US Underwriters Ins. Co. v. Landau

• Decision Date: 19 January 2010
• Docket Number: No. 05-CV-2049 (ENV)(SMG).,05-CV-2049 (ENV)(SMG).
• Citation: 679 F. Supp.2d 330
• Parties: U.S. UNDERWRITERS INSURANCE COMPANY, Plaintiff, v. Rachel LANDAU, Mordechi Landau, Vintaje General Construction Inc., Edna Deveaux, Public Administrator of Kings County, as administrator of the Estate of Julius Drecketts, Ranjette Combs, Bernard Barham, Allstate Insurance Company a/s/o Miguel Medrano and Vincent Alexis, Greenwich Insurance Company a/s/o Rachel Landau, Defendants. Rachel Landau and Mordechi Landau, Third-Party Plaintiffs, v. Secure Insure Brokerage Inc. d/b/a Insuresecure Brokerage Inc., and Leon G. Silver & Associates, Ltd., Third-Party Defendants.
• Court: U.S. District Court — Eastern District of New York

679 F.Supp.2d 330

U.S. UNDERWRITERS INSURANCE COMPANY, Plaintiff, v. Rachel LANDAU, Mordechi Landau, Vintaje General Construction Inc., Edna Deveaux, Public Administrator of Kings County, as administrator of the Estate of Julius Drecketts, Ranjette Combs, Bernard Barham, Allstate Insurance Company a/s/o Miguel Medrano and Vincent Alexis, Greenwich Insurance Company a/s/o Rachel Landau, Defendants.

Rachel Landau and Mordechi Landau, Third-Party Plaintiffs, v. Secure Insure Brokerage Inc. d/b/a Insuresecure Brokerage Inc., and Leon G. Silver & Associates, Ltd., Third-Party Defendants.

No. 05-CV-2049 (ENV)(SMG).

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

January 19, 2010.

Steven Verveniotis, Adam I. Kleinberg, Michael Anthony Miranda, Miranda Sokoloff Sambursky Slone Verveniotis LLP, Mineola, NY, for Plaintiff.

Robert E. Michael, Robert E. Michael & Associates PLLC, Steven Glen Schiesel, Pecoraro & Schiesel, Paul A. Marber, The Cochran Firm, William G. Hanft, Gennet Kallmann Antin & Robinson, PC, New York, NY, Stuart D. Markowitz, Law Offices

of Stuart D. Markowitz, P.C., Jericho, NY, for Defendants/Third-Party Plaintiffs.

Scott C. Perez, Fiedelman Garfinkel & Lesman, Heidi M. Weiss, Jacobwitz, Garfinkel & Lesman, Jeannie Valentine, Jonathan B. Bruno, Kaufman, Borgeest & Ryan LLP, New York, NY, for Third-Party Defendants.

MEMORANDUM AND ORDER

VITALIANO, District Judge.

Plaintiff U.S. Underwriters Insurance Company ("USU") entered into a contract for premises liability insurance with defendant Rachel Landau. USU brings this action for declaratory judgment pursuant to 28 U.S.C. §§ 1332 and 2201, seeking to disclaim coverage for any liability arising out of Landau's ownership of a building which suffered a major fire that fatally injured one of its tenants and caused physical damage to neighboring property. Contending the liability coverage was properly disclaimed based on the failure of the insured to provide timely notice of the occurrence as well as the separate application of a policy exclusion for work done by independent contractors, plaintiff now moves for summary judgment.¹ Defendants oppose the motion on a plethora of grounds, including that: (1) a declaratory judgment binding all defendants would be premature; (2) the independent contractors exclusion is invalid and does not apply; and (3) USU failed to timely disclaim coverage. Collaterally, third party defendants wholesale broker Leon G. Silver & Associates ("Silver Associates") and retail broker Secure Insure Brokerage, Inc. ("SIB") move for summary judgment dismissing Landau's third party negligence claims alleging damages arising out of late notice of the incident to USU.

Background

The relevant facts are drawn from the amended complaint and the submissions of the parties on the motions for summary judgment, and are reviewed in the light most favorable to the nonmoving parties. See Allstate Ins. Co. v. Hamilton Beach/Proctor Silex, Inc., 473 F.3d 450, 456 (2d Cir.2007) ("In assessing the record... the court is required to resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought.") (quoting Stern v. Trs. of Columbia Univ., 131 F.3d 305, 312 (2d Cir.1997)). Any relevant disputes as to fact are noted.

1. The Premises and Its Insurance Coverage

Rachel Landau acquired the three-story residential property at 94 Harman Street, Brooklyn in April 2003. Although Landau sought both first-party damage and third-party liability coverage, she did not directly approach potential insurers. Instead, Mordechi, her husband and the site's property manager, sought coverage through Moishe Weinstock, president of retail broker SIB. Weinstock, in turn, solicited coverage from wholesale broker Silver Associates, who pitched liability policies on behalf of a variety of insurers, including Greenwich Insurance and USU. Once Silver Associates determined that Greenwich and USU had the best policies for the Landaus, it sent applications to SIB, which filled them out, had them signed by the Landaus, and faxed them back to Silver Associates to bind coverage. At virtually all times, Silver Associates was the only party in direct communication with the insurance underwriters themselves; the Landaus were insulated from Greenwich and USU by no less than two "middleman" brokers: SIB and Silver Associates.

Silver Associates, of course, dealt with and received commissions from many different insurance companies. However, in the course of its business, Silver Associates executed an "Agency and Brokerage Agreement" with USU whereby it had the authority to receive and accept proposals for insurance and collect premiums. Pursuant to this agreement, Silver Associates was bound to forward to USU daily underwriting reports and make available to USU any records generated as a result of the parties' relationship. Section 1.6 of the agreement provided further that Silver Associates "shall report all losses and claims to the Company USU immediately after receipt by the Agent Silver Associates of notice of the loss or claim." (Affirmation of Andrew M. Bernstein ("Bernstein Aff.") Ex. T.)

The Landaus ultimately secured from Greenwich policy # PWK009534 and its renewal, which together underwrote the premises for property damage during the period May 24, 2003 to May 24, 2005. The Landaus also obtained from USU policy #CL3063526 and its renewal # CL3063526A, which provided third party liability coverage for the same policy period. Section IV(2) of the USU policy sets forth the insured's obligation to notify the insurer in the event of an incident potentially giving rise to liability: "You must see to it that we are notified as soon as practicable of an 'occurrence' or an offense which may result in a claim."² (Declaration of Steven Verveniotis ("Verv. Decl.") Ex. 1.) The provision went on to require that "if a claim or 'suit' is brought against any insured, you must . . . see to it that we receive written notice of the claim or 'suit' as soon as practicable." (Id.) The Landaus' policy also included an endorsement titled "Independent Contractors Exclusion" that purported to deny coverage for injury or damage "arising out of operations performed for any insured by independent contractors or acts or omissions of any insured by independent contractors or acts or omissions of any insured in connection with their general supervision of such operations." (Id.)

2. The Accident at 94 Harman Street

In June 2004, the Landaus hired Vintaje Construction Company to renovate the first floor of the insured premises. On the evening of June 14, 2004, Bernard Barham, a plumber hired by Vintaje to modify the building's plumbing and gas lines, were working in the basement when a gas leak developed from a pipe that was left uncapped. Although Barham allegedly became aware of this leak prior to stopping work for the night, he left the building without fixing the problem. The following morning, one of the tenants, Julius Drecketts, lit his stove, igniting gas which had by then flooded the building. The ignition sparked a conflagration that fatally wounded Drecketts and destroyed the premises. Barham was subsequently indicted by a grand jury in Kings County and pled guilty to the criminally negligent homicide of Drecketts.

Mordechi Landau learned of the fire the morning it happened. He immediately went to the location, calling to inform Weinstock of the news along the way. When Landau arrived, he saw the substantial destruction caused by the explosion and learned from the fire department that an ambulance had taken one of the tenants to the hospital with injuries. Although the happening and/or substance of later conversations between the two about the fire are hotly contested, Landau believed that Weinstock had accepted responsibility for any actions required of the insured to perfect coverage, including satisfying the notice requirements in the policies. Weinstock did contact an adjusting firm, Superior Adjusting, on behalf of the Landaus, but after that did not consider himself to be handling the claim in any way. When Silver Associates initially learned of the fire—presumably from Superior Adjusting ³—it provided Weinstock with an "Acord" form to fill out to provide written notice. Weinstock contends that he sent the Acord form to Superior Adjusting, who then filled out the substantive details and sent it back to Weinstock.

On June 16, 2004, SIB faxed the Acord form to Silver Associates, describing it on the fax cover sheet as a "property loss notice". (Verv. Decl. Ex. 25.) The form listed Greenwich as the "company" and included the Landaus' Greenwich policy number, but did not include any reference to the USU policy or liability coverage generally. (Id.) The form also listed the "loss" as an "explosion", with handwritten notes stating "fire erupted in basement". After receiving this form, Silver Associates passed on notice of the incident to a receiving agent of Greenwich, but did not contact USU or any liability insurer regarding the incident.

3. USU's Investigation

USU was not directly contacted until it learned of a claim against the Landaus by Allstate Insurance Company, the subrogee of owners of a neighboring property that was damaged by the fire. On September 29, 2004, Allstate wrote a letter to SIB asserting that "your insured," i.e. the Landaus, were responsible for the neighbors' losses. (Verv. Decl. Ex. 27.) These claims were conveyed to USU on October 14, 2004, in the form of an Acord titled "General Liability Notice of Occurrence/Claim." This Acord specifically listed "United States Liability" as the insurer, provided the USU policy number, and classified the "description of occurrence" as "fire loss". It further listed the names of both of the neighboring property owners under the heading "injured/property damaged". (Verv. Decl. Ex. 28.)

Within one week of receipt, USU assigned claims examiner Dolores Foreman to...