The Rogak Report: 09 Apr 2006 ** Coverage - Late Notice **
- INSURED'S EIGHT-MONTH DELAY IN REPORTING INCIDENT TO INSURER RESULTS
IN VALID DISCLAIMER; NOTICE TO BROKER IS NOT NOTICE TO INSURER
Paul Developers, LLC V. Maryland Casualty Insurance Company, et al.,
appellants, et al., defendants. (Index No. 32045/02) (2D Dept 2006)
In this DJ action, Zurich/Maryland Casualty appealed from a decision
of Supreme Court, Suffolk County, which denied their Motion for
summary judgment seeking a declaration that they are not obligated to
defend or indemnify this plaintiff in an underlying personal injury
action. The Appellate Division reversed and granted judgment to the
Assurance Company of America issued a general liability insurance
policy to the plaintiff Emmy Homes, LLC, naming the plaintiffs Paul
Developers, LLC, and Foxridge Associates, LLC, as additional
insureds. The policy, procured by the plaintiffs' insurance broker,
the defendant Borg & Borg, Inc., obligated the plaintiffs to notify
Assurance "as soon as practicable of an occurrence' . . . which may
result in a claim."
During the policy period, on June 11, 2001, Santos Garcia was injured
when he was struck by windblown plywood while performing construction
work at the plaintiffs' job site. By letter dated November 30, 2001,
Garcia's attorneys sent written notification of Garcia's claim to the
plaintiffs Paul Developers, LLC, and Foxridge Associates, LLC. On
August 9, 2002, the plaintiffs faxed a copy of the complaint in the
underlying action to Assurance's claims adjuster. By letter dated
August 12, 2002, the insurer disclaimed coverage based upon late
notice; the letter noted that "our file reveals that your company
received notice of this loss pursuant to a letter of representation
from Siben and Siben dated 11/30/01. Assurance Company of America
received first notice of this loss on 8/6/02."
The plaintiffs subsequently commenced the instant action for a
judgment declaring that the defendants Maryland Casualty Insurance
Company, Zurich Group of Insurance Companies, and Assurance
(collectively Zurich) were obligated to defend and indemnify them in
the underlying action. Zurich cross-moved for summary judgment,
arguing that the plaintiffs failed to comply with the notice
provision of the insurance policy. The Supreme Court denied the cross
motion on the ground that a triable issue of fact existed as to when
Zurich received notice of the Siben & Siben letter dated November 30,
"Where an insurance policy requires that notice of an occurrence be
given promptly, notice must be given within a reasonable time in view
of all of the facts and circumstances," held the Second
Department. "Providing an insurer with timely notice of a potential
claim is a condition precedent, and thus absent a valid excuse, a
failure to satisfy the notice requirement vitiates the policy. Where
there is no excuse or mitigating factor, the issue of reasonableness
poses a legal question for the court, rather than an issue for the
trier of fact."
"Zurich established, prima facie, entitlement to judgment as a matter
of law by demonstrating that the plaintiffs received notice of the
underlying claim on or about November 30, 2001, yet failed to give
notice to them until August 2002, over eight months later."
"In opposition, the plaintiffs failed to raise a triable issue of
fact as to whether Zurich received notice of the underlying claim
prior to August 2002. The fact that the plaintiffs may have provided
timely notice to their own broker is of no consequence. Notice to a
broker cannot be treated as notice to the insurer since the broker is
normally deemed to be the agent of the insured and not the carrier."
"Under these circumstances, the over eight-month delay was
unreasonable as a matter of law and justified Zurich's disclaimer.
Accordingly, the Supreme Court erred in denying Zurich's cross motion
for summary judgment."
The case was remanded back to Supreme Court for entry of judgment in
favor of Zurich.