Ashcroft, 336 F.3d 128, 137 (2d Cir. 2003) (quoting Stern v. Trs. of Columbia Univ. in City of New York, 131 F.3d 305, 312 (2d Cir. 1997)). Summary judgment is appropriate "[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
Under New York law, which governs this diversity action, it is well settled that compliance with the notice provisions of an insurance contract is a condition precedent to an insurer's liability. See Am. Ins. Co. v. Fairchild Indus., Inc., 56 F.3d 435, 438 (2d Cir. 1995); Sec. Mut. Ins. Co. of N.Y. v. Acker-Fitzsimons Corp., 31 N.Y.2d 436, 440 (1972). These types of requirements are "standard provision[s] in liability policies," Travelers Ins. Co. v. Volmar Constr. Co., Inc., 300 A.D.2d 40, 43 (1st Dep't 2002), without which "an insurer may be deprived of the opportunity to investigate a claim and is rendered vulnerable to fraud," Power Auth. v. Westinghouse Elec. Corp., 117 A.D.2d 336, 339 (1st Dep't 1986) (noting that late notification "may also prevent the insurer from providing a sufficient reserve fund"). "For these reasons, '[t]he right of an insurer to receive notice has been held to be so fundamental that the insurer need show no prejudice to be able to disclaim liability on this basis.'" Id. (quoting Allstate Ins. Co. v. Furman, 84 A.D.2d 29, 33 (2d Dep't 1981)). Prior to 2009, when the applicable statute was amended, New York law allowed ...