Sybron Int'l Corp. v. Security Insurance Co. of Hartford, 99-3050

• Decision Date: 06 March 2001
• Docket Number: 99-3050
• Citation: 243 Wis. 2d 118,627 N.W.2d 549
• Parties: This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. §808.10 and Rule 809.62. Sybron International Corporation, Sybron Transition Corp. and Kerr Manufacturing Corporation, Plaintiffs-Appellants, v. Security Insurance Company of Hartford, Defendant-Respondent, Employers Insurance of Wausau, a Mutual Company, one of the Wausau Insurance Companies, Globe Indemnity Company, one of the Royal Insurance Companies, Hartford Fire Insurance Company, Hartford Accident and Indemnity Company, National Union Fire Insurance Company of Pittsburgh, Pennsylvania, Medmarc, a/k/a Hamilton Resources Corporation, Defendants.STATE OF WISCONSIN IN COURT OF APPEALS DISTRICT I
• Court: Wisconsin Court of Appeals

This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports.

A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. §808.10 and Rule 809.62

Sybron International Corporation, Sybron Transition Corp. and Kerr Manufacturing Corporation, Plaintiffs-Appellants v Security Insurance Company of Hartford, Defendant-Respondent, Employers Insurance of Wausau, a Mutual Company, one of the Wausau Insurance Companies, Globe Indemnity Company, one of the Royal Insurance Companies, Hartford Fire Insurance Company, Hartford Accident and Indemnity Company, National Union Fire Insurance Company of Pittsburgh, Pennsylvania, Medmarc, a/k/a Hamilton Resources Corporation, Defendants

No. 99-3050

STATE OF WISCONSIN IN COURT OF APPEALS DISTRICT I

March 6, 2001

APPEAL from a judgment of the circuit court for Milwaukee County: VICTOR MANIAN, Judge. Reversed.

Before Wedemeyer, P.J., Schudson and Curley, JJ.

¶1. PER CURIAM.

Sybron International Corporation, Sybron Transition Corp., and Kerr Manufacturing Corporation (collectively, "Sybron"), appeal from the circuit court judgment following the order granting summary judgment to their insurer, Security Insurance Company of Hartford. Sybron argues that the circuit court erred in concluding that, under New York law, it failed to timely notify Security of a claim for which Sybron was seeking insurance coverage under its Security policies. Sybron contends that whether it had a reasonable basis for failing to timely notify Security is a material factual issue. Sybron is correct and, therefore, we reverse.

I. BACKGROUND

¶2. According to the summary judgment submissions, on March 30, 1989, Kerr Manufacturing Corporation, a subsidiary of Sybron International Corporation, and other parties, including the New York University Dental School, were served with a complaint filed in New Jersey by the estate of Dr. Joel Spector. The Spector suit alleged that, in 1988, Dr. Spector died from malignant mesothelioma.¹ The suit further alleged that Dr. Spector had been exposed to "asbestos-containing products and materials ... designed, manufactured and distributed" by Kerr during his dental school years, 1955-1960, and during his subsequent dental career.

¶3. Upon receiving the complaint in the New Jersey Spector suit, Stephen Tomassi, counsel for Sybron, in the words of his affidavit, "undertook an examination of available insurance coverage for [the] action" and found that "[f]rom 1996 [sic] to part of 1971," Security "issued primary policies to Sybron."² In April 1989, Tomassi, according to his affidavit, "contacted the attorney representing the Estate of Spector, [Ronald] Grayzel, and inquired when the exposure took place so that [he] could determine if there was potential insurance coverage for the lawsuit." According to Tomassi, Grayzel explained that "the only exposure he was aware of occurred during the time Dr. Spector was in dental school from 1955 to 1959." Tomassi then wrote Grayzel, stating:

As I informed you in our phone conversation on April 25, 1989, Kerr is unable to identify the insurance carrier that provided coverage for it during the years 1955 to 1960, the years in which you believe Joel Spector was exposed to Kerr products. As a result, Kerr will be directing the defense of this lawsuit and retaining counsel in New Jersey to represent it.

¶4. As detailed in his affidavit, Tomassi determined that the Security policies provided no coverage for the Spector suit against Kerr. He made that determination based on several factors, including legal research and his experience in lawsuits dealing with similar coverage issues.³ Tomassi concluded that New York law requires "injury-in-fact" for the triggering of insurance coverage and, therefore, that the Security policies covering Kerr subsequent to Dr. Spector's dental school years could not provide coverage for Dr. Spector's disease and death because New York law "rejects a continuous trigger of policies from first exposure through manifestation regardless of when actual injury occurs." Accordingly, believing the estate was alleging that Dr. Spector had been exposed to asbestos from a Kerr product only prior to the years in which Kerr was insured by Security, Tomassi did not notify Security of the Spector suit.

¶5. In March 1990, Sybron was served with a complaint filed in New York by Dr. Spector's estate. The allegations contained in the complaint were similar to those contained in the complaint that had been filed in New Jersey the previous year. According to Security's brief to this court, shortly after the New York suit was filed, the New Jersey suit was discontinued.

¶6. On November 4, 1992, however, despite the fact that no additional facts regarding Dr. Spector's exposure had been discovered or alleged, Tomassi gave Security notice of the Spector suit.⁴ By letter dated December 14, 1992, Security expressed its understanding that Kerr/Sybron was seeking coverage regarding the New York case; Security denied coverage, asserting that Tomassi's notice was too late, coming "at least two and one-half years after [Sybron's] receipt of the underlying complaint."

¶7. Security invoked two provisions of all its policies covering Sybron during the times relevant to the case. In pertinent part, the provisions addressing an "Insured's Duties in the Event of Occurrence, Claim or Suit" state:

(a) In the event of an occurrence, written notice containing particulars sufficient to identify the insured and also reasonably obtainable information with respect to the time, place and circumstances thereof, and the names and addresses of the injured and of available witnesses, shall be given by or for the insured to the company or any of its authorized agents as soon as practicable....

(b) If claim is made or suit is brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative.

(Emphases omitted.)

¶8. The Spector suit continued for several years without Security's participation, finally settling in 1995. Subsequently, Sybron filed the action underlying this appeal, seeking a declaration of Security's coverage for the Spector suit. Granting summary judgment, the circuit court concluded that there was "a reasonable possibility" that the Security policies provided coverage and, therefore, Sybron's good faith belief to the contrary was not a valid basis for the delay in providing notice. Sybron maintains, however, that whether its determination that the Security policies provided no coverage was reasonable was a material factual issue for trial. Sybron is correct.

II. DISCUSSION

¶9. As this court has explained:

"Summary judgment is appropriate to determine whether there are any disputed factual issues for trial and `to avoid trials where there is nothing to try.'" While we apply the same methodology as the trial court when reviewing summary judgment, we owe no deference to the conclusion of the trial court. We first examine the pleadings to determine whether they state a claim for relief. If the pleadings state a claim and the responsive pleadings join the issue, we then must examine the evidentiary record to analyze whether a genuine issue of material fact exists or whether either party is entitled to a judgment as a matter of law.

Kotecki & Radtke, S.C. v. Johnson, 192 Wis.2d 429, 436-37, 531 N.W.2d 606 (Ct. App. 1995) (citations omitted).

¶10. The parties agree that, in this case, New York law governs the evaluation of whether a material factual issue precluded summary judgment. They also agree that, under New York law, notice to an insurer must be given within a reasonable time under the circumstances. See Jenkins v. Burgos, 472 N.Y.S.2d 373, 375 (App. Div. 1984) (Insurance polices requiring that notice be "immediate" or "as soon as practicable" are interpreted "to require that notice be given within a reasonable time under the circumstances.").

¶11. "Where an excuse or explanation is offered for delay in furnishing notice, the reasonableness of the delay and the sufficiency of the excuse are matters to be determined at trial." Hartford Accident & Indem. Co. v. CNA Ins. Cos., 472 N.Y.S.2d 342, 345 (App. Div. 1984). A jury's determination of whether a delay in providing notice was reasonable derives from "the facts and circumstances of the case at hand" and is "heavily dependent upon the factual context" of the case. Mighty Midgets, Inc. v. Centennial Ins. Co., 389 N.E.2d 1080, 1083-84 (N.Y. 1979).

¶12. Circumstances affecting the reasonableness of a delay in providing notice may include the insured's good faith belief that the insurance policy provides no coverage. See Clute v. Harder Silo Co., 345 N.Y.S.2d 251, 253 (App. Div. 1973). Indeed, "where an insured has a reasonable belief, formed after an adequate investigation, that no claim arising out of the occurrence could fall within the coverage period of a particular insurer, a jury could find that the insured's late notice to that insurer was justifiable and excusable." Avondale Indus., Inc. v. Travelers Indem. Co., 774 F. Supp. 1416, 1431 (S.D.N.Y. 1991).

¶13. Thus, the reasonableness of the timing of an insured's notice to an insurer must be determined according to whether the facts and circumstances "`known to the insured at that time would have suggested to a reasonable person'" that the policy provided coverage. See Ogden Corp. v. Travelers Indem. Co., 924 F.2d 39, 43 (2d Cir. 1991) (quoted source omitted) ("The test for determining whether notice of occurrence must be given to a particular insurer `is whether the circumstances known to the insured at that time would have suggested to a reasonable person the possibility of a claim [against that insurer].'"). In this case, therefore, a jury would need to consider whether...