| Ponok Realty Corp. v United Natl. Specialty Ins. Co. |
| 2010 NY Slip Op 00124 [69 AD3d 596] |
| January 5, 2010 |
| Appellate Division, Second Department |
| Ponok Realty Corp., Appellant, v United NationalSpecialty Insurance Company, Respondent. |
—[*1] Greenfield & Ruhl, Uniondale, N.Y. (Brian J. Greenfield and Scott L. Mathias of counsel),for respondent.
In an action, inter alia, for a judgment declaring that the defendant, United NationalSpecialty Insurance Company, is obligated to defend and indemnify Ponok Realty Corp. in anunderlying action entitled RO Gallery Image Makers, Inc. v Ponok Realty Corp.,pending in the Supreme Court, Queens County, under index No. 19538/03, the plaintiffappeals from an order of the Supreme Court, Queens County (Kelly, J.), entered July 7, 2008,which granted the defendant's motion, among other things, in effect, for summary judgmentdeclaring that the defendant is not so obligated.
Ordered that the order is affirmed, with costs, and the matter is remitted to the SupremeCourt, Queens County, for the entry of a judgment, inter alia, declaring that the defendant is notobligated to defend and indemnify Ponok Realty Corp. in the underlying action.
The plaintiff's argument that the "prejudice" rule articulated in Insurance Law § 3420(c) (2) (A), governs this case is unavailing. A 2008 amendment to Insurance Law § 3420(c) (2) (A) (see L 2008, ch 388, § 4) provides that where "an insurer alleges that itwas prejudiced as a result of a failure to provide timely notice, the burden shall be on. . . the insurer to prove that it has been prejudiced" if the notice was providedwithin two years of the time required under the policy (see Insurance Law § 3420[c] [2] [A] [i]). However, it is clear from section 8 of the act amending Insurance Law §3420 that the amendments were to "apply to policies issued or delivered in this state on or after[January 17, 2009]" (Historical and Statutory Notes, McKinney's Cons Laws of NY, Book 27,Insurance Law § 3420, 2009 Pocket Part, at 15, quoting L 2008, ch 388, § 8; seegenerally Matter of Auerbach v Board of Educ. of City School Dist. of City of N.Y., 86NY2d 198, 204 [1995]). The insurance policy issued by the defendant to the plaintiff waseffective from October 3, 2003, until October 3, 2004. Since the policy was issued before theeffective date of the relevant amendment to Insurance Law § 3420, the amended version ofthat section does not apply to the subject insurance policy.
Moreover, the plaintiff's argument that notice of a potential claim was given to the [*2]defendant "as soon as practicable" is similarly unconvincing.Where an insurance policy requires that notice of an occurrence be given "as soon aspracticable," notice must be given within a reasonable time in view of all of the circumstances(see Great Canal Realty Corp. v SenecaIns. Co., Inc., 5 NY3d 742, 743 [2005]; 120 Whitehall Realty Assoc., LLC v Hermitage Ins. Co., 40 AD3d719, 721 [2007]; Genova v Regal Mar. Indus., 309 AD2d 733, 734 [2003]). "Theinsured's failure to satisfy the notice requirement constitutes 'a failure to comply with a conditionprecedent which, as a matter of law, vitiates the contract' " (Great Canal Realty Corp. vSeneca Ins. Co., Inc., 5 NY3d at 743, quoting Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332, 339 [2005];see Sputnik Rest. Corp. v United Natl.Ins. Co., 62 AD3d 689 [2009]). "[C]ircumstances may exist that will excuse or explainthe insured's delay in giving notice, such as a reasonable belief in nonliability" (Genova vRegal Mar. Indus., 309 AD2d at 734; see Great Canal Realty Corp. v Seneca Ins. Co.,Inc., 5 NY3d at 743-744; C.C.R.Realty of Dutchess v New York Cent. Mut. Fire Ins. Co., 1 AD3d 304, 305 [2003]).
In general, the existence of a good faith belief that the injured party would not seek to holdthe insured liable, and the reasonableness of such belief, are questions of fact for the fact-finder(see Genova v Regal Mar. Indus., 309 AD2d at 734; C.C.R. Realty of Dutchess vNew York Cent. Mut. Fire Ins. Co., 1 AD3d at 305). The burden of demonstrating thereasonableness of the excuse lies with the insured (see Genova v Regal Mar. Indus., 309AD2d at 734). Nevertheless, summary judgment may be awarded to the insurer if, construing allinferences in favor of the insured, the evidence establishes, as a matter of law, that the insured'sbelief in nonliability was unreasonable or in bad faith (see 120 Whitehall Realty Assoc., LLCv Hermitage Ins. Co., 40 AD3d at 721; Genova v Regal Mar. Indus., 309 AD2d at734).
Here, the defendant established its prima facie entitlement to judgment as a matter of law bydemonstrating that it was not notified of the subject property damage claim until more than oneyear had elapsed since the plaintiff received notice of such claim from its tenant (see GreatCanal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d at 743; Sputnik Rest. Corp. v UnitedNatl. Ins. Co., 62 AD3d at 689; 120 Whitehall Realty Assoc., LLC v Hermitage Ins. Co.,40 AD3d at 721; Genova v Regal Mar. Indus., 309 AD2d at 734). In opposition, theplaintiff failed to raise a triable issue of fact as to whether its belief that its tenant would not filea claim was reasonable. In construing all inferences in favor of the insured, the evidenceestablished, as a matter of law, that the plaintiff's belief in nonliability was unreasonable (see120 Whitehall Realty Assoc., LLC v Hermitage Ins. Co., 40 AD3d at 721; Genova vRegal Mar. Indus., 309 AD2d at 734). Accordingly, the Supreme Court properly granted thedefendant's motion for summary judgment.
Since this is a declaratory judgment action, the matter must be remitted to the SupremeCourt, Queens County, for the entry of a judgment, inter alia, declaring that the defendant is notobligated to defend and indemnify Ponok Realty Corp. in the underlying action (see Lanza vWagner, 11 NY2d 317, 334 [1962], appeal dismissed 371 US 74 [1962], certdenied 371 US 901 [1962]). Mastro, J.P., Fisher, Belen and Austin, JJ., concur. [PriorCase History: 2008 NY Slip Op 31819(U).]