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The Rogak Report: 10 Apr 2006 ** Coverage - Late Notice **

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  • Lawrence Rogak
    DESPITE PATRON S ASSERTION THAT SHE HAD FALLEN OVER HER OWN SHOELACES, DINER IS HELD TO HAVE FORFEITED COVERAGE DUE TO LATE NOTICE Kambousi Restaurant Inc.,
    Message 1 of 1 , Apr 9, 2006
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      DESPITE PATRON'S ASSERTION THAT SHE HAD FALLEN OVER HER OWN
      SHOELACES, DINER IS HELD TO HAVE FORFEITED COVERAGE DUE TO LATE NOTICE

      Kambousi Restaurant Inc., t/a Royal Coach Diner v. Burlington
      Insurance Co. Index no. 18235/2004 (Supreme Court, Bronx County)
      (BARONE, j)

      In a surprising decision, this Court held that a restaurant which did
      not report an incident in which a patron fell, because the patron
      told the manager she fell over her own shoelaces, violated the timely
      notice provision of its insurance policy and thereby forfeited
      coverage.

      This was a declaratory judgment action brought by Kambousi Restaurant
      Inc. The "undisputed facts" were that on October 25, 2003 a person
      came into the diner and told the manager, Randazzo, that a woman had
      fallen in the parking lot.

      The manager went out to investigate. He saw a woman sitting on the
      ground with a man he assumed was her husband. The man informed him
      that the woman had tripped over her shoelaces, that there was nothing
      to worry about and that he had called an ambulance.

      The woman then apologized and said she was clumsy and had fallen. The
      manager told them he needed to make a report and went in to the
      diner. When he returned all were gone and he was unable to write a
      report.

      In April of 2004 Kambousi became aware of a possible lawsuit against
      it brought by Racquel Recard based on the October 25, 2003 incident.
      Kambousi then notified Burlington.

      The Court held that "While Mr. Randazzo's actions after the incident
      were understandable the law of New York requires that he and
      plaintiff should have done more. Specifically his legal obligation
      was to notify his employer of the incident and his employer should
      have then notified Burlington. The failure to do so in a timely
      manner relieved Burlington of its duty to defend and indemnify."

      "The policy which Burlington issued to Kambousi contained the
      standard requirement that the insured notify the insurer as soon 'as
      practicable' of an 'occurrence'. This notice requirement has
      consistently been interpreted strictly against the insured by the New
      York Court of Appeals. Specifically the notice provision of an
      insurance policy is deemed to be a condition precedent to coverage
      under the policy even when no other prejudice can be shown."

      "There may be circumstances such as lack of knowledge that an
      accident has occurred or a reasonable belief in non liability that
      will excuse or explain delay in giving notice but the insured has the
      burden of showing reasonableness of such excuse. The reason cited by
      the courts for this strict rule is that absent timely notice, an
      insurer may be deprived of the opportunity to investigate a claim.
      Late notification may also prevent the insurer from providing a
      sufficient reserve fund."

      "Kambousi notified Burlington five months after the occurrence. This
      does not constitute timely notification in New York. A delay of 21
      days was held to be untimely, Rushing v. Commercial Casualty Ins.
      Co., 25 NY 302 (Cardozo, J.) and a ten day delay was ruled not to be
      timely notice under the circumstances therein. Haas Tobacco Co. v.
      American Fidelity 226 NY 343."

      "When applied to the facts of this case New York precedent requires
      Kambousi to have responded more expeditiously. Mr. Randazzo was aware
      that an incident had occurred. He was also informed that an ambulance
      had been called. In order for Kambousi to claim indemnification under
      its policy with Burlington, Mr. Randazzo was required to immediately
      notify his employer and the employer then had an obligation to notify
      the insurer. The employee's initial failure is attributable to the
      employer."

      Summary judgment was granted to Burlington.

      Comment: In all fairness, I think this decision is wrong. The Court
      here acknowledges that a reasonable belief in a lack of liability
      will excuse late notice, but obviously does not agree that a person's
      statement that she fell over her own shoelaces in the parking lot
      would make a reasonable person come to the conclusion that there was
      no liability. I disagree. When a person says they fell over their
      own shoelaces in the parking lot, it is reasonable to conclude that
      there is no liability on the part of the premises owner.
      Nonetheless, this decision will stand unless overturned on appeal.

      Larry Rogak
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