Weintraub v. Great N. Ins. Co.

• Decision Date: 29 November 2021
• Docket Number: 21-cv-7965 (JSR)
• Parties: Philip WEINTRAUB and Jamila Weintraub, Plaintiffs, v. GREAT NORTHERN INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of New York

571 F.Supp.3d 250

Philip WEINTRAUB and Jamila Weintraub, Plaintiffs,

v.GREAT NORTHERN INSURANCE COMPANY, Defendant.

21-cv-7965 (JSR)

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

Signed November 29, 2021

David Scott Frydman, Alexander Pearson McBride, Frydman LLC, New York, NY, for Plaintiff Philip Weintraub.

Eric D. Freed, Stephen S. Kempa, Cozen O'Connor, Philadelphia, PA, Paul Christopher Ferland, Cozen O'Connor, New York, NY, for Defendant.

OPINION AND ORDER

JED S. RAKOFF, U.S.D.J.:

This lawsuit seeks insurance coverage for an apparent theft from a large, private collection of antiquities owned by Plaintiffs Philip and Jamila Weintraub. Following an extended investigation into the merits of the claim, the Defendant, Great Northern Insurance Company ("Great Northern"), denied the Plaintiffs’ claim, asserting inter alia that the Weintraubs had unreasonably delayed in filing a notice of loss after discovering that their hoard was in disarray. After it removed this suit from state court, Great Northern filed the instant motion to dismiss, arguing that the Weintraubs’ claim was correctly denied because their late notice of loss violated a purportedly necessary condition precedent to coverage.

The Court concludes that under New York case law the Weintraubs’ notice was tardy and might support dismissal as a matter of law. But the Court nonetheless denies Great Northern's motion for two, independent reasons.

First, the Complaint alleges that the version of the policy that Great Northern delivered the Weintraubs upon their most recent renewal did not include the notice of loss provision upon which the motion to dismiss relies. Nor was the notice of loss provision allegedly included in the version posted on the insurer's online client portal or otherwise made accessible to the Weintraubs. Accordingly, the parties dispute both the relevance and the authenticity of the supposedly "full" policy submitted by Great Northern in support of its motion. Therefore, under Second Circuit precedent, it would be inappropriate to rely on the notice of loss provision, contained only in that "full" policy, to dismiss the Complaint.

Second, the Court holds that the Complaint alleges facts that give rise to the plausible inference that Great Northern abandoned its late notice defense and so is precluded from using it to obtain dismissal. The parties agree that shortly after the Weintraubs tendered their claim, Great Northern issued a letter expressly reserving its right to later deny coverage for late notice of loss. Normally, such a reservation would preserve the procedural defense Great Northern now asserts. But in this case, Great Northern allegedly embarked on a twenty-month investigation of the claim's merits, allegedly propounding numerous costly, burdensome, and embarrassing demands on the Weintraubs for information, while assuring the Weintraubs that their claim would be adjudicated on its merits. The Complaint therefore gives rise to the plausible inference that Great Northern's extended delay and intensive claim investigation amounted to an implied waiver of its late-notice defense. Viewing this record in the light most favorable to the Complaint, the Court accordingly holds that Great Northern is precluded from obtaining dismissal on the pleadings for the Weintraubs’ failure to timely file a notice of loss.

Still, dismissal would later be appropriate if Great Northern were able to prevail in demonstrating both that it made the "full" policy adequately available to the Weintraubs and that it did not impliedly waive its late-notice defense. The Court accordingly proposes to proceed with the procedure previewed at oral argument, provided the parties consent: a limited-scope evidentiary hearing to resolve these two factual disputes. Otherwise, this case will move forward in the usual course, on the schedule set by the previously ordered case management plan.

I. Background

A. The Lost Antiquities

Plaintiffs Philip and Jamila Weintraub are collectors of antiquities and fine arts who own a collection of more than one thousand items. ECF 1-1 ("Compl.") ¶ 1. This collection was displayed and stored in several places: their New York City apartment, their country home in Wassaic, NY, and Philip's Park Avenue cardiology office. Id. ¶ 10.

They have insured their collection since at least 1990 with Defendant Great Northern Insurance Company (a subsidiary of the Chubb insurance company),¹ renewing the policy annually on August 18 and adding new items as they were acquired through amendment of an "Itemized Articles" rider, which listed more than 800 items with an insured value of more than $7 million at the time of the loss at issue in this case. Id. ¶¶ 1, 5, 7. The Weintraubs timely and fully made their premium payments. Id. ¶ 9. As relevant here, the "Chubb Delux House Coverage – Masterpiece" insurance policy, number 11585221-05, was renewed on August 18, 2019 and is governed by New York law. Id. ¶¶ 7, 44, 51. However, the version of the policy delivered to the Weintraubs in connection with the August 18, 2019 renewal, including the version available electronically through Chubb's website, was incomplete and did not include the provisions requiring a prompt notice of claim. Id.

On or about August 25, 2019, Philip entered a storage room in the Weintraub's country house and "discovered the storage bins had been disturbed and the room was in disarray." Id. ¶ 10. After spending several days reviewing the collection, Philip determined that 10 items appeared to be missing, and he made a report to the local police department on August 30, 2019. ¶ 11. By several weeks later, after further review of the collection and records, he determined that 16 items were missing. ¶ 12. The local police determined in November 2019 that the investigation had hit a dead end and there was little chance of recovering the lost items. Id.

B. The Insurance Claim

On November 23, 2019, the Weintraubs tendered a claim for $425,162 to Great Northern for sixteen lost items. Id. ¶ 13. This was 91 days after the alleged loss. Chubb acknowledged the claim in a letter dated November 25, 2019, in which it "made a reservation of rights concerning the allegedly late notice of claim." Id. ¶ 43.

Philip continued comparing the Weintraubs’ records and collection and updated the itemized list of lost items on January 21, 2020, February 7, 2020, June 26, 2020, and July 13, 2020. Id. ¶ 14. Chubb completed its own inventory on January 5, 2021 and made a further amendment, bringing the total claim to $1,499,808.

The Complaint describes numerous allegedly "harassing, embarrassing and overbroad" requests made by the appointed claims counsel, Charles T. Rubin, Esq., as part of what would ultimately become a twenty-month investigation of the Weintraubs’ claim that the Complaint describes as "aggressive, harassing, and overbroad." Id. ¶¶ 18-37. Rubin also allegedly propounded other document requests, insisted on inspections made inconvenient by the COVID-19 pandemic, and made "embarrassing" information requests to third parties, such as auction houses. Id. The Complaint further alleges that many of these demands were duplicative of documents Great Northern was allegedly required by the New York Insurance Law to maintain, but that had apparently been destroyed by the insurance broker. Id. ¶¶ 22-26. The Weintraubs allege they nevertheless fully complied with all of Rubin's requests, but that it cost them time, money, and privacy. ¶ 37. And they allege that "Rubin also assured plaintiffs that Chubb was a good insurance company, and the claim would be resolved in good faith and on its merits." ¶ 20.

On July 16, 2021, Chubb issued a decision declining to cover the claim, relying inter alia on "lack of timely notice of claim" in November 2019. Id. ¶ 38. The other asserted grounds were "late submission of a pre-printed proof of loss form (in June 2020)" and a purported failure to establish that the loss occurred during the term of the policy. Id. ¶ 38.

C. Procedural History

Plaintiffs seek (i) a declaration that, inter alia, Great Northern is obligated to provide coverage; (ii) damages of $1,499,808 plus interest; (iii) legal fees and costs incurred during the claims adjustment process; and (iv) punitive damages. This case was filed in New York County Supreme Court on August 24, 2021. Great Northern removed it to federal court on September 24, 2021. On October 1, 2021 Great Northern moved to dismiss the complaint under Fed. R. Civ. P. 12(b)(6), arguing that coverage is precluded because the Weintraubs failed to provide a timely notice of loss as required by the policy, and that this is fatal to all of the Weintraubs’ claims. See ECF 8-1.

As explained further below, the Weintraubs have sued for coverage under their insurance policy, but the parties dispute which version of the policy controls. In support of this motion, Defendant has filed two declarations annexing two different versions of the policy documents.

First, in support of its motion to dismiss, Great Northern submitted a sworn affidavit from its counsel, Paul Ferland, Esq., stating that "attached hereto is a true and correct copy of the insurance policy issued by Great Norther Insurance Company to Phillip and Jamilla Weintraub, policy no. 11585221-05, for policy period August 18, 2019 to August 18, 2020, referenced in Plaintiffs’ Complaint." Affidavit of Paul Ferland, ¶ 2, ECF 12. Attached is a 148-page insurance policy with a listed effective date of 8/18/19 but with a timestamp in the footer reading "INSURED 09/13/21 23.57.31." ECF 12-1 at 2 ("Long Policy"). The letter to the insured at the start of the policy does not include a date indicating when it was written or sent. Id. at 2-3. Set forth between the Ferland Declaration and the Long Policy is an unsworn cover letter dated September 14, 2021 from someone whose signature line indicates he works in Chubb's Personal Risk Services Operations group, stating that the "enclosed policy is a true and...