OPINION OF THE COURT
The issue before us is whether the prompt disclaimer requirement of the Insurance Law is triggered when an insurance carrier receives the notice of claim from another insurance carrier on behalf of a mutual insured asking that the insured be provided a defense and indemnity. In light of the apparent confusion on this issue, we take the opportunity to reiterate and clarify our holding in Bovis Lend Lease LMB, Inc. v Royal Surplus Lines Ins. Co. (
Background
This insurance dispute arose out of injuries allegedly sustained by Richard Seifert when he tripped and fell on July 6, 2004, at a construction site owned by the New York City Industrial Development Agency (IDA) and Magen David Yeshiva. The owners hired plaintiff J.T. Magen as their construction manager. Plaintiff, in turn, hired defendant William Erath & Son as one of its subcontractors on the job. The injured worker was employed by Erath.
In the contract between plaintiff and Erath, the latter agreed to indemnify and hold the former harmless for personal injuries arising out of Erath’s work. The contract also called for Erath to provide liability coverage of no less than $4 million, naming plaintiff, the Yeshiva and IDA as additional insureds. To fulfill its obligations, Erath secured such a policy from defendant Hartford. At the time of the accident, plaintiff was the named insured under a commercial liability policy issued by St. Paul Travelers Insurance (Travelers).
On May 9, 2005, worker Sеifert commenced a personal injury action against various defendants, including plaintiff herein, the
Plaintiff commenced this action against Hartford, among others, seeking a declaration that Hartford owes it, and nonparties IDA and the Yeshiva, a defense and indemnification with respect to the underlying personal injury action brought against them by the injured worker. Hartford then brought the instant summary judgment motion to dismiss the complaint on the ground that plaintiff had failed to comply with the insurance contract’s notification provision. Plaintiff cross-moved for a declaration that as an additional insured under the policy, it was entitled to a dеfense by Hartford, which, it argued, was estopped from disclaiming coverage pursuant to Insurance Law § 3420 (d). Hartford countered that the provision does not apply as between insurers. Because Travelers’ tender was made on behalf of plaintiff, the insured, Supreme Court found the case law making Insurance Law § 3420 (d) inapplicable to insurers to be inapposite. Accordingly, the court granted plaintiffs cross motion, concluding that Hartford was precluded from disclaiming coverage on the ground of late notice.
Discussion
Under Insurance Law § 3420 (d) (2), an insurer wishing to disclaim liability or deny coverage for death or bodily injury must “give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage.” A failure to
We hold that the tender letter insurer Travelers wrote on behalf of plaintiff and others to insurance carrier Hаrtford— asking that their mutual insureds be provided with a defense and indemnity, as additional insureds under the policy issued to Erath—fulfills the policy’s notice of claim requirements so as to trigger the insurer’s obligation to issue a timely disclaimer pursuant to Insurance Law § 3420 (d). Indeed, as Supreme Court properly pointed out, this is precisely the implication of our ruling in Bovis, where we held that only the tendering carrier did not get the benefit of section 3420 (d) from a tendering letter it sent on behalf of its insured because that section does not apply to claims between insurers.
A somewhat detailed discussion of the case is required to determine adequately its applicability to the case at bar. In Bovis, Columbia University decided to build a new building and hired Bovis as its construction manager. Bovis, in turn, hired Millennium Masonry as one of its subcontractors on the job. Dennis Winter worked for Millennium. In September 2002, Wintеr was injured on the job when he fell from a height. Two months later, Winter commenced a personal injury action against Columbia and Bovis. Bovis was insured by National Union Fire Insurance Company, and Columbia was an additional insured under that policy. Royal Surplus Lines Insurance Company insured Millennium, and Bovis and Columbia were named as additional insureds under that policy.
On February 28, 2003, National wrote to Royal, tendering to Royal, on behalf of Bovis and Columbia, the notice of its obligations to defend and indemnify both Bovis and Columbia. While National awaited Royal’s response to its tender, National hired attorneys to defend Bovis and Columbia. Sometime in late May, Royal wrote back to National, rejecting the tender. Royal’s basis for this disclaimer was a “New Residential Work or Products”
Royal then moved for summary judgment in the declaratory judgment аction, arguing that the “New Residential Work or Products” exclusion in its policy excused Royal from any obligation to defend or indemnify its own insured (Millennium) as well as the additional insureds (Bovis and Columbia). In opposition, National argued that Royal’s disclaimer was untimely under Insurance Law § 3420 (d). Therefore, National argued, Royal could not rely on the exclusion and was obligated to defend and indemnify both Bovis and Columbia. Royal countered that section 3420 (d) only requires insurance companies to be timely in response to an insured’s claim—not in response to a tender from another insurer; in other words, assuming arguendo that its disclaimer was late, it could still argue the applicability of the exclusion.
In the declaratory judgment action, National was not the only plaintiff; Bovis and Columbia were also plaintiffs, and must receive the protections of section 3420 (d) аs additional insureds under the Royal policy because they were also “prospective claimants.” Royal was thus under a legal obligation to timely disclaim pursuant to the statute. The question then became whether Royal’s disclaimer was timely. We held that Royal’s delay of somewhere between 36 and 60 days in issuing the disclaimer, after having received “sufficient facts” to render a coverage decision, was unlawful. Therеfore, Royal was responsible for the defense and indemnity of both Bovis and Columbia.
National, however, did not get the benefit of Insurance Law § 3420 (d). In the declaratory judgment action, National was also a plaintiff. From the time it assumed the defense and indemnity of Bovis and Columbia in the personal injury action, it had accrued significant attorney’s fees, and it wished to recoup those expenses. Because National—unlike Bovis and Columbia—was not a prospective claimant to whom the benefits of section 3420 (d) were intended, we held it could not receive the
The Bovis case is consistent with other New York decisions— including this Court’s—that Insurance Law § 3420 (d) does not apply to claims between insurers. For instance, prior to Bovis, courts held that section 3420 (d) is inapplicable to a request for pro rata contribution between coinsurers (see e.g. Tops Mkts. v Maryland Cas. [appeal No. 2],
More recently, in Bovis Lend Lease LMB Inc. v Garito Contr., Inc. (
The dissent’s attempt to remove this case from the ambit of Bovis and its progeny is not persuasive. For instance, the dissent argues that “Bovis . . . lacks precedential value” because “the case does not even mention, let alone discuss, the source of the notice received by the insurer.” However, in Bovis, this Court explicitly noted that “[b]y letter dated February 28, 2003, National Union tendered the defense and indemnification of Bоvis and Columbia to Royal” (
Likewise, the dissent lacks any factual or legal basis in averring that the real party in interest in this case is Travelers. In fact, it is undisputed that Travelers’ tender letter of June 24, 2005 was sent on behalf of plaintiff, IDA and the Yeshiva, seeking coverage for them with respect to the underlying personal injury action. Moreover, unlike Bovis, where one of the plaintiffs seeking declaratory relief was an insurer, the only plaintiff in this action is J.T. Magen, which seeks a defense and indemnification from Hartford. Travelers has not asserted any claim against Hartford for monetary relief covering thе costs it incurred in the underlying personal injury action.
Finally, defendant Hartford has not made any attempt to justify its 45-to-50-day delay in disclaiming coverage of the underlying accident. Indeed, it has not even suggested that the letter tendering notice of the claim against plaintiff, IDA and the Yeshiva did not provide it with sufficient facts to disclaim coverage on any basis. Rather, misinterpreting the import of Bovis, Hartford argues that Insurance Law § 3420 (d) is inapplicable since the tender letter was from an insurer and the statute does not require a prompt response to claims asserted by other insurers. We thus conclude that Hartford’s disclaimer letter was untimely as a matter of law (see e.g. West 16th St. Tenants Corp. v Public Serv. Mut. Ins. Co.,
Accordingly, the order of the Supreme Court, New York County (Marylin G. Diamond, J.), entered January 10, 2008, which denied the motion of defendants Hartford and Erath for summary judgment and granted plaintiff’s cross motion for summary judgment declaring that Hartford’s policy is primary to any other policy covering plaintiff, thus obligating Hartford to defend and indemnify plaintiff and nonpartiеs IDA and Ha-gen David Yeshiva in the underlying personal injury action, should be affirmed, without costs.
Tom, J. (dissenting). This insurance coverage dispute arose out of injuries allegedly sustained by defendant Richard Seifert in July 2004 while in the employ of defendant William Erath and Son. Plaintiff J.T. Hagen, the construction manager for the project, was insured under a policy obtained from St. Paul Travelers. Erath was a subcontractor at the site under a contraсt that required it to indemnify and hold Hagen harmless for any personal injury arising out of Erath’s work. In connection with its contractual obligation, Erath obtained comprehensive general liability insurance from defendant Hartford Fire Insurance Company, naming Hagen as an additional insured.
On May 9, 2005, Seifert and his wife commenced an action for personal injuries against various defendants, including Hagen. Hagen notified only its own insurance carrier, Travelers, of the occurrence. Two months later, Hagen commenced a third-party action against Erath seeking contribution and indemnification under the contract. On June 24, 2005, some 11 months after the accident, Travelers tendered Hagen’s defense in the underlying action to Hartford and on October 6, 2005, Hartford disclaimed coverage on the ground that Hagen had failed to comply with the notice requirement contained in its policy. The provision requires the insured to provide notice of a claim or lawsuit or any “occurrence” that might result in damages covered under the policy “as soon as practicable.”
Travelers commenced this declaratory judgment action against Hartford, as subrogee and in the name of Hagen. Hartford then brought the instant motion seeking dismissal of the complaint on the ground that Hagen had failed to comply with the contract’s notification provision. Travelers cross-moved
Reasoning that Travelers’ tendеr was made on behalf of Ma-gen, the insured, Supreme Court found inapposite the case law making section 3420 (d) inapplicable to insurers. Thus, the court granted Magen’s cross motion, concluding that Hartford was precluded from disclaiming coverage on the ground of late notice.
With respect to policies of insurance, it is fundamental that notice is “a condition precedent to coverage” White v City of New York,
“Where a policy of liability insurance requires that notice of an occurrence be given ‘as soon as practicable,’ such notice must be accorded the carrier within a reasonable period of time. The insured’s failure to satisfy the notice requirement constitutes ‘a failure to comply with a condition precedent which, as a matter of law, vitiates the contract’ ” (citations omitted).
This Court’s decisions have made clear that notice received from a third party
Bovis Lend Lease LMB, Inc. v Royal Surplus Lines Ins. Co. (
It should be noted that Magen was afforded coverage both as the primary insured under its policy with Travelers and as an additional insured under the policy obtained by Erath from Hartford. Magen chose to avail itself of the coverage afforded by the Travelers policy and the contractual indemnity provided by the agreement with its subcontractor, timely notifying Travelers of the occurrеnce and commencing a third-party action against Erath for contribution and indemnification. The insured’s interests were thus well protected (see Excelsior Ins. Co. v Antretter Contr. Corp.,
The effectiveness of Travelers’ notice notwithstanding, it remains that Hartford was not notified of the underlying accident for more than 11 months. Accepting, for the sake of argument, the majority’s proposition that notice was given on behalf of the insured, it was untimely because the delay was unreasonable as a matter of law (see Reg-Tru Equities, Inc. v Valley Forge Ins. Co.,
Accordingly, the order should be revеrsed, the cross motion denied, Hartford’s motion granted, and a declaration issued that Hartford is not obligated to defend or indemnify plaintiff or other parties in the underlying action.
Gonzalez, P.J., Nardelli and Moskowitz, JJ., concur with Renwick, J.; Tom, J., dissents in a separate opinion.
Order, Supreme Court, New York County, entered January 10, 2008, affirmed, without costs.
Notes
. This Court thus focused its attention on the basis for the Royal disclaimer, i.e. the applicability of the “New Residential Work or Products” exclusion, which, by its terms, applied to injuries arising out of Millennium’s work “associated with new residential property” (id. at 93). “[N]ew residential property” is defined in the exclusion as “apartments, single family and multi-family dwellings, condominiums, and townhouses” (id.). We found that the “Columbia University School & Faculty Residence” was a mixed-use building (id. at 94). By its terms, the exclusion applied to residential property and not to mixed-use property. Therefore, Royal’s disclaimer was invalid as a matter of lаw. National was thus entitled to recoup all of its incurred defense costs in the personal injury action from Royal.
. In fact, in Bovis, we specifically ruled that the disclaimer letter issued in response to an insurer’s tender of a defense and indemnity on behalf of its two insureds was untimely under section 3420 (d), and that the issue of whether the disclaimer letter was substantively valid thus need not be reached with respect to the two insureds.
. A third party is someone оther than the insured, the injured person or another party having a claim for which the insured may be liable (Insurance Law § 3420 [a] [3]; see Hartford Acc. & Indem. Co. v J. J. Wicks, Inc.,
. Indeed, the majority concedes that the rule it purports to extract is merely “the implication of our ruling in Bovis.”
. The majority anomalously posits that Travelers’ notice was given on behalf of Magen for the purpose of fulfilling the insured’s notice requirement and on behalf of Travelers for the purpose of exempting it from the selfsame notice requirement.