| NYAT Operating Corp. v GAN Natl. Ins. Co. |
| 2007 NY Slip Op 09675 [46 AD3d 287] |
| December 6, 2007 |
| Appellate Division, First Department |
| NYAT Operating Corp., Formerly Known as New York AppleTours, Inc., Plaintiff, and Renata Cabrera, Respondent, v GAN National InsuranceCompany et al., Appellants. |
—[*1] Sivin & Miller, LLP, New York City (Edward Sivin of counsel), for respondent.
Judgment, Supreme Court, New York County (Debra A. James, J.), entered July 25, 2006, ina declaratory judgment action involving defendant insurers' (GAN) obligation to defend andindemnify plaintiff insured (NYAT) in an underlying action in which plaintiff-intervenor(Cabrera) obtained a judgment against NYAT for having negligently hired and retained anemployee who sexually assaulted her, in favor of Cabrera and against GAN in the principalamount of $997,448, plus interest, costs and disbursements, unanimously affirmed, with costs.Appeal from order, same court and Justice, entered May 31, 2005, which, inter alia, on NYAT'sdefault, granted GAN's motion pursuant to CPLR 3126 to dismiss the action to the extent ofdismissing NYAT's complaint, and granted Cabrera's cross motion for summary judgment on hercause of action against GAN under Insurance Law § 3420 (b) (1), and appeal from order,same court (Steven E. Liebman, Special Referee), entered July 11, 2006, which computedCabrera's damages and interest, unanimously dismissed, without costs.
The dismissal of NYAT's complaint as a result of its default in opposing GAN's CPLR 3126motion does not estop Cabrera from asserting NYAT's coverage under the subject commercialgeneral liability policy for the sexual assault committed against her by NYAT's employee (Zimmerman v Tower Ins. Co. of N.Y.,13 AD3d 137 [2004]; see StumpfAG v Dynegy Inc., 32 AD3d 232, 233 [2006]). On the merits, because NYAT's liabilityin the underlying action was based on its negligent hiring and retention of the employee, notrespondeat superior, the sexual assault was a covered "accident" within the meaning of thepolicy, and the exclusion for injuries expected or intended from the standpoint of the insureddoes not apply (RJC Realty Holding Corp. v Republic Franklin Ins. Co., 2 NY3d 158[2004]). It does not avail GAN to argue that the assault was foreseeable (cf. id. at 164).Any right GAN had to disclaim on the ground that it did not receive timely notice of the assaultwas lost when it did not give either [*2]NYAT or Cabrera noticeof disclaimer on such ground as soon as reasonably possible (Tully Constr. Co., Inc. v TIG Ins. Co., 43 AD3d 1150, 1151-1152[2007]; see Milbank Hous. Dev. Fund vRoyal Indem. Co., 17 AD3d 280, 280-281 [2005]). That GAN had such ground todisclaim was readily apparent as soon as it learned of Cabrera's lawsuit against NYATcommenced 2½ years earlier (see Milbank at 281); yet, GAN never served a noticeof disclaimer. Instead, it served a reservation of rights letter on NYAT, which has no relevance tothe question of timely notice of disclaimer (Hartford Ins. Co. v County of Nassau, 46NY2d 1028, 1029 [1979]), and, if its answer herein be deemed a notice of disclaimer, it wasuntimely as a matter of law (see id. at 1029-1030). Accordingly, Cabrera was properlygranted summary judgment for the compensatory portion of the underlying judgment, up to the$1 million limit of the policy, plus interest from the date of entry of the underlying judgment (see Kleynshvag v GAN Ins. Co., 21AD3d 999, 1000-1001 [2005]; Levit v Allstate Ins. Co., 308 AD2d 475, 477 [2003]).We have considered GAN's other arguments and find them unavailing. Concur—Tom,J.P., Saxe, Friedman, Gonzalez and Catterson, JJ.