Wednesday, September 17, 2008

Timely Notice of Suit From Named Insured Did Not Satisfy Additional Insured's Notice Obligation

1700 Broadway Co. v. Greater N.Y. Mut. Ins. Co.
(1st Dept., decided 9/16/2008)

Where a named insured (NI) and additional insured (AI) are both defendants in a single action, notice of the occurrence or lawsuit provided by one of them will be deemed notice on behalf of both of them where the NI and AI are united in interest or where there is no adversity between them. See, 23-08-18 Jackson Realty Assoc. v Nationwide Mut. Ins. Co., (2nd Dept. , decided 7/8/2008).

In this case plaintiff, an additional insured did not provide Greater NY Mutual with notice of the underlying personal action until eight months after it was served with the summons and complaint. It offered no excuse for the delay, instead arguing that the NI's timely notice of the suit to Greater NY Mutual, in which the NI also was a defendant, was timely notice for both defendants.

In AFFIRMING the lower court's award of summary judgment to Greater NY Mutual, the First Department noted that an unexplained 8-month delay in forwarding suit papers constitutes late notice as a matter of law and Greater NY Mutual was not obligated to show prejudice from that delay. As to plaintiff's argument that the named insured's timely notice of the suit was timely notice for both of them, the Second Department held:
The named insured cannot be deemed to have provided timely notice of the lawsuit to defendant on behalf of plaintiff since the notice requirement in the policy applies equally to both primary and additional insureds, and notice provided by one insured in accordance with the policy terms will not be imputed to another (Travelers Ins. Co. v Volmar Constr. Co., 300 AD2d 40, 44 [2002]). An exception might exist where two claimants are similarly situated, i.e., where their interests are not adverse to each other, in which case notice by one may also be deemed applicable to a claim by another (see e.g. Motor Vehicle Acc. Indem. Corp. v United States Liab. Ins. Co., 33 AD2d 902 [1970]). Here, plaintiff, an out-of-possession landlord of the premises where the accident in the underlying personal injury action took place, had an interest adverse to the primary insured, the tenant in the premises, from the moment the complaint was served naming them both as defendants. This adversity was confirmed when plaintiff and the primary insured filed cross claims against each other. Under these circumstances, notice of suit by the primary insured cannot be deemed timely notice by plaintiff.
Rule: For a "similarly situated" NI and AI, timely notice from one can be timely notice from the other. If they have adverse interests, however, i.e., where one could or would assert a crossclaim against the other, each must provide timely notice of the occurrence and suit to the insurer.

In a footnote, the First Department reminds us that "[s]tarting in January 2009, policies will be required to permit an insured such as plaintiff to bring this type of action notwithstanding late notice of claim, with the burden on the insurer to establish prejudice from the delay (L 2008, ch 388, § 2, § 4, amending Insurance Law § 3420[a][6], [c][2][A])."

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