AMERICAN MEDICAL ALERT CORP v. Michael G. Kaiser, M.D., et al., Defendants. (2020)

Judgment, Supreme Court, New York County (Martin Shulman, J.), entered June 12, 2019, which (1) granted defendant Evanston Insurance Company's (Evanston) cross motion for summary judgment for a declaration that it had no duty to defend and indemnify plaintiff American Medical Alert Corp. (AMAC), and to dismiss the complaint, and (2) denied AMAC's motion for summary judgment, unanimously affirmed, with costs.

The IAS court properly declared that Evanston had no duty to indemnify AMAC, based on the prior knowledge condition in the policy.  Under the two-pronged “subjective/objective” test, the court must “first ․ consider the subjective knowledge of the insured and then the objective understanding of a reasonable [person] with that knowledge” (Liberty Ins. Underwriters, Inc. v. Corpina Piergrossi Overzat & Klar LLP, 78 A.D.3d 602, 604, 913 N.Y.S.2d 31 [1st Dept. 2010];  CPA Mut. Ins. Co. of Am. Risk Retention Group v. Weiss & Co., 80 A.D.3d 431, 915 N.Y.S.2d 57 [1st Dept. 2011]).  In applying this test, the IAS court properly found that AMAC's admitted knowledge of the “relevant facts” in this case would lead a reasonable person in possession of those facts to “expect such facts to be the basis of a claim” (Liberty Ins., 78 A.D.3d at 605, 913 N.Y.S.2d 31).  Specifically, AMAC does not contest that its errors caused a “serious delay” in the underlying plaintiff receiving the “patient care she needed.”  Instead, its acknowledgment that directing calls promptly to doctors in situations where time was of the essence was precisely the function that the Hospital had hired it to perform.  AMAC's attempts to add additional requirements to the subjective/objective test that the law does not require were properly rejected by the IAS court.

We have considered the parties' remaining contentions, and find them unavailing.