Opinion
114123/2007.
Decided September 26, 2008.
ATTORNEY FOR THE DEFENDANT: KINGSBROOK BROKERAGE SERVICES-Prose, NW YORK, NY.
ATTORNEY FOR THE DEFENDANT: DELOS INS. CO.-Prose, NEW YORK, NY.
ATTORNEY FOR THE DEFENDANT: LUSTIG BROWN LLP, WHITEPLAINS, NY.
By this motion, Plaintiff 301 W. 151 Realty Corp. moves to amend the pleadings pursuant to 3025(b) to add additional Plaintiffs. Plaintiff also moves for a declaration that Defendant is required to indemnify and defend Plaintiff and reimburse Plaintiff for all expenses incurred in the underlying personal injury action (CPLR 3212).
FACTS
This action arises out of Delos Insurance Company's ("Delos" or Insurer) denial of insurance coverage to 301 W. 151 Realty Corp. ("301 Realty" or "Insured").
On August 28, 2004, Bobby Voyd slipped and was injured near the entrance of 8th Ave Liquors, located at 301 W. 151 St. (See Plaintiff Exhibit "E" page 2). On January 4, 2006, Mr. Voyd and his wife Louvenia Voyd commenced an action (hereinafter "Voyd Action") against 8th Ave Liquors and the building's owner, 301 Realty.
Almost a year later, on December 20, 2006, 8th Ave Liquors, as a third party plaintiff, commenced an action against 301 Realty. The Third-Party Plaintiff, 8th Ave Liquors sought indemnification and a finding that 301 Realty was negligent, thereby breaching the lease agreement. After 301 Realty failed to answer, this court, on January 12, 2007, granted a default judgment.
In April of 2007, several months after the default judgment was entered, 301 Realty received, for the first time, notice of the Voyd Action and of the default judgment. 301 Realty's attorney had passed away and 301 Realty was unaware of the action against them.
At the time of the incident, 301 Realty was insured by Defendant Delos. Plaintiff's general commercial liability policy with Defendant spanned from January 6, 2004 through January 6, 2005, the period during which Mr. Voyd was injured. (See Plaintiff's Motion Exhibit "A" page 8).
On May 1, 2007, upon becoming informed of the action and default judgment against them, Plaintiff 301 Realty contacted its insurance brokerage carriers, Kingsbrook Brokerage Services, Inc. (hereinafter "Kingsbrook") and A. Aronson Co, Inc. (hereinafter "Aronson"). Kingsbrook and Aronson were to inform Defendant Delos of the pending action against Plaintiff. Delos was notified of Voyd's injury and of the subsequent suit on May 31, 2007.
Upon receiving Plaintiff's claim for insurance coverage, Cheryl Rabb, the claim's examiner at Delos, conducted a routine investigation to determine whether Plaintiff would be covered under its policy. On June 14, 2007, after a one-week investigation, Rabb wrote to inform 301 Realty of their determination. Rabb denied coverage to 301 Realty, citing that the notification to Delos of the pending action against Plaintiff was untimely. According to Rabb," . . . the lawsuit was served upon [301 Realty] in December 2006, however it was not reported to Delos until May 31, 2007." (See Motion Exhibit "G" page 4). Therefore, Plaintiff was denied coverage based on the six-month delay in informing Delos of the lawsuit against Plaintiff.
After receiving this denial of coverage from Defendant, Plaintiff commenced an action against 8th Ave Liquors to vacate the default judgment against Plaintiff. Plaintiff argued that due to Plaintiff's attorney's death, Plaintiff lacked knowledge of the original injury and the Voyd Action along with 8th Ave Liquors' suit against them. Plaintiff claimed to have had no knowledge of the underlying suit, thereby preventing Plaintiff from appearing or otherwise providing a defense. On September 11, 2007, this court granted Plaintiff 301 Realty's motion to vacate the default judgment. This court determined that vacating the default judgment was proper considering the attorney's death and that vacating the default judgment would not prejudice the other parties.
The following month, on October 15, 2007, Plaintiff 301 Realty wrote a letter to Defendant Delos informing Delos that the court had vacated the default judgment against Plaintiff. Therefore, Plaintiff stated that Delos now had no reasonable basis for denying coverage because Plaintiff's lack of knowledge of the suit had been judicially excused. Delos acknowledged receipt of the letter.
Plaintiff 301 Realty now moves to amend the pleading to include 301 Realty Corp and 301 Realty Corp. pursuant to CPLR 3025(b). Moreover, Plaintiff seeks a declaration pursuant to 3212(b) that Defendant Delos must both defend and indemnify 301 Realty Corp in the Voyd Action. In addition, Plaintiff moves for a declaration that Defendant must reimburse Plaintiff for costs incurred as a result of the Voyd action. Alternatively, if the court denies Plaintiff's motion for summary judgment, Plaintiff claims the broker carriers are liable for damages incurred as a result of untimely notifying Delos of the claim.
The distinction being the period after "Corp".
DISCUSSION
Plaintiff 301 Realty's Motion to Amend the PleadingsPlaintiff seeks to include 301 Realty Corp. in addition to 301 W. 151 Realty Corp to the caption pursuant to 3025(b).
CPLR 3025(b) states that parties may amend or supplement pleadings granted by leave of the court and that ". . . [l]eave shall be freely given upon such terms as may be just." Courts shall freely grant leave to amend a pleading unless doing so would hinder the opposing party's ability to prepare a case. ( Loomis v. Civetta Corinno Const. Corp., 54 NY2d, 18, 23). If the opposing party would be unfairly surprised or prejudiced, granting a leave to amend a pleading is improper. ( Murray v. City of New York, 43 NY2d 400, 406).
Concerning the case at bar, Plaintiff seeks to add several derivatives of Plaintiff's name as parties to the suit. Defendant Delos argues that the contract between Defendant and Plaintiff did not encompass the amended names and that allowing Plaintiff to amend would be improper.
In the instant case, Plaintiff's motion to amend the names would not prejudice Defendant or hinder Defendant's ability to prepare its case. Defendant Delos fails to provide evidence of undue prejudice or surprise. Moreover, Defendant will likely prepare the same defense regardless of which derivation of Plaintiff's name is used. Therefore, Plaintiff's motion to amend the complaint to add parties is granted.
Motion for Injunctive Relief Requiring Defendant Delos Indemnify and Defend Plaintiff
Plaintiff 301 Realty moves for summary judgment pursuant to 3212(b) seeking an order requiring Defendant Delos to defend and indemnify Plaintiff. Plaintiff contends that Defendant's initial basis for denying coverage was because of untimely notice of the injury. Defendant specifically denied coverage based on the almost six month period between commencing the underlying action and Plaintiff becoming aware of the suit and informing Defendant. Defendant Delos initially refused coverage to Plaintiff, arguing that Plaintiff should have stayed informed of possible suits arising from injuries on Plaintiff's property. Defendant argues that Plaintiff could have easily discovered the underlying suit and timely informed Defendant.
However, in the responsive pleadings, Defendant had changed its basis for denying coverage. Defendant abandoned its argument that the six-month lapse of time justified its denial of coverage and instead now argues that coverage should be denied based on a 31 day delay in notification to the insurer following Plaintiff's awareness of the action.
Plaintiff argues that Defendant is barred from introducing this 31-day timeframe as a basis for denying coverage because Defendant's initial denial of coverage cited the delay from December 2006 until Defendant was notified in May of 2007. Plaintiff asserts that when Defendant issued the initial denial of coverage, Defendant waived the right to submit an additional basis or new time-frame for denial.
CPLR § 3212 requires that the moving party make a prima facie case of judgment as a matter of law, showing that no material issues of fact exist. ( Glick Dolleck, Inc. v. Tri-Pac Export Corp., 22 NY2d 439). Summary judgment is a drastic remedy, only to be applied in the absence of genuine issues of material fact. ( Id.). One opposing summary judgment must prove triable issues of material fact that warrant a trial. ( Zuckerman v. City of New York, 49 NY2d 557, 562). If there is any doubt as to the existence of genuine issues of material fact, summary judgment should be denied. ( Sillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395).
An insured has a duty to notify the insurer of an injury in a reasonably timely manner in light of mitigating circumstances. Once becoming informed of the injury, the insured must, in good faith, communicate it to the insurer promptly after receiving information of the occurrence. ( Merchants Mut. Ins. Co. v. Hoffman, 56 NY2d 799).
Typically, a thirty-day period is applied to insurance carriers' notification of coverage or denial of a claim. ( Fireman's Fund Ins. Co. of Newark v. Hopkins, 88 NY2d 836). Additionally, an insurer must provide specific grounds for disclaiming coverage. ( General Acc. Ins. Group v. Cirucci, 46 NY2d 862). After disclaiming coverage with specificity, an insurer is precluded from adding grounds for denial after providing the claimant with the initial reason for refusing coverage. ( Id.; Paul M. Maintenance, Inc. v. Transcontinental Ins. Co., 300 AD2d 209 [1st Dep't 2002]).
The present case turns on whether Defendant's denial of benefits for untimely notification was proper.
Defendant Delos is precluded from adding grounds for denial of coverage to its original disclaimer, which specified that the denial was based on the delay between December of 2006 and May of 2007. Since Defendant may not change the reasons it denied Plaintiff coverage, this court must take Defendant's denial of coverage based on a six month delay in notification as its reason for the denial. ( General Acc. Ins. Group v. Cirucci, 46 NY2d 862).
Once becoming aware of the action against it, the insured must, in good faith, communicate it to the insurer promptly after receiving information of the occurrence. ( Merchants Mut. Ins. Co. v. Hoffman, 56 NY2d 799). Plaintiff, in good faith, notified Delos of the Voyd Action 31 days after it became aware of it, under the circumstances this is not considered unreasonable. Defendant's denial of coverage based on a six month delay is improper because the specific grounds for disclaiming are incorrect and insufficient under the specificity requirements of General Acc. Ins. Group v. Cirucci, 46 NY2d 862 and Paul M. Maintenance, Inc. v. Transcontinental Ins. Co., 300 AD2d 209 [1st Dep't 2002]. Defendant's insufficient denial of coverage coupled with Plaintiff's reasonable delay in notification requires the Defendant to indemnify and defend and reimburse Plaintiff for all expenses incurred in the underlying personal injury action.
Accordingly, it is
ORDERED that plaintiff 301 Realty's motion for leave to amend the pleadings is granted; and it is further
ORDERED that 301 Realty's motion to dismiss is granted and this action is dismissed; and it is further
ORDERED that Defendant indemnify, defend and reimburse Plaintiff for all expenses incurred in the underlying personal injury action; and it is further
ORDERED that the Clerk of the Court enter judgment accordingly.
This memorandum opinion constitutes the decision and order of the Court.