Questions of Fact on Insureds' Excuses for Late Notice Preclude Summary Judgment to Homeowners Liability Insurer

HOMEOWNERS – LATE NOTICE – LACK OF KNOWLEDGE OF INJURY
Hanover Ins. Co. v. Straus
(Sup. Ct., Suffolk Co., decided 5/23/2008)

O’Neil was allegedly injured by a dog owned by Richard and Maureen Straus on December 5, 2002. O’Neil and his wife sued the Strauses, and a default judgment was entered them on December 20,2005, in the amount of $250,000.

Hanover received first notice of the incident on February 12, 2006, approximately 2 1/2 months after the default judgment was entered. On March 6, 2006, Hanover disclaimed based on the insureds' late notice of the claim. It then brought this DJ action for validation of its disclaimer, while O'Neil brought a direct action against Hanover pursuant to Insurance Law § 3420(a)(2) for payment of the default judgment.

Brian Straus testified at his deposition that on the date of the alleged incident in 2002, he resided at the insured residence his wife and five children but he was not at home when Brian O’Neil, while allegedly delivering a package, was injured. He further testified that his daughter told him that there was an incident, that the individual fell in the street after the O’Neil’s dog barked and that this individual “ ran out to his truck in the street, and fell down and got up and took off and hit the pole.” He said that his daughter told him that O’Neil fell in the street and not on his property. Straus stated that he never discussed this matter with his wife. He further testified that the first time he was aware that an action had been commenced was when he received a copy of the default judgment at home. He stated that he did not remember when he received the judgment, but the other testimony and evidence in this case indicated that it was received early in 2006.

The police were never called to the house and the injured O’Neil allegedly drove off in his truck. Some of Brian Straus's statements were at odds with statements he had made to an investigator of Hanover, but he did tell the investigator that he never received a summons and complaint. Further, he was consistent with his testimony to the extent that he stated that he was not at the house when the incident occurred and that the dog never touched the delivery man.

Maureen Straus also testified she was not aware of the O'Neil action until the judgment came in the mail.

In denying Hanover's motion for summary judgment, Suffolk County Supreme Court Justice Sandra Sgroi held:

Here, the Defendants Richard Straus and Maureen Straus are alleging that they did not believe that anyone was injured in the occurrence. Their belief that only a “trivial incident” occurred is supported by the facts of this case because the police were not called to the scene of the accident, their dog allegedly was not vicious, it is alleged that the dog was on a leash, their children told them that no one was injured in the incident and the Brian Straus drove away in his vehicle.

Here * * * triable issues of fact exist as to the reasonableness of the actions of Richard Straus and Maureen Straus in failing to notify Hanover Insurance Company as to the incident (citations omitted).

While there may be strong factual basis supporting the reasonableness of the Strauses' actions in not notifying the insurance company of the incident after the accident occurred in 2002, separate fact issues exist as to the reasonableness of their actions in not notifying the insurance company after the action was commenced by service of process by the attorneys for Brian O’Neil and Terry O’Neil.

The Court recognizes that there is evidence in this record that would support a finding that Richard Straus and/or Maureen Straus may have received notice of both this accident and the negligence litigation when the summons and complaint was served, the Court cannot make that factual determination on these papers. Both Maureen Straus and Richard Straus have denied that they received notice that they were served with a summons and complaint in this action. If, eventually, there is a factual determination that either Maureen Straus or Richard Straus knew of the existence of the law suit, Hanover Insurance Company might be entitled to a declaratory judgment in its favor. However, if the trier of the facts determines that Maureen Straus and Richard Straus were reasonable in their belief that there was no incident that required them to notify Hanover Insurance Company of the accident in 2002, that neither Maureen nor Richard Straus were aware that an action was commenced against them in 2005 and that they did not get notice of that action until they were served with the default judgment in 2006 by mail, their delay in notifying the insurance company is explained.

The issue herein, whether notice to Hanover Insurance Company was timely, is a factual issue and therefore the motion for summary judgment by the Plaintiff Hanover Insurance Company against the Defendants is denied.