Monday, January 18, 2010

Four-Month Delay in Providing Notice Is Not "As Soon As Practicable", But Insured Raises Triable Issue of Fact As to Its Good-Faith Belief of Nonliability

Bauerschmidt & Sons, Inc. v Nova Cas. Co.
(2nd Dept., decided 1/12/2010)

Nova denied liability coverage to plaintiff, its insured, based on the insured's four-month delay in notifying Nova of the underlying incident.  The insured commenced this declaratory judgment action for defense and indemnification coverage, and Nova moved for summary judgment.  Queens Supreme denied Nova's motion, and it appealed.

In AFFIRMING the lower court's denial of Nova's motion, the Second Department held that although Nova had made a prima facie showing of entitlement to judgment as a matter of law based on the plaintiff's approximately four-month delay in notifying Nova of the underlying incident, in opposition, the plaintiff raised a triable issue of fact as to whether its delay was reasonably based on a good-faith belief of nonliability.

The denial of Nova's motion comports with the general rule that "[o]rdinarily, the question of whether the insured had a good faith belief in nonliability, and whether that belief was reasonable, presents an issue of fact and not one of law[.]"

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