Opinion
2016–11075 Index No. 709504/15
07-24-2019
AVR–POWELL C DEVELOPMENT CORP., et al., Respondents, v. UTICA FIRST INSURANCE COMPANY, Appellant.
Farber Brocks & Zane LLP, Garden City, N.Y. (Sherri N. Pavloff of counsel), for appellant. Kenney Shelton Liptak Nowak LLP, Buffalo, N.Y. (Timothy E. Delahunt of counsel), for respondents.
Farber Brocks & Zane LLP, Garden City, N.Y. (Sherri N. Pavloff of counsel), for appellant.
Kenney Shelton Liptak Nowak LLP, Buffalo, N.Y. (Timothy E. Delahunt of counsel), for respondents.
JOHN M. LEVENTHAL, J.P., SHERI S. ROMAN, HECTOR D. LASALLE, LINDA CHRISTOPHER, JJ.
DECISION & ORDER ORDERED that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Queens County, for the entry of a judgment making the appropriate declaration in accordance herewith.
In March 2008, the plaintiff AVR–Powell C Development Corp. (hereinafter AVR–Powell), the owner of and general contractor at a construction site located on Lax Avenue in College Point, entered into a written agreement with nonparty Vinny Construction Corp. (hereinafter Vinny Construction), which was to perform masonry work in connection with the construction project. Pursuant to the agreement, Vinny Construction was required to procure and maintain a commercial general liability insurance policy naming AVR–Powell and the plaintiff Powell Cove Associates, LLC (hereinafter Powell Cove), as additional insureds. The defendant, Utica First Insurance Company (hereinafter Utica), issued a policy to Vinny Construction which included a "Blanket Additional Insured" endorsement specifying that an "[i]nsured also includes ... [a]ny person or organization whom you are required to name as an additional insured on this policy under a written contract or written agreement." AVR–Powell and Powell Cove were also named as insureds under a general liability insurance policy issued to AVR–Powell and Powell Cove by nonparty Mt. Hawley Insurance Company (hereinafter Mt. Hawley).
In June 2008, Zdzislaw Klimowicz, an employee of Vinny Construction, allegedly was injured while working at the construction site. By letter dated March 16, 2009, Mt. Hawley wrote to Utica tendering a claim on behalf of the plaintiff AVR Realty Company, LLC (hereinafter AVR Realty), and Powell Cove for defense and indemnification in connection with any claim by Klimowicz. The following day, Utica sent a letter to Vinny Construction disclaiming coverage based on the policy exclusion for bodily injuries sustained by an employee of the insured in the course of his or her employment (hereinafter the employee exclusion). In June 2009, Klimowicz commenced an action to recover damages for personal injuries against Powell Cove and AVR Realty. By letter dated July 29, 2009, to Vinny Construction, Mt. Hawley tendered a claim for indemnification on behalf of AVR–Powell, Powell Cove, and AVR Realty (hereinafter collectively the plaintiffs). A copy of this letter was also sent to Utica. By letter dated August 31, 2009, Utica wrote to Mt. Hawley, disclaiming coverage based on the employee exclusion.
In February 2015, prior to the trial in the underlying action, Powell Cove and AVR Realty, through counsel, advised Utica that its disclaimer of coverage was ineffective inasmuch as it was not sent directly to the additional insureds, and they renewed their demand for coverage. Utica rejected the position that its disclaimer was invalid, and, after receiving a copy of the contract between AVR–Powell and Vinny Construction, it sent a letter dated March 20, 2015, directly to the plaintiffs, disclaiming coverage. In September 2015, the plaintiffs commenced this action for a judgment declaring, inter alia, that Utica was obligated to defend and indemnify them in the underlying action. Subsequently, the plaintiffs moved for summary judgment declaring that Utica was obligated to defend and indemnify AVR–Powell and Powell Cove in the underlying action, and to reimburse them for all defense costs incurred in connection with the underlying action. In the order appealed from, the Supreme Court granted the plaintiffs' motion. Utica appeals.
Pursuant to Insurance Law § 3420(d), an insurer is required to provide its insured and any other claimant with timely written notice of its disclaimer or denial of coverage on the basis of a policy exclusion, and will be estopped from disclaiming liability or denying coverage if it fails to do so (see QBE Ins. Corp. v. Adjo Contr. Corp., 121 A.D.3d 1064, 1084, 997 N.Y.S.2d 425 ; Key Fat Corp. v. Rutgers Cas. Ins. Co., 120 A.D.3d 1195, 1197, 992 N.Y.S.2d 327 ). Furthermore, where, as here, "a primary insurer ... tenders a claim for a defense and indemnification to an insurer ... which issued a certificate of insurance to the parties, indicating that they are additional insureds, that insurer must comply with the disclaimer requirements of Insurance Law § 3420(d)(2) by providing written notice of disclaimer of coverage to the additional insureds" ( Sierra v. 4401 Sunset Park, LLC, 101 A.D.3d 983, 985, 957 N.Y.S.2d 219, affd 24 N.Y.3d 514, 2 N.Y.S.3d 8, 25 N.E.3d 921 ; see Endurance Am. Specialty Ins. Co. v. Utica First Ins. Co., 132 A.D.3d 434, 436, 17 N.Y.S.3d 401 ).
On their motion for summary judgment, the plaintiffs established their prima facie entitlement to judgment as a matter of law by demonstrating that Utica did not give timely written notice of its disclaimer directly to its additional insureds (see Sierra v. 4401 Sunset Park, LLC, 24 N.Y.3d at 518, 2 N.Y.S.3d 8, 25 N.E.3d 921 ; Harco Constr., LLC v. First Mercury Ins. Co., 148 A.D.3d 870, 873, 49 N.Y.S.3d 495 ; Endurance Am. Specialty Ins. Co. v. Utica First Ins. Co., 132 A.D.3d at 436, 17 N.Y.S.3d 401 ). The plaintiffs' submissions showed that Utica did not provide a disclaimer of coverage directly to its additional insureds until March 20, 2015, approximately six years after the first demand for coverage from Utica. The failure of Utica to provide timely written notice of disclaimer to its additional insureds rendered its disclaimer of coverage ineffective against them (see Sierra v. 4401 Sunset Park, LLC, 24 N.Y.3d at 518–519, 2 N.Y.S.3d 8, 25 N.E.3d 921 ; Maughn v. RLI Ins. Co., 68 A.D.3d 1067, 1068, 892 N.Y.S.2d 172 ).
In opposition, Utica failed to raise a triable issue of fact. There is no merit to Utica's contention that its obligation to comply with Insurance Law § 3420(d) did not begin until it received the contract documents in March 2015. Utica did not need to receive those documents in order to provide a disclaimer directly to the additional insureds based on the employee exclusion. An insurer may not delay issuance of a disclaimer on a ground that the insurer knows to be valid while investigating other possible grounds for disclaiming coverage (see Endurance Am. Specialty Ins. Co. v. Utica First Ins. Co., 132 A.D.3d at 436, 17 N.Y.S.3d 401 ; George Campbell Painting v. National Union Fire Ins. Co. of Pittsburgh, PA, 92 A.D.3d 104, 106, 937 N.Y.S.2d 164 ; City of New York v. Northern Ins. Co. of N.Y., 284 A.D.2d 291, 292, 725 N.Y.S.2d 374 ).
Utica's remaining contentions are without merit.
Accordingly, we agree with the Supreme Court's determination to grant the plaintiffs' motion for summary judgment declaring that Utica is obligated to defend and indemnify AVR–Powell and Powell Cove in the underlying action, and to reimburse them for all defense costs incurred in connection with the underlying action. Since this is a declaratory judgment action, we remit the matter to the Supreme Court, Queens County, for the entry of a judgment, inter alia, declaring that Utica is obligated to defend and indemnify AVR–Powell and Powell Cove in the underlying action, and to reimburse them for all defense costs incurred in connection with the underlying action (see Lanza v. Wagner, 11 N.Y.2d 317, 334, 229 N.Y.S.2d 380, 183 N.E.2d 670 ).
LEVENTHAL, J.P., ROMAN, LASALLE and CHRISTOPHER, JJ., concur.