105 Street Associates LLC v. Greenwich Ins. Co.

• Decision Date: 05 September 2007
• Docket Number: No. 05 Civ. 9938(VM).,05 Civ. 9938(VM).
• Citation: 507 F.Supp.2d 377
• Parties: 105 STREET ASSOCIATES, LLC, Plaintiff, v. GREENWICH INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of New York

507 F.Supp.2d 377

105 STREET ASSOCIATES, LLC, Plaintiff, v. GREENWICH INSURANCE COMPANY, Defendant.

No. 05 Civ. 9938(VM).

United States District Court, S.D. New York.

September 5, 2007.

Donald F. Schneider, Schneider, Goldstein, Bloomfield, LLP, New York, NY, for Plaintiff.

Jill Cadre, Glenn J. Fuerth, Wilson Elser Moskowitz Edelman & Dicker LLP, New York, NY, for Defendant.

DECISION AND ORDER

MARRERO, District Judge.

Plaintiff 105 Street Associates ("105 Associates") brought this action against defendant Greenwich Insurance Company ("Greenwich"), seeking a declaratory judgment determining that Greenwich is obligated to defend and indemnify 105 Associates with respect to a personal injury action (the "Conrad Action") that was filed against it in New York state court. This Court has diversity jurisdiction over 105 Associates's claims pursuant to 28 U.S.C. § 1332. The parties have both submitted motions for summary judgment. For the reasons set forth below, the parties' motions for summary judgment are DENIED.

I. BACKGROUND¹

The basis for 105 Associates' complaint against Greenwich is the Conrad Action, a personal injury suit brought by Richard Conrad ("Conrad") against 105 Associates BFC Construction Corp. ("BFC Construction"), and BFC Partners, L.P. ("BFC Partners"). 105 Associates owns the real property where Conrad's personal injury accident is Alleged to have occurred. 105 Associates had hired BFC Construction as a general contractor for a development project at the site. Conrad is alleged to have been employed by Jem Erectors, Inc., a subcontractor hired by BFC Construction. BFC Partners' role in the Conrad Action is unclear, but it should be noted that all three defendants are listed under the same business address and name Donald Capoccia ("Capoccia") as the addressee to whom the secretary of state will mail process if accepted on behalf of the entity.² (See Exhibit C attached to Barnaba Aff.) Additionally, the letters BFC stand for the last initials of Brandon Baron ("Baron"), Joseph Ferrara ("Ferrara"), and Capoccia, who are the sole members of 105 Street Manager ("105 Manager"), a part-owner of 105 Associates. Capoccia asserts that 105 Manager's interest in 105 Associates is "nominal (.01%)," and that the remaining 99.99% of the company is owned by two entities with which "neither Baron, Ferrara nor [Capoccia] ever owned an interest in or were affiliated in any manner with." (Capoccia Decl. ¶ 2).

On August 6, 2002, Conrad sent a letter addressed to BFC Construction, notifying the company of his personal injury and claim, and requesting that the letter be forwarded to BFC Construction's liability insurance carrier. When BFC Construction failed to respond, Conrad sent a second, identical letter the following month, which also elicited no response.

On April 20, 2004, Conrad served a summons and complaint, naming 105 Associates, BFC Construction, and BFC Partners as defendants, upon the secretary of state, who promptly forwarded the documents to the defendant corporations. Though the documents were received by Estelle Rodriguez ("Rodriguez") on April 26, 2004, Capoccia alleges that Rodriguez was never authorized to accept or open mail addressed to 105 Associates or to Capoccia. He further asserts that Rodriguez never delivered the summons and complaint to him, nor did she notify him in any other manner of the Conrad Action.

105 Associates claims that it was first notified of the Conrad action in "mid-July 2004," when the company received a letter from Conrad's attorney notifying it that Conrad would be moving for default judgment absent an appearance or answer by the defendants. After receiving the letter, 105 Associates promptly informed its insurance broker, North Shore Risk Management ("North Shore"), of the Conrad Action. Due to North Shore's erroneous determination of 105 Associates' insurance coverage, North Shore did not notify Greenwich of the claim until approximately one month later, on August 18, 2004. On September 20, 2004, Greenwich denied 105 Associates' claim on the grounds that notice of both the "suit" and the underlying "occurrence" was not given "as soon as practicable."

The insurance agreement between 105 Associates and Greenwich reads, in relevant part:

[The insured] must see to it that [the insurer is] notified as soon as practicable of an "occurrence" or an offense which may result in a claim.... If any claim is made or "suit" is brought against any insured, [the insured] must ... [n]otify [the insurer] as soon as practicable.

[The insured] must see to it that [the insurer] receiver[s] written notice of the claim or "suit" as soon as practicable.

(Ex. A attached to Richards Decl.) The parties do not dispute that the injury allegedly suffered by Conrad qualifies as an "occurrence" as that term is defined in the contract, nor that the Conrad Action qualifies as a "suit." They do, however, disagree as to whether 105 Associates notified Greenwich "as soon as [was] practicable" under the circumstances.

105 Associates also asserts that Greenwich's 34-day delay in responding to its claim violates state insurance law, which requires "an insurer [who] disclaim[s] liability or den[ies] coverage for death or bodily injury ... [to] give written notice as soon as is reasonably possible of such disclaimer ... to the insured and the injured person or any other claimant." New York Insurance Law § 3420(d). 105 Associates contends that Greenwich's allegedly unreasonable 34-day delay effectively constitutes a waiver of its right to disclaim. The Court will address below two issues raised in the parties' motions: (1) whether 105 Associates failed to comply with the requirement that notice be given to the insurance carrier "as soon as practicable," and (2) whether Greenwich's 34-day delay in informing 105 Associates that it would deny coverage was so unreasonable as to constitute a waiver of its right to disclaim.

II. DISCUSSION

A. LEGAL STANDARD FOR SUMMARY JUDGMENT "

Pursuant to Fed.R.Civ.P. 56, "[s]ummary judgment is proper if, viewing all the facts of the record in a light most favorable to the non-moving party, no genuine issue of material fact remains for adjudication." Samuels v. Mockry, 77 F.3d 34, 35 (2d Cir.1996) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). The role of a court considering a motion for summary judgment "is not to resolve disputed issues of fact but to, assess whether there are any factual issues to be tried, while resolving ambiguities and drawing reasonable inferences against the moving party." Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir.1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987). The moving party bears the burden of demonstrating that no genuine issue of material fact exists or that due to the paucity of evidence presented by the non-movant, no rational jury could find in favor of the nonmoving party. See Gallo v. Prudential Residential Servs., L.P., 22 F.3d 1219, 1223 (2d Cir.1994). When deciding crossmotions for summary judgment, the standard to be applied "is the same as that for individual summary judgment motions and a court must consider each motion independent of the other." Schultz v. Stoner, 308 F.Supp.2d 289, 298 (S.D.N.Y.2004).

B. DENIAL OF COVERAGE FOR LATE NOTICE

New York law holds that "an insured's failure to comply with a policy's notice provision violates a condition precedent to coverage, and relieves an insurer of an obligation to defend or indemnify the insured." Nouveau Elevator Indus., Inc. v. Cont'l Cas. Ins. Co., No. 05 cv 0813, 2006 WL 1720429, at *3 (E.D.N.Y. June 21, 2006); see also Commercial Union Ins. Co. v. Int'l Flavors & Fragrances, Inc., 822 F.2d 267, 271 (2d Cir.1987) (finding that "under New York law, compliance with a notice-of-occurrence provision in an insurance policy is a condition precedent to an insurer's liability under the policy"). An insurer must receive timely notice of a claim or potential claim "in order to be able to take an active, early role in the litigation process and in any settlement discussions and to set adequate reserves." Argo Corp. v. Greater New York Mut. Ins. Co., 4 N.Y.3d 332, 794 N.Y.S.2d 704, 827 N.E.2d 762, 765 (2005). Because "Mate notice of lawsuit in the liability insurance context is so likely to be prejudicial," New York courts do not consider whether the insurer was actually prejudiced by late notice. Id.; see also Olin Corp. v. Insurance Co. of North America, 743 F.Supp. 1044, 1053 (S.D.N.Y.1990) ("Late notice is a complete defense whether or not the insurance company was prejudiced by the delay.").

In the present case, the insurance agreement contained a notice provision requiring 105 Associates to notify Greenwich of any claim or potential claim "as soon as practicable," and the parties disagree as to when this notice provision was triggered. With respect to the two letters sent to BFC Construction in August and September of 2002, there is clearly still a disputed issue of fact regarding whether 105 Associates received notice of the Conrad action through these letters. The dispute centers around the connection between the defendants in the Conrad Action and the specific role played by Rodriguez in each of the three defendant corporations. Though the stated reasons proffered by 105 Associates for failing to receive timely notification of the Conrad action are somewhat less than compelling (see Capoccia Reply Decl. ¶ 4-6), such outstanding issues of fact necessarily preclude summary judgment based on the 2002 correspondence. See Anderson, 477 U.S. at 247-50, 106 S.Ct. 2505.

Accordingly, the issue for the court is whether 105 Associates' duty to notify Greenwich was triggered when it received actual notice of the lawsuit by way, allegedly, of the July 2004 letter from Conrad's attorney, or when it received constructive notice of the lawsuit through Conrad's service of process...