FOILed Again

CGL – LATE NOTICE – NO GOOD FAITH BELIEF IN NON-LIABILITY
Patti & Johnny's, Inc. v. United States Liab. Ins. Grp.
(Sup.Ct., Nassau Co., decided 3/27/2008)

Yogi Berra, the guru of all things baseball and insurance coverage related, once said that it's not over until it's over. In this case, USLIG's persistence paid off.

Bar fight. Delayed/late reporting. Disclaim coverage. DJ suit. Move to dismiss. Lose. FOIL the police file. Discover new evidence, contradictory to what the insured had said. Move to dismiss again. Win.

In Patti & Johnny's, Inc. v. United States Liab. Ins. Grp., 2008 NY Slip Op 31203(U)(Sup.Ct., Nassau Co., decided 3/27/2008), the court reversed its earlier decision and granted USLIG's renewed motion to dismiss the insured's DJ complaint. USLIG had lost its initial motion to dismiss the complaint based on the insured's late notice of a bar fight that had started inside its premises. Afterwards, USLIG made a FOIL (Freedom of Information Law) request for and received the police file, which had been unavailable during the pendency of the assailant's criminal prosecution. The police file contained witness statements and surveillance videos that directly contradicted the insured's professed belief that it had no reason to suspect liability as a result of that altercation, including a bartender's statement that he had asked the assailant to carry the injured patron out of the bar, where the beating continued.

In ruling in favor of USLIG on it renewed motion, the court noted that an insured' s reasonable belief in nonliability will excuse the delay in giving notice to an insurer in compliance with the notice provision of an insurance policy, but the insured has the burden of showing the reasonableness of such excuse and it may be relevant on the issue of reasonableness whether and to what extent, the insured has inquired into the circumstances of the occurrence. The "overwhleming evidence" from materials obtained after the intitial motion via the FOIL request showed "that a brutal assault on [the injured party] occurred both inside and outside the establishment and that the employee of [the insured] not only stood by silently, but in fact, participated to the extent that he asked [the assailant] to carry the victim outside the bar where he proceeded to continue the assault[.]" On these newly discovered facts, the court granted USLIG's motion to dismiss the insured's DJ complaint, holding that the evidence from the police file "render[ed] the belief of non-liabilty on the part of Patti and Johnny [the insured] nonsensical and absurd."