AGOADO REALTY CORP., et al., Plaintiffs-Appellants, v. UNITED INTERNATIONAL INSURANCE COMPANY, Defendant-Respondent, Rosa Felipe, etc., et al., Defendants.
Order, Supreme Court, New York County (Harold Tompkins, J.), entered on or about October 16, 1998, granting defendant United International Insurance Company's motion to add two affirmative defenses to its answer, and denying plaintiffs' cross-motion for summary judgment, unanimously modified, on the law, without costs, to deny defendant's motion to amend its answer and grant partial summary judgment to plaintiffs to the extent of dismissing defendant's second and third affirmative defenses, and otherwise affirmed, without costs.
On May 19, 1996, Miguel Felipe, a tenant of the building owned by plaintiffs, was murdered in the building by unknown assailants. Felipe's estate and family commenced a wrongful death action against plaintiffs, alleging negligent security, by service on the Secretary of State on February 10, 1997. The attorney designated to accept service for plaintiffs was deceased, and plaintiffs did not receive actual notice that a claim had been made against them until they received the summons and complaint in the mail on June 9, 1997.
Plaintiffs immediately notified their broker, which filed a notice of occurrence with the “producer” of the insurance. The producer, in turn, forwarded the notice, summons and complaint to defendant, which received it June 20, 1997.
On July 23, 1997, defendant sent a letter to plaintiffs disclaiming coverage on the grounds of late notice of occurrence and late notice of claim. The policy conditions required the insured to notify the company “as soon as practicable” of any occurrence which may result in a claim, and of any suit brought against the insured. Defendant contended that these policy conditions were breached because defendant did not receive notice of the occurrence until 397 days after it occurred, nor did it receive notice of the claim until 130 days after the Felipes' summons and complaint was served on the Secretary of State.
On August 11, 1997, plaintiffs' attorney filed an answer in the underlying wrongful death action and commenced the instant declaratory judgment action seeking a declaration that defendant was required to defend and indemnify plaintiffs. On September 22, 1997, defendant served its answer, alleging that plaintiff breached the insurance contract by virtue of the late notices of the occurrence and the lawsuit.
On June 23, 1998, defendant moved to amend its complaint to add two affirmative defenses never previously asserted. First, defendant alleged that there was no “occurrence,” because “occurrence” is defined as “an accident” in the policy. Second, defendant invoked the exclusion for “expected or intended” injury, although the exclusion only applies to bodily injury “expected or intended from the standpoint of the insured ” (emphasis added).
Plaintiffs opposed the motion to amend as violative of Insurance Law § 3420(d), and cross-moved for summary judgment. The IAS court granted defendant's motion to add two affirmative defenses to its answer and denied plaintiffs' cross-motion for summary judgment.
The IAS court erred in permitting defendant to amend its answer to the complaint by adding new affirmative defenses based upon alleged policy exclusions. The addition of these amendments violated Insurance Law § 3420(d), which requires an insurance company to give prompt notice of the grounds for disclaimer. Insurance Law § 3420(d) states: “If under a liability policy delivered or issued for delivery in this state, an insurer shall disclaim liability or deny coverage for death or bodily injury arising out of a motor vehicle accident or any other type of accident occurring within this state, it shall give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant.”
Case law interpreting Insurance Law § 3420(d) has consistently held that when an insurer denies coverage on a specific ground, it is estopped from later asserting other grounds, not previously specified, for denying coverage (Haslauer v. North Country Adirondack Co-op. Ins. Co., 237 A.D.2d 673, 674, 654 N.Y.S.2d 447; Aguirre v. City of New York, 214 A.D.2d 692, 694, 625 N.Y.S.2d 597). Therefore, the insurer's additional grounds for disclaimer in the instant case were waived by its failure to assert them in its original notice of disclaimer.
Furthermore, an insurance company will not be allowed to deny coverage where all the relevant facts were known to the insurer at the outset, but it unreasonably delayed in asserting a basis for disclaimer. In Hartford Ins. Co. v. County of Nassau, 46 N.Y.2d 1028, 416 N.Y.S.2d 539, 389 N.E.2d 1061, reconsideration denied 47 N.Y.2d 951, 419 N.Y.S.2d 1028, 393 N.E.2d 1051, an unexplained delay of two months was found to be unreasonable in disclaiming coverage. In this case, the defendant waited an even longer amount of time, with an unexplained delay of approximately one year, before mentioning two new reasons for disclaimer. This is unreasonable as a matter of law (Hartford, supra, at 1030, 416 N.Y.S.2d 539, 389 N.E.2d 1061), whether or not the insured was prejudiced (Allstate Ins. Co. v. Gross, 27 N.Y.2d 263, 269-270, 317 N.Y.S.2d 309, 265 N.E.2d 736).
A question of fact remains regarding plaintiffs' alleged good faith belief that no covered event had occurred until they were sued. The IAS court properly denied summary judgment to plaintiffs with respect to the insurer's first affirmative defense, namely late notice of the occurrence. Although the landlord was not given notice of the murder until several days after it occurred, and the landlord was not questioned by the police, the landlord's alleged good faith is a question of fact that needs to be determined at trial. Plaintiffs cite Nalea Realty Co. v. Public Serv. Mut. Ins. Co., 238 A.D.2d 252, 656 N.Y.S.2d 613, appeal dismissed 90 N.Y.2d 927, 664 N.Y.S.2d 260, 686 N.E.2d 1355, which held that a landlord's belief of non-liability for the intentional criminal acts of a third person may be reasonable and can excuse a delay in notifying an insurer of the occurrence. While other cases similar to Nalea stand for the same proposition (see, e.g., Marinello v. Dryden Mut. Ins. Co., 237 A.D.2d 795, 655 N.Y.S.2d 156; D'Aloia v. Travelers Ins. Co., 85 N.Y.2d 825, 623 N.Y.S.2d 837, 647 N.E.2d 1345, recons. denied 85 N.Y.2d 968, 629 N.Y.S.2d 727, 653 N.E.2d 623), none of these cases, including Nalea, granted summary judgement to an insured on similar facts. Therefore, it is necessary to verify the plaintiffs' alleged good faith belief of non-liability before a fact-finder (Marinello v. Dryden Mut. Ins. Co., supra, 237 A.D.2d 795, 798, 655 N.Y.S.2d 156).
However, there is no issue of fact regarding defendant's second and third affirmative defenses alleging that the plaintiff unreasonably delayed giving notice of the actual lawsuit. The circumstances of the filing upon receipt of summons negate these defenses as a matter of law. For reasons beyond plaintiffs' control, plaintiffs did not get the summons till June, and then sent it to the insurer less than two weeks later.