39 F. Supp. 3d 255
E.D.N.Y2014Background
- Plaintiffs Gelfman and Gelfman International insured by Capitol; two POLICIES CS00218055 and CS00217969 (2006–2008).
- Kuklachev plaintiffs sued Gelfmans for trademark infringement related to Moscow Cats Theatre; Gelfmans were alleged promoters.
- Gelfmans did not notify Capitol of the May 31, 2007 cease-and-desist letter or potential claim; Capitol learned of the suit in July 2008 from Tribeca.
- Capitol reserved its rights multiple times (Oct 2, 2008 and Dec 30, 2008) while defending Gelfmans; later disclaimed coverage on June 4, 2009.
- Kuklachev suit proceeded; settlement occurred in 2010 without monetary judgment against Gelfmans; Capitol had continued defense costs through Aug 2009.
- This diversity of actions forms the basis for the insurer’s motions for summary judgment and the district court’s adoption of the magistrate judge’s R&R.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend given late notice | Gelfman asserts coverage due unless late notice waived | Capitol argues late notice bars defense | Capitol owed no duty to defend due to untimely notice |
| Coverage of Kuklachev claims | Claims may be within policy coverage | Exclusions apply; claims not covered | No duty to defend due to exclusions or lack of coverage showing |
| Estoppel from disclaimer | Capitol estopped by defense of claim | Reservations of rights negate estoppel; no prejudice shown | Estoppel not established; no prejudice or waiver |
Key Cases Cited
- Town of Massena v. Healthcare Underwriters Mut. Ins. Co., 98 N.Y.2d 435 (N.Y. 2002) (duty to defend broader than indemnity; reasonable possibility of recovery)
- Hugo Boss Fashions, Inc. v. Federal Ins. Co., 252 F.3d 608 (2d Cir. 2001) (preliminary issues; good faith and coverage considerations)
- Burt Rigid Box, Inc. v. Travelers Prop. Cas. Corp., 302 F.3d 83 (2d Cir. 2002) (estoppel/waiver limitations in insurance disputes; prejudice required)
- Int’l Flavors & Fragrances, Inc. v. Consolidated Edison Co. of N.Y., 822 F.2d 267 (2d Cir. 1987) (notice requirements; condition precedent to coverage)
- American Ins. Co. v. Fairchild Indus., Inc., 56 F.3d 435 (2d Cir. 1995) (notice as condition precedent; effect on coverage)