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The Rogak Report: 09 Nov 2004 ** Cooperation Clause **

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  • Lawrence Rogak
    INSURER FAILS TO MEET BURDEN REQUIRED FOR NON-COOPERATION DISCLAIMER Clarendon National Insurance Company v. Bajwa, NYLJ 11/09/04 (Supreme Court, Kings County)
    Message 1 of 1 , Nov 9 8:56 AM
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      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."

      Larry Rogak
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