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25 Avenue C New Realty, LLC, et al v. Alea North America Insurance Company

June 12, 2012

25 AVENUE C NEW REALTY, LLC, ET AL., PLAINTIFFS,
v.
ALEA NORTH AMERICA INSURANCE COMPANY, DEFENDANT-RESPONDENT, MERRIMACK MUTUAL FIRE INSURANCE COMPANY, DEFENDANT-APPELLANT.



25 Ave. C New Realty, LLC v Alea N. Am. Ins. Co.

Decided on June 12, 2012

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.

Tom, J.P., Sweeny, Acosta, Renwick, Roman, JJ.

Order, Supreme Court, Bronx County (Stanley Green, J.), entered August 23, 2010, which, to the extent appealed from as limited by the briefs, granted plaintiffs' motion for summary judgment to the extent of declaring that defendant Merrimack Mutual Fire Insurance Company (Merrimack) is obligated to defend and indemnify plaintiffs in an underlying personal injury action, granted defendant Alea North America Insurance Company's cross motion for summary judgment dismissing the complaint and all cross claims against it, and denied Merrimack's cross motion for summary judgment, modified, on the law, to the extent of denying plaintiffs' motion for summary judgment, and granting defendant Merrimack's cross motion for summary judgment to the extent of declaring that Merrimack is not obligated to defend and indemnify plaintiffs in the underlying personal injury action, and otherwise affirmed, without costs.

Plaintiffs are the owners and parties in interest to property located at 25 Avenue C in New York County. Defendant Merrimack insured this property under a liability policy that was in effect on June 27, 2003. Defendant Alea North America Insurance Company (Alea) insured this property under a liability policy that was in effect on June 27, 2005.

On June 27, 2005, Eamonn Grimes commenced an action against 25 Avenue C to recover for personal injuries allegedly sustained on that property. The complaint alleged that the date of the accident was June 27, 2005. Plaintiffs gave timely notice of the summons and complaint to Alea, and Claims Administration Corporation (CAC), Alea's third-party claims administrator, assigned the defense of this action to the Law Office of Jeffrey Samel (Samel).

In May 2007, an investigator from CAC discovered, after speaking with Grimes, that the accident actually occurred on June 27, 2003, not June 27, 2005 as stated in the complaint. In August 2007, Samel's office received a bill of particulars which alleged that Grimes's accident occurred on June 27, 2003. At the same time, it also received hospital records showing Grimes was hospitalized from June 28 to July 8, 2003. On October 4, 2007, Samel's office took the deposition of a nonparty witness who testified that Grimes' accident occurred on June 27, 2003.

On May 15, 2008, CAC contacted plaintiffs to determine the name of the insurance carrier that insured the premises during 2003. Plaintiffs advised CAC that Merrimack was the insurer during that period. On May 23, 2008, Samel notified Merrimack that the actual date of the incident was June 27, 2003 and that Alea's policy was not in effect at that time. It tendered the defense of the Grimes action to Merrimack.

On July 8, 2008, Merrimack rejected Alea's tender on the ground that it had not been given timely notice of the claim. Alea advised plaintiffs on August 11, 2008 that it was declining coverage, as the actual date of the incident predated Alea's policy coverage.

Plaintiffs thereafter commenced this action seeking a declaration that either Alea or Merrimack is obligated to defend and indemnify plaintiffs in the underlying personal injury action. All parties subsequently moved and cross moved for summary judgment. Supreme Court granted plaintiffs' motion against Merrimack, finding that Merrimack was obligated to defend and indemnify plaintiffs. It also denied Merrimack's cross motion for, among other things, a declaration that its disclaimer was valid, finding that Merrimack "was notified within a reasonable time under the facts and circumstances and there is no apparent prejudice, as discovery is ongoing." Finally, the court granted Alea's cross motion for summary judgment dismissing the complaint and all cross claims against it.

Supreme Court properly found that there is no basis in equity for compelling Alea to continue defending and indemnifying plaintiffs. Since Alea's insurance policy was not in effect when the incident took place, equitable remedies cannot create insurance where none exists (see Axelrod v Magna Carta Cos., 63 AD3d 444, 445 [2009]; Wausau Ins. Cos. v Feldman, 213 AD2d 179, 180 [1995]).

A different analysis is warranted with respect to the validity of Merrimack's disclaimer of coverage.

Initially, Merrimack was not required todemonstrateany prejudice resulting from the claimed untimely notice, as its policy predated the effective date of the amendments to Insurance Law § 3420(a)(5) that now requires such showing [*fn1] (Board. of Mgrs. of the 1235 Park ...


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