CITY OF NEW YORK v. Insurance Company of North America, Defendant-Appellant-Respondent. (2008)

Order, Supreme Court, New York County (Edward H. Lehner, J.), entered May 11, 2006, which denied the motion of defendant Century Indemnity Company (Century), successor to Insurance Company of North America, for summary judgment dismissing the complaint as against it, and denied the City of New York's cross motion for partial summary judgment as against Century, unanimously affirmed, without costs.

 Because defendant Welsbach Electric Corp., the named insured under the policy issued by Century, and the City, an additional insured under the policy, were adverse parties in the underlying action, the City had an independent obligation to provide timely written notice of the claim to Century (see Travelers Ins. Co. v. Volmar Constr. Co., 300 A.D.2d 40, 44, 752 N.Y.S.2d 286 [2002] ).   Further discovery as to whether Welsbach provided timely notice would serve no purpose (see American Mfrs. Mut. Ins. Co. v. CMA Enters., 246 A.D.2d 373, 667 N.Y.S.2d 724 [1998] ).

 Since Century asserted its late notice defense 92 days after receiving the City's summons and complaint, its disclaimer cannot be held to be timely as a matter of law (see CPLR 3012[c];  Insurance Law § 1212[b] ).  While the City waived any defense based on lack of personal jurisdiction in the parties' agreement extending Century's time to answer, it did not waive its right to assert an untimely disclaimer defense (cf. DiGuglielmo v. Travelers Prop. Cas., 6 A.D.3d 344, 346, 776 N.Y.S.2d 542 [2004], lv. denied 3 N.Y.3d 608, 786 N.Y.S.2d 811, 820 N.E.2d 290 [2004] ).

 Nor can Century's notice of disclaimer be held to be untimely as a matter of law, since Century asserts that it needed time to investigate the 10-year old claim.   However, an issue of fact exists whether Century conducted its investigation promptly, diligently and in good faith (see Those Certain Underwriters at Lloyds, London v. Gray, 49 A.D.3d 1, 7, 856 N.Y.S.2d 1 [2007], 2007 WL 3380450;  cf. 2540 Assoc. v. Assicurazioni Generali, 271 A.D.2d 282, 284, 707 N.Y.S.2d 59 [2000] ).   Contrary to Century's contention, discovery as to its investigation would not violate the attorney-client and protected work-product privileges (see Brooklyn Union Gas Co. v. American Home Assur. Co., 23 A.D.3d 190, 191, 803 N.Y.S.2d 532 [2005] ).

 Contrary to Century's further contention, Insurance Law § 3420(d) protects the insured from the insurer's unreasonable delays in disclaiming coverage even where, as here, the underlying claim has been satisfied (see e.g. 474431 Assoc. v. AXA Global Risks U.S. Ins. Co., 18 A.D.3d 604, 605, 795 N.Y.S.2d 626 [2005] ).

In light of our determination, we do not address Century's remaining contentions.