| Tower Ins. Co. of N.Y. v Lin Hsin Long Co. |
| 2008 NY Slip Op 03057 [50 AD3d 305] |
| April 3, 2008 |
| Appellate Division, First Department |
| Tower Insurance Company of New York, Appellant, v LinHsin Long Co., Trading as Hunan Ritz Restaurant, et al.,Respondents. |
—[*1] Larry Dorman, P.C., Astoria (Michael S. Murphy of counsel), for Lin Hsin Long Co.,respondent. Levine & Slavit, New York (Ira S. Slavit of counsel), for Charlotte Theodoratos,respondent.
Order, Supreme Court, New York County (Judith J. Gische, J.), entered September 7, 2007,which denied plaintiff's motion for summary judgment declaring that it is not obligated to defendor indemnify defendant Lin Hsin Long Co., trading as Hunan Ritz Restaurant (the insured), in anaction commenced against it by defendant Charlotte Theodoratos, reversed, on the law, withoutcosts, the motion granted and summary judgment awarded to plaintiff declaring that it is notobligated to defend or indemnify the insured in the lawsuit commenced against it byTheodoratos. The Clerk is directed to enter judgment accordingly.
Plaintiff issued a commercial general liability policy to the insured, a restaurant, that was toprovide coverage for the insured's premises from February 3, 2004 through February 3, 2005.The policy contained a provision requiring the insured, "as soon as practicable," to provide noticeto plaintiff of an "occurrence" that may result in a claim.
On January 29, 2005, Theodoratos slipped and fell near the women's restroom on the lowerlevel of the insured's premises. Theodoratos was removed from the premises on a stretcher andtransported by ambulance to a hospital. Employees of the insured were present when the accidentoccurred, were aware of the accident and offered assistance to Theodoratos. The manager of theinsured, while not present when the accident occurred, was informed of the accident the day itoccurred by other employees of the insured. Based on the information imparted to him by theemployees, the manager has asserted in this litigation that he believed that the accident was"caused by [Theodoratos'] own actions," that no claim would be asserted against the insured andthat "no further action" was required.
Approximately 2½ weeks after the accident, Theodoratos retained counsel to representher in connection with the accident. Shortly after being retained, counsel requested the name andaddress of the licensee of the premises where the accident occurred from both the WestchesterCounty Department of Health and the State Liquor Authority (SLA), and a copy of the policereport regarding the accident generated by the New Rochelle Police Department. By a letter datedMarch 3, 2005, the SLA provided counsel with the name and address of the insured.
Counsel sent a letter dated March 8, 2005 to the insured, notifying it that Theodoratos had[*2]sustained personal injuries on the premises as a result of theinsured's negligence, and "suggest[ing] that [the insured] forward th[e] letter to [its] insurancecarrier so that they [sic] may investigate th[e] occurrence and advise us as to whatdisposition they [sic] intend on making on this claim." After receiving no response fromthe insured, counsel sent a follow-up letter dated April 11, 2005. Counsel observed that he hadnot been contacted by the insured's insurance carrier despite his "suggestion that [the insured]forward [the March 8] letter to [the insurance carrier]," and stated that "[i]n view of the timeelement, a prompt response from your insurance company would be appreciated." Counsel hadno further contact with the insured, and did not undertake any efforts to identify the insured'sinsurance carrier or notify the insurance carrier of the accident.
Plaintiff did not receive notice of the accident until October 21, 2005, when it received fromeither the insured or the insured's broker a copy of the summons and complaint in Theodoratos'personal injury action, which was commenced on July 12, 2005. Following its investigation ofthe accident, plaintiff, by a letter dated November 17, 2005, disclaimed coverage on the groundthat neither the insured nor Theodoratos timely notified plaintiff of the accident. Plaintiffcommenced this action seeking a declaration that it has no duty to defend or indemnify theinsured in Theodoratos' action. Supreme Court denied plaintiff's motion for summary judgmenton the complaint, and this appeal ensued.
Where a liability insurance policy requires that notice of an occurrence be given "as soon aspracticable," such notice must be accorded the carrier within a reasonable period of time (Great Canal Realty Corp. v Seneca Ins. Co.,Inc., 5 NY3d 742, 743 [2005]). "The duty to give notice arises when, from theinformation available relative to the accident, an insured could glean a reasonable possibility ofthe policy's involvement" (Paramount Ins. Co. v Rosedale Gardens, 293 AD2d 235,239-240 [2002]). " '[W]here 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" (SSBSS RealtyCorp. v Public Serv. Mut. Ins. Co., 253 AD2d 583, 584 [1998], quoting Hartford Acc. &Indem. Co. v CNA Ins. Cos., 99 AD2d 310, 313 [1984]).
Here, plaintiff established as a matter of law that the insured failed to give plaintiff notice ofthe accident within a reasonable period of time. The accident involved a patron who slipped andfell on a floor on the insured's premises and had to be removed from the premises on a stretcherand placed in an ambulance. Moreover, the insured, through its employees (see Public Serv. Mut. Ins. Co. v HarlenHous. Assoc., 7 AD3d 421 [2004]), knew about the accident on the day it occurred.Thus, although the duty to give notice arose on the day of the accident, the insured did not giveplaintiff notice until almost nine months after it occurred—an unreasonable delay as amatter of law (see id.; DiGuglielmo v Travelers Prop. Cas., 6 AD3d 344, 346 [2004],lv denied 3 NY3d 608 [2004]; Paramount Ins. Co., 293 AD2d at 238, 241).
Seeking to avoid the consequences of its failure to give notice to plaintiff within a reasonableperiod of time, the insured asserts that it had a reasonable, good faith belief that the accidentwould not result in liability (see Great Canal Realty Corp., 5 NY3d at 743). As a matterof law, however, this excuse fails for the reasons just discussed—the insured's employeeswere aware of the accident, it involved a patron who slipped and fell on the insured's premisesand the patron had to be removed by stretcher and transported by ambulance (see ParamountIns. Co., 293 AD2d at 240-241; SSBSS Realty Corp., 253 AD2d at 585; see alsoDiGuglielmo, 6 AD3d at 346; Rondale Bldg. Corp. v Nationwide Prop. & Cas. Ins. Co., 1 AD3d584 [2003]). [*3]Moreover, the manager's professed beliefthat the accident was Theodoratos' own fault is insufficient to raise a triable issue of fact withrespect to whether the insured had a reasonable, good faith belief that the accident would notresult in liability. As Justice Sullivan stated in Paramount Ins. Co. (293 AD2d at 240):"the requirement of prompt notice of any occurrence that 'may result in a claim' should not beinterpreted in a way that the insurer is compelled to relinquish its right to prompt notice and allthe benefits that accrue therefrom—a timely investigation and the opportunity, ifappropriate, to dispose of the claim in its early stages, an opportunity that might be irretrievablylost in the case of delayed notice—by placing undue emphasis on the liability assessmentof one not trained or even knowledgeable in such matters."
Similarly, no triable issue of fact exists regarding the adequacy of the efforts of Theodoratos'counsel to ascertain the identity of plaintiff and notify it of the accident. An injured party, such asTheodoratos, has an independent right to notify an insurance carrier of an accident (seeInsurance Law § 3420 [a] [3]). However, "the injured party is required, in order to relyupon that provision, to demonstrate that he or she acted diligently in attempting to ascertain theidentity of the insurer, and thereafter expeditiously notified the insurer" (Steinberg v Hermitage Ins. Co., 26AD3d 426, 428 [2006]; see also Lauritano v American Fid. Fire Ins. Co., 3 AD2d564, 568 [1957], affd 4 NY2d 1028 [1958] ["When the injured party has pursued his [orher] rights with as much diligence as was reasonably possible the statute shifts the risk of theinsured's delay to the compensated risk-taker who can initially accept or reject those for whom itwill bear such risks" (internal quotation marks omitted)]). Stated differently, "where the injuredperson proceeds diligently in ascertaining coverage and in giving notice, he [or she] is notvicariously charged with any delay by the assured" (Jenkins v Burgos, 99 AD2d 217, 221[1984]; see National Grange Mut. Ins. Co. v Diaz, 111 AD2d 700, 701 [1985]).
Here, the evidence establishes as a matter of law that Theodoratos neither exercisedreasonable diligence in attempting to ascertain the identity of plaintiff nor notified it of theaccident. With regard to the latter, it is undisputed that Theodoratos did not give any notice toplaintiff; the belated notice received by plaintiff was supplied by the insured when it or its brokerforwarded to plaintiff the summons and complaint in Theodoratos' action. Since Theodoratos didnot assert her own right to provide notice, but rather relied on the insured to do so, her rights arederivative of the insured's (see Mount Vernon Fire Ins. Co. v Harris, 193 F Supp 2d 674,679 [ED NY 2002]). Appel v AllstateIns. Co. (20 AD3d 367 [2005]), Denneny v Lizzie's Buggies (306 AD2d 89[2003]) and Cirone v Tower Ins. Co. ofN.Y. (39 AD3d 435 [2007], lv denied 9 NY3d 808 [2007]), cited by the dissent,are distinguishable. In both Appel and Denneny, the injured party provided someform of belated notice to the insurance carrier. In Cirone, the Court found that the injuredparty's action to recover insurance proceeds pursuant to Insurance Law § 3420 (a) (2) wasnot barred based upon her failure to give written notice to the carrier because the insuredprovided notice of the accident to the carrier and the injured party's counsel, upon beingcontacted by the carrier, provided the carrier information regarding the accident.
With regard to the issue of reasonable diligence, shortly after the accident, Theodoratos'counsel made inquiries with both the Westchester County Department of Health and the SLA,seeking the name and address of the licensee of the premises where the accidentoccurred; no request for information regarding the insurer of the licensee was requested fromthese agencies or anyone else. The plain language of the requests shows that Theodoratos'counsel was seeking to [*4]ascertain the identity of the licensee ofthe premises, not the licensee's insurer, and thus these requests do not evince reasonablediligence by Theodoratos' counsel in seeking to identify plaintiff. For the same reasons, the mererequest for a copy of the police report regarding the accident generated by the New RochellePolice Department does not evince reasonable diligence.
Even more importantly, however, Theodoratos' counsel's letter to the insured simply"suggest[ed]" that the insured forward the letter to its insurance carrier. Counsel's subsequentletter stated only that "a prompt response from [the insured's] insurance company would beappreciated." Neither letter is sufficient to raise a triable issue of fact regarding whetherTheodoratos exercised reasonable diligence. Indeed, the undisputed fact that Theodoratos'counsel never even requested from the insured the name of its insurance carrier (nor undertookadditional efforts to identify the carrier) compels the conclusion that Theodoratos did notexercise reasonable diligence.
In sum, Supreme Court erred in denying plaintiff's motion because no triable issue of factexists regarding whether the insured or Theodoratos provided timely notice of the accident toplaintiff. In light of our conclusion that plaintiff is entitled to summary judgment on that ground,we do not pass on plaintiff's remaining arguments in favor of reversal. Concur—Buckley,Sweeny and McGuire, JJ.
Mazzarelli, J.P., and Andrias, J., dissent in part in a memorandum by Andrias, J., as follows:On January 29, 2005, Charlotte Theodoratos slipped and fell near the bottom of the stairs leadingto the bathroom in the Hunan Ritz Restaurant and was removed from the restaurant byambulance on a stretcher, which was enough to trigger the restaurant's obligation under thesubject policy to notify plaintiff insurer of Ms. Theodoratos's potential claim as soon aspracticable (see Zadrima v PSM Ins. Cos., 208 AD2d 529 [1994], lv denied 85NY2d 807 [1995]). We therefore agree that the restaurant failed to comply with that obligationwhen, despite two letters from Ms. Theodoratos's attorney suggesting that it forward her claim toits insurer, it did not notify plaintiff until October 2005, when it forwarded the summons andcomplaint that had been served on the Secretary of State in July. We disagree, however, with themajority's conclusion that Ms. Theodoratos and her attorney failed to exercise reasonablediligence in attempting to ascertain plaintiff's identity for purposes of independently placing it onnotice of her claim pursuant to Insurance Law § 3420 (a) (3).
It is well settled that in exercising this independent right to give notice to the insurer, aninjured party should not be charged vicariously with the insured's delay and that, in determiningthe reasonableness of such notice, the notice required is measured less rigidly than that requiredof the insured and the sufficiency thereof is governed not by the mere passage of time but by themeans available therefor (Appel vAllstate Ins. Co., 20 AD3d 367, 368-369 [2005]). Thus, "[w]here, as here, the insurerdoes not dispute receiving notice from its insured, the only issue with respect to the injured party[is] whether the efforts of the injured party to facilitate the [*5]providing of proper notice were sufficient in light of theopportunities to do so afforded [her] under the circumstances" (id. at 369 [internalquotation marks and citations omitted]). That Ms. Theodoratos never provided plaintiff withformal, written notice of the claim does not necessarily relieve plaintiff of its duty to indemnifythe restaurant, inasmuch as plaintiff did eventually receive notice of the claim from the restaurant(see Cirone v Tower Ins. Co. ofN.Y., 39 AD3d 435, 436 [2007], lv denied 9 NY3d 808 [2007]).
While Ms. Theodoratos and her attorney might possibly have done more (phone calls,personal visit, etc.), the case law does not so hold, nor can we say as a matter of law that theirefforts were inadequate. They sent their first claim letter to the restaurant on March 8, 2005,shortly after they ascertained its corporate identity, and a follow-up letter on April 11, 2005asking for a prompt response. When they received no response to those letters, they finally gotthe restaurant's attention by filing their summons and verified complaint with the WestchesterCounty Clerk on July 12, 2005 and serving it on the Secretary of State on July 18, 2005 pursuantto Business Corporation Law § 306 (b). Presumably the Secretary of State promptly sent acopy of the process to the restaurant, as required by the statute. Nevertheless, it was not untilshortly after October 10, 2005, when plaintiff notified it that service on the Secretary of State hadbeen made in July, that the restaurant notified plaintiff of Ms. Theodoratos's claim. However,even though the restaurant's notice may have been untimely as to it, that does not foreclose afinding that Mrs. Theodoratos's efforts were sufficient under the circumstances and the noticewas timely as to her. Unlike automobile accidents, where it is easier to find the insurer of theoffending vehicle, in order to ascertain the name of the restaurant's insurer some cooperationfrom the restaurant was required (cf. Cirone, 39 AD3d 435 [2007], supra). Whilethis is not a case where the restaurant affirmatively misled the injured party (see Denneny vLizzie's Buggies, 306 AD2d 89 [2003]), the restaurant nevertheless did nothing in responseto the letters.
Thus, the motion court properly denied plaintiff's motion for summary judgment on its claimfor a declaratory judgment that it is entitled to disclaim coverage, finding an issue of fact as towhether Ms. Theodoratos made diligent efforts to ascertain plaintiff's identity and independentlygive it notice of her claim. It should be left to the finder of fact to weigh the restaurant's failure tocontact plaintiff until after it was served with process, and determine whether any further effortby Ms. Theodoratos to communicate with the restaurant would have been futile.
The motion court also correctly found a triable issue of fact as to whether, as plaintiff claims,it had effectively cancelled the policy almost a year before the accident for nonpayment ofpremiums. For present purposes, plaintiff's claim that it has no record of ever receiving orcashing the restaurant's check is rebutted by the affidavit of the restaurant's principal that hemailed a check for the premium prior to the cancellation date as corroborated by the restaurant'scheck logbook. Moreover, the invoice sent by plaintiff to the restaurant for precancellation [*6]earned premiums was not clear that the policy had been cancelled,and the fact that plaintiff sent no further invoices to the restaurant relating to the subject policy isnot dispositive. [See 16 Misc 3d 1137(A), 2007 New York Slip Op 51718(U).]