| Matter of New York Cent. Mut. Fire Ins. Co. v Steiert |
| 2009 NY Slip Op 09665 [68 AD3d 1120] |
| December 22, 2009 |
| Appellate Division, Second Department |
| In the Matter of New York Central Mutual Fire InsuranceCompany, Appellant, v Dawn Steiert et al., Respondents. Erich John Bohn et al.,Proposed Additional Respondents. |
—[*1] Votto & Cassata, LLP, Staten Island, N.Y. (Joseph Votto of counsel), forrespondent-respondent Dawn Steiert.
In a proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration of aclaim for supplemental underinsured/uninsured motorist benefits, the petitioner appeals from anorder of the Supreme Court, Nassau County (Davis, J.), entered July 22, 2008, which, after aframed-issue hearing, denied the petition and directed the parties to proceed to arbitration.
Ordered that the order is reversed, on the law, with costs, the petition is granted, and thearbitration is permanently stayed.
In this proceeding, the petitioner New York Central Mutual Fire Insurance Company(hereinafter NYCM) sought to permanently stay arbitration of a claim for supplementalunderinsured/uninsured motorist (hereinafter SUM) benefits filed by the respondent DawnSteiert, under a policy held by her mother. One ground upon which NYCM sought to stay thearbitration was that Steiert failed to comply with a requirement contained in the SUM policyendorsement that she first exhaust the limits of liability under all other insurance policiesapplicable at the time of the accident. After the accident, Steiert had made a claim for coveragefrom Kemper Auto and Home Insurance Company (hereinafter Kemper) under a policy held bythe additional respondent Erich A. Bohn, the driver's grandfather, with whom he resided at thetime of the accident. Kemper disclaimed coverage based upon a policy exclusion, on the groundthat the vehicle involved in the accident was provided to the driver, the proposed additionalrespondent Erich John Bohn, by his father, the proposed additional respondent Erich M. Bohn(who resided elsewhere), for his regular use. Steiert thereafter commenced a declaratoryjudgment action against Kemper challenging the disclaimer. By order dated March 22, 2004, theSupreme Court, Nassau County, awarded summary judgment to Kemper, declaring that it wasnot obligated to provide coverage for the accident. Notably, NYCM was not a party to thataction. In the instant proceeding, in an order dated February 10, 2005, the Supreme Court foundthat the prior declaratory judgment action was determinative on the issue of whether Steiert hadexhausted all available coverage, and thus any recovery on the SUM claim would not be barredby her failure to comply with the exhaustion requirement. That order was appealed to this Court,which held in Matter of New York Cent. Mut. Fire Ins. Co. v Steiert (43 AD3d 1065,1067 [2007]), that NYCM was not collaterally estopped by the ruling in the prior declaratoryjudgment action, and therefore was entitled to litigate Kemper's disclaimer on the merits. Aframed-issue hearing [*2]was then conducted on the issue of thevalidity of Kemper's disclaimer and the Supreme Court held that the disclaimer was not onlytimely, but that Kemper was under no duty to timely disclaim since the claim did not fall withinthe coverage terms of the liability policy. We now reverse and permanently stay arbitration ofthe SUM claim.
Contrary to the holding of the Supreme Court, since the basis for Kemper's disclaimer ofcoverage was a policy exclusion rather than a lack of coverage, it was under a duty to give noticeof its disclaimer "as soon as is reasonably possible" (Insurance Law § 3420 [d] [2]; seeMarkevics v Liberty Mut. Ins. Co., 97 NY2d 646, 648 [2001]; Matter of Worcester Ins.Co. v Bettenhauser, 95 NY2d 185, 188-189 [2000]; Handelsman v Sea Ins. Co., 85NY2d 96 [1994]; City of New York v St. Paul Fire & Mar. Ins. Co., 21 AD3d 978, 981[2005]).
"The timeliness of an insurer's disclaimer is measured from the point in time when theinsurer first learns of the grounds for disclaimer of liability or denial of coverage" (Tex Dev.Co., LLC v Greenwich Ins. Co., 51 AD3d 775, 778 [2008]; see First Fin. Ins. Co. v JetcoContr. Corp., 1 NY3d 64, 68-69 [2003]). Here, Kemper acquired facts entitling it to disclaimafter conducting examinations under oath of Erich A. Bohn and Erich John Bohn on January 2,2002 triggering its duty to provide prompt notice pursuant to Insurance Law § 3420 (d)(see Matter of American Express Prop. Cas. Co. v Vinci, 18 AD3d 655, 656 [2005]).Under these circumstances, Kemper's failure to disclaim coverage until February 27, 2002, forwhich no valid excuse was established, was unreasonable as a matter of law (id.; seeMoore v Ewing, 9 AD3d 484, 488 [2004]; Matter of Colonial Penn Ins. Co. v Pevzner,266 AD2d 391 [1999]).
Accordingly, the petition to permanently stay arbitration should have been granted. Rivera,J.P., Dillon, Miller and Roman, JJ., concur.