Question of Fact Found on Timeliness of Auto Insurer's Late Notice Disclaimer

AUTO – INSURANCE LAW § 3420(A)(2) – TIMELINESS & SUFFICIENCY OF DISCLAIMER – LATE NOTICE
Liriano v. Eveready Ins. Co.
(2nd Dept., decided 8/4/2009)

Plaintiff sued and obtained a $40,122,06 default judgment against Eveready's insured.  In accordance with Insurance Law § 3420(a)(2), plaintiff served a copy of the default judgment with notice of entry on Eveready by mail on August 13, 2007. Eveready claimed that it never received that judgment in the mail, but first learned of it on March 13, 2008, issuing a disclaimer six days later.  Plaintiff commenced this direct action pursuant to Insurance Law § 3420(b)(1) and successfully moved for summary judgment.  Eveready appealed. 

In REVERSING judgment to the plaintiff, the Second Department ruled that the motion court had improperly granted plaintiff's motion:

In response, the defendant came forward with a sworn denial of receipt and an affidavit of an employee with personal knowledge regarding the defendant's regular practices and procedures in retrieving, opening, and indexing its mail and in maintaining its files on existing claims. That affidavit indicated that the defendant did not receive the judgment in the mail, and instead first learned of it on March 13, 2008, promptly issuing a disclaimer only six days later. Under the circumstances of this case, the defendant's submissions sufficed to raise a triable issue of fact regarding the service of the judgment, and the question of whether the defendant's disclaimer of coverage was timely must await the resolution of that issue (see e.g. Matter of TNT Petroleum, Inc. v Sea Petroleum, Inc., 40 AD3d 771; Johnson v Deas, 32 AD3d 253; First Union Mtge. Corp. v Silverman, 242 AD2d 258; Long Is. Sav. Bank v Meliso, 229 AD2d 478; Poet v Kolenda, 142 AD2d 633). 

Plaintiff had also challenged the sufficiency of Eveready's disclaimer, contending that it was defective and, thus, invalid as against the plaintiff.  The Second Department rejected that argument, as well, holding:

Contrary to the plaintiff's contention and the determination of the Supreme Court, the letter of disclaimer was not defective and, therefore, was not invalid as against the plaintiff. Rather, the letter sent to the plaintiff adequately recited that the defendant was disclaiming coverage as to the plaintiff on the ground that he failed to provide the defendant with timely notice of the underlying litigation and with legal papers filed in connection therewith (see American Tr. Ins. Co. v Sartor, 3 NY3d 71; Matter of GEICO Co. v Wingo, 36 AD3d 908; cf. Shell v Fireman's Fund Ins. Co., 17 AD3d 444; Vacca v State Farm Ins. Co., 15 AD3d 473).