Holyoke Mut. Ins. Co. v. B. T. B. Realty Corp.

• Decision Date: 20 July 1981
• Parties: HOLYOKE MUTUAL INSURANCE COMPANY, Appellant, v. B. T. B. REALTY CORP. et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 301

441 N.Y.S.2d 301

83 A.D.2d 603

HOLYOKE MUTUAL INSURANCE COMPANY, Appellant, v. B. T. B. REALTY CORP. et al., Respondents.

Supreme Court, Appellate Division,

Second Department.

July 20, 1981.

Rivkin, Leff & Sherman, Garden City (Jeffrey Silberfeld, Garden City, of counsel; John F. Morrison and David H. Ledgin, Garden City, on the brief), for appellant.

Dean, Falanga, Sinrod & Rose, Carle Place (Francis J. Donovan, Carle Place, of counsel), for respondents Caron.

Before MOLLEN, P. J., and DAMIANI, MARGETT and THOMPSON, JJ.

MEMORANDUM BY THE COURT.

In an action to declare that plaintiff is not obligated to defend or indemnify the defendant B. T. B. Realty Corp. in a personal injury action, plaintiff appeals from a judgment of the Supreme Court, Nassau County, entered May 15, 1980, which, after a nonjury trial, declared that plaintiff must defend in the personal injury action and pay any judgment which may be rendered against the said defendant.

Judgment reversed and new trial granted, with costs to abide the event.

The plaintiff insurance company seeks a judgment declaring that it is not obligated to defend or indemnify the defendant B. T. B. Realty Corp. in a personal injury action brought against it by defendants Albert and Phyllis Caron. That action arose out of an accident in which Albert Caron, an employee of D. Brown & Strober Building Supply Corp., sustained an injury while delivering building material to a home being constructed by B. T. B. As he was unloading his truck at the job site, the boom he was operating came into contact with a high tension wire owned and maintained by defendant Long Island Lighting Company.

The accident occurred on May 7, 1975. The plaintiff did not acquire actual notice of the incident, however, until May 23, 1978, when it received a copy of a summons and complaint which had been served on B. T. B. some three weeks earlier. The plaintiff promptly disclaimed on the ground that B. T. B. had failed to give timely notice of the incident as required by the two liability policies in force at the time. Those policies provided in pertinent part as follows:

The general liability policy:

"Conditions

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* * *

"4. Insured's Duties in the Event of Occurrence, Claim or Suit:

"(a) In the event of an occurrence, written notice containing particulars sufficient to identify the insured and also reasonably obtainable information with respect to the time, place and circumstances thereof, and the names and addresses of the injured and of available witnesses, shall be given by or for the insured to the company or any of its authorized agents as soon as practicable."

The umbrella policy:

"Conditions

* * *

* * *

"4. Insured's duties in the event of occurrence, claim or suit:

"(a) In the event of an occurrence which is likely to involve this contract, written notice containing particulars sufficient to identify the insured and also reasonably obtainable information with respect to time, place, and circumstances thereof, and the names and addresses of the injured and of available witnesses, shall be given by or for the insured to the company or any of its authorized agents as soon as practicable.

The plaintiff subsequently instituted this action seeking a declaration that it was not obligated to defend or indemnify B. T. B. because the construction firm had failed to give the required notice. B. T. B. defaulted in the action but the Carons vigorously opposed the plaintiff's request for relief.

Following trial, the court found that B. T. B.'s failure to give timely notice was excusable because its principal had acted under a good faith and reasonable belief, based upon what he had heard about the accident, that his firm was not liable for Mr. Caron's injuries. Accordingly, a judgment was entered declaring that the plaintiff was obligated to defend B. T. B. and to pay any judgment rendered against it to the limit of its policies. It is this judgment from which the plaintiff now appeals.

The general rule regarding the effect of a failure to comply with the notice provision of an insurance policy was stated by the Court of Appeals in Security Mut. Ins. Co of N. Y. v. Acker-Fitzsimons Corp. (31 N.Y.2d 436, 340 N.Y.S.2d 902, 293 N.E.2d 76). The court there wrote (pp. 440-441, 340 N.Y.S.2d 902, 293 N.E.2d 76):

"Notice provisions in insurance policies afford the insurer an opportunity to protect itself (Utica Sanitary Milk Co. v. Casualty Co. of Amer., 210 N.Y. 399 31 N.Y.Jur., Insurance, § 1261), and the giving of the required notice is a condition to the insurer's liability. (Rushing v. Commercial Cas. Ins. Co., 251 N.Y. 302 Absent a valid excuse, a failure to satisfy the notice requirement vitiates the policy (Deso v. London & Lancashire Ind. Co., 3 N.Y.2d 127 Insurance Law, § 167 subd. 1, par. and the insurer need not show prejudice before it can assert the defense of noncompliance. (31 N.Y.Jur., Insurance, § 1262.)

"There may be circumstances, such as lack of knowledge that an accident has occurred, that will explain or excuse delay in giving notice and show it to be reasonable. (Rushing v. Commercial Cas. Co., 251 N.Y. 302 supra; Woolverton v. Fidelity & Cas. Co. of N. Y., 190 N.Y. 41 But the insured has the burden of proof thereon. (Rushing v. Commercial Cas. Co., 251 N.Y. 302 supra.) Moreover, he must exercise reasonable care and diligence to keep himself informed of accidents out of which claims for damages may arise. (Woolverton v. Fidelity & Cas. Co. of N. Y., 190 N.Y. 41 supra; American Sur. Co. of N. Y. v. Mariani, 130 N.Y.S.2d 755 affd. 286 App.Div. 1083 13 Couch, Insurance § 49:334.)

"Then, too, a good-faith belief of nonliability may excuse or explain a seeming failure to give timely notice. (875 Forest Ave. Corp. v. Aetna Cas. & Sur. Co., 37 A.D.2d 11 affd. 30 N.Y.2d 726 Woolverton v. Fidelity & Cas. Co. of N. Y., 190 N.Y. 41 supra ; 31 N.Y.Jur., Insurance, § 1281.) But the insured's belief must be reasonable under all the circumstances and it may be relevant on the issue of reasonableness, whether and to what extent, the insured has inquired into the circumstances of the accident or occurrence. (Haas Tobacco Co. v. American Fid. Co., 226 N.Y. 343 Woolverton v. Fidelity & Cas. Co. of N. Y., 190 N.Y. 41 supra; Marallo v. Aetna Cas. & Sur. Co., 148 N.Y.S.2d 378 American Sur. Co. of N. Y. v. Mariani, 130 N.Y.S.2d 755, affd. 286 App.Div. 1083 supra ; 31 N.Y.Jur., Insurance, § 1281; 8 Appleman, Insurance Law and Practice, § 4744.)

"Finally, a provision that notice be given 'as soon as practicable' after...