Schulman v. Indian Harbor Insurance Company, 2006-00637.

• Decision Date: 22 May 2007
• Docket Number: 2006-00637.
• Parties: MARTIN SCHULMAN et al., Respondents, v. INDIAN HARBOR INSURANCE COMPANY, Appellant.
• Court: New York Supreme Court — Appellate Division

40 A.D.3d 957

836 N.Y.S.2d 682

2007 NY Slip Op 04468

MARTIN SCHULMAN et al., Respondents, v. INDIAN HARBOR INSURANCE COMPANY, Appellant.

2006-00637.

Appellate Division of the Supreme Court of the State of New York, Second Department.

Decided May 22, 2007.

In an action for a judgment declaring that the defendant is obligated to defend and indemnify the plaintiffs in an underlying personal injury action entitled Salten v Schulman, commenced in the Supreme Court, Queens County, under index No. 14163/04, the defendant appeals from an order and judgment (one paper) of the Supreme Court, Queens County (Schulman, J.), entered November 25, 2005, which, upon a decision of the same court dated October 12, 2005, in effect, denied those branches of the defendant's motion which were to dismiss the complaint pursuant to CPLR 3211 (a) (1) and (7) and for summary judgment, granted the plaintiffs' cross motion for summary judgment declaring that the defendant is obligated to defend and indemnify them in the underlying personal injury action, and declared that the defendant is obligated to defend and indemnify the plaintiffs in the underlying personal injury action.

Ordered that the order and judgment is affirmed, with costs.

Insurance Law § 3420 (d) requires an insurer to provide a written disclaimer "as soon as is reasonably possible." The reasonableness of the delay is measured from the time when the insurer "has sufficient knowledge of facts entitling it to disclaim, or knows that it will disclaim coverage" (First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 66 [2003]). The insurer bears the burden of justifying any delay (id. at 69). "While Insurance Law § 3420 (d) speaks only of giving notice `as soon as is reasonably possible,' investigation into issues affecting an insurer's decision whether to disclaim coverage obviously may excuse delay in notifying the policyholder of a disclaimer" (id. at 69). The failure of an insured to timely notify the insurer of a claim does not excuse the insurer's failure to timely disclaim coverage (see Mount Vernon Fire Ins. Co. v Gatesington Equities, 204 AD2d 419 [1994]).

In the instant case, the defendant's submission of an unsworn letter of its claims analyst, containing hearsay statements of the plaintiff Myron Schulman, who was one of the defendants in the underlying personal injury action, failed to establish that its delay in issuing a disclaimer was reasonable under the circumstances (see First Fin. Ins. Co. v Jetco Contr. Co., supra; Hartford Ins. Co. v County of Nassau, 46 NY2d 1028 [1979]). Moreover, the plaintiffs demonstrated that the defendant failed to promptly disclaim coverage for the underlying personal injury action within a reasonable amount of time after learning of facts or circumstances which might provide a reasonable basis for a disclaimer. The Supreme Court thus properly denied that branch of the defendant's motion which was for summary judgment.

Where, as here, the insurance...