Sunday, November 16, 2008

Employee Neglect or Inadvertence Is Not a Valid Excuse for Late Notice

Board of Hudson River-Black Riv. Regulating Dist. v. Praetorian Ins. Co.

(3rd Dept., decided 11/13/2008)

On October 19, 2005, plaintiff insured received a notice of claim for personal injuries and damages relating to a July 24, 2005 incident that was alleged to have occurred on property it controlled and maintained.  Plaintiff did not forward the notice of claim to its liability insurer or otherwise notify defendant of the occurrence. One year later, plaintiff was served with a summons and complaint in the underlying personal injury action and only then forwarded the summons and complaint to its insurance broker, who promptly forwarded them to defendant. Defendant disclaimed coverage based upon plaintiff's failure to notify it of the occurrence "as soon as practicable" and to "[i]mmediately" send it a copy of the notice of claim, as required by the insurance policy.  Plaintiff commenced this declaratory judgment action, and both parties moved for summary judgment.

In AFFIRMING Albany County Supreme's order granting summary judgment to defendant, the Third Department held:
Plaintiff concedes that there is no evidence that it furnished notice of the occurrence to defendant prior to October 2006, a full year after it received the notice of claim. Plaintiff's only excuse for the delay is that its then-general counsel "should have" forwarded the notice of claim to defendant when it was received and that it "assumed" that notice had been so provided. Although "[t]here may be circumstances, such as lack of knowledge that an accident has occurred or a reasonable belief in nonliability, that will excuse or explain delay in giving notice" (White v City of New York, 81 NY2d 955, 957 [1993]; see Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d at 441), mere neglect or inadvertence on the part of plaintiff's employee is not a valid excuse (see e.g. Todd v Bankers Life & Cas. Co., 135 AD2d 1066, 1068 [1987]; Tennant v Farm Bur. Mut. Auto. Ins. Co., 286 App Div 117, 120-121 [1955]). Thus, in the absence of a reasonable excuse, plaintiff's one-year delay in notifying defendant of the occurrence was unreasonable as a matter of law (see Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d at 339-340; Centenniel Ins. Co. v Hoffman, 265 AD2d 629, 630 [1999]).

Finally, even had plaintiff provided notice to its broker prior to October 2006, notice to an insurance broker does not constitute notice to the liability carrier (see Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d at 442 n 3; Kamyr, Inc. v St. Paul Surplus Lines Ins. Co., 152 AD2d 62, 65 [1989]) and, unlike the circumstances in Jeffrey v Allcity Ins. Co. (26 AD3d 355 [2006]), the notification provisions of the instant policy are not ambiguous as to who must be notified in the event of an occurrence.

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