Smalls v. Reliable Auto Service, Inc.

• Citation: 612 N.Y.S.2d 674,205 A.D.2d 523
• Parties: James Garfield SMALLS, Plaintiff, v. RELIABLE AUTO SERVICE, INC., Defendant Third-Party Plaintiff-Respondent; Nationwide Mutual Insurance Company, Third-Party Defendant-Appellant.
• Decision Date: 06 June 1994
• Court: New York Supreme Court — Appellate Division

Page 674

612 N.Y.S.2d 674

205 A.D.2d 523

James Garfield SMALLS, Plaintiff, v. RELIABLE AUTO SERVICE, INC., Defendant Third-Party

Plaintiff-Respondent;

Nationwide Mutual Insurance Company, Third-Party Defendant-Appellant.

Supreme Court, Appellate Division,

Second Department.

June 6, 1994.

Farrell & Mahoney, P.C., Huntington Station (Patrick J. Mahoney, of counsel), for third-party defendant-appellant.

Before O'BRIEN, J.P., and RITTER, SANTUCCI and KRAUSMAN, JJ.

MEMORANDUM BY THE COURT.

In an action to recover damages for personal injuries, in which the defendant Reliable Auto Service, Inc., brought a third-party action for a judgment declaring that Nationwide Mutual Insurance Company has a duty to defend and indemnify it in connection with the main personal injury action, Nationwide Mutual Insurance Company appeals from an order and judgment (one paper) of the Supreme Court, Queens County (O'Donoghue, J.), dated November 26, 1991, which, after a nonjury trial, is in favor of Reliable Auto Service, Inc., and against it, granting that relief.

ORDERED that the order and judgment is reversed, on the law, with costs, and it is declared that Nationwide Mutual Insurance Company is not obligated to defend or indemnify Reliable Auto Service, Inc., in connection with the personal injury action.

It is settled that an insured must give notice of an accident to its insurer within the time limit provided in the insurance policy or within a reasonable time thereafter under all the circumstances (see, 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; Reliance Ins. Co. of N.Y. v. Garsart Bldg. Corp., 131 A.D.2d 828, 829, 517 N.Y.S.2d 189; Holyoke Mut. Ins. Co. v B.T.B. Realty Corp., 83 A.D.2d 603, 604-605, 441 N.Y.S.2d 301; see also, Insurance Law § 3420). Since compliance with a proper "notice of claim" provision in an insurance policy is a condition precedent to an insurer's duty to defend or indemnify the insured (see, Empire City Subway Co. v. Greater N.Y. Mut. Ins. Co., 35 N.Y.2d 8, 358 N.Y.S.2d 691, 315 N.E.2d 755; Rushing v. Commercial Cas. Ins. Co., 251 N.Y. 302, 167 N.E. 450), absent a valid excuse, the failure of the insured to satisfy the notice requirement vitiates coverage, and the insurer need not demonstrate prejudice in order to disclaim coverage (see, Unigard Sec. Ins. Co. v. North Riv. Ins. Co., 79 N.Y.2d 576, 581, 584 N.Y.S.2d 290, 594 N.E.2d 571; Security Mut. Ins. Co. v. Acker-Fitzsimons Corp., supra ). Moreover, it is the insured's burden to establish a reasonable excuse, such as a lack of knowledge that an accident has occurred, that will explain or excuse its delay in giving timely notice to the insurer (see, Woolverton v. Fidelity & Cas. Co. of N.Y., 190 N.Y. 41, 82 N.E. 745; Holyoke Mut. Ins. Co. v. B.T.B. Realty Corp., supra ).

Contrary to the finding of the Supreme Court, we find that Reliable Auto Service, Inc. (hereinafter Reliable) did not establish a reasonable excuse for its failure to notify Nationwide of the "dog bite" incident of July 5, 1987, until it had received the plaintiff's summons and complaint nearly one year thereafter. A principal is bound by notice to or knowledge of his or her agent in all matters within the scope of the agency, notwithstanding the fact that such information is never actually communicated to the principal (see, Farr v. Newman, 14 N.Y.2d 183, 187, 250 N.Y.S.2d 272, 199 N.E.2d 369; see also, Center v. Hampton Affiliates, 66 N.Y.2d 782, 784, 497 N.Y.S.2d...