Misreading the Policy Does Not Excuse Late Notice

D&O – CLAIMS-MADE POLICY – LATE NOTICE – EXCUSE
The Penn Traffic Co. v. National Union Fire Ins. Co. of Pittsburgh, Pa
(4th Dept., decided 12/30/2010)

Plaintiff sought reimbursement from defendant under a two-year, claims-made "Executive and Organization Liability Insurance Policy" of defense costs associated with two, separate federal investigations.  Defendant denied coverage on the ground that plaintiff failed to make the claim within the policy period. 

In MODIFYING the lower court's order to completely grant summary judgment to defendant, the Appellate Division, Fourth Department, held that plaintiff failed to comply with the policy's requirement that notice be given "as soon as practicable . . ., but in no event later than . . . the end of the Policy Period or Discovery Period[.]"  The appellate court also rejected the plaintiff's contention that that its failure to give timely notice of the claim should be excused because it did not realize that subpoenas it had been served with were covered under the policy until after the deadline date:

The policy unambiguously includes the subject subpoenas within the definition of potential claims, and plaintiff's unilateral mistake in reading the policy cannot serve as a basis for expanding coverage. "[O]ne who executes a plain and unambiguous [contract] cannot avoid its effect by merely stating that [he or] she misinterpreted its terms" (Koster v Ketchum Communications, 204 AD2d 280, lv dismissed 85 NY2d 857).