Summary Judgment Granted Not on Application Misrepresentation Defense, But on Insured's 1-Year Late Notice of Accident

HOMEOWNERS – APPLICATION MISREPRESENTATION – "INSURED LOCATION" – LATE NOTICE – SIGNED STATEMENT
Tower Ins. Co. of New York v. Kravtchouk
(Sup. Ct., New York Co., decided 9/10/2008)

Kid falls off bicycle in Staten Island in front of defendant's property, insured by Tower under a homeowners policy. Tower investigates and learns that the defendant lives in Brooklyn, never lived at the Staten Island house, and was having a general contractor add an extension to the front of that existing house. Tower denies coverage based on the named insured's material misrepresentations in the policy application, the property not being an "insured location" because defendant never lived there, and late notice of one year.

Tower then commenced this action, seeking declaratory relief on its coverage defenses. All but the injured party defendants defaulted, including the named insured, and Tower moved for judgment against the defaulting parties.

Although an application misrepresentation defense had worked a month earlier in Tower v. Rajaram, this time New York County Supreme Court Justice Eileen Rakower rejected that defense, finding that the statement Tower's investigator had obtained from the named insured "fail[ed] to demonstrate that the premises were non-owner occupied or non-primary residences."

Justice Rakower also correctly ruled noted that Tower’s motion for a default judgment could not be granted solely on the basis of the named insured's and general contractor's failure to appear in the action. “Declaratory relief should not issue merely on the basis of a default by one side to the controversy. The plaintiff stills bears the burden of affirmatively proving its right to the declaratory relief it seeks.” (Mount Vernon Fire Ins. Co. v. NIBA Const. Inc., 195 AD2d 425 [lst Dept. 1993], Sullivan, J. concurring).

The court did, however, grant Tower's motion for summary judgment based on the insured's 12-month delay in notifying Tower of the accident. In his statement to Tower's investigator, the named insured indicated that he was aware of the incident on June 26, 2006 through an “attorney’s letter” but did not report the incident directly to Tower. Rather, he contacted his attorney and relied on the attorney to inform Tower of the incident. The attorney did not do so until almost one year later, June 4, 2007, and the injured party also failed to notify Tower of the accident.

As she did in the Rajaram case, Justice Rakower accepted and relied upon the named insured's signed but unsworn statement:

While generally, unsworn statements should not be considered in a motion for summary judgment, the statement by [the named insured] Kravtchouk is annexed to a sworn affidavit of [Tower's investigator] Eric Chappe. That affidavit attests that at the end of his conversation with Kravtchouk, Mr. Chappe accurately transcribed what Kravtchouk told him and Kravtchouk reviewed and signed the statement Chappe transcribed. Admissions by a party of any fact material to the issue are always competent evidence against that party. (Reed v. McCord, 160 NY 330,341).

On the insured's and injured party's late notice, the court ruled:

Where there is no reasonable excuse or mitigating circumstances offered for the delay, “the issue of reasonableness poses a legal question for the court, rather than an issue for the trier of fact.” (Id. at 307). The nearly one year delay in notifying Tower of the claim is unreasonable as a matter of law. (see Holmes v. Morgan Guar. and Trust Co. of New York, 223 AD2d 441 [1st Dept. 1996]; where court found that a ten month delay was unreasonable; and see Heydt Contracting Corp. v. American Home Assur. Co., 146 AD2d 497 [1st Dept. 1989]; where court found a nearly four month delay unreasonable as a matter of law).

An injured party has an independent right to notify an insurance carrier of his or her accident. (Id. at 308). In order to assert that right, the injured party must show that she diligently attempted to ascertain coverage and to promptly notify the carrier of the accident. If those steps are taken, the injured party is not charged with the delay of the insured. If the injured party fails to show that she asserted her own right to provide notice, but “rather, relied on the insured to do so, her rights are derivative of the insured’s.’’ Here, Galati failed to notify Tower of the accident, thus Kravtchouk’s late notice is imputed to her.