Cullen v. Naples

• Decision Date: 05 July 1972
• Citation: 39 A.D.2d 336,334 N.Y.S.2d 257
• Parties: Michael CULLEN, etc., et al., Respondents, v. Francis NAPLES et al., Appellants, et al., Defendants.
• Court: New York Supreme Court — Appellate Division

Page 257

334 N.Y.S.2d 257

39 A.D.2d 336

Michael CULLEN, etc., et al., Respondents, v. Francis NAPLES et al., Appellants, et al., Defendants.

Supreme Court, Appellate Division, Second Department.

July 5, 1972.

Michael Saunders, New York City (Edward H. Schiff, and Harold L. Cowin, Brooklyn, of counsel), for appellants.

Simonson & Cohen; Russo, Dworkin, Taub & Agar, P.C., and Cohen & Siegel, Staten Island (Solomon R. Agar, Staten Island, of counsel), for respondents.

Before HOPKINS, Acting P.J., and LATHAM, SHAPIRO, GULOTTA and CHRIST, JJ.

SHAPIRO, Justice.

In this action for a declaratory judgment, the judgment under review adjudges that defendant Kleine, at the time of the automobile collision in question, was operating the vehicle owned by defendant Francis Naples, Sr., with the latter's implied permission and consent. The car was then in the custody of Francis Naples, Jr.

The basic claim of the appellant insurer is that it had a right to disclaim coverage under its policy because the automobile was being used by Kleine without the consent of its assured. However, I do not find it necessary to reach that question, as the undisputed proof in this record clearly establishes, in any event, and as a matter of law, that the insurer waited an unreasonable length of time before attempting to disclaim coverage.

When the accident occurred, on October 20, 1969, the policy was in full force and effect. Both Naples, Sr. and Jr., learned of the accident the same day. The very next day the appellant insurance carrier obtained a statement from Naples, Jr. in which he stated unequivocally that the vehicle had been taken and driven by Kleine without his knowledge or consent. The carrier did not disclaim coverage until April 7, 1970, when it sent a letter to the plaintiffs stating:

'The disclaimer of coverage has been made on the ground that at the time of the accident of October 29, 1969, Robert Kleine, was operating a vehicle registered in the name of Dr. Francis Naples, without the permission of Dr. Francis Naples, he being the 'named insured' in the policy of automobile liability insurance issued to him by General Accident Fire and Life Assurance Corp., Ltd.'

It was then too late to disclaim or deny coverage under the policy for, as Judge Breitel stated in Allstate Ins. Co. v. Gross, 27 N.Y.2d 263, 267, 269, 317 N.Y.S.2d 309, 311, 313, 265 N.E.2d 736, 737, 738.

'Subdivision 8 of section 167 was enacted as part of the Motor Vehicle Accident Indemnification Law, which also created the MVAIC (L.1958, ch. 759, § 3, as amd. by L.1959, ch. 650, § 2). On its face it mandates speed in giving notice of disclaimer or denial of coverage. The purpose undoubtedly is concern for the MVAIC and the injured party whose interests will be affected by disclaimer. In the statutory scheme, MVAIC has an obligation to its members, who are insurers (Insurance Law, § 605). It is empowered to investigate claims or defend actions against insureds subject to disclaimers and to pay limited sums in the event the disclaimer or denial is sustained (id. §§ 605, 606, 613, 614). Obviously, if it can make its investigation earlier rather than later, the investigation will be more complete.

'The Motor Vehicle Accident Indemnification Law has, in effect, established an absolute rule that unduly delayed disclaimer of liability or denial of coverage violates the rights of the insured, the injured party, and MVAIC.'

In the Allstate case a delay of seven and one-half...