Opinion
652380/2016
04-29-2020
Judith GREENBERG, Plaintiff, v. UTICA FIRST INSURANCE COMPANY, Defendant.
Law Offices of Evan Sarzin, P.C., New York, NY (Evan Sarzin of counsel), for plaintiff. Farber Brocks & Zane L.L.P., Garden City, NY (Andrew J. Mihalick of counsel), for defendant.
Law Offices of Evan Sarzin, P.C., New York, NY (Evan Sarzin of counsel), for plaintiff.
Farber Brocks & Zane L.L.P., Garden City, NY (Andrew J. Mihalick of counsel), for defendant.
Gerald Lebovits, J.
The following e-filed documents, listed by NYSCEF document number (Motion 006) 131, 132, 133, 134, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 148, 149, 150, 151, 152, 153, 154, 158, 159, 160, 161, 162, 163, 164, 165, 166, 167, 168, 169, 170, 171, 172, 173, 174, 175, 176, 177, 178 were read on this motion for SUMMARY JUDGMENT.
Plaintiff Judith Greenberg brings this declaratory judgment action against the insurer of the restaurant where she fell and sustained injuries. The insurer, defendant Utica First Insurance Company (Utica), moves for summary judgment dismissing the complaint and for a declaratory judgment that it is not obligated to provide coverage for plaintiff. Utica contends that it was not given timely notice of the accident. Plaintiff cross-moves for summary judgment on her complaint and dismissal of defendant's counterclaims for declaratory relief, contending that timely notice was given to Utica.
BACKGROUND
Plaintiff's accident occurred on October 10, 2010, at a restaurant owned and operated by Thai Lemon Grass on Broadway, Inc., which was covered by a liability policy from Utica. Plaintiff seeks $236,313.31 from Utica, the amount of the default judgment that she obtained against the restaurant in the underlying action (Greenberg v. Thai Lemon Grass on Broadway, Inc. , Sup Ct, NY County, Index No. 107275/2011).
The accident caused plaintiff to incur medical and other expenses, which were paid by her insurer, nonparty Aetna Health Plans. Nonparty Rawlings Company, LLC, which is in the business of obtaining reimbursement for insurers, had Aetna as a client. On January 7, 2011, Peggy Stewart, a Rawlings recovery analyst, wrote to the restaurant requesting the identity of its insurer. The restaurant provided her with Utica's name, address, and phone number, and with the policy number for the restaurant's insurance.
Stewart wrote two affidavits about her subsequent communication with Utica. In an affidavit dated March 8, 2016, Stewart stated that on April 29, 2011, she called the general liability department at Utica. A Utica employee confirmed to her that the restaurant was one of its insureds and that the policy number was correct. That person advised Stewart that no claim was filed against the policy.
Stewart's second affidavit, dated March 21, 2019, provides more details about her April 29, 2011 call to Utica. The affidavit states that it is based on Stewart's personal knowledge of Rawlings policies and procedures with respect to recovering payments on behalf of Aetna and on her present recollection of those efforts. Stewart states that at the time that she was handling Greenberg's claim she would have been handling several hundred other claims, and that she has no present independent recollection of Greenberg's claim. Her recollection of the April 29, 2011 call to Utica is based on a review of the file. Based on her practice as a recovery analyst with respect to such phone calls, she would have given Utica the number of the policy that she was calling about, Greenberg's name, and the date of the accident and asked Utica if any claim had been made with respect to the alleged accident. She states that she would not have advised Utica that she was giving notice to Utica on behalf of Greenberg or otherwise asserting any claim for coverage on behalf of Greenberg, Rawlings, or Aetna. Stewart further states that, based on her recollection and work procedures, since she was told by Utica that no claim had been made against the policy, she did not thereafter have any written communication with Utica regarding the subject claim or any other claim against said policy.
On June 22nd, 2011, plaintiff commenced the action against the insured. The insured defaulted, a default order issued on December 16, 2011, and an inquest was held on June 12, 2012. In September 2012, plaintiff was awarded judgment against the insured. Plaintiff tried but was not able to collect the amount of the judgment from the insured as it had become insolvent.
Plaintiff alleges that Utica received notice from Rawlings in April 2011. In addition, in a June 2019 affidavit, a person who used to be an employee of the corporation that owned the restaurant states that in July or August 2011, the restaurant received the summons and complaint in the mail and that he took it to "my insurance agent and accountant" (Qun Lin affidavit). Plaintiff states also that the insured received the note of issue in the underlying action about March 21, 2012 and promptly turned it over to Utica (Sarzin affirmation, NYSCEF 159, paras. 12-13).
Plaintiff alleges as follows. "Plaintiff also learned about the communication between the restaurant corporation and Rawlings, which resulted in the Rawlings call to UTICA FIRST in April 2011. However, it took the plaintiff until March 15, 2016 to obtain the affidavit of Peggy Stewart. It was not until March 15, 2016 that plaintiff discovered the connection between the restaurant corporation and UTICA FIRST which supports this action" (Sarzin affirmation, NYSCEF 159, para 22).
Utica's position is that it never received any call from Rawlings. Utica's representative testified that it was Utica's practice, upon receiving the notice of a claim, to make an electronic record of the claim; in this case, no such record was ever made, indicating that Utica had not been notified of the claim (Utica's motion, exhibit I, at 68-70).
Utica alleges that it first received notice about plaintiff's accident on April 4, 2012. On that date, the insurance broker for Utica's insured sent Utica copies of an occurrence/claim form, the letter dated January 7, 2011 from Stewart to the insured, a notice of inquest in the lawsuit against the insured, and the summons and complaint in the lawsuit against the insured. On April 19 and 25, 2012, Utica wrote to its insured disclaiming coverage because the insured had failed to notify Utica of plaintiff's claim. Utica sent copies of the letters to plaintiff's attorney.
Utica alleges that neither the insured nor plaintiff timely notified it of plaintiff's accident or lawsuit, and the notice purportedly made in April 2011 was not notice at all. Utica states that, since it did not receive notice of the claim until April 2012 which was after the liability of its insured was determined by the default order in December 2011, there is an "irrebuttable presumption" of prejudice, pursuant to Insurance § 3420 (c) (2) (B). Utica states that the late notice denied it the opportunity to investigate and defend its insured.
DISCUSSION
As the party moving for summary judgment, Utica must make a prima facie showing of entitlement to judgment as a matter of law, offering sufficient evidence to eliminate any material issues of fact ( Santiago v. Filstein , 35 AD3d 184, 185-186 [1st Dept 2006] ). If the moving party makes a prima facie showing, the opponent of the motion must "present evidentiary facts in admissible form sufficient to raise a genuine, triable issue of fact" in order to defeat the motion ( Mazurek v. Metropolitan Museum of Art , 27 AD3d 227, 228 [1st Dept 2006] ). Reliance upon mere conclusions or unsubstantiated allegations will not defeat summary judgment ( Corcoran Group, Inc. v. Morris, 107 AD2d 622, 624 [1st Dept 1985], aff'd 64 NY2d 1034 ).
Providing an insurer with timely notice of a potential claim is a condition precedent to coverage. Absent a valid excuse, a failure to satisfy the notice requirement in the policy vitiates coverage ( Sayed v. Macari , 296 AD2d 396, 397 [2d Dept 2002] ). Here, under the restaurant's policy the notice of claim must include the insured's name, the policy number, and the time, place, and circumstances of the occurrence (Policy, at BP-100, at 21). The insured must "promptly" give notice of an occurrence which might be a claim and, in the event that a claim is brought, must "promptly" send Utica copies of all legal papers (id. ).
Where an insurance policy requires that notice of an occurrence be given promptly, notice must be given within a reasonable time in view of all the facts and circumstances ( Eagle Ins. Co. v. Zuckerman, 301 AD2d 493, 495 [2d Dept 2003] ; and see 24 Fifth Owners, Inc. v. Sirius Am. Ins. Co., 124 AD3d 551, 551 [1st Dept 2015] ). When the injured person gives notice of an accident to the tortfeasor's insurer, the injured person is required to demonstrate that he or she acted diligently in attempting to ascertain the identity of the insurer, and thereafter expeditiously notified the insurer ( Tower Ins. Co. of NY v. Lin Hsin Long Co ., 50 AD3d 305, 308 [1st Dept 2008] ; Steinberg v. Hermitage Ins. Co. , 26 AD3d 426, 428 [2d Dept 2006] ).
Under the Insurance Law, failure to give the notice required by the policy "shall not invalidate any claim made by the insured, an injured person or any other claimant if it shall be shown not to have been reasonably possible to give such notice within the prescribed time and that notice was given as soon as was reasonably possible thereafter" ( Insurance Law § 3420 [a] [4] ). " ‘Where there is no excuse or mitigating factor for late notice, the issue [of reasonableness] poses a legal question for the court, rather than an issue for the trier of fact’ " ( SSBSS Realty Corp. v. Public Serv. Mut. Ins. Co. , 253 AD2d 583, 584 [1st Dept 1998], quoting Hartford Acc. & Indem. Co. v. CNA Ins. Co. , 99 AD2d 310, 313 [1st Dept 1984] ).
Where, as here, notice is given to the insurer given almost seven month after the occurrence, that notice is untimely as a matter of law unless there is a reasonable excuse for the delay. But the plaintiff in this case does not offer any explanation for the delay, show that it was not reasonably possible to have given notice sooner, or demonstrate diligence in attempting to ascertain the insurer's identity (see Deso v. London & Lancashire Indem. Co., 3 NY2d 127, 129 [1957] [un-excused delay of 51 days in notifying insurer was unreasonable and untimely as a matter of law]; Cruz v. W. Heritage Ins. Co., 145 AD3d 565, 566 [1st Dept 2016] [unexplained delay of two months]; Young Israel Co-Op City v. Guideone Mut. Ins. Co. , 52 AD3d 245, 246 [1st Dept 2008] [40 days]; Steinberg v. Hermitage Ins. Co. , 26 AD3d 426, 427 [2d Dept 2006] [57 days]; DiGuglielmo v. Travelers Prop. Cas. , 6 AD3d 344, 346 (1st Dept 2004], overruled on other grounds [7 months] ).
To be sure, the standard for determining the timeliness of notice to a liability insurer is more lenient when notice is given by the injured party than when it is given by the insured ( Spentrev Realty Corp. v. United Natl. Specialty Ins. Co., 90 AD3d 636, 637 [2d Dept 2011] ; Malik v. Charter Oak Fire Ins. Co., 60 AD3d 1013, 1016 [2d Dept 2009] ). "The injured person's rights must be judged by the prospects for giving notice that were afforded him, not by those available to the insured" ( Lauritano v. American Fid. Fire Ins. Co., 3 AD2d 564, 568 [1st Dept 1957], affd 4 NY2d 1028 [1958] ). But plaintiff's notice was untimely even under this more lenient standard.
Additionally, the content of the notice was inadequate. Notice is deemed adequate when it is sufficient to enable the insurer to frame an intelligent estimate of its rights and liabilities ( Bilsky v. Mutual Benefit Health & Acc. Assn., 182 Misc 122, 123 [App Term, 1st Dept 1944], affd 268 App Div 973 [1st Dept] ), or when it contains the details of the policy and accident sufficient to alert the insurer that a claim was being made ( U.S. Underwriters Ins. Co. v. City Club Hotel, LLC, 369 F3d 102, 108 [2d Cir 2004] ; Matter of Metropolitan Prop. & Liab. Ins. Co. v. Torcivia, 90 AD2d 811, 811 [2d Dept 1982] ). Notice is inadequate when it gives no indication that it is a notice of claim ( Travelers Indem. Co. v. Northrop Grumman Corp., 3 F Supp 3d 117, 126 [SD NY 2014] ), affd 677 Fed Appx 701 [2d Cir 2017] ), or the notice states that its drafter was unable to verify insurance coverage and that a claim "may be made" (Matter of GuideOne Specialty Mut. Ins. Co. v. Cruz, 149 AD3d 837, 838 [2d Dept 2017] ).
In this case, Rawlings did not clearly advise Utica that an occurrence had taken place and that notice of claim was being made. Stewart does not state that she gave Utica any information about the accident or that she advised Utica that Rawlings, plaintiff, or the insured had a claim against Utica. Indeed, she states that even if she had mentioned plaintiff's name and the date of the accident during the phone call, she would not have advised Utica that she was giving notice of the accident or asserting a claim against Utica on behalf of plaintiff or anyone else.
Utica did not receive notice when the restaurant's employee gave its insurance agent the summons and complaint. An insurance broker is the agent of the insured, not of the insurer. Notice of an accident given by the insured to its insurance broker is therefore not effective as a notice to the insurer, absent some basis for finding that the broker possessed authority to represent the insurer ( Strauss Painting, Inc. v. Mt. Hawley Ins. Co., 24 NY3d 578, 591 [2014] ; Prince Seating Corp. v. QBE Ins. Co., 73 AD3d 884, 885 [2d Dept 2010] ). Plaintiff here does not allege that the broker had such authority.
Having determined that the notice of claim was unreasonably delayed, this court now considers the insurer's claim that it was prejudiced. Insurance Law § 3420 addresses prejudice brought about by late notice. Failure to give notice in the time required by the policy "shall not invalidate any claim by the insured, injured person or any other claimant, unless" said failure prejudices the insurer ( Insurance Law § 3420 [a] [5] ). Where the insurer alleges prejudice due to untimely notice, "the burden of proof shall be on: (i) the insurer to prove that it has been prejudiced, if the notice was provided within two years of the time required under the policy; or (ii) the insured, injured person or other claimant to prove that the insurer has not been prejudiced, if the notice was provided more than two years after the time required under the policy" ( Insurance Law § 3420 [c] [2] [A] ).
Notwithstanding (A), though, "an irrebuttable presumption of prejudice shall apply if, prior to notice, the insured's liability has been determined by a court of competent jurisdiction ..." ( Insurance Law § 3420 [c] [2] [B] ). The insured's rights shall not be deemed prejudiced unless the failure to provide notice "materially impairs the ability of the insurer to defend or investigate the claim" ( Insurance Law § 3420 [c] [2] [C] ).
Recent court decisions have applied a narrow interpretation and strict construction to "irrebuttable presumption," and concluded that the provision applies according to its plain language ( Tower Ins. Co. v. Commissary Direct, Inc., 63 Misc 3d 1229[A], *9, 2019 NY Slip Op 50792[U] [Sup Ct, NY County 2019] ; see Villavicencio v. Erie Ins. Co ., 172 AD3d 1276, 1278 [2d Dept 2019] ). This court agrees with the reasonableness of those decisions and finds that Utica is entitled to an irrebuttable presumption of prejudice in this case. Greenberg obtained a default judgment against the restaurant in December 2011. To grant a default judgment, a court must first conclude that the plaintiff's factual allegations—as deemed admitted by the defendant upon its default—state a cause of action (see Matter of Dyno v. Rose , 260 AD2d 694, 698 [3d Dept 1999] ; see also Cillo v. Rejefal Corp., 13 AD3d 292, 294 [1st Dept 2004] ). The default-judgment order thus determined the restaurant's liability in December 2011. Utica did not receive notice until April 2012.
Plaintiff argues that Utica was not prejudiced because on or about April 4, 2012, a claims representative of Utica spoke with plaintiff's attorney and requested (unsuccessfully) that the plaintiff vacate the default judgment. Plaintiff contends that since Utica was willing to defend the action if the default judgment was withdrawn, it was not prejudiced. This contention, though, is foreclosed by the plain language of Insurance Law § 3420 (c) (2) (A) providing that the presumption of prejudice is irrebuttable in the circumstances present here. And in any event, this court declines to hold an insurer's willingness to negotiate solutions against it for purposes of the prejudice analysis.
Accordingly, it is hereby
ORDERED that Utica's motion for summary judgment under CPLR 3212 is granted; and it is further
ORDERED that plaintiff's cross-motion for summary judgment under CPLR 3212, seeking summary judgment in plaintiff's favor on her complaint and seeking summary judgment dismissing Utica's counterclaims for declaratory relief, is denied; and it is further
ADJUDGED AND DECREED that Utica has no insurance-related obligation to plaintiff Judith Greenberg in connection with the accident alleged in the personal-injury action captioned Judith Greenberg v. Thai Lemongrass on Broadway, Inc., and Lemongrass on Broadway Corporation, commenced in New York State Supreme Court, New York County, under Index No. 107275/2011, and that Utica is awarded costs and disbursements in this action as calculated by the Clerk of the Court upon submission of a bill of costs; and it is further
ORDERED that Utica shall serve a copy of this order with notice of its entry on all parties and on the Clerk of the Court, who is directed to enter judgment accordingly; and it is further
ORDERED that Utica may serve notice of entry by mail or by overnight delivery service; and it is further
ORDERED that Utica shall e-file a copy of its notice of entry (and the accompanying affidavit(s) of service) on NYSCEF as soon as filing in pending nonessential matters is again permitted by order of Chief Administrative Judge Lawrence Marks.