Mount Vernon Fire Ins. Co. v. Dlrh Associates

• Decision Date: 05 June 1997
• Docket Number: No. 95 Civ. 3460(SAS).,95 Civ. 3460(SAS).
• Citation: 967 F.Supp. 105
• Parties: MOUNT VERNON FIRE INSURANCE COMPANY, Plaintiff, v. DLRH ASSOCIATES, Kettley Henry, and Wade Golden, Defendants.
• Court: U.S. District Court — Southern District of New York

Page 105

967 F.Supp. 105

MOUNT VERNON FIRE INSURANCE COMPANY, Plaintiff, v. DLRH ASSOCIATES, Kettley Henry, and Wade Golden, Defendants.

No. 95 Civ. 3460(SAS).

United States District Court, S.D. New York.

June 5, 1997.

Michael A. Miranda, Thurm & Heller, L.L.P., New York City, for Plaintiff.

Daniel Galinson, Kaplowitz & Galinson, Garden City, NY, for Defendant DLRH Associates.

AMENDED OPINION AND ORDER

SCHEINDLIN, District Judge.

Plaintiff Mount Vernon Fire Insurance Company ("Mt. Vernon") moves for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, and for a declaratory judgment stating that Mt. Vernon has no duty to defend or indemnify defendant DLRH Associates ("DLRH") in the pending state action Kettley Henry v. DLRH Associates and Wade Golden.¹ Defendant DLRH opposes this motion and cross-moves for summary judgment and for a declaratory judgment stating that Mt. Vernon does have a duty to defend and indemnify DLRH.

In an Opinion and Order dated May 6, 1997, I found that DLRH had failed to notify Mt. Vernon of Kettley Henry's accident within a reasonable time under the circumstances. I therefore granted plaintiff's motion for summary judgment and denied defendant's cross-motion for summary judgment. However, I withdrew the May 6, 1997 Opinion and Order on May 7, 1997, because DLRH had not had an opportunity to brief the issue of notice. I have now received Supplemental Memoranda of Law and Statements of Fact Pursuant to Local Rule 3(g) — now Local Rule 56.1 — from both DLRH and plaintiff relating to this issue. For the reasons set forth below, plaintiff's motion is granted, defendant's motion is denied.

I. Applicable Legal Standard

A party is entitled to summary judgment when there is "no genuine issue of material fact" and the undisputed facts warrant judgment for the moving party as a matter of law. See Fed.R.Civ.P. 56(c); Celotex v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The burden of demonstrating the absence of a material factual dispute rests on the moving party. See Gallo v. Prudential Residential Svcs., Ltd., 22 F.3d 1219, 1223 (2d Cir.1994). Once that burden is met, the non-moving party must present "significant probative supporting evidence" that a factual dispute exists. Fed.R.Civ.P. 56(e); Anderson, 477 U.S. at 249, 106 S.Ct. at 2510.

The court's role is not to try issues of fact, but rather to determine whether issues exist to be tried. See Balderman v. United States Veterans Admin., 870 F.2d 57, 60 (2d Cir. 1989); Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 58 (2d Cir.1987). All ambiguities must be resolved and all inferences drawn in favor of the party against whom summary judgment is sought. See Anderson, 477 U.S. at 255, 106 S.Ct. at 2513-14; Donahue, 834 F.2d at 57, 60. If there is any evidence in the record from which a reasonable inference could be drawn in favor of the non-moving party on a material issue of fact, summary judgment is improper. See Chambers v. TRM Copy Centers Corp., 43 F.3d 29, 37 (2d Cir.1994).

II. Factual Background

Applying the above standards, the undisputed facts of this case are as follows. On November 17, 1992, Mt. Vernon issued a commercial liability policy (the "Policy") to DLRH² to provide coverage for hotel operations at premises located on West 79th Street in New York City (the "Hotel"). The Policy included the following assault and battery exclusion and notice provision:

It is agreed that no coverage shall apply under this policy for any claim, demand or suit based on Assault and Battery, and Assault and Battery shall not be deemed an accident, whether or not committed by or at the direction of the insured ...

[DLRH] must see to it that [Mt. Vernon] is notified as soon as practicable of an "occurrence³" or an offense which may result in a claim. To the extent possible, notice should include: (1) How, when and where the "occurrence" or offense took place; (2) The names and addresses of any injured persons and witnesses; and (3) The nature and location of any injury or damages arising out of the "occurrence" or offense.

See Plaintiff's Statement of Facts Pursuant to Local Rule 3(g) ("Plaintiff's 3(g) Statement"), dated November 15, 1995, at ¶¶ 3-4.

On December 12, 1992, Henry was a resident at the Hotel. Henry now claims that DLRH negligently permitted her ex-boy-friend Wade Golden ("Golden") to enter the hotel, that as a result of DLRH's negligence she was placed in fear of her safety because of Golden's presence, and that in attempting to escape from Golden she fell from the third floor of the hotel and sustained serious injuries for which DLRH is liable. See Plaintiff's Rule 3(g) Statement, Ex. C (Plaintiff Kettley Henry's Complaint, Henry v. DLRH Associates and Wade Golden).

III. Discussion

A. The Notice Provision

An insurer is not obliged to cover the loss of its insured unless the insured gives timely notice of loss in accordance with the terms of the insurance contract. See Power Authority v. Westinghouse Electric Corp., 117 A.D.2d 336, 502 N.Y.S.2d 420, 421 (1st Dep't 1986) (citing Security Mutual Ins. Co. of New York v. Acker-Fitzsimons Corp., 31 N.Y.2d 436, 340 N.Y.S.2d 902, 293 N.E.2d 76 (1972) and Allstate Ins. Co. v. Furman, 84 A.D.2d 29, 445 N.Y.S.2d 236 (2d Dep't 1981), aff'd, 58 N.Y.2d 613, 458 N.Y.S.2d 532, 444 N.E.2d 996 (1982)). See also AXA Marine and Aviation Ins. Ltd. v. Seajet Industries Inc., 84 F.3d 622, 624-25 (2d Cir.1996). Without timely notice of an insured's loss, an insurer may be deprived of the opportunity to investigate the facts upon which the loss is predicated — thereby protecting itself from fraudulent claims — and to adjust its books in order to maintain a proper reserve fund in light of the insured's claim. See Utica Mutual Ins. v. Fireman's Fund Ins. Cos., 748 F.2d 118, 121 (2d Cir.1984). Thus, under New York law, "[t]he right of an insurer to receive notice has been held to be so fundamental that the insurer need show no prejudice to be able to disclaim liability on this basis [citations omitted]." Allstate Ins. Co., 445 N.Y.S.2d at 239. See also Seajet Industries Inc., 84 F.3d at 625(citing New York cases).

The Policy required DLRH to notify Mt. Vernon of any "occurrence" or "offense" which "may result in a claim" by written notice "as soon as practicable". Identical notice provisions "have been uniformly interpreted to require that notice be given within a reasonable time under the circumstances." Power Authority, 502 N.Y.S.2d at 422 (citing Jenkins v. Burgos, 99 A.D.2d 217, 472 N.Y.S.2d 373 (1st Dep't 1984)). New York courts have held that even relatively short periods of unexcused delay have been found unreasonable as a matter of law. See, e.g., Deso v. London & Lancashire Ind. Co. of America, 3 N.Y.2d 127, 164 N.Y.S.2d 689, 143 N.E.2d 889 (1957) (51 days); Rushing v. Commercial Cas. Ins. Co., 251 N.Y. 302, 167 N.E. 450 (1929) (22 days); Haas Tobacco Co. v. American Fid. Co., 226 N.Y. 343, 123 N.E. 755 (1919) (10 days); Republic New York Corp. v. American Home Assurance Co., 125 A.D.2d 247, 509 N.Y.S.2d 339 (1st Dep't 1986) (45 days).

Whether a delay in notifying the insurer is reasonable is a question of fact normally left for determination at trial, but where the insured provides no excuse for the delay in notifying the insurer, and where mitigating circumstances are absent, "the issue may be disposed of as a matter of law in advance of trial." Id. See also State of New York v. Blank, 27 F.3d 783, 795 (2d Cir.1994); Young v. N.Y. State Dep't of Ins., Liquidation Bureau, 152 A.D.2d 835, 543 N.Y.S.2d 768, 769 (3d Dep't 1989). To determine whether DLRH was obliged to notify Mt. Vernon directly after Henry's injury on December 12, 1992, a trier of fact must determine "whether the circumstances known to the insured at that time would have suggested to a reasonable person the possibility of a claim." Sparacino v. Pawtucket Mut. Ins. Co., 50 F.3d 141, 143 (2d Cir.1995). See also Beach Haven Apartments v. Allcity Ins. Co., 182 A.D.2d 658, 581 N.Y.S.2d 689, 690 (2d Dep't) ("the insured's good-faith belief that it is not liable will excuse a failure to give timely notice if the belief is reasonable under all the circumstances of the case"), leave to appeal denied, 80 N.Y.2d 761, 592 N.Y.S.2d 670, 607 N.E.2d 817 (1992).

Mt. Vernon has presented evidence that DLRH's hotel manager Haydee Rodriguez ("Rodriguez") knew that Henry had been injured in connection with an altercation with Golden as early as December 12, 1992. Rodriguez stated in pertinent part:

Ms. Henry complained to me on many occasions to not allow her boyfriend into the bldg. When I am on duty the male would disobey me and other persons and go to Room 306. The reason why Ms. Henry did not want her male friend to visit her was because he would steal her money, her jewelry because he was addicted to DRUGS. At least once every week Ms. Henry and her boyfriend would fight....

On 12/12/92 the only person that was on duty was the attendant in the Lobby office TONY GROSS or Regoerto Vergara. On 12/12/92 Sat. I was on my day off. I received a telephone call at my home from TONY GROSS and he told me come right away because Ms. Henry's male friend ran pass [sic.] him in the lobby and he took the elevator to the 3rd floor and kicked the door down in Room # 306. When the male friend entered the room, Ms. Henry opened the window and was walking on the window sill outside the bldg. in order to alert her next door neighbor.... When Ms. Henry was walking on the window sill, she fell to the street.... There were no window guards installed at the window.... I was told later by some of the tenants that either Ms. Henry was pushed from the window ledge or she fell off the ledge. Ms. Henry was removed to the St. Lukes [sic.] Hospital.

See Lung Aff., Ex. C ("Rodriguez Statement") at 3-5. DLRH does not...