Briggs Avenue v. Insurance Corp. of Hannover, Docket No. 06-3231-cv.

CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)
Citation516 F.3d 42
Docket NumberDocket No. 06-3231-cv.
PartiesBRIGGS AVENUE L.L.C., Plaintiff-Appellant, v. INSURANCE CORPORATION OF HANNOVER, Defendant-Appellee.
Decision Date15 February 2008

Robert Scher, Scher & Scher, PC, Great Neck, N.Y., for Plaintiff-Appellant.

Janet Ford, White, Fleischner & Fino, LLP, New York, N.Y., for Defendant-Appellee.

Before: LEVAL, CALABRESI, and WESLEY, Circuit Judges.

CALABRESI, Circuit Judge:

This case raises a question of state law that has yet to be addressed by the New York Court of Appeals and that has led to divergent opinions in the federal district courts. When an injured party begins its suit against an insured by serving process on the Secretary of State, who, under New York corporate and, limited liability company law, is the insured's agent for such service, does this service suffice to trigger the provisions in the relevant insurance policy that require the insured to inform its insurer in a timely manner that a suit has been brought, where: (a) the insurance policy does not expressly refer to notice that a suit has been brought being given to an insured's "representative" rather than the insured itself, and (b) the insured plausibly argues that — due to its failure to update its address with the Secretary of State — it had not received actual notice that the suit had been brought? Because we believe that the New York Court of Appeals should be given the opportunity to decide whether it wishes to address this technical but recurring question of New York state law, we CERTIFY the question to the New York Court of Appeals.

BACKGROUND

Plaintiff-Appellant Briggs Avenue LLC ("Briggs" or "Appellant") filed an action in New York State Supreme Court seeking a declaratory judgment that its insurer, Insurance Corporation of Hannover ("ICH" or "Appellee"), be required to defend and indemnify Briggs in a personal injury lawsuit filed by one of Briggs's tenants against Briggs. ICH removed the suit, pursuant to 28 U.S.C. § 1441, to federal district court in the Southern District of New York.1

At the district court, ICH moved for judgment on the pleadings and/or summary judgment on the ground that Briggs failed to comply with various notice requirements contained in its insurance policy. Briggs cross-moved for summary judgment. The district court granted ICH's motion, denied Briggs's cross-motion, and dismissed the case with prejudice. Briggs Ave. L.L.C. v. Ins. Corp. of Hannover, No. 05 Civ. 4212, 2006 WL 1517606 (S.D.N.Y. May 30, 2006). Briggs appeals that decision.

A. The Underlying Tort Lawsuit

Briggs owns and operates an apartment house at 2570 Briggs Avenue in the Bronx. On or about May 14, 2003, Shahan Mehaj, the sole principal of Briggs, was informed of an incident at this apartment house. A portion of the ceiling in one of the apartments had fallen. Mehaj visited the apartment shortly thereafter, and asserts in his affidavit that he "was not informed that anyone in the apartment had been injured in the incident and had no reason to suspect so." Mehaj did not notify Briggs's insurer, ICH, because, at this point, he assertedly "had no knowledge or notice that anyone had been injured."

Later, on or about July 28, 2003, Nelson Bonilla, an adult son of one of the tenants at 2570 Briggs Avenue, filed a personal injury action against Briggs, alleging that on May 14, 2003, he was injured when a piece of the ceiling fell and struck him, and that the accident was caused by Briggs's negligence in maintaining the premises. The lawsuit sought $2 million in damages. A week or so earlier, Bonilla had served his personal injury complaint on the Secretary of State of New York, who under New York law functions as Briggs's agent for service. N.Y. Ltd. Liab. Co. L. § 203(e)(4). The Secretary of State forwarded copies of the complaint to the address for Briggs then on file at the Secretary's office. That address was, however, incorrect as Briggs had failed to advise the Secretary of State of its new mailing address. Briggs asserts that, because of the wrong address, it did not receive word of Bonilla's suit.

In state court, Bonilla moved for default judgment against Briggs and, in late March or early April 2004, directly served Briggs at its correct address. Briggs received the notice and "within days" informed its insurance broker of the lawsuit. Shortly thereafter, ICH received, through the insurance broker, an Accord General Liability Notice of Occurrence/Claim form, dated April 2, 2004.

B. The Briggs Insurance Policy and Affirmative Defenses Claimed by ICH

Briggs's insurance policy, issued by ICH, provided coverage for the period of September 20, 2002 to September 20, 2003, and thus was in place at the time of the ceiling incident. The policy included a section entitled "Commercial General Liability Conditions" which articulated notice requirements that the insured needed to comply with, in the event of an occurrence, offense, claim or suit. The policy stated:

2. Duties in the Event of Occurrence, Offense, Claim or Suit

a. You must see to it that we are notified as soon as practicable of an "occurrence" or an offense which may result in a claim. . . .

b. If a claim is made or "suit" is brought against any insured, you must:

(1) Immediately record the specifics of the claim or "suit" and the date received; and

(2) Notify us as soon as practicable. You must see to it that we receive written notice of the claim or "suit" as soon as practicable.

c. You and any other involved insured must:

(1) Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or "suit" . . . .

ICH, after receiving the notification of Bonilla's lawsuit, replied to Briggs in a disclaimer letter dated April 12, 2004, claiming affirmative defenses and indemnity due to Briggs's failure to comply with the policy notification conditions. The relevant portion of the letter explains that "despite the service on the Secretary of State in July of 2003, Briggs Ave LLC first notified Insurance Corporation of Hannover of the occurrence, claim or suit and first provided copies of the summons and legal papers by cover letter dated April 2, 2004."

In summary, ICH argues that Briggs is not entitled to insurance coverage because Briggs failed to inform ICH of the ceiling incident or the Bonilla lawsuit until eleven months after the incident, and eight months after the filing of the lawsuit, thus violating the conditions in the insurance policy requiring (1) notice to ICH "as soon as practicable of an `occurrence' or an offense which may result in a claim," (2) notice to ICH "as soon as practicable" of a lawsuit filed against Briggs, and (3) that Briggs "[i]mmediately" send to ICH any papers received in connection with a lawsuit. In response, Briggs argues that ICH has waived certain of these arguments by failing to mention them specifically in its April 12, 2004 letter disclaiming coverage, and further contends that none of the relevant conditions was violated by Briggs.

The district court, in addressing the cross-motions for summary judgment, found that there were outstanding issues of fact regarding whether or not Briggs violated its duty to inform ICH of the occurrence — the falling of the ceiling in May 2003. It noted, however, that ICH could nonetheless prevail on summary judgment if it were able to demonstrate that, as a matter of law, Briggs violated its duty to notify ICH as soon as practicable of the Bonilla lawsuit. This ICH did to the district court's satisfaction, by citing a short (one paragraph), but clear, decision of the New York Appellate Division for the First Department. 26 Warren Corp. v. Aetna Cas. & Sur. Co., 253 A.D.2d 375, 676 N.Y.S.2d 173, 174 (App.Div.1998). Other federal district courts, facing similar factual circumstances, have chosen to distinguish 26 Warren Corp. and have come out the opposite way. See 105 St. Assocs., LLC v. Greenwich Ins. Co., 507 F.Supp.2d 377, 381 (S.D.N.Y.2007); Nouveau Elevator Indus., Inc. v. Cont'l Cas. Ins. Co., No. 05 Civ. 0813, 2006 WL 1720429, at *6 (E.D.N.Y. Jun. 21, 2006). For the reasons that follow, we believe that the New York Court of Appeals should be given the opportunity — if it wishes — to address the Appellate Division decision and the underlying issues of public policy that opinion raises.

DISCUSSION

The law of New York and Second Circuit Local Rule § 0.27 permit us to certify to New York's highest court "determinative questions of New York law [that] are involved in a case pending before [us] for which no controlling precedent of the Court of Appeals exists." 22 N.Y. Comp. Codes R. & Regs. tit. 22, § 500.27(a) (2008). We have certified questions to the Court of Appeals "where state law is not clear and state courts have had little opportunity to interpret it." State Farm Mut. Auto. Ins. Co. v. Mallela, 372 F.3d 500, 505 (2d Cir.2004). In Unigard Security Insurance Company, Incorporated v. North River Insurance Company, 949 F.2d 630, 631-32 (2d Cir.1991), we particularly noted the problems that arise when an issue of state law, recurring in federal cases, leads to a split of authority within or between federal districts. There, as here, the Southern District of New York was split on a question relating to the interpretation of New York state law,2 with only a single decision of a lower New York state court as guidance. Id.

The certification process provides us with a "valuable device for securing prompt and authoritative resolution" of questions of state law. Ex rel. Kidney v. Kolmar Labs., Inc., 808 F.2d 955, 957 (2d Cir.1987). And often when we certify we express no view as to the merits of the issue at hand. See, e.g., Rivkin v. Century 21 Teran Realty LLC, 494 F.3d 99, 108 (2d Cir.2007); O'Mara v. Town of Wappinger, 485 F.3d 693, 697-99 (2d Cir.2007); White Plains Coat & Apron, Co....

To continue reading

Request your trial
20 cases

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT