Opinion
DOCKET NO. A-2953-14T2
09-07-2016
WALDORF HOLDING CORP., Plaintiff-Appellant, v. CHARTIS CLAIMS INC., ILLINOIS NATIONAL INSURANCE COMPANY, JOHN ROCCO, INC. and ARCH INSURANCE COMPANY, Defendants-Respondents.
Arleo & Donohue, LLC, attorneys for appellant (Frank P. Arleo, on the brief; Jo Ann K. Dobransky, of counsel and on the brief). Squire Patton Boggs (US) LLP, attorneys for respondents Chartis Claims, Inc. and Illinois National Insurance Company (Mark D. Sheridan, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Hoffman and Currier. On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-2851-11. Arleo & Donohue, LLC, attorneys for appellant (Frank P. Arleo, on the brief; Jo Ann K. Dobransky, of counsel and on the brief). Squire Patton Boggs (US) LLP, attorneys for respondents Chartis Claims, Inc. and Illinois National Insurance Company (Mark D. Sheridan, on the brief). PER CURIAM
In this declaratory judgment action, plaintiff Waldorf Holding Corp. (Waldorf) sought indemnification and coverage under a policy issued by defendant Illinois National Insurance Company (INIC). The trial judge determined that New York law governed the terms of the applicable policy and entered summary judgment in favor of defendant. On appeal, plaintiff argues the judge erred in applying New York law. After reviewing the record in light of the contentions advanced on appeal and the applicable law, we affirm.
INIC is a member of defendant Chartis, Inc., an insurance company.
Plaintiff is a demolition and construction company. INIC issued a commercial umbrella liability policy to named insured plaintiff with the mailing address listed in the policy as Mount Vernon, New York. The INIC policy applied in excess of the general liability policy provided by Arch Specialty Insurance Company (Arch) to Waldorf. The INIC policy instructed that notice of an excess claim be directed to the excess claims department of AIG Domestic Claims Inc. (AIG) at a New York address. It also required that an insured "must see to it that we are notified as soon as practicable of an Occurrence that may result in a claim or Suit under this policy." The insured is to "immediately send us copies or any demands, notices, summonses or legal papers received in connection with the claim or Suit."
In May 2008, an employee of a Waldorf subsidiary was working on a demolition project in New York and suffered significant injuries. The worker filed suit against the general contractor and owner of the construction project; those defendants filed a third-party complaint against Waldorf seeking a defense and indemnity. Arch accepted the tender of defense and indemnification in December 2008. Although AIG was carbon copied on the letter, its address was listed as a post office box in Georgia. The letter was not sent to the New York address as required under the policy.
We also refer to the subsidiary as Waldorf for purposes of ease and clarity.
In August 2010, the Arch claims representative sent a letter to AIG Excess Claims at the New York address listed in the INIC policy advising of the personal injury action and indicating that the letter served "as formal notice of the . . . loss." Arch informed that its policy had limits of $1,000,000 per occurrence and plaintiff had recently made a $6,000,000 settlement demand.
The INIC policy had limits of $10,000,000 per occurrence.
On September 1, 2010, INIC notified Arch and Waldorf that it was declining coverage under its policy as Waldorf had failed to timely notify INIC of the loss. INIC stated: "[t]his failure to provide INIC with proper notice of [the] accident and claim constitutes a breach of the Policy's notice conditions and vitiates any coverage that may otherwise have been afforded to Waldorf."
The personal injury lawsuit was settled in February 2011 with Arch agreeing to pay its $1,000,000 policy limits and Waldorf paying the remaining $500,000. Waldorf subsequently instituted a declaratory judgment action against INIC, Arch, and an individual defendant.
Arch and the individual defendant, an insurance broker/agent, resolved their claims with plaintiff and are not subjects of this appeal.
After a period of discovery, both parties moved for summary judgment. INIC argued that New York law was appropriate under a choice-of-law analysis. Under New York law, a condition precedent to obtaining coverage is the requirement of prompt written notice by the insured of any claim or suit. INIC argued that twenty-seven months had passed from the inception of the personal injury suit and twenty-one months elapsed following the filing of the third-party complaint prior to INIC being placed on notice of the claim. Those delays, INIC contended, were outside the "reasonable under all the circumstances" notice standard required in New York. Great Canal Realty Corp. v. Seneca Ins. Co., 833 N.E.2d 1196, 2005 (N.Y. 2005) (citations omitted).
In its cross-motion for summary judgment and opposition, plaintiff urged for the application of New Jersey law. Although incorporated in New York, Waldorf posited that it had not used the Mt. Vernon address since 2006, its only place of business was in Englewood, New Jersey, and the policy had been prepared by a New Jersey insurance broker and delivered to Waldorf's New Jersey address. Contrary to New York, under New Jersey law, the notice requirements of a claim are breached only if the insurer can satisfy a threshold burden of demonstrating "appreciable prejudice" resulting from the delay. Sagendorf v. Selective Ins. Co. of Am., 293 N.J. Super. 81, 93 (App. Div. 1996).
INIC was granted summary judgment and plaintiff's application was denied in a comprehensive written decision of April 11, 2012 issued by Judge Susan J. Steele.
The judge underwent an extensive analysis of choice-of-law principles using the governmental interest standard and concluded that New York law should apply as New York had the most significant interest in the matter. She determined:
We employ a flexible governmental interest standard to "determine which state has the greatest interest in governing the specific issue that arises in the underlying litigation." Walsh v. Mattera, 379 N.J. Super. 548, 555 (App. Div. 2005) (citing Erny v. Estate of Merola, 171 N.J. 86, 94 (2002)). Under this analysis, the court is required to determine: (1) whether there is an actual conflict between the laws of the states involved; (2) the policy interest that each state has in applying its law to the particular circumstances and parties; and (3) how strongly the contacts involved relate to each state's policy and whether application of one law will further or frustrate the policies of the other state. Ibid.
[w]hile the contract was signed in New Jersey through a New Jersey insurance broker, [it] does not outweigh the other contacts which lean in favor of New York. The policy was issued to Waldorf, a New York corporation with a New York address, which had not changed regardless if the plaintiff asserted the principal place of business of the company is now Englewood, New Jersey and the New York address had not been used for some years. Nothing set forth before the court indicated the New York address was invalid at the time the policy was executed.
Furthermore, the circumstances surrounding the necessity for coverage all occurred in New York. New York has not only a greater relationship to the events which necessitated the insurance coverage, but New York would also have a greater interest in applying its own laws to an entity incorporated under New York law and which employs its residents. The agreement entered into by Waldorf . . . was for the provision of demolition services in New York for a New York construction project. The accident resulting in the [personal injury] action occurred in New York, involved a New York litigant, was litigated in a New York court and the settlement was reached in New York. As such, the totality of the circumstances surrounding the personal injury action and the subsequent proceedings predominantly involved New York and its laws. That the principle [sic] office of
Waldorf is in Englewood and the policy was procured by a New Jersey insurance broker and delivered in New Jersey appears to be of less moment when the aforementioned factors weigh in favor of applying New York law.
Judge Steele found plaintiff had not provided any excuse for the two-year delay in notice to INIC. Citing to New York authority in which the courts had declined to extend coverage to time periods well under the present two-year timeframe, she found plaintiff's delay to be unreasonable.
See, e.g., Deso v. London & Lancashire Indem. Co., 3 N.Y.2d 127, 130 (N.Y. 1957) (finding 51 days between knowledge of injury and forwarding notice to insurer not reasonable); Rushing v. Commercial Cas. Ins. Co., 251 N.Y. 302, 304 (N.Y. 1929) (finding 22 days not reasonable); Power Authority of New York v. Westinghouse Electric Corp., 502 N.Y.S.2d 420, 424 (N.Y. App. Div. 1986); Government Employees Ins. Co. v. Elman, 338 N.Y.S.2d 666, 667 (N.Y. App. Div. 1972) (finding 29 days unreasonable). --------
In reviewing the summary judgment entered in defendant's favor, we apply the same standard that bound the motion judge. Townsend v. Pierre, 221 N.J. 36, 59 (2015) (citing Davis v. Brickman Landscaping, Ltd., 219 N.J. 395, 405 (2014)). We are required to reverse only when "the competent evidential materials presented, . . . viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged dispute in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). The import of this standard is that courts "should not hesitate to grant summary judgment" — and appellate courts should not hesitate to affirm those summary judgments — "when the evidence 'is so one-sided that one party must prevail as a matter of law.'" Ibid. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S. Ct. 2505, 2512, 91 L. Ed. 2d 202, 214 (1986)).
On appeal, plaintiff presents the same arguments as it did to the motion judge regarding the choice-of-law issues and also raises a discovery issue first presented to the judge at the time of oral argument. Defendant argued that AIG may have had constructive notice of the claim at an earlier timeframe based on a document it had in its possession but had not attached to either its motion, opposition or reply papers.
Despite the untimely production of this document, Judge Steele entertained the argument and addressed it in her decision. She found that plaintiff had not provided any authority that constructive notice was sufficient or acceptable under the circumstances. "Absent authority to the contrary, of which there appears to be none, that the insurer may have been copied on a letter does not absolve the insured of its obligations under the agreement it signed to timely send notice."
As to the choice-of-law analysis and conclusion, Judge Steele employed the governmental interest analysis set forth under Erny v. Estate of Merola, 171 N.J. 86 (2002) and determined New York had the greater interest in governing the contract language in the insurance policy. We see no reason to disturb her ruling and affirm substantially for the reasons expressed by Judge Steele as reflected in her well-reasoned, thorough written opinion.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION