WESCO INSURANCE COMPANY INC v. KOOKMIN BEST INSURANCE CO LTD (2025)

Order, Supreme Court, New York County (Gerald Lebovits, J.), entered on or about May 8, 2024, which denied plaintiff Wesco Insurance Company's motion for summary judgment declaring that defendant Kookmin Best Insurance Company, Ltd. (U.S. Branch) (KBIC) has a duty to defend and indemnify in the underlying action, that KBIC must reimburse Wesco for incurred defense costs, and that KBIC's coverage was primary to Wesco's, and granted KBIC's cross-motion for summary judgment for a declaration that it had no duty to defend or indemnify in the underlying action and for dismissal of the complaint, unanimously reversed, on the law, with costs, the complaint reinstated, Wesco's motion for summary judgment granted to the extent of declaring that KBIC has a duty to indemnify in the underlying action as an excess insurer, KBIC's cross-motion granted to the extent of declaring that it has no duty to defend the underlying action, and otherwise denied, and the matter remanded for further proceedings consistent with this decision.

Wesco's ability to seek reimbursement from KBIC for the costs of defending any given claim turns on whether Wesco provided notice of that claim to KBIC within a reasonable time under all the circumstances (see Continental Cas. Co. v. Employers Ins. Co. of Wausau, 85 A.D.3d 403, 407, 923 N.Y.S.2d 538 [1st Dept. 2011]).  Although justifiable ignorance of insurance coverage may excuse a delay in giving notice of an occurrence if reasonably diligent efforts were made to ascertain whether coverage existed (State of New York v. Flora, 173 A.D.3d 1402, 1407, 102 N.Y.S.3d 771 [3d Dept. 2019], lv denied 34 N.Y.3d 910, 2020 WL 772738 [2020]), Wesco did not give notice to KBIC until more than three years after its insured, the underlying defendant building owner (owner), was served with the summons and complaint (see Ocean Partners, LLC v. North Riv. Ins. Co., 25 A.D.3d 514, 515, 810 N.Y.S.2d 430 [1st Dept. 2006]).  Furthermore, Wesco failed to establish what it did during that three-year period to uncover whether the owner had other insurance.

Nonetheless, despite the late notice, KBIC was not prejudiced because Wesco promptly began investigating and defending the owner and a codefendant commercial tenant from the onset of the underlying personal injury litigation and was fully prepared to share its information relating to its investigation and defense.  Moreover, KBIC failed to point out “how Wesco's defense of the [underlying] matter materially prejudiced it” (Salvo v. Greater N.Y. Mut. Ins. Co., 213 A.D.3d 587, 588, 185 N.Y.S.3d 28 [1st Dept. 2023]).  However, under its plain policy language, KBIC is only required to provide excess coverage to the named insured and any additional insured only after Wesco's primary coverage has been exhausted, but has no duty to defend or reimburse Wesco its defense costs (cf.  Pecker Iron Works of N.Y. v. Traveler's Ins. Co., 99 N.Y.2d 391, 392, 756 N.Y.S.2d 822, 786 N.E.2d 863 [2003]).