Kamyr, Inc. v. St. Paul Surplus Lines Ins. Co.
Decision Date | 22 November 1989 |
Citation | 547 N.Y.S.2d 964,152 A.D.2d 62 |
Parties | KAMYR, INC., et al., Respondents, v. ST. PAUL SURPLUS LINES INSURANCE COMPANY et al., Appellants, and Alexander & Alexander, Inc., et al., Respondents. |
Court | New York Supreme Court — Appellate Division |
Oppenheimer Wolff & Donnelly, New York City, and Carusone & Muller (John Carusone, of counsel), Glens Falls, for appellants.
Bond, Schoeneck & King (John M. Freyer, of counsel), Albany, for St. Paul Surplus Lines Ins. Co. and another, respondents.
Wilson, Elser, Moskowitz, Edelman & Dicker (Steven L. Young, of counsel), New York City, for Alexander & Alexander, Inc. and another, respondents.
Before CASEY, J.P., and WEISS, LEVINE, MERCURE and HARVEY, JJ.
Plaintiffs, in the business of supplying specialized equipment to companies in the paper-making industry, contracted in the fall of 1979 with Federal Paper Board, Inc. (hereinafter Federal) to furnish and install certain equipment at Federal's North Carolina paper mill. The equipment was placed in operation in 1981. On June 1, 1984, an explosion took place within a portion of the equipment supplied by plaintiffs, causing extensive property damage to Federal's facility and disrupting paper production. In July 1986, Federal commenced an action against plaintiffs in North Carolina, alleging damages in excess of $10,000,000 as a result of the accident. At the time of the occurrence, defendant St. Paul Guardian Insurance Company (hereinafter Guardian or, collectively with defendant St. Paul Surplus Lines Insurance Company, St. Paul) had in effect an umbrella excess liability policy providing plaintiffs with coverage of $10,000,000 in excess of $500,000 of primary coverage provided by the Mutual Fire Marine and Inland Insurance Company (hereinafter Mutual Fire) and $50,000 and $10,000 in self-insured retentions. Both of these policies were obtained by plaintiffs through defendant Alexander & Alexander, Inc. (hereinafter A & A). Guardian's policy provided that "[i]n the event of an occurrence, which appears likely to involve this Policy, written notice * * * shall be given * * * to the Company * * * as soon as practicable".
Plaintiffs sent four representatives to the Federal facility immediately after the June 1, 1984 explosion and on June 6, 1984 gave notice of the incident to Alexsis, Inc., an affiliate of A & A which provided plaintiffs with claim services. St. Paul was not notified of the incident until March 10, 1986 when a representative of A & A gave notice that the "claim may be extensive enough to involve your Umbrella Excess Layer of $10,000,000". In February 1987, St. Paul advised plaintiffs that it was disclaiming coverage, asserting, inter alia, plaintiffs' failure to adequately notify it of the June 1, 1984 incident.
In May 1987, plaintiffs commenced this action against St. Paul seeking, inter alia, a declaration that St. Paul was obligated to pay any judgment which may be recovered against plaintiffs in the North Carolina action, within the limits of their policy and in excess of the underlying policy. Following considerable discovery, St. Paul moved for leave to file a second amended answer, to allege a new ground for disclaimer, i.e., that plaintiffs' activities came within the category of "design professional errors and omissions" for which there was, St. Paul asserted, no coverage under the policy. Plaintiffs cross-moved for summary judgment against St. Paul. Supreme Court, without explanation, denied the motion and granted the cross motion. This appeal by St. Paul ensued.
We turn first to the cross motion for summary judgment. In the absence of a written memorandum (see, Dworetsky v. Dworetsky, 152 A.D.2d 895, 544 N.Y.S.2d 242), we have no way of knowing whether Supreme Court determined that plaintiffs' notice to St. Paul complied with the language of the insurance policy or, rather, that St. Paul's disclaimer was untimely as a matter of law. In any event, the record offers insufficient support for a grant of summary judgment in favor of plaintiffs on either basis. In our view, there are triable issues of fact, including whether A & A was an authorized agent of St. Paul for purposes of receiving notice and whether plaintiffs were actually prejudiced by the timing of St. Paul's disclaimer. Nevertheless, to "[salvage] something of value from an otherwise aborted CPLR 3212 motion" (E.B. Metal & Rubber Inds. v. County of Washington, 102 A.D.2d 599, 603, 479 N.Y.S.2d 794), we will exercise our discretion under CPLR 3212(g) and declare that plaintiffs' March 10, 1986 notice to St. Paul and St. Paul's disclaimer were both untimely.
Initially, we reject plaintiffs' argument that their June 6, 1984 notice to Alexsis constituted notice to an authorized agent of Guardian as a matter of law. Plaintiffs concede that they retained A & A to handle their insurance needs and to act on their behalf in communicating with their insurers. It is well established in this State that an insurance broker is the agent of the insured (see, Matco Prods. v. Boston Old Colony Ins. Co., 104 A.D.2d 793, 796, 480 N.Y.S.2d 134) and "notice to the ordinary insurance broker is not notice to the liability carrier" (Security Mut. Ins. Co. of N.Y. v. Acker-Fitzsimons Corp., 31 N.Y.2d 436, 442 [152 A.D.2d 66] n. 3, 340 N.Y.S.2d 902, 293 N.E.2d 76). To establish that A & A was acting as the agent of Guardian, "[t]here must be evidence of some action on the insurer's part, or facts from which a general authority to represent the insurer may be inferred" (Matco Prods. v. Boston Old Colony Ins. Co., supra, 104 A.D.2d at 796, 480 N.Y.S.2d 134). Here, plaintiffs made such a showing. Nevertheless, we agree with St. Paul that the sworn testimony of representatives of A & A, Alexsis and St. Paul specifically denying that either A & A or Alexsis ever acted as an agent of Guardian is sufficient to raise a triable issue of fact.
Next, in our view, plaintiffs' March 1986 notification was untimely as a matter of law because plaintiffs had no good-faith belief of their nonliability regarding the Federal incident. The contract requires notification "as soon as practicable". Courts have interpreted that language to require that notice be given within a reasonable time under the circumstances (Mighty Midgets v. Centennial Ins. Co., 47 N.Y.2d 12, 19, 416 N.Y.S.2d 559, 389 N.E.2d 1080; see, Cohoes Rod & Gun Club v. Firemen's Ins. Co. of Newark, ...
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