| St. James Mech., Inc. v Royal & Sunalliance |
| 2007 NY Slip Op 08213 [44 AD3d 1030] |
| October 30, 2007 |
| Appellate Division, Second Department |
| St. James Mechanical, Inc., Appellant, v Royal &Sunalliance et al., Respondents. |
—[*1] Ahmuty, Demers & McManus, Albertson, N.Y. (Brendan T. Fitzpatrick and William J.Mitchell of counsel), for respondents.
In an action, inter alia, for a judgment declaring that the defendants are obligated to defendand indemnify the plaintiff in an underlying personal injury action entitled Freehill v ITTSheraton Corp., pending in the Supreme Court, Queens County, under index No. 24232/97,the plaintiff appeals, as limited by its brief, from so much of an order of the Supreme Court,Suffolk County (Werner, J.), entered December 23, 2005, as granted the defendants' cross motionfor summary judgment dismissing the complaint.
Ordered that the order is reversed insofar as appealed from, on the law, with costs, and thedefendants' cross motion for summary judgment dismissing the complaint is denied.
In May 1996 the ITT Sheraton Corp. (hereinafter the Sheraton) hired the plaintiff, St. JamesMechanical, Inc. (hereinafter St. James), to renovate the ventilation system in the sub-cellar ofthe Sheraton New York Hotel & Towers located at 811 Seventh Avenue in Manhattan. On July25, 1996, a worker employed by Budd Contracting Corp. (hereinafter Budd) fell off a ladder atopa scaffold while he was removing the curtain wall in a garage to accommodate the new exhaustsystem. At the time of the accident, St. James was insured by the defendant Royal InsuranceCompany (hereinafter Royal) under a commercial general liability policy that required theinsured to provide notice "as soon as practicable" of an occurrence that may result in a claim.
Although Budd's employee sued the Sheraton in October 1997 to recover damages [*2]for the injuries he allegedly sustained as a result of the accident, hedid not name St. James as a defendant until he filed an amended complaint in August 1998. Uponreceiving the amended complaint, St. James notified Royal, which subsequently disclaimedcoverage on the ground that St. James failed to provide it with notice of the accident as soon aspracticable.
St. James commenced the present action against Royal and an affiliated insurance carrier fora judgment declaring that they were obligated to defend and indemnify it in the underlyingpersonal injury action brought by Budd's employee. When St. James moved for summaryjudgment in its favor, the insurance carriers cross-moved for summary judgment.
An insurance carrier is not obligated to pay for a loss if the insured does not provide timelynotice of the underlying occurrence (see Security Mut. Ins. Co. of N.Y. v Acker-FitzsimonsCorp., 31 NY2d 436, 440 [1972]). In general, the insured's failure to comply with therequirement in an insurance policy that it give notice as soon as practicable of an incident thatmay result in a claim constitutes a failure to satisfy a condition precedent which vitiates thepolicy (see Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743 [2005];White v City of New York, 81 NY2d 955, 957 [1993]; Deso v London & LancashireIndem. Co. of Am., 3 NY2d 127, 129 [1957]; Brennan Bros. Co., Inc. v LumbermensMut. Cas. Co., 14 AD3d 525, 526 [2005]).
The courts have recognized, however, that there may be circumstances where the insured'sfailure to give timely notice is excusable, such as where the insured does not know about theaccident or has a good faith belief in nonliability (see Security Mut. Ins. Co. vAcker-Fitzsimons Corp., 31 NY2d at 441). The insured's belief in nonliability "must bereasonable under all the circumstances, and it may be relevant on the issue of reasonableness,whether and to what extent, the insured inquired into the circumstances of the accident oroccurrence" (id.).
As a general rule, where notice is required, the insured bears the burden of proving that therewas a reasonable excuse for the delay in giving notice (see Great Canal Realty Corp. v SenecaIns. Co., Inc., 5 NY3d at 744; Felix v Pinewood Bldrs., Inc., 30 AD3d 459, 461[2006]). Ordinarily, the question of whether the insured had a good-faith belief in nonliability,and whether that belief was reasonable, presents an issue of fact and not one of law (seeGenova v Regal Mar. Indus., 309 AD2d 733 [2003]; Mobile Home Estates v PreferredMut. Ins. Co., 105 AD2d 883, 884 [1984]). It is only when the facts are undisputed and notsubject to conflicting inferences that the issue can be decided as a matter of law (seeGreenwich Bank v Hartford Fire Ins. Co., 250 NY 116, 131 [1928]; SSBSS Realty Corp.v Public Serv. Mut. Ins. Co., 253 AD2d 583, 584 [1998]).
In the present case, the insurance carriers made a prima facie showing of entitlement tojudgment as a matter of law based on St. James's two-year delay in reporting the underlyingaccident. However, St. James raised a triable issue of fact as to whether the delay was reasonablybased on a good faith belief in nonliability. Under these circumstances, the Supreme Courtshould not have granted the insurance carriers' cross motion for summary judgment (seeJordan Constr. Prods. Corp. v Travelers Indem. Co. of Am., 14 AD3d 655, 656 [2005];Blue Ridge Ins. Co. v Jiminez, 7 AD3d 652, 653 [2004]; Genova v Regal Mar.Indus., 309 AD2d at 734; G.L.G. Contr. Corp. v Aetna Cas. & Sur. Co., 215 AD2d821, 822 [1995]; Triantafillou v Colonial Coop. Ins. Co., 178 AD2d 925, 926-927[1991]). Crane, J.P., Spolzino, Krausman and McCarthy, JJ., concur.