The Rogak Report: 09 Nov 2004 ** Cooperation Clause **
- INSURER FAILS TO MEET BURDEN REQUIRED FOR NON-COOPERATION DISCLAIMER
Clarendon National Insurance Company v. Bajwa, NYLJ 11/09/04 (Supreme
Court, Kings County) (Schmidt, j)
In this DJ action, Clarendon National Insurance Company moved for
summary judgment, declaring that Clarendon was not obligated to
defend or indemnify defendant Liaqat Bajwa in an underlying action.
On June 12, 2001, a motor vehicle owned and operated by Bajwa
collided with a vehicle owned by Shomua and operated by Shampa.
Sakine Boz and the infant Ferhat Boz, passengers in the Bajwa
vehicle, were seriously injured in that accident. Thereafter, a
negligence action was commenced against Bajwa, Shomua and Shampa by
Ferhat Boz, Nikali Boz, and Sakine Boz. Bajwa's vehicle was insured
under a policy issued by Clarendon.
Clarendon moved for summary judgment on the grounds that Bajwa failed
to cooperate with the company as required by the express language of
the insurance policy between Clarendon and Bajwa.
Part B of that policy entitled "Duties After an Accident or Loss",
states in pertinent part:
We [Clarendon] have no duty to provide coverage under this policy
unless there has been full compliance with the following duties:
B. A person seeking any coverage must:
1. Cooperate with us in the investigation, settlement or defense of
any claim or suit.
The Court stated, "An insurer who seeks to disclaim liability based
on lack of cooperation of the insurer faces a heavy burden since the
defense frustrates the public policy that innocent victims of
automobile accidents be compensated for their injuries" (citing
Hanover Ins. Co. v. DeMato, 143 AD2d 807; Thrasher v. United States
Liab. Ins. Co., 19 NY2d 159). Thus, to effectively deny insurance
coverage on this ground, the insurance carrier must demonstrate (1)
that it acted diligently in seeking to bring about the insured's
cooperation, (2) that the efforts employed by the carrier were
reasonably calculated to obtain the insured's cooperation, and (3)
that the attitude of the insured, after his cooperation was sought,
was one of willful and avowed obstruction."
Moreover, held the Court, "a very heavy burden is imposed on the
insurer to show, in the first instance, that the circumstances
support the inference that the insured's failure to cooperate was
"In this case, "a short summary of the efforts taken by Clarendon and
its agents to locate Bajwa... makes plain that Clarendon has failed,
as a matter of law, to satisfy its burden of demonstrating that it
took sufficient steps to gain Bajwa's cooperation. Specifically, it
is unclear whether the letters sent to Bajwa seeking his cooperation
immediately following the accident were sent to an address at which
he resided; later correspondence between Professional Claims Service
(PCS), retained by Clarendon, and the insurance company list two
other "possible" addresses for Bajwa. Moreover, when representatives
of PCS visited those two residences some eighteen months after the
accident, Bajwa was not present nor was his name listed on the
building directory. While Lee Van Orden, a claim representative from
PCS, claimed that correspondence addressed to Bajwa was given to
someone at one of the addresses who identified herself as Bajwa's
wife, it was later revealed that Bajwa may have relocated to Pakistan
a year earlier."
"As the foregoing evidence makes plain," held the Court, "Clarendon
failed to act diligently in seeking Bajwa's cooperation and failed to
employ reasonable efforts to locate him. Most egregious was the
investigators' utter failure to ascertain Bajwa's actual residence by
visiting commercial establishments in the neighborhood, visiting his
place of employment, requesting information from the Department of
Motor Vehicles, Board of Elections, or by requesting that a credit
check be performed."
Finally, "since the evidence does not support a conclusion that Bajwa
was aware of the fact that Clarendon was seeking his cooperation, it
cannot be said that he wilfully refused to cooperate."
Therefore, said the Court, "Clarendon has failed to demonstrate that
it acted diligently in attempting to contact Bajwa, that the efforts
it did make were likely to obtain his cooperation, or that Bajwa's
failure to respond to those efforts was either wilful or deliberate.
Thus, Clarendon's motion seeking a declaration that it is not
obligated to defend or indemnify Bajwa is denied."