... and Sometimes the Bar Eats You

CGL – 62-DAY LATE NOTICE – 33-DAY UNTIMELY DISCLAIMER
Tower Ins. Co. of N.Y. v. NHT Owners LLC
(1st Dept., decided 12/20/2011)

Those of you who read the advance sheets know that Tower Insurance Company has successfully defended many late notice disclaimers, especially in the Appellate Division, First Department, where Tower is headquartered.  Reporting delays of 3 months, 5 months, 5 months, 7 months, 9 months, and 9 months to Tower have been ruled unreasonable as a matter of law, entitling Tower to summary judgment.  Most of the reported case law to date, of course, was decided under New York's "old" no-prejudice rule; under most New York liability policies issued, renewed or modified on and after January 17, 2009, insurers must demonstrate that they were prejudiced by their insureds' delayed reporting in order successfully to disclaim coverage based on such late notice.

In this latest episode of late notice limbo, Tower disclaimed liability coverage to the defendant insureds in this case based on their 62-day delay in notifying Tower of an accident in which an individual fell from a ladder in an elevator at defendants' premises.  The insureds were aware of the accident on the day it occurred.  Supreme Court, New York County (Marcy S. Friedman, J.) granted the defendant insureds' cross motion for summary judgment against Tower in this declaratory judgment action, and Tower appealed.

In unanimously AFFIRMING the order appealed from, with costs, the Appellate Division, First Department, found it unnecessary to reach the issue of whether the insureds' 62-day reporting delay was timely because Tower's 33-day delay in disclaiming was, in the First Department's opinion, untimely as a matter of law:

A liability policy that requires an insured to provide notice of an occurrence to its insurer "as soon as practicable" obligates the insured to give notice of the occurrence within a reasonable period of time (Great Canal Realty Corp. v Seneca Ins. Co., 5 NY3d 742, 743 [2005]). However, we need not reach the question of whether, under all the circumstances, the insureds' notice of claim, 62 days after the occurrence, was timely, where they conducted an inquiry into the underlying accident, and believed there was no liability (see Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 441 [1972]) because the court properly held that the notice of disclaimer, after a 33-day period, was untimely as a matter of law (see Ins Law § 3420[d]; First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 68-69 [2003]; see e.g. West 16th St. Tenants Corp. v Public Serv. Mut. Ins. Co., 290 AD2d 278 [2002], lv denied 98 NY2d 605 [2002]). The insurer's sole ground for the disclaimer of coverage was the insured's delay in notifying it of the occurrence, which was readily apparent at the time of the notice of claim (see First Fin. Ins. Co., 1 NY3d at 69). 

The New York courts have recognized a number of excuses to an insured's late notice of occurrence:

• reasonable, good faith belief in non-liability
• de minimus injury
• ignorance of coverage

In effect, a liability insurer's untimely disclaimer of coverage can also operate to excuse an insured's late notice.  New York Insurance Law § 3420(d)(2) requires that for bodily injury or death claims arising out of New York accidents, liability insurers must disclaim liability or deny coverage in writing "as soon as is reasonably possible" to the insured and the injured person or any other claimant.

How soon is that?  In this case, 33 days was not as soon as reasonably possible.  But that's not the New York state record.  30 days is.  Where the ground or grounds for the liability insurer's disclaimer are "readily apparent" from the time of the insured's first notice of claim, any delay by the insurer in disclaiming liability or denying coverage will be scrutinized by the New York courts.  Here are the low water marks in New York for what have been found to be untimely disclaimers as a matter of law:

30 days	West 16th Street Tenants Corp. v. Public Service Mut. Ins. Co., 290 AD2d 278 (1st Dept. 2002)
37 days	2833 Third Ave. Realty Assocs. v. Marcus, 12 AD3d 329 (1st Dept. 2004)
41 days	Matter of Nationwide Mut. Ins. Co. v. Steiner, 199 AD2d 507(2nd Dept. 1993)
48 days	First Fin. Ins Co. v. Jetco Contr. Corp., 1 NY3d 64 (Ct. Apps. 2003)
60 days	Milbank Housing Dev. Fund v. Royal Indem. Co., 17 AD3d 280 (1st Dept. 2005)

Don't Ask, Don't Tell Me You Have a Good Faith Belief in Nonliability

CGL – LATE NOTICE – GOOD FAITH BELIEF IN NONLIABILITY
Fine Line Bldrs. & Remodelers, Inc. v. Atlantic Cas. Ins. Co.
(2nd Dept., decided 12/13/2011) 

Atlantic Casualty disclaimed liability coverage based on its insured's late notice of an accident.  The insured attempted to explain its late notice by claiming that it had a good faith belief in nonliability, one of the judicially recognized excuses for late notice in New York.  The motion court was unpersuaded, granting summary judgment to Atlantic Casualty in this declaratory judgment action.

The Appellate Division, Second Department, AFFIRMED, noting:

The plaintiff's claim that it had a reasonable, good faith belief in nonliability was belied by its failure to inquire into the circumstances of the accident at issue in the underlying action (see Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 441; Hanson v Turner Constr. Co., 70 AD3d 641; York Specialty Food, Inc. v Towers Ins. Co. of N.Y., 47 AD3d 589, 590; St. Nicholas Cathedral of Russian Orthodox Church in N. Am. v Travelers Prop. Cas. Ins. Co., 45 AD3d 411; Felix v Pinewood Bldrs., Inc., 30 AD3d at 461).

Belied:  to show something to be false or wrong.

Insureds who do not inquire into the circumstances of a known accident may not legitimately claim that they had a reasonable, good faith belief in nonliability so as to excuse their late reporting of the accident to their liability insurers.

Insured's 6-Month Delay in Notifying His Insurer of Dog-Bite Incident Found Unreasonable as a Matter of Law

HOMEOWNERS – LATE NOTICE – DOG-BITE INCIDENT – NO-PREJUDICE RULE – GOOD-FAITH BELIEF IN NONLIABILITY
Zimmerman v Peerless Ins. Co.
(2nd Dept., decided 6/21/2011) 

I knew that into an 8-month hole in blogging there would be some back filling.   Here's some late notice fill. 

On October 31, 2006, while jogging in Eaton's Neck, New York, Arthur Angst allegedly was bitten by Erwin Zimmerman's unleashed dog.  Angst and Zimmerman had a brief verbal confrontation, during which Zimmerman saw blood on Angst's hand.  Zimmerman offered to pay Angst's medical expenses, but Angst declined, and the two men did not exchange contact information.  Zimmerman was aware of an incident several years before, in which his dog had "nipped" a neighbor. Within 48 hours of the incident involving Zimmerman's dog and Angst, the Suffolk County Department of Health requested the dog's vaccination records and informed Zimmerman that the dog would be restricted to Zimmerman's property.

Just over six months later, on May 8, 2008, Zimmerman was served with the summons and complaint in the underlying personal injury action. The next day, for the first time, he notified his insurer, Peerless Insurance Company, of the incident.  Zimmerman's insurance policy required that 

in case of an ... "occurrence," the "insured" will perform the following duties that apply:

Give written notice to us or our agent as soon as is practical, which sets forth: 

(1) The identity of the policy and "insured"; 

(2) Reasonably available information on the time, place and circumstances of the ... "occurrence"; and 

(3) Names and addresses of any claimants or witnesses.  

The policy defined an "occurrence" as "an accident ... which results, during the policy period, in: ... 'Bodily injury'" and "bodily injury" was defined, in relevant part, as "bodily harm."

By letter dated May 11, 2008, Peerless disclaimed coverage on the ground that Zimmerman had not complied with the notice provisions of the policy.  Zimmerman commenced this action seeking a judgment declaring that Peerless was required to defend and indemnify him in the underlying action. Following discovery, Peerless moved, and Zimmerman cross-moved, for summary judgment. Supreme Court, Suffolk County (Rebolini, J.), denied the motion and cross motion, and both parties appealed.

In REVERSING the order appealed from insofar as Peerless' motion was concerned, the Appellate Division, Second Department, held that while Peerless had established its prima facie entitlement to summary judgment on the issue of the insured's late notice, the insured had not carried his opposing burden of raising a triable issue of fact as to whether there existed a reasonable excuse for his delay in notifying Peerless of the dog-bite incident:

Here, Peerless established its prima facie entitlement to judgment as a matter of law that Zimmerman's failure to notify Peerless for six months was not based on a reasonable or good faith belief in nonliability by demonstrating that Zimmerman knew immediately that his dog allegedly bit Angst and that Angst may have been injured by the bite. Indeed, Zimmerman knew within 48 hours that a complaint had been made about the incident, even if he did not know Angst's identity. In addition, Zimmerman knew of at least one substantiated incident involving his dog prior to the incident with Angst (see Steinberg v Hermitage Ins. Co., 26 AD3d 426, 427 [2006]; C.C.R. Realty of Dutchess v New York Cent. Mut. Fire Ins. Co., 1 AD3d 304, 305 [2003]; 120 Whitehall Realty Assoc., LLC v Hermitage Ins. Corp., 40 AD3d at 721; cf. Courduff's Oakwood Rd. Gardens & Landscaping Co., Inc. v Merchants Mut. Ins. Co., 84 AD3d 717 [2011]; Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d at 597; Sputnik Rest. Corp. v United Natl. Ins. Co., 62 AD3d at 689). Consequently, the burden shifted to Zimmerman to raise a triable issue of fact as to whether there existed a reasonable excuse for his delay in notifying Peerless (see Ponok Realty Corp. v United Natl. Specialty Ins. Co., 69 AD3d at 597; Sputnik Rest. Corp. v United Natl. Ins. Co., 62 AD3d at 689). Even construing all inferences in favor of Zimmerman, he failed to raise a triable issue of fact (see Hanson v Turner Constr. Co., 70 AD3d 641, 643 [2010]; 120 Whitehall Realty Assoc., LLC v Hermitage Ins. Corp., 40 AD3d at 721; Steinberg v Hermitage Ins. Inc., 26 AD3d at 427; C.C.R. Realty of Dutchess v New York Cent. Mut. Fire Ins. Co., 1 AD3d at 305). We reject Zimmerman's argument that the policy was ambiguous as to whether he was obligated to give notice of the occurrence before learning of the possible claimant's identity (see Magistro v Buttered Bagel, Inc., 79 AD3d 822 [2010]). Accordingly, the Supreme Court erred in denying Peerless' motion for summary judgment declaring that it is not obligated to defend or indemnify Zimmerman in the underlying action. In light of this determination, the Supreme Court properly denied Zimmerman's cross motion for summary judgment.  

Because Zimmerman's policy was issued before January 17, 2009 (see Insurance Law § 3420 [c] [2] [A]), Peerless was not required to demonstrate prejudice from Zimmerman's six-month delay in notification. 

Question of Fact on Insured's Good-Faith Belief in Nonliability Staves Off Summary Judgment to Insurer on Insured's 8-Month Delayed Notice of Underlying Incident

CGL – LATE NOTICE – GOOD-FAITH BELIEF OF NONLIABILITY
Columbia Univ. Press, Inc. v Travelers Indem. Co. of Am.
(2nd Dept., decided 11/1/2011) 

Plaintiff insured's notice of a potentially covered incident was eight months delayed to its commercial liability insurer, Travelers.  Travelers disclaimed liability coverage based on the insured's late notice, and the insured commenced this declaratory judgment action.  Travelers moved for summary judgment and Supreme Court, New York County (Lefkowitz, J.), denied that motion.  Travelers appealed.

In AFFIRMING the order appealed from, the Appellate Division, Second Department, held that although Travelers had made a prima facie showing of its entitlement to summary judgment based on the insured's approximately eight-month delay in notifying Travelers of the underlying incident, in opposition to Travelers' motion, the insured raised a triable issue of fact as to whether its delay was reasonably based on a good-faith belief of nonliability, one of the judicially recognized excuses to late notice.  The appellate court's decision reads like a law digest compilation of seminal principles and case law citations on the issue of late notice to a liability insurer and who has to establish what in demonstrating such a coverage defense.

The appellate court also noted that because that policy in question was issued before January 17, 2009, Travelers could disclaim coverage when the insured failed to satisfy the notice condition, without regard to whether Travelers was prejudiced by the insured's failure to satisfy such condition.  

Insured's Five-Month Delay in Notifying Its Liability Insurer of Assault in Insured's Bar Found Unreasonable As a Matter of Law

CGL – LATE NOTICE – FIVE-MONTH DELAY IN REPORTING – AWARENESS OF FACTS SUGGESTING REASONABLE POSSIBILITY OF CLAIM
Tower Ins. Co. of N.Y. v. Miles
(1st Dept., decided 6/1/2010)

Approximately one week after a patron of his bar had assaulted another patron on the premise, the insured became aware of the incident, but did not notify his commercial liability insurer, Tower, of the incident until five months later.  Tower disclaimed liability coverage with respect to an underlying personal injury action based on the insured's asserted failure to notify Tower of any potential claims "as soon as practicable".  Tower then commenced this declaratory judgment action and unsuccessfully moved for summary judgment on its late notice defense.

In REVERSING the New York County Supreme Court's order denying Tower's motion, the Appellate Division, First Department, held:

Where, as here, the contract of insurance requires the insured to notify its liability carrier of a potential claim "as soon as practicable," such requirement acts as a condition precedent to coverage (Great Canal Realty Corp. v Seneca Ins. Co., Inc, 5 NY3d 742, 743 [2005]), and the insured's failure to provide timely notice of an occurrence vitiates the contract as a matter of law (see Argo Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332, 339 [2005]). Here, Miles became aware approximately one week after the incident that a patron of his bar had potentially assaulted another patron on his premises. Because defendants were knowledgeable of facts that suggested a reasonable possibility of a claim against them and failed to conduct a sufficient inquiry into the circumstances, their five-month delay in notifying plaintiff of the incident was unreasonable as a matter of law (see e.g. Tower Ins. Co. of N.Y. v Christopher Ct. Hous. Co., 71 AD3d 500 [2010]; SSBSS Realty Corp. v Public Serv. Mut. Ins. Co., 253 AD2d 583 [1998]). Miles' claimed belief of nonliability on the basis that none of his employees were involved in the incident was not reasonable under the circumstances (see e.g. Tower Ins. Co. of N.Y. v Lin Hsin Long Co., 50 AD3d 305, 308 [2008]).

Since no mention is made of any prejudice requirement, the commercial liability policy under which the insureds sought coverage was likely issued or renewed prior to January 17, 2009, when New York's new prejudice requirement for late notice disclaimers went into effect.

Three-Month Delay in Notifying Liability Insurer of Tenant's Assault Found Untimely -- Insured Failed to Make Reasonable Inquiry Into Incident

CGL – ASSAULT OF TENANT – LATE NOTICE – GOOD-FAITH BELIEF IN NONLIABILITY – REASONABLE INQUIRY
Tower Ins. Co. of N.Y. v. Christopher Ct. Hous. Co.
(1st Dept., decided 3/16/2010)

The New York courts have repeatedly held that the reasonableness of an insured's asserted good-faith belief in nonliability excuse to late notice depends on whether and to what extent the insured has inquired into the circumstances of the accident or occurrence.  In this case, the insured's failure to obtain a copy of the related police report was found, as a matter of law, to show a lack of reasonable inquiry. 

A residential tenant in defendant's building was allegedly assaulted in the hallway outside her apartment. The incident report generated by the security guard on duty, which was submitted to defendant's employee, the building's property manager, reported that the tenant claimed she was "grabbed" by the assailant, police and emergency medical personnel were called to the scene, and there was "no evidence" of the assailant. The police report, which the property manager did not obtain, reported that the tenant stated that an unknown assailant came out from the stairwell, grabbed her, pulled her hair, knocked off her glasses and that her arm was scratched; that the tenant was going through an "anxiety attack," was "very distraught," and was taken to the hospital by emergency medical personnel; and that the officers canvassed the premises but were unable to find the assailant.

Tower Insurance Company's first notice of the incident was its receipt of the tenant's summons and complaint against defendant some three months after the incident. Tower disclaimed liability coverage based on the insured's late notice of the incident and commenced this declaratory judgment action.   In opposition to Tower's motion for summary judgment, the insured argued that it had a good-faith belief in nonliability.  New York Supreme denied Tower's motion and it appealed. 

In REVERSING the lower court's order and granting summary judgment to Tower, the First Department found that by not obtaining a copy of the incident's police report, the insured had not made a reasonable inquiry into the incident and possibility of a claim:

Defendant argues that its delay in giving notice was reasonable where there was no evidence that the tenant was knocked down by the assailant, security staff told the property manager that a problematic rear door was closed at the time of the incident, and the property manager observed the tenant to be uninjured and was rebuffed by the tenant when she attempted to talk to her about the incident.  Such circumstances, as a matter of law, do not show a reasonable inquiry.  The property manager knew that the building's security staff did not speak to the tenant and had learned of the incident from the responding police officers.  Had the property manger inquired whether a police report had been filed, as she should have, she would have learned of details that were not reported by the security staff, including that the tenant was in distress and had been taken from the building by ambulance. Coupled with her personal knowledge of a potentially hazardous condition — a fire exit door that was sometimes found propped open or held open from the insider by tenants — the police report would have alerted the property manager to the possibility of a claim (see SSBSS Realty Corp. v Public Serv. Mut Ins. Co., 253 AD2d 583 [1998]).

Had the claim been submitted for coverage under a liability policy issued or renewed on or after January 17, 2009, Tower likely would have been required to demonstrate prejudice from the three-month delay in notice.  The absence of any mention of a prejudice requirement in this decision probably means that the late notice issue was decided under New York's "old" no prejudice rule of law.

Fourth Department Holds that Additional Insured's Asserted Belief in Nonliability Was an "Insufficient Excuse" to Its Three-Month Late Notice of Suit

CGL – ADDITIONAL INSURED – LATE NOTICE OF SUIT – GOOD FAITH BELIEF IN NONLIABILITY – TIMELY DISCLAIMER
Lehigh Constr. Group, Inc. v. Lexington Ins. Co.
(4th Dept., decided 2/11/2010)

On February 23, 2007, Lehigh Construction Group received suit papers from an employee of a subcontractor who allegedly had been injured on a construction site on which Lehigh had been acting as the general contractor.  Although Lehigh had been named as an additional insured on the subcontractor's CGL policy with Lexington, Lehigh did not notify Lexington of the occurrence until April 17, 2007 and did not forward a copy of the complaint to Lexington until May 8, 2007.  Lexington's policy required notice of an occurrence, claim or suit "as soon as practicable".

By letter dated May 15, 2007, Lexington denied defense and indemnification coverage to Lehigh in relation to the underlying action based upon Lehigh's failure to provide notice of its receipt of the complaint as soon as practicable.  Lehigh commenced this declaratory judgment action, attempting to excuse its delay in forwarding the complaint by arguing that its delay was based upon a reasonable belief in nonliability, namely, because it was only a "pass through" defendant with respect to the underlying action.  Erie County Supreme Court denied Lexington's motion for summary judgment based on its determination that there were issues of fact regarding whether Lehigh's notice to Lexington was timely.

In REVERSING the order appealed from and granting summary judgment to Lexington, the Appellate Division, Fourth Department, held that plaintiff's assumption that other parties would bear the ultimate responsibility for the underlying plaintiff's injuries was an insufficient excuse for failing to provide Lexington with timely notice of the underlying action's commencement.  The appellate court ruled that although an insured's good faith belief in nonliability may excuse that insured's failure to provide timely notice of an occurrence, Lehigh's asserted belief in nonliability was an "insufficient excuse" for its late notice of the lawsuit:

In opposing the motion, plaintiff contended that its delay was based upon a reasonable belief in nonliability because it was only a "pass through" defendant with respect to the underlying action. Although a good faith belief in nonliability may excuse a failure to provide timely notice of an occurrence (see Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743), here there was a failure to provide timely notice of the actual commencement of the underlying action. We thus conclude under these circumstances that, as a matter of law, plaintiff's assumption that other parties would bear the ultimate responsibility for Sherk's injuries is an insufficient excuse for failing to provide Lexington with timely notice of the fact that the underlying action had been commenced (see Philadelphia Indem. Ins. Co. v Genesee Val. Improvement Corp., 41 AD3d 44, 47).  

The Fourth Department further held that Lexington's disclaimer, issued after Lexington's investigation of the matter and within four weeks of its first notice of the accident and underlying action, was timely as a matter of law.

Pay attention.  This appears to be a new rule, at least in the Fourth Department.  An insured's asserted good faith belief in nonliability will not serve to excuse its failure to comply with a liability insurance policy's timely notice of claim or suit condition.  That excuse will only apply to the insured's failure to comply with the policy's notice of accident or occurrence condition.   Remember -- most liability policies contain tandem but distinct notice conditions:  (1) notice of accident or occurrence; and (2) notice of claim or suit.  In the opinion of the Fourth Department, an insured's asserted good faith belief in nonliability applies only to the former condition, not the latter.

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

CGL – LATE NOTICE – FOUR-MONTH DELAY – 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[.]"

Old Policy, Old Law -- CGL Insurer Not Required to Show Prejudice from Insured's Late Notice

CGL – LATE NOTICE – NO PREJUDICE RULE – GOOD FAITH BELIEF IN NONLIABILITY
Ponok Realty Corp. v. United Natl. Specialty Ins. Co.
(2nd Dept., decided 1/5/2010)

Plaintiff, insured landlord, received notice of its tenant's property damage claim more than one year before it notified its CGL insurer, United National Specialty Insurance Company, of that claim.  UNSIC disclaimed liability coverage based on the plaintiff's late notice, and plaintiff commenced this declaratory judgment action for defense and indemnification coverage, arguing: (1) that UNSIC was required to show that plaintiff's delayed reporting prejudiced UNSIC; and (2) that plaintiff's late notice should be excused because it had a good faith belief in nonliability.  Queens Supreme granted UNSIC's motion for summary judgment and plaintiff appealed.

In affirming Supreme Court's order, the Second Department noted that New York's new "prejudice rule" of New York Insurance Law § 3420(c)(2)(A) applies only to policies issued or delivered in New York State on or after January 17, 2009.  The policy in this case was effective from October 2003 to October 2004:

The plaintiff's argument that the "prejudice" rule articulated in Insurance Law § 3420(c)(2)(A), governs this case is unavailing. A 2008 amendment to Insurance Law § 3420(c)(2)(A) (see L 2008, ch 388, § 4) provides that where "an insurer alleges that it was prejudiced as a result of a failure to provide timely notice, the burden shall be on . . . the insurer to prove that it has been prejudiced" if the notice was provided within two years of the time required under the policy (see Insurance Law § 3420[c][2][A][i]). However, it is clear from section 8 of the act amending Insurance Law § 3420 that the amendments were to "apply to policies issued or delivered in this state on or after [January 17, 2009]" (McKinney's Cons Laws of NY, Book 27, Insurance Law § 3420, 2009 Pocket Part, at 15, Historical and Statutory Notes, L 2008, ch 388, § 8; see generally Matter of Auerbach v Board of Educ. of City School Dist. of City of N.Y., 86 NY2d 198, 204). The insurance policy issued by the defendant to the plaintiff was effective from October 3, 2003, until October 3, 2004. Since the policy was issued before the effective date of the relevant amendment to Insurance Law § 3420, the amended version of that section does not apply to the subject insurance policy.

The Second Department also rejected plaintiff's argument that it gave notice of the tenant's claim to UNSIC "as soon as practicable" and found that although the reasonableness of an insured's asserted good faith belief in nonliability generally is a question of fact for the fact-finder, plaintiff in this case had failed to raise a triable issue of fact as to whether its belief that its tenant would not file a claim was reasonable:

In general, the existence of a good faith belief that the injured party would not seek to hold the insured liable, and the reasonableness of such belief, are questions of fact for the fact-finder (see Genova v Regal Mar. Indus., 309 AD2d at 734; C.C.R. Realty of Dutchess v New York Cent. Mut. Fire Ins. Co., 1 AD3d at 305). The burden of demonstrating the reasonableness of the excuse lies with the insured (see Genova v Regal Mar. Indus., 309 AD2d at 734). Nevertheless, summary judgment may be awarded to the insurer if, construing all inferences in favor of the insured, the evidence establishes, as a matter of law, that the insured's belief in nonliability was unreasonable or in bad faith (see 120 Whitehall Realty Assoc., LLC v Hermitage Ins. Co., 40 AD3d at 721; Genova v Regal Mar. Indus., 309 AD2d at 734).

Here, the defendant established its prima facie entitlement to judgment as a matter of law by demonstrating that it was not notified of the subject property damage claim until more than one year had elapsed since the plaintiff received notice of such claim from its tenant (see Great Canal Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d at 743; Sputnik Rest. Corp. v United Natl. Ins. Co., 62 AD3d at 689; 120 Whitehall Realty Assoc., LLC v Hermitage Ins. Co., 40 AD3d at 721; Genova v Regal Mar. Indus., 309 AD2d at 734). In opposition, the plaintiff failed to raise a triable issue of fact as to whether its belief that its tenant would not file a claim was reasonable. In construing all inferences in favor of the insured, the evidence established, as a matter of law, that the plaintiff's belief in nonliability was unreasonable (see 120 Whitehall Realty Assoc., LLC v Hermitage Ins. Co., 40 AD3d at 721; Genova v Regal Mar. Indus., 309 AD2d at 734). Accordingly, the Supreme Court properly granted the defendant's motion for summary judgment.

If I only had a dollar for every time I've seen an appellate court remit a DJ matter back to the motion court for entry of a judgment. Remember folks, declaratory judgment actions end in judgments, not orders.

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. 

14-Month Late Notice Found Unreasonable As a Matter of Law

CGL – LATE NOTICE – GOOD FAITH BELIEF IN NON-LIABILITY – 14-MONTH DELAY – REASONABLE POSSIBILITY OF THE POLICY'S INVOLVEMENT
Ponok Realty Corp. v. United National Specialty Ins. Co.
(Sup. Ct., Queens Co., decided 6/27/2008)

Ponok Realty, owned in part and run by the apposite anagrammist and attorney, Thomas Konop, leased storage space in Ponok's commercial building to Omega Shell, Ltd., which allowed a related entity, RO Gallery, to store its artwork within the building. United National Specialty Insurance Company insured Ponok and the building for a one-year period, from October 2003 to 2004.

In an action brought in August 2003, RO Gallery alleged that water leaks from/through the roof of Ponok's building in June and July 2002 damaged its artwork. In June 2004, RO Gallery moved for leave to amend its complaint to assert a claim for damage to artworks stored at the premises due to a water leak that occurred on February 5, 2004. The court granted that motion.

Ponok did not notify United National of the February 5, 2004 water loss until April 5, 2005, 14 months later, and United National disclaimed liability coverage for damages alleged to related to that water loss based on Ponok's late notice. Ponok then brought this action.

In granting United National's motion for summary judgment, declaring that it had no obligation to defend or indemnify Ponok in relation to RO Gallery's underlying property damage action, Queens County Supreme Court Justice Peter Kelly held:

Construing all inferences in favor of the insured, the evidence presented establishes, as a matter of law, that Mr. Konop’s alleged belief in Ponok’s non-liability was unreasonable (citation omitted) and a prudent insured "should have realized that there was a reasonable possibility of the subject policy’s involvement" (citations omitted). Mr. Konop was aware of the February 5, 2004 incident on the same day, at which time he inspected the premises and arranged for the repair of the broken drain pipe. Furthermore, Ponok and Thomas Konop had previously received other complaints of water leaks from Mr. Rogal, and were aware of the fact that RO Gallery had made a claim in 2002 against Ponok’s prior insurer for property damage allegedly caused by a water leaks.

Moreover, at the time of the February 5, 2004 incident, the underlying action had already been commenced. Although Ponok and Mr. Konop assert that they were not personally aware of the underlying action at its commencement on August 12, 2003, this is of no moment. Ponok acknowledges that the summons and complaint in the underlying action were served on the Secretary of State, and it is the corporation’s obligation to keep a current address on file with the Secretary of State (BCL § 306[b]). Contrary to Mr. Konop’s suggestions, Ponok must have been aware of the Underlying action prior to the February 5, 2004 incident, as an answer dated December 3, 2003 had been served on its behalf in that action. It is noted that Ponok, in the underlying action, did not move to dismiss on jurisdictional grounds and did not preserve the defense of lack of personal jurisdiction in its answer. Ponok, therefore, should have realized that there was a possibility that RO Gallery would make a claim regarding the February 5, 2004 incident, whether or not Ponok could possibly be liable for the alleged damage to the artworks. Ponok’s failure to notify United National of the February 5, 2004 incident until April 5, 2005, a year and two months later, and some three months after it was aware of the amendment of the underlying complaint, was without legal justification and vitiates the insurance contract.

This is a case of life imitating art. Artwork spoiled by water. Coverage spoiled by late notice of artwork's spoilage.

4-Month Delay Found to Constitute Late Notice By Insureds, But Not By Injured Party

CGL – LATE NOTICE – GOOD FAITH BELIEF IN NON-LIABILITY – NOTICE FROM INJURED PARTY
Tower Ins. Co. of New York v. Jaison John Realty Corp.
(Sup. Ct., New York Co., decided 6/17/2008)

In counseling insurer clients on late notice issues, we regularly remind them that not one but two late notice analyses and determinations need to be made in every case: one with respect to the insured's delay or failure in providing notice; and the second with respect to the injured party's or claimant's delay or failure.

The latter determination is needed because Insurance Law § 3420(a)(3) gives injured parties an independent right to notify tortfeasors' liability insurers of an accident or occurrence. The standard or test used to measure late notice by an injured party is, however, less stringent than the one applicable to insureds. Notice by an injured party, even if much later than what would be expected from an insured, will be deemed timely if the injured party is found to have acted with due diligence to identify the tortfeasor's liability insurer, and then have placed that insurer on notice as soon after learning that insurer's identity as possible.

In this case, the court found that while the insureds breached their policy obligation to provide Tower with timely notice of falldown accident of which they were immediately aware, Tower had not met its burden of showing that the injured party relied solely on the insured to give notice to Tower and failed to proceed diligently in giving notice of her claim directly to Tower.

Claim Chronology:

• 9/17/2006 -- Dias falls down staircase in apartment building owned by insureds. Passerby calls 911. Paramedics arrive. Police arrive and cut off a piece of the staircase's railing in order to extricate Dias. Dias taken from scene to hospital ER where she was treated and released. Insured principal shareholder, John, finds staircase handrail missing later that day and calls the police. Receives a call back from the police, who inform him that someone named Dias had fallen on the staircase. Dias claims she called John from the hospital to tell him about her accident, but he said he already knew about it. John denies receiving such a call.
• 9/18/2006 -- John says he reached and spoke with Dias, but she never mentioned that she had fallen on the apartment's front step and been injured. Denies subsequently receiving a copy of the police report.
• 12/20/2006 -- Attorney for Dias writes to John advising that he had been retained to prosecute a personal injury claim. John denies receiving that letter.
• January 2007 -- John claims he first became aware of Dias's injuries when he received a copy of her summons and complaint. He immediately forwards those suit papers to Tower.
• 2/16/2007 -- Tower disclaims liability and denies coverage based on the insureds' late notice.
• 6/7/2007 -- Tower reiterates its late notice disclaimer after receiving a letter from John explaining that he did not report the incident on the date of occurrence because he believed Dias was making a false claim (Wait, so he was aware of Diaz's injuries?).

In granting Tower's motion for summary judgment as against the insureds, New York County Supreme Court Justice Jane Solomon noted and ruled:

In this case, John admits that on the day of the occurrence he received notice from someone who identified himself as a police officer that someone named Dias had fallen on his premises and that a piece of railing was removed because of the falll. John‘s assertion that he did not know that anyone was injured is belied by his own statement that he knew that someone fell; Dias's testimony that she called John from the hospital to tell him that she fell and the accident report which states that the police officer contacted Matthew John by phone and notified him of the occurrence (Sander’s Aff., Ex. 3). Under the circumstances, even construing the facts most favorably to the insured, there is no evidence that would lead to a “reasonable belief” that the party who fell would not assert a claim and, with the facts in his possession, John had both the ability and the responsibility to investigate the outcome of the occurrence (citations omitted). John’s failure to investigate the occurrence was unreasonable as a matter of law.

In denying Tower's motion as respects Dias, the injured party, however, the court held:

Here, there has been no showing that Dias had reason to know that notice directly to Tower was required (citation omitted), and under the circumstances, her counsel was reasonably diligent in his efforts to ascertain the identity of John's insurer. Tower urges the court to hold that the efforts by Dias's attorney were inadequate as a matter of law. In light of the fact that her attorney contacted John approximately three months after the accident and commenced the lawsuit one month later, it cannot be said that Dias sat on her rights. Moreover, Tower disclaimed even before John's time to answer the complaint had expired. On February 12, 2007, four days before Tower sent its formal disclaimer letter, it sought, and received, the consent of
Dias's attorney to extend John's time to serve an answer to the complaint * * *. Tower acknowledged receipt of the complaint in its disclaimer letter of February 16, 2007 * * *. Dias's lawyer communicated directly with Tower regarding the litigation, and Tower participated in the litigation by requesting Dias's forbearance in permitting it the opportunity to file a late answer on John's behalf. Under these circumstances, it cannot be said that Tower has met its burden of showing that Dias, as the injured party, relied solely on the insured to give notice to Tower and failed to proceed diligently in giving notice of her claim directly to Tower.

40-Day Delay in Giving Notice of Auto Accident Found Unreasonable As a Matter of Law

AUTO – LATE NOTICE – 40-DAY DELAY – NO GOOD-FAITH BELIEF OF NONLIABILITY
Young Israel Co-Op City v. Guideone Mut. Ins. Co.
(1st Dept., decided 6/5/2008)

Plaintiffs brought this DJ action for defense and indemnification coverage in relation to an underlying personal injury action that stemmed from a rear-end MVA. Guideone Mutual apparently had disclaimed coverage based on the insureds' 40-day delay in giving notice of the accident.

In REVERSING the lower court's award of summary judgment to the insureds and instead granting summary judgment to Guideone Mutual, the First Department held:

The court improperly found that plaintiffs' 40-day delay in notifying defendant of the motor vehicle accident was reasonable as a matter of law (citation omitted). Under the insurance policy at issue, which required "prompt notice" of any accident or loss, plaintiffs' timely forwarding of the claim letter was not adequate notice (see e.g. City of New York v Continental Cas. Co., 27 AD3d 28 31 [2005]). Given that plaintiffs were allegedly negligent in this rear-end collision and that the underlying claimant was taken away from the accident by ambulance (cf. Kelly v Nationwide Mut. Ins. Co., 174 AD2d 481 [1991]), plaintiffs failed to raise an issue of fact as to whether its delay in giving notice was reasonably founded upon a good-faith belief of nonliability (see Paramount Ins. Co. v Rosedale Gardens, 293 AD2d 235, 241 [2002]).

Late notice of only 40 days. No question that a 40-day delay is not "prompt notice", but this case ranks among the most stringent on insureds. Key factors in this case were: (1) that the MVA was a rear-end collision; and (2) that the insureds apparently were aware that the underlying claimant was taken away from the accident scene in an ambulance.

Late Notice of Occurrence -- 4 1/2-Month Delay Found Unreasonable As a Matter of Law

CGL – LATE NOTICE – 4 1/2-MONTH DELAY BY LAW FIRM INSURED FOUND UNREASONABLE AS A MATTER OF LAW – NO GOOD FAITH BELIEF IN NON-LIABILITY
Avery & Avery, P.C. v. American Ins. Co.
(2nd Dept., decided 5/13/2008)

Plaintiff law firm leased an office building in Brooklyn from an out-of-possession landlord. On March 24, 2004, a client of the insured law firm's subtenant, fell as he descended the steps from the second floor to the first floor of the building. The injured party, Verrone, said something that day to the firm's principal about the "bannister not going down to the bottom." Verrone was removed from the building by paramedics and died a few weeks later. An employee of the insured law firm knew this, and the firm's principal further acknowledged that she was aware that Verrone's nephew came to the premises to take photographs of the scene of the accident and that his family was "exploring the possibility of a claim."

On July 2, 2004, an attorney for Verrone's estate notified the landowner of the accident and advised the landowner to notify its insurance carrier. On August 10, 2004, the plaintiff's insurance broker forwarded a notice of the claim to the defendant, the plaintiff's insurance carrier. On August 17, 2004, an insurance adjuster for the defendant insurer telephoned the plaintiff's principal. In his affidavit, the adjuster claimed that the plaintiff's principal informed him that Verrone's nephew came to the premises to take pictures a few days after the accident. The plaintiff's principal did not deny this assertion.

On September 10, 2004 (one month after first notice), American Insurance Company disclaimed coverage on the ground that it did not receive timely notice of the claim. Plaintiff law firm then brought this DJ action, seeking defense and indemnification coverage in relation to the underlying personal injury and wrongful death action brought by Verrone's estate. American moved for summary judgment on the ground that the plaintiff failed to notify it of the claim as soon as practicable, and plaintiff cross-moved for summary judgment, claiming it had a reasonable belief in nonliability.

In REVERSING the Supreme Court's denial of American's cross motion for summary judgment, the Second Department noted:

* * * If the insured did not know about the accident, or had a "reasonable belief in nonliability," a delay in giving notice will be excused (citation omitted). However, the insured has the burden of showing the reasonableness of the excuse (id.). The issue is whether the insured had a reasonable basis for a belief that no claim would be asserted against it (citation omitted).

Here, the defendant established, as a matter of law, that the plaintiff did not have a reasonable belief that no claim would be asserted against it. The plaintiff had possession of the building, knew of the accident and that injuries were sustained on the day the accident occurred, and knew, within days of the accident, that Verrone's family was contemplating a claim. The delay of more than four months in notifying the defendant of the claim was unreasonable as a matter of law (see Evangelos Car Wash, Inc. v Utica First Ins. Co., 45 AD3d 727). In opposition, the plaintiff failed to raise a triable issue of fact.

The plaintiff asserts that the underlying action has no merit. However, at issue here is not whether the plaintiff reasonably believed that any claim brought by Verrone or on his behalf would lack merit. Rather, the issue is whether the plaintiff reasonably believed that no claim would be asserted against it (citations omitted; emphasis added).

Once again, a New York appellate court has pointed out that an insured's subjective assessment and belief that a potential claim would lack legal merit is not the relevant inquiry. Instead, it is whether the insured reasonably believed that no claim would be asserted against it.

FOILed Again

CGL – LATE NOTICE – NO GOOD FAITH BELIEF IN NON-LIABILITY
Patti & Johnny's, Inc. v. United States Liab. Ins. Grp.
(Sup.Ct., Nassau Co., decided 3/27/2008)

Yogi Berra, the guru of all things baseball and insurance coverage related, once said that it's not over until it's over. In this case, USLIG's persistence paid off.

Bar fight. Delayed/late reporting. Disclaim coverage. DJ suit. Move to dismiss. Lose. FOIL the police file. Discover new evidence, contradictory to what the insured had said. Move to dismiss again. Win.

In Patti & Johnny's, Inc. v. United States Liab. Ins. Grp., 2008 NY Slip Op 31203(U)(Sup.Ct., Nassau Co., decided 3/27/2008), the court reversed its earlier decision and granted USLIG's renewed motion to dismiss the insured's DJ complaint. USLIG had lost its initial motion to dismiss the complaint based on the insured's late notice of a bar fight that had started inside its premises. Afterwards, USLIG made a FOIL (Freedom of Information Law) request for and received the police file, which had been unavailable during the pendency of the assailant's criminal prosecution. The police file contained witness statements and surveillance videos that directly contradicted the insured's professed belief that it had no reason to suspect liability as a result of that altercation, including a bartender's statement that he had asked the assailant to carry the injured patron out of the bar, where the beating continued.

In ruling in favor of USLIG on it renewed motion, the court noted that an insured' s reasonable belief in nonliability will excuse the delay in giving notice to an insurer in compliance with the notice provision of an insurance policy, but the insured has the burden of showing the reasonableness of such excuse and it may be relevant on the issue of reasonableness whether and to what extent, the insured has inquired into the circumstances of the occurrence. The "overwhleming evidence" from materials obtained after the intitial motion via the FOIL request showed "that a brutal assault on [the injured party] occurred both inside and outside the establishment and that the employee of [the insured] not only stood by silently, but in fact, participated to the extent that he asked [the assailant] to carry the victim outside the bar where he proceeded to continue the assault[.]" On these newly discovered facts, the court granted USLIG's motion to dismiss the insured's DJ complaint, holding that the evidence from the police file "render[ed] the belief of non-liabilty on the part of Patti and Johnny [the insured] nonsensical and absurd."

Late Notice of Occurrence -- 5-Month Delay Found Unreasonable

CGL – LATE NOTICE – 5-MONTH DELAY UNREASONABLE AS A MATTER OF LAW – NO GOOD FAITH BELIEF IN NON-LIABILITY
Kaesong Corp. d/b/a Feel Health Beauty Supply, Inc. v. United National Specialty Ins. Co.
(EDNY decided 4/24/2008)

In Kaesong Corp. d/b/a Feel Health Beauty Supply, Inc. v. United National Specialty Ins. Co., 2008 U.S. Dist. LEXIS 34254 (EDNY decided 4/24/2008), the court granted summary judgment to the United National, the GL insurer, holding that the insured's 5-month delay in reporting an accident with injury on the insured's property was unreasonable as a matter of law. A customer had fallen at the plaintiff insured's store on August 10, 2006. That same day, the store manager prepared a written report, which stated that the woman had fallen on her wrist and hit her head while in the store, two employees had assisted the woman following the fall, and that she had been taken by ambulance to a local hospital. The report also states that the woman told the employees that she had "lost her balance." The insured reported the accident to United National on January 8, 2007, approximately five months later, and United National disclaimed coverage on January 18, 2007 based on the insured's late notice.

In granting summary judgment to United National, the court note that "[f]ive months is an unreasonable amount of time to delay notification to an insurer of a potential claim." Citing to New York state court decisions, the court observed that the duty to give notice arises when, from the information available relative to the accident, an insured could glean a reasonable possibility of the policy's involvement. "The reasonableness of the belief does not turn on whether the insured believes he will ultimately be found liable for the injury, but whether he has a reasonable basis for a belief that no claim will be asserted against him." "New York courts have consistently found that knowledge that an injured person had to be taken from a store's premises by ambulance should indicate a reasonable possibility that an insurance policy might be implicated by that accident. "

Notably, the court found that because the insured had not submitted any evidence of further inquiry into its potential liability, the court could not accept the insured's claim that it had a reasonable belief in its nonliability. As Coverage Counsel has said before -- a good faith belief in non-liability is something active, not passive. It requires an actual belief, based on inquiry and determination, that no claim will be brought against the insured. Assuming that no claim will be brought simply because the insured hears nothing further will not satisfy most courts, including the Eastern District.

Late Notice of Occurrence -- 7-Month Delay Found Unreasonable

HOMEOWNERS – LATE NOTICE – 7-MONTH DELAY UNREASONABLE AS A MATTER OF LAW – NO GOOD FAITH BELIEF IN NON-LIABILITY
Tower Ins. Co. of New York v. Ubah
(Sup.Ct., New York Co., decided 4/14/2008)

In Tower Ins. Co. of New York v. Ubah, 2008 NY Slip Op 31133(U)(Sup.Ct., New York Co., decided 4/14/2008), the court granted summary judgment to Tower, holding that the insured's 7-month delay in reporting an accident with injury on the insured's property was unreasonable as a matter of law. The insured had learned of the accident on June 6, 2005, was served with a complaint on December 5, 2005, and notified her broker on January 12, 2006. Tower received the complaint on January 13, 2006 and issued a disclaimer on February 10, 2006. In her signed statement given to Tower's investigator, the insured had acknowledged that she had learned of the accident and that the claimant had been taken away by ambulance on the day it happened. She also knew that a fire truck had shown up and that later that day someone had come by to take pictures of the scene.

In noting that the "issue is not whether the insured believes he will ultimately be found liable for the injury, but whether he has a reasonable basis for the belief that no claim will be asserted against him" (emphasis added), the court held that the insured's subjective belief that a claim would not be made against her, standing alone, was insufficient to exempt her from the notice requirement of the policy. The court found no extenuating factors which could have been associated with a reasonable belief that a plaintiff would not assert a claim, such as where there is no indication of injury or no defect at the accident site.

The court summarily rejected as "not supported by case law" the insured's further argument that Tower's 28-day delay in issuing its disclaimer was unreasonable.

Under the law of the First Department, a good faith belief in non-liability is an actual belief that no claim will be asserted, rather than the converse, viz, a lack of any belief that a claim will be made. This is an important distinction that should be made in investigating and assessing late notice situations and potential coverage defenses.

Good Faith Belief in Non-Liability -- Late Notice Excused

CGL – LATE NOTICE – GOOD FAITH BELIEF IN NON-LIABILITY
North Country Ins. Co. v. Jandreau
(3rd Dept. decided 4/24/2008)

In North Country Ins. Co. v. Jandreau, 2008 NY Slip Op 3552, 2 (3rd Dept. decided 4/24/2008), the 3rd Department affirmed the lower court's denial of summary judgment to the plaintiff insurer based on its late notice defense. Although defendant GC knew a roofing subcontractor's employee had broken his leg and later had surgery after having fallen off a roof, defendant did not report the accident to his insurer until approximately one year later when he was served with a summons and complaint. The relevant provision of the policy stated that "[i]n case of an occurrence or if you become aware of anything that indicates there might be a claim under this policy, you must give us or our agent notice . . . as soon as practicable."

In this case, the defendant explained that he did not contact his insurer because the injured employee was working for the subcontractor and under the subcontractor's control and supervision at the time of the accident. The subcontractor had provided proof of liability and workers' compensation coverage prior to commencing work, and informed defendant on the day of the accident that it was submitting a claim to its insurer. Defendant did not hear from the injured worker or anyone on his behalf from the date of the accident until defendant was served with the pleadings in the underlying action. He further believed that there was no liability because the injured worker was acting contrary to his own advice, and presumably that of the worker's supervisor, that no one go on the roof. Despite owning a construction company for 12 years, defendant had never been sued for a construction site injury and was thus unfamiliar with the nuances of liability. Defendant notified plaintiff the same day that he was served process.

Under the circumstances, and in light of the preference for permitting a jury to decide the question of reasonableness, the 3rd Department held that Supreme Court did not err in denying plaintiff's motion for summary judgment.