Insurance Co. of North America v. Norris
| Citation | 455 N.Y.S.2d 190,116 Misc.2d 314 |
| Parties | INSURANCE CO. OF NORTH AMERICA, Petitioner, v. Gladys M. NORRIS, individually, and Gladys M. Norris, as mother and natural guardian of Lisa Norris, an infant over the age of fourteen years, Arc Leasing Corp. and American Transit Insurance Company, Respondents. |
| Decision Date | 28 September 1982 |
| Court | United States State Supreme Court (New York) |
In this non-jury trial, the issues were delineated by order of this Court dated February 5, 1982, as follows:
1. "Whether the vehicle owned by Arc Leasing Corp. and insured by American Transit Insurance Co. was being driven by a thief at the time of the accident with respondents?"
2. "Whether American Transit has properly disclaimed coverage?"
Respondent Gladys M. Norris testified that she was involved in an automobile accident on April 26, 1981 on Third Avenue and 31st Street in the Borough of Manhattan. In this accident, both she and her daughter Lisa were injured. The impact was very severe, and her car was thrown across to the other side of the street. Both she and her daughter ("claimants") sustained injuries.
The other vehicle involved in the accident was a brownish Cadillac driven by a young man in his twenties with blond hair. This person asked Mrs. Norris if she was all right and said something about wanting to make a settlement right then and there and for her to give him some money. His license was not in order; and as soon as a pedestrian said that he would call the police, this driver walked away and disappeared. Mrs. Norris did not obtain his name or any identification number, and she never saw or heard from him again.
It was ultimately discovered that the Cadillac automobile was owned by respondent Arc Leasing Corp. ("Arc Leasing") of 4250 Hempstead Turnpike, Bethpage, New York.
Mrs. Norris retained the law firm of Gandin, Schotsky & Rappaport, P.C., within a few weeks after the accident. It was stipulated by the parties that (1) Arc Leasing owned the Cadillac involved in this accident, and (2) that the car was insured by the respondent American Transit Insurance Company ("American Transit") at the time of this occurrence.
Charles J. Zoubek testified on behalf of the respondent American Transit. He is and was, for a period of five years, the claims manager for American Transit. He reviewed the claims file and testified that American Transit received an accident report from their assured Arc Leasing on May 11, 1981. This report (petitioner's Exhibit 3) indicated that the subject Cadillac car was stolen from their lessee's home on April 25, 1981.
Mr. Zoubek further testified that the claimants' attorneys had sent Arc Leasing a letter on May 12, 1981, which American Transit had received on May 18, 1981. The only communication between American Transit and the claimants' attorneys was that American Transit mailed a copy of the police report to said counsel.
Mr. Zoubek conceded that no written disclaimer or letter was ever sent to the claimants or their attorneys or to Arc Leasing, their insured. Mr. Zoubek explained that the reason no written notice of disclaimer was sent out was because there was "no reason to believe that the Norris's would be claimants" and that there was no claim ever made by the Norris's or anyone on their behalf.
Dennis J. Sturtz, a principal of Arc Leasing, testified that he received notice that the Cadillac was stolen on April 24 or April 25 from Terry Worth, a principal in Checkmate Travel Co., the firm that leased the automobile. He testified that Arc Leasing as owner gave no one permission to use the vehicle except Checkmate Travel.
Terry S. Worth, principal owner of Checkmate Travel, the lessee of the Cadillac automobile, testified that the automobile was in the possession of her partner, Esther Levine, who garaged the vehicle at 82-10 214th Street, Queens Village. On April 25, 1981, Mrs. Levine was on vacation and, in response to a call by a neighbor, Mrs. Worth went to Mrs. Levine's residence in Queens Village and saw that the car was missing. She went into the house and saw that the house had been obviously burglarized, and that it was in a disheveled condition with the windows ajar. She called the police and later went to the station house in Queens to report the theft. Mrs. Worth testified that she gave permission to no one to use the Cadillac car on April 26, 1981.
Police officer Fritz Holm testified that he investigated the alleged burglary and went to premises 82-10 214th Street and found the place was in disorder and ransacked.
Charles Rappaport, Esq., who is an attorney in the firm of Gandin, Schotsky & Rappaport, P.C., testified that his firm was retained on May 11, 1981. He received a copy of the New York City Police Department accident report from American Transit, which report indicated that the Cadillac car was a stolen one. His firm made no claim directly against American Transit and did not commence an action against Arc Leasing. They wrote to Arc Leasing on May 12, 1981, who advised them by letter that the car was stolen.
The claimants' law firm contacted American Transit by telephone and advised the representative of that insurance company that they will make an uninsured motorists claim if they are satisfied that the car was stolen. After American Transit sent them a copy of the police blotter, the law firm made a claim for arbitration against the petitioner Insurance Company of North America under the uninsured motorist provision of claimants' policy. Petitioner thereafter moved to permanently stay arbitration and for a determination that American Transit had a valid insurance policy in effect covering the Arc Leasing Cadillac car at the time of the accident.
In an oral decision rendered from the bench, the Court determined that at the time of this accident, the Cadillac car owned by Arc Leasing and insured by American Transit was being operated by a thief; that the car was stolen from Levine's Queens Village premises; that no permission or consent was given by Checkmate Travel or Arc Leasing to the operator; and that there was no permission to operate the vehicle within the provisions of Vehicle & Traffic Law § 388.
With regard to the second issue as to whether American Transit "has properly disclaimed coverage", the Court reserved decision.
Another issue became apparent during the course of the trial, namely, the effect of an invalid disclaimer by American Transit with regard to the defense available to American Transit that the Cadillac was driven by a thief. If the Court finds that there was no valid disclaimer, then American Transit's insurance policy was in effect, and the claimants cannot make a claim against the petitioner under the uninsured motorists provision. However, in that event, the claimants will be faced with the absolute defense by Arc Leasing and American Transit that, at the time of the accident, the car was being operated by a thief without permission or consent.
Therefore, petitioner's attorney has requested that if there is a finding that there was no proper disclaimer by American Transit, that American Transit be estopped from pleading the defense of "stolen car" or "no permissive use" in the negligence lawsuit against Arc Leasing.
With regard to the validity of American Transit's "disclaimer", there are three issues to be determined by the Court, as follows:
1. Was American Transit required to give "written notice" of its disclaimer or denial of coverage?
2. If so, was such written notice given?
3. If written notice was required but not given, what is the effect thereof upon the rights of the claimants, the insured and the carrier vis a vis the "stolen car" defense?
Was American Transit required to give written notice of
disclaimer or denial of coverage?
Insurance Law § 167 subdivision 8 provides as follows:
"If under a liability policy delivered or issued for delivery in this state, an insurer shall disclaim liability or deny coverage for death or bodily injury arising out of a motor vehicle accident or any other type of accident occurring within this state, it shall give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant."
The interpretation by the courts of the words in the statute "disclaim coverage" and "deny coverage" have given rise to a plethora of litigation. What type of disclaimer or denial of coverage did the legislature intend when it mandated the giving of written notice? The Court of Appeals has recently interpreted the statute with regard to the duty to give written notice. In Zappone v. Home Insurance Co., 55 N.Y.2d 131, 447 N.Y.S.2d 911, 432 N.E.2d 783 (1982), Judge Meyer stated that a carrier may deny liability in three general categories. First, where the insured has breached the terms of the policy by failing to cooperate or give notice, written notice of disclaimer is required. Second, where although the vehicle may be covered by the policy, there is a policy exclusion such as the person injured being an employee of the insured within the course of his employment (worker's compensation defense) or a vehicle insured as a pleasure vehicle was being operated as a public conveyance, written notice of denial of coverage is required.
However, where there is a denial of coverage because there is no contract of insurance covering the person or the vehicle, or the policy had been previously cancelled by the insurer or terminated by the acts of the insured, no written notice is required. In this latter case, there was never any insurance in effect, and a failure to give written notice may not create such...
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