Opinion
No. 71 SSM 2.
Decided February 11, 2009
APPEAL from an order of the Appellate Division of the Supreme Court in the First Judicial Department, entered September 2, 2008. The Appellate Division, with two Justices dissenting, affirmed an order and judgment (one paper) of the Supreme Court, New York County (Michael D. Stallman, J.), which had confirmed a Referee's report finding coverage under the insurer's policy and awarded damages in favor of plaintiff insured and against defendant insurer.
Plaintiff insured received a letter from an attorney, prior to the effective date of a claims-made directors and officers liability policy issued by defendant, seeking information regarding allegations that his clients, club employees, had been unlawfully deprived of tips and bonuses. Thereafter, during the policy period, the attorney commenced litigation. Defendant disclaimed coverage on the ground that the letter constituted notice of a claim made and, thus, the claim arose outside the policy period because it was received prior to the date the policy commenced.
The Appellate Division concluded that the letter, which neither made a demand for payment nor advised that legal action was forthcoming, was insufficient to state a claim within the meaning of the policy; that it was not a type of demand that could be defended, settled and paid by the insurer; and that the failure of the policy to provide a definition of "claim" presented an ambiguity that was construed against the insurer. Matter of Reliance Ins. Co., 55 AD3d 43, affirmed.
Herzfeld Rubin, P.C., New York City ( David B. Hamm of counsel), for appellant.
Cone Kilbourn, Mount Kisco ( Joseph A. Kilbourn of counsel), for respondent.
OPINION OF THE COURT
On review of submissions pursuant to section 500.11 of the Rules of the Court of Appeals ( 22 NYCRR 500.11), order affirmed, with costs. Based on the arguments presented, the Appellate Division did not err in concluding that the insurance company could not rely on the August 1993 letter as the basis to avoid coverage under the claims-made policy.