Question of Fact Found on Whether Insured Had Good-Faith Belief of Nonliability to Excuse 10-Month Notice of Occurrence Delay

CGL – LATE NOTICE – GOOD-FAITH BELIEF OF NONLIABILITY
426-428 W. 46th St. Owners, Inc. v. Greater N.Y. Mut. Ins. Co.
(1st Dept., decided 10/30/2008)

In August 2002, a tenant of the insureds allegedly was injured when she fell down a staircase within the apartment she rented in a building owned by the insured.  Greater New York Mutual was not notifed of the occurrence until 10 months later, in June 2003, and disclaimed coverage based on the insured's late notice, prompting this DJ action.

In AFFIRMING the lower court's denial of Greater New York Mutual's motion for summary judgment, the First Department held:

The record shows that the tenant's accident occurred in August 2002, and although defendant was not notified of the occurrence until June 2003, the motion court appropriately concluded that there are triable issues of fact as to whether plaintiffs' failure to timely notify defendant was based on a good-faith, reasonable belief of nonliability (see e.g. Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743-744 [2005]). The superintendent of the building discovered the tenant lying on the floor inside her apartment, and there is evidence, supported by the tenant's affidavit, that she did not mention the details of what had happened or the nature of her condition. Plaintiffs therefore had no way of knowing that the tenant had fallen due to an allegedly defective staircase in her home, particularly in light of her previous claims to have suffered from a medical condition that prevented her from paying her rent in a timely manner for several months. Under these circumstances, plaintiffs had some justification for assuming that the tenant's hospitalization was attributable to a continuing medical illness or condition such as would raise a question of fact as to whether it was reasonable for them not to undertake any further inquiry into how she had come to be lying on her floor (see D'Aloia v Travelers Ins. Co., 85 NY2d 825, 826 [1995]; Aviles v Dryden Mutual Ins. Co., 278 AD2d 829 [2000].

Ordinarily, an insured has a duty to inquire into the facts and circumstances of an accident that occurs on its property.  In this case, the courts found that the tenant's prior claims of a disabling medical condition created a question of fact as to the reasonableness of the insured having apparently made no further inquiry into how the tenant had fallen.