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Liberty Insurance Underwriters Inc v. Great American Insurance Company

June 20, 2012

LIBERTY INSURANCE UNDERWRITERS INC., PLAINTIFFS,
v.
GREAT AMERICAN INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Denise Cote, District Judge:

OPINION & ORDER

This insurance coverage dispute arises out of a judgment obtained in a personal injury lawsuit in the New York Supreme Court, Luis Garcia v. Plaza 400 Owners Corp., et al., Index No. 107425/06, 2010 WL 3772575 (N.Y. Sup. Ct. July 23, 2010) (the "Underlying Action"). Plaintiff Liberty Insurance Underwriters Inc. ("Liberty"), as subrogee of Arrow Restoration, Inc. ("Arrow"), seeks to enforce against Great American E & S Insurance Company ("Great American") a judgment in the amount of $424,000 obtained against Diamond Waterproofing Corp. ("Diamond").

Diamond, a subcontractor that was performing work for Arrow and whose employee was injured on April 4, 2006 during that work, had an insurance policy with Great American. Great American denied coverage to Diamond, however, based on late notice of the claim. Liberty paid $1,060,000 to Diamond's injured employee Luis Garcia ("Garcia") on behalf of Arrow, as Arrow's liability insurance carrier, in full satisfaction of a judgment in the Underlying Action. Pursuant to N.Y. Ins. Law § 3420(a)(2), Liberty now challenges Great American's disclaimer of coverage to Diamond.

Great American and Liberty have moved for summary judgment. For the following reasons, Great American's motion for summary judgment is granted, and Liberty's motion for summary judgment is denied.

BACKGROUND

I. The Garcia Accident The following facts are undisputed unless otherwise indicated. In April 2006, Arrow was the general contractor for a construction project at 401 East 55th Street, New York, NY (the "Premises"). Arrow had subcontracted certain work on the Project to Diamond. On April 4, 2006, Garcia allegedly sustained injuries during the course of his employment for Diamond at the Premises (the "Garcia Accident").

II. The Great American Policy There is no evidence that Diamond ever advised Great

American of the Garcia Accident. At the time of the Garcia Accident, Diamond maintained primary general liability insurance with Great American in the amount of $1,000,000 per occurrence, subject to a $2,000,000 aggregate, for the period November 27, 2005 through November 27, 2006 (the "Great American Policy"). The Great American Policy contained a provision requiring timely notice of "occurrences," "claims," or "suits" (the "Notice Provision"). The Notice Provision provides in relevant part:

2. Duties In The Event Of Occurrence, Offense, Claim or Suit

a. You must see to it that we are notified as soon as practicable of an "occurrence" or an offense which may result in a claim. To the extent possible, notice should include:

(1) How, when and where the "occurrence" or offense took place;

(2) The names and addresses of any injured persons and witnesses; and

(3) The nature and location of any injury or damage arising out of the "occurrence" or offense.

b. If a claim is made or "suit" is brought against any insured, you must:

(1) Immediately record the specifics of the claims or "suit" and the date received; and

(2) Notify us as soon as practicable.

You must see to it that we receive written notice of the claim or "suit" as soon as practicable. (Emphasis supplied.)

III. The Underlying Action On May 30, 2006, Garcia commenced the Underlying Action in the Supreme Court, New York County, seeking money damages for his injuries. Garcia later filed an amended complaint to add Arrow as a defendant in the Underlying Action. At the time of the Garcia Accident, Arrow maintained primary general liability insurance with Liberty. On October 18, 2007, Arrow filed a third-party complaint in the Underlying Action against Diamond, alleging that Garcia was an employee of Diamond at the time of the Garcia Accident and that Arrow would be entitled to contribution and contractual indemnity from Diamond for any judgment Garcia might obtain against Arrow for his personal injuries.

IV. Great American's Notice of the Garcia Accident In a letter dated January 2, 2008 (the "January 2, 2008 Letter") and addressed to Loyd Keith Friedlander Partners, Ltd. ("LKF"), Rivkin Radler LLP ("Rivkin"), ...


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