SHORT FORM ORDER
SUPREME COURT STATE OF NEW YORK
HON. THOMAS P. PHELAN.
TRIAL/lAS , PART 10
THE NORTH RIVER INSURANCE COMPANY
and NEW YORK CONTRACTING AND
ORIGINAL RETURN DATE:06/30/06
Plaintiff(s), SUBMISSION DATE: 08/25/06
INDEX No. : 003172/04
CLARENDON NATIONAL INSURANCE COMPANY MOTION SEQUENCE #2
The following papers read on this motion:
Notice of Motion.................................. ..................
Answering Papers..... ...
Plaintiffs ' Brief......................................................
On December 30, 1999, Robert Schutt was injured while working on a construction project at the
Mineola Vilage Firehouse in Mineola , NY (the Firehouse Project). Schutt was an employee of
Noble Elevator Company, a subcontractor of plaintiff New York Contracting, the general
Plaintiff North River is the general liabilty insurance carrier for New York Contracting. Insofar
as is relevant, defendant Clarendon is the carrier for Noble.
It is undisputed that as required by Noble s contract with New York Contracting, Noble s policy
with Clarendon named New York Contracting as an additional insured.
In March , 2002 , Schutt commenced a personal injury action against New Yark Contracting in this
court arising out of his accident at the Firehouse Project. Following an
initial default and
premised upon New York Contracting s alleged lack of notice of the personal injury action , Schutt
consented to vacatur of the default order , dated April 15, 2003 and entered April 28 , 2003. On
July 31 , 2003 , New York Contracting interposed an answer to the complaint.
The personal injury
action remains pending.
RE: NORTH RIVER v. CLARENDON Page 2.
New York Contracting first provided notice of Schutt s claim to his broker by correspondence
dated May 20, 2003, subsequently forwarded to North River. New York Contracting did not
however , provide notice to either Noble or Noble s carrier , Clarendon , at that time.
Clarendon first learned of the claim when correspondence dated September 16 2003 from Robert
Urban ofCrum & Forester (the third- party administrator for North River) to Noble was forwarded
by Noble to Clarendon. By this correspondence , North River demanded coverage by Noble
carrier (Clarendon) to New York Contracting regarding Schutt s personal injury action given New
York Contracting s status as an additional named.
Less than three weeks later , by correspondence dated October 3 , 2003 addressed to Urban (and
copied to Noble and Noble s broker), North American Risk Services , an authorized third- party
administrator for Clarendon , denied the coverage demand citing the late notice of the Schutt
In the interim , by correspondence dated September 30, 2003 addressed to Clarendon , New York
Contracting itself (through counsel) demanded that Clarendon defend and indemnify New York
Contracting in Schutt's personal injury action.
Plaintiffs North River and New York Contracting bring this action seeking, inter alia , judgment
declaring that defendant Clarendon is obligated to defend and indemnify New York Contracting
in the Schutt action.
By their motion (sequence #2), plaintiffs seek an order pursuant to CPLR 3212 awarding them
summary judgment on their complaint. Defendant , in turn , moves (sequence #3) for an order
awarding it summary judgment dismissing plaintiffs ' complaint in its entirety.
In support of its motion for summary judgment , inter alia, declaring that Clarendon is obligated
to afford primary coverage for the defense and indemnification of New York Contracting in
connection with the Schutt lawsuit, plaintiffs argue that the evidence clearly establishes that New
York Contracting was an additional insured under Noble s general liabilty policy. New York
Contracting s additional insured status is not , however, in dispute in this case. Clarendon denied
plaintiffs ' request for additional insured coverage and moves for summary judgment on the basis
that New York Contracting provided late notice to Clarendon in violation of the notice provisions
in Clarendon s policy (see New York Contracting Notice of Motion,
Plaintiffs argue that they should nevertheless be awarded summary judgment because Clarendon
disclaimer letter ineffectively denied coverage to New York Contracting. More specifically,
plaintiffs contend that Clarendon s October 3 , 2003 letter to Urban " (flailed to specifically deny
coverage to New York Contracting or respond to New York Contracting s notice of
tender.. (and)... failed to serve a copy of the disclaimer on New York Contracting and the
underlying plaintiff... (see Affrmation in Support of Motion 5). Plaintiffs also argue that
Clarendon failed to disclaim coverage to New York Contracting within a reasonable time, or any
time, after it received New York Contracting s notice of claim (see Affrmation in Support of
RE: NORTH RIVER v. CLARENDON Page 3.
It is well settled that where an insurance policy such as the one involved in this case, requires an
insured to provide " notice of the claim or ' suit' as soon as practicable " such notice must be
provided within a reasonable time in view of all of the facts and circumstances (see Merchants
Mut. Ins. Co. v. Hoffan 56 NY2d 799 (1982); Travelers Indem. Co. v. Worthy, 281 AD2d 411
Dept. 2001)). Providing an insurer with timely notice of a potential claim is a condition
precedent and thus " (a)bsent a valid excuse , a failure to satisfy the notice requirement vitiates the
policy (Security Mut. Ins. Co. of N. Y. v. Acker-Fitzsimons, 31 NY2d 436, 440 (1972)).
Pursuant to Insurance Law 3420(d), however , when an insurer disclaims liabilty or denies
coverage for bodily injury arising out an accident , the insurer must give written notice " as soon
as is reasonably possible of such disclaimer. .. to the insured and the injured person or any other
claimant " (Insurance Law 3420(d)). This rule applies even if the insured has in the first instance
failed to provide the carrier with timely notice of the claim (Prudential Propert and Cas. Ins. V.
Persaud, 256 AD2d 502 , 504). Failure to do so renders the disclaimer ineffective (Id.
Plaintiffs argue that Clarendon s October 3, 2003 disclaimer letter (which made no reference to
New York Contracting s September 30, 2003 demand of coverage) was never sent to New York
Contracting. As such , plaintiffs contend that Clarendon failed to promptly disclaim coverage to
the insured thereby violating Insurance Law 3420(d) and vitiating New York Contracting
purported late notice of claim.
In Zappone v. Home Ins. Co., 55 NY2d 131 (1982), the Court of Appeals held that literal
interpretation of 3420(d) is inappropriate " when to do so wil occasion great inconvenience , or
produce inequality, injustice or absurdity . As further explained by the Appellate Division , First
(t)he purpose of the statute was to protect the insured, the injured person , and any other
interested party who has a real stake in the outcome , from being prejudiced by a belated
denial of coverage. It was not intended to be a technical trap that would allow interested
parties to obtain more than the coverage contracted for under the policy (citations omitted)
(Excelsior Ins. Co. v. Antretter Contr. Corp. 262 AD2d 124 , at 127 (Ist Dept. 1999)).
In this case , North River is the " real party in interest " since it maintained the pecuniary interest
in whether or not Clarendon would provide coverage. New York Contracting itself would suffer
no loss regardless of Clarendon s disclaimer since North River had already agreed to provide such
coverage. North River would only be relieved of its obligation to defend and indemnify New
York Contracting if Clarendon s obligation superceded North River s. Thus, since North River
is the " real party in interest , Clarendon s disclaimer letter , which was only sent to North River
by way of Crum & Forester and not to New York Contracting directly, was fully effective to deny
coverage to New York Contracting (Excelsior Ins. Co. v. Antretter Contr. Corp. , supra; see , also
Bovis Lend Lease LBM Inc. V. Royal Service Lines Ins. Co. 27 AD3d 84 (Ist Dept. , 2005); State
Ins. Fund v. Utica First Ins. Co, 25 AD3d 388, 389 (Ist Dept. 2006).
RE: NORTH RIVER v. CLARENDON Page 4.
Plaintiffs also argue that because Clarendon failed to disclaim coverage to New York Contracting
within a reasonable time , or any time after it received New York Contracting s September 30
2003 notice of tender , it violated Insurance Law ~3420(d).
Again , it is plainly evident and undisputed that the October 3 , 2003 letter from North American
Risk Services , the third party administrator for Clarendon , was addressed to Crum & Forster , the
third- party administrator for North River New York Contracting s insurer. As a general
proposition , notice given to an agent of the insured is considered notice to the insured (see
Ribacoffv. Chubb Group of Ins. Co. 2 AD3d 153 (pt Dept 2003); Hayden v. S&W Meat &
Poultry, 221 AD2d 823 (3 Dept. 1995)). In this case , a simple and plain reading of North
River s September 16th demand letter (by way of Crum & Forester) supports the conclusion that
North River was the agent or was acting as the agent of New York Contracting.
Moreover , in light of Robert Urban s testimony before trial that he received Clarendon
disclaimer letter on or about October 3, 2003 (Clarendon s Notice of Motion, Ex. N, p. 68),
plaintiffs contention that the disclaimer letter should be deemed invalid because it was not
specifically addressed or sent to New York Contracting is wholly without merit as service of the
disclaimer on the agent , (Crum & Forester) constitutes proper service of the disclaimer on the
principal (New York Contracting) under Insurance Law ~3420(d)
(Excelsior Ins. Co. v. Antretter
Contr. Corp. supra).
Plaintiffs also argue that Clarendon s denial of coverage should be deemed invalid because
Clarendon did not issue any separate disclaimer in response to the September 30 , 2003 tender
letter from New York Contracting s counsel. However, as it has already been established that
Clarendon fully complied with Insurance Law ~3420(d) by issuing the disclaimer letter to North
River , this Court finds that it did not maintain any additional obligation to respond to New York
Contracting s attorneys ' tender letter given that Clarendon had responded to Nort River , the " real
party in interest" and the agent of New York Contracting.
Plaintiffs ' motion for summary judgment is accordingly denied.
Defendant , Clarendon s motion for summary judgment dismissing plaintiffs ' complaint on the
grounds that New York Contracting breached the notice conditions of the policy is granted.
It is well settled that an additional insured is required to provide independent notice of an
occurrence or claim to the insurer with regard to any policy under which the additional insured
asserts a claim for coverage (see City of New York v. Welsbach Elec. Corp. 2006 WL 1072064
(Sup. Ct. New York 2006) citing City of New York v. St. Paul Fire and Marine Insurance
Company, 21 AD3d 978 (2 Dept. 2005)).
Robert Schutt was injured on December 30 , 1999 and he commenced his lawsuit in or about
March 2002. Accepting, arguendo , the contention by New York Contracting that it first learned
of the underlying claim and lawsuit by Schutt in May, 2003, the first notification by Urban
behalf of New York Contracting was dated September 16, 2003 and sent to Noble, not Clarendon.
Clarendon first received notice of New York Contracting s demand when it received Noble s letter
of September 16, 2003 forwarding Urban s letter.
RE: NORTH RIVER v. CLARENDON Page 5.
In support of its motion , defendant submits the testimony of New York Contracting s president
John Moore , who admitted that he knew in the spring of 1999 that Noble had actually obtained
additional insured coverage for New York Contracting (see Clarendon s Notice of Motion, Ex. H,
pp. 26- 30, 33- 34). Additionally, defendant submits the testimony of Robert Urban , the claims
representative of North River who testified that in order to faciltate the demand and notice to
Noble s insurer , he repeatedly attempted to obtain from New York Contracting, a copy of the
contract entered into between New York Contracting and Noble together with the certificates of
insurance reflecting that Noble had secured additional insured coverage on behalf of New York
Contracting. Specifically, Urban stated that he could not demand coverage from Noble s carrier
at any earlier point in time because " I didn t have the information , the contracts , and the response
from New York Contracting, which would tell me the carrier or any information like that (see
Clarendon s Notice of Motion, Ex. N , pp. 66- 67).
Plaintiffs have therefore failed to provide any reasonable excuse for New York Contracting s four-
month delay in providing notice to Clarendon of Schutt s personal injury action. Defendant's
September 30, 2003 disclosure was therefore valid, entitling defendant to summary judgment in
its favor (see, Sayed v. Macari 296 AD2d 396 (2 Dept. , 2002); Gershaw Recycling Corp. V.
Transcontinental Ins. Co., 22 AD3d 460 (2 Dept. , 2005)).
As this is an action for a declaratory judgment , defendant is awarded judgment declaring that it
is not obligated to defend or indemnify New York Contracting in the underlying personal injury
action (City of N. Y. v. St. Paul Fire Marine Ins. Co., 21 AD3d 978 (2 Dept. , 2005); Viggiano
v. Encompass Ins. Co. 6 AD3d 695 (2 Dept. , 2004).
This decision constitutes the order and judgment of the court.
HON THOMAS P. PHELAN
Dated: ().- () cj
Havkins, Rosenfeld, Ritzert & Varriale , LLP
Attn: Gail Ritzert , Esq.
Attorneys for Plaintiff
11 Penn Plaza, Suite 2101 \J
New York , NY 10001
White , Fleischner & Fino , LLP 'l\)f;
Attn: Evan A. Richman , Esq. (/ov
Attorneys for Defendant
140 Broadway, 36th Floor
New York , NY 10005