Opinion
101080-2006.
Decided January 15, 2008.
MEMORANDUM DECISION
In this declaratory judgment action, defendant Thomas C. Spasiano ("Spasiano") moves pursuant to CPLR 3212 for summary judgment dismissing the complaint of the plaintiff Tower Insurance Company of New York ("Tower Insurance"). Tower Insurance cross moves for summary judgment declaring that it has no duty to defend or indemnify defendant Mohamed Abdo Nagi Saleh ("Mohamed") d/b/a Court Discount Stationary Corp. ("Discount Stationary") in a pending action by Spasiano against Discount Stationary (the "underlying action"). Factual Background
The action against Discount Stationary is entitled Thomas C. Spasiano v Mohamed Abdo Nagi Saleh aka Mohamed Abdo Nagi Saleh, 92 Court Discount, Inc. d/b/a Court Discount d/b/a Court Discount Stationary, Index No. 17026/2005, pending in Bronx County.
Mohamed owns Discount Stationary. Tower Insurance issued an insurance policy (the "Policy") to Discount Stationary, effective August 11, 2003 through August 11, 2004, covering Discount Stationary's store at 92 East 161st Street, Bronx, New York (the "store"). The Policy provides liability coverage for "sums the insured becomes legally obligated to pay as damages because of bodily injury'. . . caused by an occurrence.'" However, coverage is conditioned upon Discount Stationary notifying Tower Insurance "as soon as practicable" of an "occurrence . . . which may result in a claim." Under the Policy, "occurrence" is defined in part as "accident."
On October 19, 2003, Spasiano, a police officer, entered into the store with several other officers. Spasiano alleges that he was injured when he fell through an open cellar door leading to the basement in the rear of the store. At the time of Spasiano's accident, Ahmed Nageh Awad ("Ahmed") and Mohamed's brother, Hisham Saleh ("Hisham"), who was also Ahmed's supervisor, were working at the store; Ahmed was outside emptying trash and Hisham was handling purchases at the front of the store. Hisham heard Spasiano scream, ran to the back, and observed Spasiano "coming up from the basement" through the cellar door. Ahmed entered the store and observed Spasiano seated in the front of the store. Hisham told Ahmed that Spasiano "got hurt. Something like that." According to Ahmed, he offered Spasiano water, but Spasiano refused. Spasiano stated "Nothing happened. I am fine." "I have nothing wrong." Spasiano stood up and talked to Ahmed, and then walked out of the store.
About five minutes after the accident, Hisham saw other officers taking pictures of the store. The officers requested that Hisham and Ahmed provide a copy of the store's business certificate.
Three days later, Ahmed saw Spasiano buying coffee at a restaurant next door.
On a subsequent occasion, Hisham asked the other officers about Spasiano, and learned that Spasiano had been hospitalized.
As Mohamed's only employees, Hisham and Ahmed were responsible for notifying Mohamed when there were incidents such as "slipping," when someone was injured, or when an ambulance or police were called to the premises. If an incident was "slight," Misham and Ahmed were not required to notify Mohamed. However, neither Misham nor Ahmed, reported the incident to Mohamed. Mohamed did not know about Spasiano's incident until he received "mail" long after the incident occurred. When Mohamed received such "mail," he went to his attorney and then confronted Misham and Ahmed about the incident. Misham and Ahmed then told Mohamed that one of the customers came into the store and fell down, stood up, and left the store. Hisham told Mohamed that he did not think it was that "serious."
According to Spasiano, Mohamed admits that he knew a police officer had requested a copy of the store's business certificate. Mohamed reported the incident to his insurance broker, apparently after receiving a letter of representation from Spasiano's attorney dated April 21, 2005, 18 months after the accident.
Tower Insurance was first notified of the accident on April 25, 2005, 18 months after the occurrence, when it received a standard-form notice from the insured's broker.
Tower Insurance's claims examiner investigated the claim, which generated a statement from Hisham concerning his knowledge of the incident. In his statement, Hisham states that he noticed Spasiano was walking with a minor limp, but did not see any signs of injury. Hisham also stated that about 10 minutes after the incident, other police officers returned to the store, and asked for identification cards and the store's business certificate. After the accident, Hisham asked Spasiano's friends about him, and was told that Spasiano was in the hospital and "was not going to sue us."
Subsequently, Tower Insurance disclaimed coverage based on late notice, on the ground that the insured was aware of the occurrence when it occurred on October 19, 2003.
Motions
In support of dismissal of Tower Insurance's complaint, Spasiano argues that Tower Insurance can not disclaim coverage because Discount Stationary gave notice as soon as practicable. Spasiano contends that Discount Stationary first became aware of Spasiano's accident when Mohamed received the letter of representation from counsel for Spasiano. Neither Hisham nor Ahmed told Mohamed of the accident until Mohamed confronted them about it on April 25, 2005. Additionally, no incident reports were prepared regarding the accident. Caselaw holds that the lack of knowledge that an accident has occurred will excuse or explain a delay in giving notice to an insurer. Further, Spasiano left the scene of the accident because he was "ok." Mohammed's employees acted on a good faith belief that Spasiano was not injured and therefore did not tell Mohamed of the accident. Mohamed acted in good faith when he immediately passed Spasiano's letter of representation along to his insurance broker, who then faxed the "Acord" to Tower Insurance that same day. Thus, notice was given to Tower Insurance as soon a reasonably possible.
Tower Insurance's claim that Mohamed had notice of the accident on the day it occurred is pure speculation. The written statement of Hisham taken by Tower Insurance's claim examiner is silent on whether Hisham had informed Mohamed of the accident. Mohamed instructed his employees to inform him when someone was seriously injured or if an accident occurred. However, the deposition testimony of both Hisham and Ahmed are clear that they did not inform Mohamed of the occurrence.
In support of its cross-motion for summary judgment on its declaratory judgment action, Tower Insurance contends that Spasiano was removed from the store in a police van and that the other officers arrived soon after the accident to complete a line-of-duty report and investigate the accident. Thus, Hisham and Ahmed's contemporaneous knowledge of Spasiano's accident, complaints of injury, removal in a police van, and subsequent hospitalization belies any claim of reasonable excuse for the delay. Further, Tower Insurance's employees witnessed a police investigation, and thus, were required to report the incident to Mohamed. Additionally, Hisham's knowledge is imputed to Mohamed for purposes of determining whether the insured breached the policy's notice conditions. It is unrefuted that Hisham was Ahmed's supervisor. Thus, since Mohamed never actually worked at the store, both Ahmed and Hisham were responsible for notifying him of incidents at the store. Absent such a simple investigation by Discount Stationary, its bare reliance on the belief that it was not implicated in the accident does not reasonably excuse its failure to notify Tower Insurance promptly.
In opposition to Tower Insurance's cross-motion, Spasiano maintains that it is undisputed that Spasiano walked out of the basement unassisted, that he told Discount Stationary that he was okay, he did not ask for an ambulance, that no ambulance was ever called and that Spasiano left the store in a police van. A police officer leaving the scene in a police van would not give any notice of an injury. Nothing in the record shows that the police ever identified to the store employees the purpose of their investigation or why they asked for the business certificate. neither Hisham nor Ahmed had any reason to think Spasiano suffered any injuries.
Further, both Hisham and Ahmed did not have supervisory duties. The examiner's report acknowledged that Spasiano told the employees that he was not injured even after he said that his leg hurt and that he had a minor limp.
Analysis
As one of the conditions to coverage, the Policy requires that Discount Stationary must see to it that we [Tower Insurance] are notified as soon as practicable of an "occurrence" or an offense which may result in a claim. . . . (Section IV (2)(a)).
Where a policy of insurance requires that the insured give the insurer notice "as soon as practicable," notice must be afforded within a "reasonable time under the circumstances" ( Travelers Insurance Co. v Volmar Constr. Co., 300 AD2d 40, 42 [1st Dept 2002]). There is not a large window of opportunity for an insured to serve a notice of a claim upon its insurer, as relatively short periods of time have been found to be untimely as a matter of law ( see id. [six months]; Brownstone Partners/A F F, LLC v A. Aleem Constr., Inc., 18 AD3d 204 [1st Dept 2005] [five months]; Heydt Contracting Corp. v American Home Assurance Co., 146 AD2d 497 [1st Dept 1989] [four months]). 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 ( see Security Mut. Ins. Co. v Acker-Fitzsimons Corp., supra, 31 NY2d at 441-443; Haas Tobacco Co. v American Fid. Co., 226 NY 343, 346-347; Woolverton v Fidelity Cas. Co., 190 NY 41, 48; Paramount Ins. Co. v Rosedale Gardens, Inc., 293 AD2d 235, 239 [1st Dept 2002]). The obligation to give notice "as soon as practicable" of an occurrence that may result in a claim is measured by the yardstick of reasonableness ( 875 Forest Ave. Corp. v Aetna Cas. Sur. Co., 37 AD2d 11, 12, affd 30 NY2d 726). Moreover, knowledge of an occurrence obtained by an agent charged with the duty to report such matters is imputed to the principal ( see, White v City of New York, supra, 81 NY2d at 958).
The notice requirement is a condition precedent to coverage and so, failure to provide such notice vitiates the contract of insurance ( Great Canal Realty Corp. v Seneca Ins. Co., 5 NY3d 742; Ocean Partners, LLC v North River Insurance Co., 25 AD3d 514, 515 [1st Dept 2006] ["[p]laintiff's failure to provide notice of its claim until 28 months after the fire constituted an unreasonable delay and a failure to satisfy a condition precedent to coverage under the policy"]; Paramount Ins. Co. v. Rosedale Gardens, Inc., 293 AD2d 235, 743 NYS2d 59 citing White v City of New York, 81 NY2d 955, 957).
However, it has been held that "there may be circumstances that excuse a failure to give timely notice, such as where the insured has a good faith belief of nonliability, provided that belief is reasonable [internal quotation marks and citation omitted]" ( Great Canal Realty Corp. v Seneca Insurance Company, Inc., 5 NY3d 742). Thus, the failure to give notice may be excused when an insured, acting as a reasonable and prudent person, believes that he is not liable for the accident ( 875 Forest Ave. Corp. v Aetna Cas. Sur. Co., 37 AD2d 12-13, supra). However, relevant on the issue of reasonableness, is consideration of whether and to what extent, the insured has inquired into the circumstances of the accident or occurrence ( Id. citing White v City of New York, 81 NY2d 955, 958 [stating that, "where a reasonable person could envision liability, that person has a duty to make some inquiry"]).
It also bears noting that the insured bears the burden of proving, under all the circumstances, the reasonableness of any delay in the giving of notice ( see, Argentina v Otsego Mut. Fire Ins. Co., 86 NY2d 748, 749-750). There is no need to show that the insurer suffered any prejudice as a result of tardy notice ( see also Argo Corp. v Greater New York Mutual Insurance Co., 4 NY3d 332; Security Mutual Ins. Co. of New York v Acker-fitzsimons Corp., 31 NY2d 436).
The record indicates that Mohamed did not have actual knowledge of Spasiano's alleged accident until at least one year after its occurrence, when he received correspondence relating to Spasiano's claim of injury. Thus, the issue is whether Hisham and Ahmed's knowledge of the incident and its attendant circumstances gave rise to a duty to inform Mohamed, and in turn, the duty to timely notify Tower Insurance of Spasiano's accident. Hisham and Ahmed were both charged with the responsibility to notify Mohamed if anyone "fell" or when the police were involved, and both were aware of Spasiano's accident inside of the store at the time of the occurrence. According to Mohamed, if someone "fell" or "if the ambulance came or the police came to the store and something serious, like somebody was injured in the store they had to notify me." "If something was slight, slightly happened, so [they] shouldn't have woke me up or disturbed me." The record indicates a procedure was established for either Ahmed or Misham to notify Mohamed in the event someone fell in the store and the police were called ( see also Bauer v Whispering Hills Assocs., 210 AD2d 569, 620 NYS2d 147 [3rd Dept 1994] [finding that the knowledge of the accident is imputed to his employer, the insureds, who in turn had the duty under the policy to notify Aetna in writing of the accident where it was within the scope of employee's duties to notify his employer of an accident which he had notice of and was a witness to]). Thus, the knowledge of Hisham and Ahmed of Spasiano's accident is imputed to Mohamed, who in turn, had the duty to notify Tower Insurance of the subject accident.
Hisham heard Spasiano scream and observed Spasiano come out of the basement. According to Hisham's statement to the claim's examiner, Spasiano informed him that his "leg hurt" and that Spasiano "walked with a minor limp" and offered Spasiano a chair. Such circumstances reflect the possibility of injury due to the dangerous condition of the open cellar door leading to the basement. Although Spasiano and his fellow officers were retail customers when they entered the store prior to Spasiano's accident, Spasiano's fellow officers returned to the store and requested identification cards and the store's business certificate. The officers also took photographs of the premises. The actions of the officers upon their return to store was not unrelated to Spasiano's accident, but reasonably appears to have been an investigation of Spasiano's accident. Furthermore, after the accident, Hisham asked Spasiano's friends about Spasiano and "they said he was in the hospital but he was okay." Evidently, Hisham thought Spasiano's accident serious to the extent that he followed up with Spasiano's friends to ascertain of his condition. Moreover, at this point, Hisham was advised that Spasiano was in the hospital. In light of such circumstances, it cannot be said that any belief of nonliability of Spasiano's accident was reasonable.
That Spasiano's friends told Hisham that Spasiano was "was not going to sue us" did not obviate Tower Insurance's right to timely notice of Spasiano's accident, under the circumstances.At issue is not whether an insured believes that he or she will ultimately be found liable but whether the circumstances known to the insured at the time would have suggested to a reasonable person the possibility of a claim against the insured ( Stone Webster Management Consultants, Inc. v. Travelers Indem. Co., 1996 WL 180025 [SDNY 1996]; SSBSS Realty v Pub. Serv. Mut. Ins. Co., 253 AD2d 583, 584, 677 NYS2d 136, 138). The circumstances giving rise to the duty to provide Tower Insurance with timely notice existed prior to any indication that Spasiano did not initially intend to sue Discount Stationary.
Thus, the Court finds that Discount Stationary failed to satisfy the burden of establishing that the delay in giving notice to Tower Insurance was reasonably founded upon a good-faith belief of nonliability. Accordingly, Tower Insurance is entitled to summary judgment declaring that it has no duty to defend or indemnify Discount Stationary in the underlying action, and Spasiano's motion for summary judgment dismissing the complaint is denied.
Based on the foregoing, it is hereby
ORDERED that the motion by Thomas C. Spasiano for summary judgment dismissing the complaint is denied; and it is further
ORDERED that the cross-motion by Tower Insurance Company of New York for summary judgment declaring that it has no duty to defend or indemnify defendant Mohamed Abdo Nagi Saleh ("Mohamed") d/b/a Court Discount Stationary Corp. in a pending action by Spasiano against Discount Stationary in the action entitled Thomas C. Spasiano v Mohamed Abdo Nagi Saleh aka Mohamed Abdo Nagi Saleh, 92 Court Discount, Inc. d/b/a Court Discount d/b/a Court Discount Stationary, Index No. 17026/2005, pending in Bronx County, is granted; and it is further
ORDERED that Tower Insurance serve a copy of this order with notice of entry upon all parties within 20 days of entry.
ORDERED that the Clerk may enter judgment accordingly.
This constitutes the decision and order of the Court.
Hon. Carol Robinson Edmead, J.S.C.
In accordance with the accompanying Memorandum Decision, it is hereby
ORDERED that the motion by Thomas C. Spasiano for summary judgment dismissing the complaint is denied; and it is further
ORDERED that the cross-motion by Tower Insurance Company of New York for summary judgment declaring that it has no duty to defend or indemnify defendant Mohamed Abdo Nagi Saleh ("Mohamed") d/b/a Court Discount Stationary Corp. in a pending action by Spasiano against Discount Stationary in the action entitled Thomas C. Spasiano v Mohamed Abdo Nagi Saleh aka Mohamed Abdo Nagi Saleh, 92 Court Discount, Inc. d/b/a Court Discount d/b/a Court Discount Stationary, Index No. 17026/2005, pending in Bronx County, is granted; and it is further
ORDERED that Tower Insurance Company of New York serve a copy of this order with notice of entry upon all parties within 20 days of entry; and it is further
ORDERED that the Clerk may enter judgment accordingly.
This constitutes the decision and order of the Court.