| 25th Ave., LLC v Delos Ins. Co. |
| 2011 NY Slip Op 03833 [84 AD3d 781] |
| May 3, 2011 |
| Appellate Division, Second Department |
| 25th Avenue, LLC, et al., Appellants, v Delos InsuranceCompany, Respondent. |
—[*1] White, Quinlan & Staley, LLP, Garden City, N.Y. (Eileen Farrell of counsel), forrespondent.
In an action for a judgment declaring that the defendant is obligated to defend and indemnifythe plaintiffs in an underlying action entitled Jaramillo v Colonial Constr., LLC,commenced in the United States District Court for the Eastern District of New York underdocket No. 07-2142, the plaintiffs appeal from (1) an order of the Supreme Court, Nassau County(Palmieri, J.), entered May 4, 2010, which granted the defendant's motion for summary judgmentdeclaring that the defendant was not obligated to defend and indemnify the plaintiffs in theunderlying action, and (2) a judgment of the same court entered June 25, 2010, which, upon theorder, among other things, declared that the defendant was not so obligated.
Ordered that the appeal from the order is dismissed; and it is further,
Ordered that the judgment is reversed, on the law, the defendant's motion for summaryjudgment is denied, and the complaint is reinstated, and the order is modified accordingly; and itis further,
Ordered that one bill of costs is awarded to the plaintiffs.
The appeal from the intermediate order must be dismissed because the right of direct appealtherefrom terminated with the entry of judgment in the action (see Matter of Aho, 39NY2d 241 [1976]). The issues raised on the appeal from the order are brought up for review andhave been considered on the appeal from the judgment (see CPLR 5501 [a] [1]).
The plaintiff 25th Avenue, LLC (hereinafter the owner), owns premises at 45-15 25thAvenue in Queens, where the plaintiff Colonial Construction and Development, LLC (hereinafterthe general contractor), managed a construction project. On June 8, 2005, Hermes Jaramillo, anemployee of nonparty subcontractor Biltmore Contracting, Inc., was allegedly injured on the job.In May 2007 Jaramillo commenced the underlying action in the United States District Court forthe Eastern District of New York against the owner and general contractor, alleging violations ofthe Labor Law. Thereafter, the [*2]plaintiffs filed a claim seekinga defense and indemnification under their insurance policy with the defendant Delos InsuranceCompany (hereinafter the insurer). The insurer denied coverage, inter alia, on the ground of latenotice of claim.
The plaintiffs commenced this action for a judgment declaring that the insurer is obligated todefend and indemnify them in the underlying action. The insurer moved for summary judgment,and the Supreme Court granted the motion, holding that the insurer had established, prima facie,the plaintiffs' unreasonable delay in giving notice of the occurrence, and the plaintiffs, inopposition, had failed to raise a triable issue of fact as to whether their delay was based upon areasonable, good faith belief in nonliability. Contrary to the conclusion of the Supreme Court, wehold that the plaintiffs raised a triable issue of fact sufficient to defeat the insurer's motion.
Where, as here, a policy of liability insurance requires that notice of an occurrence whichmay give rise to a claim be given "as soon as practicable," "such notice must be accorded thecarrier within a reasonable period of time" (Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743[2005]; see Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 441[1972]; Donovan v Empire Ins.Group, 49 AD3d 589, 590 [2008]). This requirement is a condition precedent tocoverage (see Argo Corp. v GreaterN.Y. Mut. Ins. Co., 4 NY3d 332, 339 [2005]; White v City of New York, 81NY2d 955, 957 [1993]; Donovan v Empire Ins. Group, 49 AD3d at 590). However,"there may be circumstances that excuse a failure to give timely notice, such as where the insuredhas 'a good-faith belief of nonliability,' provided that belief is reasonable" (Great Canal RealtyCorp. v Seneca Ins. Co., Inc., 5 NY3d at 743, quoting Security Mut. Ins. Co. of N.Y. vAcker-Fitzsimons Corp., 31 NY2d at 441; see White v City of New York, 81 NY2dat 957; Felix v Pinewood Bldrs.,Inc., 30 AD3d 459, 461 [2006]). The insured bears the burden of establishing thereasonableness of such excuse (see Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5NY3d at 744; White v City of New York, 81 NY2d at 957; Security Mut. Ins. Co. ofN.Y. v Acker-Fitzsimons Corp., 31 NY2d at 441), which is ordinarily an issue of fact andnot one of law (see Hermitage Ins. Co. vArm-ing, Inc., 46 AD3d 620, 621 [2007]; St. James Mech., Inc. v Royal & Sunalliance, 44 AD3d 1030,1031-1032 [2007]; Kim v Maher, 226 AD2d 350 [1996]).
Here, although the plaintiffs were aware on the date of the incident that Jaramillo had beeninjured and had obtained medical care, other evidence they submitted in opposition to theinsurer's summary judgment motion raises a triable issue as to their reasonable, good faith beliefof nonliability excusing their delay in notifying the insurer, including statements by thesubcontractor that Jaramillo was fine and had returned to work, the subcontractor's proof prior tocommencement of the work of its own liability and workers' compensation insurance, thesubcontractor's entry into a "hold-harmless" agreement with the general contractor, the owner'sand general contractor's lack of supervision or control over the work done by the subcontractor'semployees, and the small size of the plaintiffs' businesses and the principals' relative lack ofexperience in the construction industry and lack of any experience with construction site injuries.Under the particular circumstances of this case, the plaintiffs raised a triable issue of fact as tothe reasonableness of their belief of nonliability (see Bauerschmidt & Sons, Inc. v Nova Cas. Co., 69 AD3d 668[2010]; R & L Richmond Ave. Corp. vPublic Serv. Mut. Ins. Co., 56 AD3d 643 [2008]; North Country Ins. Co. v Jandreau, 50 AD3d 1429 [2008]; St.James Mech., Inc. v Royal & Sunalliance, 44 AD3d at 1031-1032). Accordingly, theSupreme Court should have denied the defendant's motion for summary judgment. Covello, J.P.,Angiolillo, Dickerson and Hall, JJ., concur.