*1 218, 390] 2 NYS3d [26 NE3d Appellant-Respondent, Painting, Inc., v Respondent-Appellant, and Metro Company, Insurance Respondent. Opera politan Inc., Association, 2014; 24,
Argued decided November October *3 OF POINTS COUNSEL Janowitz,
Richard Mineóla, for appellant-respondent. law, deciding that, courts erred in as a matter of below Mt. Hawley Company Inc.’s notice to Insurance Painting, circumstances, not as soon under given practicable as was of the untimeliness Strauss’s notice was reason and/or case, the facts and circumstances of this ably excused (Mighty jury. rather the issue to be decided allowing than Co., Ins. Battle v State Midgets v Centennial 12; 47 NY2d of
581 York, 745; Canales, 1017; New 257 AD2d v AD3d Gerdes 74 Ac Vantage Mgt. Simmons, 1096; Servs., cetta v 108 Yu v AD3d Phillips, Rodriguez LLC, 564; 469; 85 AD3d Siwek 71 v AD3d v Corp., N.Y.C., 199; Dixie 26 AD3d v Inc., Seccombe Rest. Serafina Welding 2 516; Serv., AD3d & Abetta Boiler Inc. v American Specialty Co., Intl. Lines 412; Ins. 76 AD3d Matter Cohalan, of 196.) 71 2dMisc Moring City (Clifton Elgarten, & LLP, Crowell New York S. counsel), respondent-
Stuart C. Levene and Jared A. Levine of
appellant.
apply
plain language
I. The lower courts failed to
Compa
of the
construction contract
Insurance
(Jacobson
ny’s comprehensive general
liability policy.
v Sas
Cinque Cinque,
sower,
991;
66 NY2d
Revson v
&
P.C., 221 F3d
Teddy
Realty
59; Vermont
Bear
v 538
Co.,
Co.
Madison
1 NY3d
Capital Republic Argentina,
470;
v
NML
250;
17 NY3d
Green
Records,
v Philles
v 74 AGS NY2d II. Mt. Insurance Company properly Metropolitan Opera denied to the (Webster Association, Inc. based on late notice. rel. v ex Webster Roofing 209; Mount Vernon Fire 368 Co., Ins. F3d v Consultants Dryden Co., 933; Scottsdale Ins. 273 AD2d Mut. Ins. Co. v Brock City man, 947; AD2d New vYork St. Paul Fire & Mar. Rong Rong Co., 21 978; Ins. AD3d Sun, Tower Ins. Co. v of N.Y. Corp., 561; 105 AD3d Excelsior Ins. Co. v Antretter Contr. Zappone 124;
AD2d v Co., 131; Ins. Home 55 NY2d Commercial Fragrances, Union Ins. Co. & Inc., v International Flavors Corp. 267; QBE Inc., F2d 508; Ins. v 102 AD3d Estee Jinx-Proof 33.) *4 Group, Lauder Inc. v OneBeacon Ins. LLC, 62 AD3d III. correctly Painting,
The lower courts determined that Strauss inexcusably (Security Inc.’s notice was late. Mut. Ins. Co. of N.Y. Corp., Recycling
v 436; 31 Acker-Fitzsimons NY2d Gershow Corp. Ridge Co., 460; v Transcontinental 22 AD3d Blue Ins. Ins. Biegelman, 736; Co. v AD3d 36 Fire Ins. Co. v Baseball Hartford Developers, Mary Commr., 334; 236 AD2d Paul LLC v Off. of Corp. Co., land 443; Cas. Ins. 28 AD3d 319 McKibben St. v Gen Mighty Midgets Co., eral Star Natl. AD2d 26; Ins. 245 v Centen nial Co., 12; Ins. 47 NY2d U.S. Underwriters Ins. Co. v Co., Manhattan 600; Demolition 250 AD2d Nowicki v Insur 1013.) america, 103 AD2d (William
Ahmuty, McManus, & Demers Albertson J. Mitchell counsel), respondent. Company of I. Mt. Insurance (Chelsea did disclaim for late notice. Vil. Assoc. v 582 AD3d States Under Co., 617; 82 United Ins.
U.S. Underwriters City Hotel, LLC, 102; J.T. Ma 369 F3d Ins. Co. v Club writers gen 266; AD3d Admiral Ins. Co. v Co., Fire 64 v Ins. Hartford Industry City Mgt. v Co., 486; Fire & 86 AD3d State Farm Cas. Hosp. City Presbyterian Co., 433; AD3d Mut. Ins. 64
Atlantic Allcity Maryland Matter Ins. Co., 274; 90 NY2d N.Y.v Cas. of of Co. v N.Y.Mut. Ins. Chubb [Jimenez], 1054; Co. 78 NY2d Greater Park, 523; LLC, Sierra v 4401 Sunset Co., 105 AD3d Indem. Ins. County Nassau, 46 983; Ins. Co. v NY2d
101 AD3d 1028.) Hartford of Opera Metropolitan Association, Inc. is an ad The II. Painting, policy. (Long on Inc.’s ditional insured Strauss Light. Co., 832; Misc 2d v Acc. & Indem. 76 Is. Rentways, Co. Hartford 342; Co., v Milk & Cream 308 NY Pecker
Inc. O’Neill Co., 426, 99 v Ins. 290 AD2d NY2d Iron N.Y. Traveler’s Works of County Corp. Assn., Fed. & Loan Mallad Constr. v Sav. 391; Corp., AD2d 259; v 1125 Park Ave. 285; NY2d Santamaria City York, 557; 49 NY2d Brown Bros. Elec. v New Zuckerman Corp., 41 Technicon 397; Beam Constr. NY2d Elecs. Contrs. v Corp. v Co., 66; American Assur. 74 NY2d Lib v Home Sincoff
erty 386; Co., Fire Ins. 11 NY2d National Screen Serv. Mut. 275.) Corp. Co., F2d v States Fid. & Guar. United OF THE COURT OPINION
Per Curiam. Painting,
By agreement September 3, 2008, dated (Creative) (Strauss)/Creative Finishes, Ltd. contracted with Inc. Met) (the perform Metropolitan Opera Association, Inc. repaint premises; specifically, strip work rooftop the Met’s carriage opera track for house’s automated steel (hereafter, window-washing generally equipment referred contract). a tailored Ameri- contract was version Agreement can of Architects’ “Abbreviated Form of Institute For and Contractor PROJ- Between Owner ECTS OF CONSTRUCTION Payment LIMITED SCOPE where Basis is (AIA ed]), [1978 SUM” Document A107 with the STIPULATED through parties’ part D thereof. The attached A made exhibits designates page “the first of the contract the Met as Owner” as “the Contractor.” Strauss/Creative
I Requirements and Insurance Indemnification *5 indemnify and The contract mandates that Strauss/Creative permitted by “[t]o harmless, the fullest extent hold the against damages law,” from and all and claims attributable to bodily injuries “arising resulting performed out of or from” work by any or of its subcontractors “caused in Strauss/Creative part by negligent [their] whole or omission,” act or and “regardless part by [the Met].” of whether or not. . . caused provisions addressing obligate The contract’s insurance Strauss/ purchase liability Creative to and maintain contractors insur- protect compensa- ance to the Met from claims under workers’ employee damages tion and other acts, benefit and “claims for bodily injury because of . . . which arise out of or result operations” [Strauss/Creative’s] from contract, by any whether Strauss/Creative, undertaken of its subcontrac- “anyone directly indirectly employed by any tors or or of them.” Additionally, liability the insurance “shall include contractual applicable duty insurance” indemnify contractual Strauss/Creative’s “[certificates
and hold the Met harmless; and [the Met] prior such insurance shall be filed with to the com- project. mencement of’ the construction
Importantly, D, exhibit entitled REQUIRE- “INSURANCE obligations. MENTS,” fleshes out insurance Strauss/Creative’s requires procure This contract document Strauss/Creative (1) types compensation three of insurance: workers’ insurance (2) (OCP) [a]); (para protective liability owners and contractors single [b]); (para insurance with a combined limit of million $5 (3) (CGL) comprehensive general liability and insurance, with coverage property bodily injury combined mini- with a single might mum limit of million, $5 be met umbrella [c]). (b) coverage (para appeal, paragraph As relevant to this identifying D, exhibit after OCP an as insurance “ requirement, specifies [Liability [the Met] should add an additional insured and should include contractual (e) completed operations coverage”; paragraph directs [the Met] [with] Original to “furnish Own- Strauss/Creative policy,” “provide ers Contractors and also to certificates of Compensation, [Workers’] [CGL] insurance for the and the Policy,prior ‘Umbrella’ to the commencement of the contract.” signed The contract behalf of the Met as “OWNER” opera manager, house’s and on behalf of Strauss as (Drewes) by Ralph “CONTRACTOR” Drewes as “VP”1 Strauss although separately Creative, owned, shared the same ad- words, although 1. In other page designates the first of the contract Contractor,” as “the Drewes executed the contract on a Strauss/Creative *6 584 2 deposition, employees. At his the same and some of
dress operations day-to-day of both he ran the Drewes testified reported and companies, Strauss, the owner to both Victor and presi Hillary president Klein, the owner J. Strauss, and of agreement an with did not have Strauss dent of Creative. painters’ did, Creative union, while 9, District Council required the and the Met between contract Strauss/Creative by “fully project insured union be carried out construction painters.” the labor to reason, subcontracted For this Strauss consisting September by agreement 3, 2008, dated Creative agreed-upon an rider with standard form contract an unaltered underlying contract be attachments, and the construction subcontract). (hereafter, the and the Met tween Strauss/Creative designates “the Contractor” and Strauss as The subcontract generally requires Subcontractor,” as “the Creative project in accordance the construction to undertake Creative specified provide insur- contract, and to the terms of the with indemnify the Met Strauss. and hold harmless ance and and/or solely responsible for work site Creative The subcontract makes safety. signed on behalf of Strauss the subcontract
Victor signed “believe[d] [he] he Strauss; Drewes testified that on behalf of Creative.”3 September began project the construction
Creative work on supplied point, Met with a certificate 4, 2008. At some policy Creative, Nova to stat- of insurance for a CGL issued ing insureds under that the Met and Strauss were additional original policy policy.4 OCP The Met was never furnished covering project, neither and, out, as it turned the construction (see Mayo identifying only v Met- signature line Strauss “CONTRACTOR” Assn., 422, [concluding, Inc., Dept 2013] ropolitan Opera [1st 108 AD3d 424 Strauss, Casualty against Creative and Nova third-party the Met’s action insurer, (Nova), fact with re- Company that an issue of exists Creative’s CGL authority to the or intent to bind Creative spect to whether Drewes had contract]). opinion, generally identified Throughout this we have “Strauss/ says. page this is what the contract’s first Creative” as the contractor because contract, an thereby imply is bound to the intend that Creative We do not But, course, or not Creative is yet whether issue which has to be resolved. contract, surely is. bound to the Strauss Court, identi- corporate statement filed Strauss 2. In its disclosure corporation.” “affiliated fies Creative as an “Hillary signature J. Klein” the handwritten 3. The subcontract bears Drewes’s initials. copy policy, or of the certificate of not include a of this
4. The record does insurance. purchased actually policy
Strauss nor Creative an OCP protect the Met. Policy
Strauss’s CGL with Mt. time At the Met, contracted with the Strauss/Creative place had in a CGL issued Mt. Insurance (Mt. Company Hawley) policy period for the 7, November (Insurance 2007 to November 2008. The included ISO Inc.) (“AD- Office, Services form endorsement CG 33 07 OWNERS, DITIONAL LESSEES OR CONTRAC- INSURED— *7 REQUIRED TORS—AUTOMATIC STATUS WHEN IN CON- YOU”), specifies STRUCTION AGREEMENT WITH which follows:
“WHO IS AN INSURED is to amended include as person organization any an additional insured or for [Strauss is] performing operations whom when [Strauss] person organization such and or have agreed writing agreement in in a or contract that person organization such or be added as an ad- [Strauss’s] policy” (emphasis ditional insured on added). policy, person organization”
Under the “such or would be an respect liability bodily injury additional insured with to so long injury part, by as the caused, was at least Strauss’s acts acting “[t]he or omissions or acts or of omissions those on [Strauss’s] behalf.”
Regarding policy specifies bodily injury notice, the “will be to deemed have been to known have occurred at the earliest any time when insured listed . . . WHO IS INSURED AN any employee [an by insured] give or authorized or receive [b]ecomes notice of an or . occurrence claim . . . . . that aware (internal bodily injury begun . . . has occurred has to occur” or omitted). quotation Further, marks see to it insured “must [Mt. practicable is] notified as soon as occur- (internal quota- rence or an offense which in a result claim” omitted). tion marks Injury Accident, the Personal Lawsuit Notice to the
Insurers September (Mayo), Mayo 2008, On Manuel em- Creative ployee, injured was he fell from a when fixed ladder located on opera the sixth floor of the led house. This 15-foot ladder ceiling, provided rooftop hatch door access to the Mayo trying carriage was to close the track. and thus steel footing. he his shift when lost his door at the end of hatch Mayo’s receptionist/ when accident Drewes first learned telephone manager call fielded a late at Creative’s office office opera workday September at the from someone in the on 16th record) (not reported that identified in the The caller house. Mayo being transported injured had been was happened hospital office at Drewes to be ambulance. time the call received. day “primary at I.
The next called his contact” Dachs Drewes (Dachs), broker for Creative Sons, & Inc. the insurance both liability upcoming Strauss, to insurance renewals. discuss brought up Mayo’s During accident, conversation, Drewes “[led] [the broker] that no rea- to believe there was notify general carrier, carrier, because was son to compensation claim.” a workers’ timely OF WORK- filed an “EMPLOYER’S REPORT
Creative (Form RELATED DISEASE” ACCIDENT/OCCUPATIONAL C-2) notify Compensation Board and Creative’s the Workers’ days Mayo’s couple compensation accident. “A carrier about perhaps Mayo’s or “a week after” accident while later” Drewes opera project to check how the was at house construction *8 manager coming along, he mentioned to the Met’s house “[t]here accident, [i.e., man was hurt and he that was an the expected Mayo, injured worker] Drewes] [i.e., the to come him point comp [and] a claim.”5 work, back to at that it was worker’s complaint Mayo By 19, 2008, and his wife dated November Performing Arts, Met the sued the and Lincoln Center for Inc.
(Lincoln Center), asserting negligence, for causes of action viola- of the and of consortium in connection tions Labor Law loss lawsuit). (hereafter, injuries Mayo Mayo’s work-related the alleged disrepair, Mayo hatch in that the door was broken and rungs skid-resistant, and not and there the ladder’s were worn cage, proper safety safety no devices as a belt or were such complaint safety line. The in Met received the summons and Secretary Mayo State December the lawsuit from the 2008. day, attorney to
That same the Met’s in-house wrote copy Company Creative, to and with a Travelers Insurance record, incomplete, Deposition testimony although included in 5. the security manager, clear that the Met’s house assistant director of makes Mayo’s just nurse about after it an in-house knew accident occurred. (Travelers), primary liability forwarding carrier, the Met’s the complaint. attorney summons and The advised Strauss that the expected to be indemnified and held to the harmless fullest by permitted agreed law, extent as Strauss in the contract.
This 5th December letter also referred to the of in- certificate provided Liability “evidenced] Met, surance General per aggregate $1,000,000 occurrence/$2,000,000 [Nova] Liability coverage issue[d] from and Excess/Umbrella Indemnity per Co[.] RSUI $5,000,000 the amount of occur- aggregate.” Asserting rence and that the Met an ad- policies, attorney ditional insured under these asked Strauss “immediately notify expect[ed] these carriers the Met provide, them to Met, without cost to the a defense as lawsuit well as On 11, 2008, indemnification.” December copy complaint by Met received another summons and lawyer. Mayos’ mail, this time from the The in-house at- Met’s torney again copy Creative, wrote Strauss and awith to Travel- forwarding complaint requesting ers, the summons and necessary that “the be actions” taken. representative
On 29, 2008, December a of Travelers wrote Strauss, Creative, Nova and She Dachs. stated that Travelers general liability was the insurer Center, for the Met and Lincoln complaint alleging Mayo and that Travelers had received injured working opera had been while at house; Creative obligation she then recited Strauss’s contract indemnify and hold the Met harmless from as claims such Mayo “procure [the naming Met] lawsuit, and to insurance representative an additional insured.” Travelers enclosed copies lawsuit, insurance, of the contract and certificate of asked for written “a confirmation that defense and indemnifica- provided, assigned [for] identity tion will be of counsel January Hawley’s to the defense.” On 12, 2009, broker (including copy received notice of claim the Met’s of Travel- letter) Hawley’s ers’ 29th December from Dachs. Mt. broker *9 Hawley, acknowledged then faxed the Met’s claim to Mt.
receipt January 14, 2009. Hawley’s Response
Mt. to Strauss’s and the Tenders and Met’s Third-Party
the Met’s Action February Hawley deny On 3, 2009, Mt. to wrote Strauss to coverage on the basis of late notice because aware Strauss “was Septem- of this occurrence on it occurred[,] the date which was Hawley 16, and 2008”; ber to inform Strauss that Mt. was [the Met] “reviewing whether information as to the and/or qualify [Lincoln Center] the insureds under terms as additional Hawley Finally, policy.” [the] that had let Strauss know Mt. Mayo behalf; to Nova on its the the lawsuit tendered defense of copies February Drewes and 2, 2009, with to letter i.e., dated indemnify Hawley and the to defend Mt. Nova Dachs, asked Mayo defend and lawsuit, to Center in the Met and Lincoln brought by any indemnify third-party the Met in action Lincoln Center. February 2009, dated Mt. Travelers, letter also In a to Hawley first that the contract between observed Center was to be nowhere stated that Lincoln Strauss/Creative any policy under is- made insured or an additional indemnified Hawley Accordingly, Mt. denied Creative. sued to Strauss and/or Hawley continued as Lincoln Center.6 Mt. tender to Travelers’ quali- “attempting the Met to determine” whether that it was policy of its CGL insured under terms fied as additional with Strauss. Mayo employed
Referring C-2, which showed that to Hawley requested “copies [that] [the Creative, of checks payment required Met] contract,” in work issued for adding questionable “[i]t [was] [Strauss] as to whether Hawley light actually that, in work.” Mt. noted involved this in its of the additional insured endorsement CGL actually [Strauss] was Strauss, “we need to determine whether [the Met] in order to determine whether involved this work point “[a]t insured”; is as an additional added right [the Met] Hawley] [Mt. is assert that time, reserves Policy . . . issued to not an additional insured [Strauss] to ask for information [;] [h]owever, we continue more obligations.” discovery our to determine and it take further Summing up, told Travelers that
“[a]s have denied for contractual we [Strauss] indemnification our and have reserved [the Met] rights an additional to whether is will [Strauss], under the issued we insured taking indemnifica- not be over the defense and/or [the Met] above, we at this time. As stated tion of purport to ask Mt. from Travelers did 6. The December 29th letter Center, indemnify the Met’s landlord. Lincoln to defend and Lincoln (as Center, address), is Center, organization opposed Lincoln Met’s the subcontract. not mentioned in either the contract or *10 coverage have denied for contractual indemnifica- [Lincoln Center].” tion toas Hawley again 4, 2009,
On March Mt. Travelers, wrote this stating requested February time that the information in the 3rd (i.e., copies pay letter of checks issued the Met to Strauss to project) for the construction had received, not been and that its “investigation yielded [had] [the Met] information that was [ap- [since] of this on aware loss the date that it . occurred . .
parently [the Met] [Drewes] [Strauss] . .. contacted at Hawley “[s]hould inform him of the accident.” Mt. added that provided correct, information that we have been be no cover- age apply [the Met] requested would lawsuit,” in this Mayo’s affidavit as to when Met “first became aware” of ac- Hawley “[u]ntil cident. Mt. further declared that such time as being provided, Hawley] [Mt. we can review the affidavit right coverage apply reserves the assert no would based policy’s provision. on” the CGL notice Both the Met and Lincoln copied day, Center are shown on this letter. That same March Hawley attorney, reiterating 4, 2009, Mt. wrote to Strauss’s its coverage ground denial of to Strauss on the of late notice. January responded
Meanwhile, on 28, 2009, Nova to Travel- disclaiming ers’ December 29th letter of the Met as an additional insured on Creative’s CGL due to late no- (see Mayo Metropolitan Opera Slip Assn., tice Inc., v 2011 NY 2011]). Op [Sup County 32943[U], Ct, *12 NY The Met was copied on this disclaimer letter sent to Travelers. February brought third-party
On 6, 2009, the Met a action Mayo against lawsuit Strauss, Creative Nova. The Met alleged against causes of action Strauss and Creative for common-law and indemnification, contractual and for breach of purchase policy required by contract for failure to the OCP ex- alleged against D contract, hibit of the a cause of action denying coverage. Nova for breach of contract for against Hawley Strauss’s Lawsuit Mt. and the Met and the
Decisions Below By complaint filed 16, 2009, on March Strauss commenced against Hawley seeking Met, this action Mt. and the declara- Hawley obligated indemnify tion that Mt. to defend it just-filed third-party in the Met’s then 16, 2010, action. On June against Hawley, later, 15 months the Met cross-claimed Mt. ask- ing in its first cross claim for declaration that it an ad- thereby policy, requiring ditional insured on Strauss’s CGL Mayo indemnify litigation; in the defend and summary judgment on July 9, 2010, the moved July to dismiss the moved 14, 2010, claim. On cross *11 July untimely, 30, 2010, Mt. Haw- and on as Met’s cross claims against summary judgment ley Met, seek- cross-moved for obligated ing to defend it not that was a declaration July indemnify Mayo 26, 2010, Then on in the lawsuit. the Met summary granting judgment Hawley to an moved for order Mt. complaint not obli- and to declare that was dismiss Strauss’s gated Mayo indemnify in the lawsuit.7 to defend Supreme disposed motion in these motions and cross Court of (2011 Slip Op 13, 2011 NY and order dated October a decision 32706[U] 2011]). Addressing County [Sup Ct, Met’s mo- NY Judge Hawley’s determined that motion, cross tion Mt. policy, and Strauss’s CGL an additional insured on was (counting of from the date three-month
that while the Met’s lawsuit) accident) (counting the date of the four-month from or Hawley delay notifying as matter a Mt. was unreasonable statutory duty Hawley comply under with its law, Mt. did (d)8 promptly § disclaim cover- former 3420 to Insurance Law age, Hawley the Met to Travelers as the letters from Mt. and/or Consequently, Hawley’s right only do so. Mt. reserved disclaiming Hawley precluded Judge from ruled that Mt. Supreme
coverage Relatedly, Mt. Court denied Haw- to the Met. 7. 16, third-party The Mayo settled October 2013. Met’s lawsuit personal injury action, underlying previously been severed from the which had counsel, lawsuit, pending. According to the Met’s the settlement remains coverage all and contractual “preserved third-party actions and insurance indemnity among parties their carriers.” rights all of the defendant specified provision
8. This policies maintained under delivery” state”]), (see [2008] In Insurance Law 3420 response this give disclaimer of injured person death or any “[i]f § 3420 now [under issued in New state, other covers written notice legislature [d]). to our decision or bodily injury arising Insurance type York delivered liability policies such a § insurer shall disclaim liability policy or of accident only struck “issued any policy]). [d] Law if it in New York on or after that or denial other in Preserver Ins. Co. [2]; soon “covers former see occurring delivered or issued for claimant” as is out also L are both insureds and risks located § of motor reasonably possible liability 3420 “issued a 2008, delivery” within this (Insurance (d), to the insured and the ch or v or delivered in this state” vehicle Ryba deny coverage from section 3420 [eff state, date and (10 Law accident or delivery Jan. NY3d is “issued for of such it shall former 17, any for 635, 2009 for action 642 (d), ley’s motion to dismiss Met’s cross claim due to untimeli- chalking up any delay Hawley’s neglect ness, coverage promptly; Mt. to disclaim complaint against
and dismissed Strauss’s Hawley Hawley on the basis of its late notice to Mt. Mayo’s accident. April Appellate
In its decision and order dated 11, 2013, the agreed Supreme Hawley Division with Court that Mt.
required Mayo to defend the Met in the lawsuit because the purchase liability naming contract directed Strauss to insurance the Met as an insured, additional and the CGL issued to Strauss contained an additional insured endorse (105 2013]). Dept [1st ment agreed AD3d The court also Supreme timely Court that Mt. had not coverage; only disclaimed rather, its letters were “intended to preserve right its disclaim,” and thus were “insufficient *12 (id.). actually coverage” Finally, Appellate disclaim Division rejected Hawley timely, Strauss’s claim that its notice to Mt. was opining that
“[Strauss’s] Hawley notice of the accident to Mt. untimely Hawley a law, as matter of and Mt. timely coverage ground. disclaimed on that [Strauss’s] provide notice to its broker did not timely Hawley. notice to Mt. There is no indication [Strauss’s] agent that Hawley broker acted as an for Mt. [Strauss’s] or that the CGL listed 514). agent” {id.
broker as its at appeals Hawley cross-appeals pursuant Strauss now and Mt. granted by Appellate August
to leave Division on 20, 2013, asking properly us whether its order in this matter was made (2013 2013]). Slip Op 82536[U] [1st Dept NY
II long-running coverage dispute, appeal In Strauss’s calls upon timely Hawley tous decide whether Strauss notified Mt. Mayo’s Hawley’s appeal poses
of accident. Mt. cross the thresh- question old of whether the Met an is additional insured on Hawley; then, is, Strauss’s CGL with Mt. if it whether Hawley promptly disclaiming the Met notified that it was untimely on account of notice. Appeal Strauss’s argues they
Strauss the lower courts erred when untimely concluded that its notice to Mt. as mat- 592 (47 Midgets Relying Mighty Ins. v Co. Centennial
ter law. of [1979]), position that whether takes the 12 Strauss NY2d practicable” gave or, alterna- “as soon notice to questions tively, are its late notice was excusable whether law. This be as a matter of of fact and not decided the trier followed his usual and contends, because Drewes so, is notifying customary practice promptly Dachs, Strauss’s bro- of every expectation Mayo’s ker, accident, with reasonable of timely notify proper insurer. Dachs, turn, would timely policyholder’s long to a notice bro have held that We [insur contemplated the notice ker does “constitute normally agent ance] policy is insured a broker since ordinary broker is not notice to the insurance and notice (Security Ins. v Mut. Co. N.Y. Acker- carrier” Corp., 436, [1972]; n see 442 3 also NY2d Fitzsimons Hartford [1st Commr., 334, 236 AD2d Ins. Co. v Baseball Fire ofOff. though Dept 1997] [late even was not excused notice (the primary policyholders inform their “instructed broker commencement”], insurers) shortly after its about the lawsuit and excess Recycling [1997]; v NY2d 803 Gershow denied 90 l [2d Dept Corp. Co., Ins. 22 AD3d v Transcontinental “timely policyholder’s [a 2005] action to its broker notice consequence” excuse the failure to of no and thus does not is comply policy]). obligations Our with notice insurance Mighty Midgets not alter this fundamental decision does principle. organized
Mighty Midgets nonprofit corporation awas boys’ encourage, manage support football teams and otherwise *13 County. Orangetown Dunn in in Rockland & Fowler Divi (Dunn) Company Frank secured two insur sion of B. Hall & Midgets: policy policies Orangetown liability the a from ance for (Centennial) policy Company a Centennial Insurance providing protection health the Hartford Ac accident and with Hartford). (the Indemnity Company & We described cident specialist ap leading in Dunn as “a athletic team insurance upon parently organization 2,500 the more than the which Midgets program in national of which the teams enrolled guidance part rely were a in insurance matters” would 17). (Mighty Midgets, 47 at NY2d uncommonly inter-
The roles Dunn and Centennial were liability specifically, being the solicitor of twined; in addition to premiums policies Centennial, Dunn collected the and was “agent designated by policy or Dunn wrote most broker.” of its athletic team business with which Centennial, entrusted large policies already Dunn with batches of blank executed signatories, leaving completely up Centennial-authorized it policy premiums Dunn to fill numbers, in names of insureds, go and the date a was to into effect. nine-year-old boy, 18,
On October 1970, a a member of a Midgets-sponsored injured game right team, when, after a played, large pot boiling he which had a water which rested improvised dog operated by on the counter of hot stand Midgets fundraising activity pour as a was “caused to him” over (id.). (Halle), 21-year-old president Halle Robert volunteer Midgets, present of the time, was not at the but he learned of day the accident before the was out and called Dunn to ask ‘put liability [a] he “whether should it a under medical or ” (id.). representative claim’ notify The Dunn instructed Halle to dutifully the Hartford, and Halle filed claima with the supplied by Hartford, on a form Dunn. April Midgets 7, 1971,
Then the Hartford notified the happened its did not cover the accident after because game year played. Although nine had old year supporter Midgets,” father, nine old’s “an avid of the had slightest pursue never before exhibited the a li- inclination ability pay claim, the Hartford’s refusal his son’s medical lawyer, Midgets claim caused him to a consult who wrote the a May indicating 25, letter dated that a suit was (id. 18). offing” “in at immediately lawyer’s
Halle forwarded the letter to Centen- Midgets’ nial in care of Dunn. This first written notice liability policy required to Centennial. The notice of an occur- writing rence to be made the insurer and “as soon as practicable.” light delay, In of the seven-month Centennial untimely Midgets disclaimed notice, due to and the brought declaratory judgment action. judge, sitting jury,
On this record, the trial without found as a fact
“(1) handling that Dunn’s of the communications (2) negligent; that, from Halle was cumstances’, standing ‘under the cir- including ‘limited . Halle’s . . under- *14 relationship of insurance matters’ and the Midgets between Dunn and the Centennial, acted reasonably they they did that all that ‘could do’ May until the arrival the of letter first Dunn had misinformation them the disabused (3) transmitting imparted; the the letter that lawyer’s writ- claim letter constituted . . . practicable’ given after the as
ten notice ‘as soon omitted]). (id. [footnote at 18-19 claim made” was dissenting Appellate affirmed, Justices with two The Division 1978]). (62 disagreement Dept [2d no There was AD2d 1014 simply have held the writ- dissenters would facts; about untimely. to ten notice be by margin
Sitting six-Judge affirmed, a Court, we also especially [was] “it The dissenters commented that to two. four give ‘practicable’ notice not to that it was to difficult conclude expiration long when the insured of seven months before the (47 day agent gave accident” NY2d after the oral notice majority dissenting]). ruled, however, that [Jones, J, The at 23 presented, “in the facts and circumstances” enough from it be
“there evidence which could was notify Midgets’ failure to insurer found that the that, unreasonable and conse- before it did was not quently, entitled disclaim. Centennial determining Since review is limited whether our sup- fact-finding courts the conclusion of the port finds uphold must their determi- evidence, in the we (id. 21). at nation” we courts, the “facts and circumstances” that
Like the lower just youth particularly compelling were not Halle’s considered was] background[ ] [which personal and “limited and vocational totally or the law” alien either the world of insurance that of (id. 18), unusually ties between Centennial at but also close blindly reasonably Dunn, caused Halle to solicit and follow Dunn’s advice. although long been
Here, contrast, Dachs have nothing broker, in this record reveals the Strauss’s insurance relationship kind Dachs and of close between (which agent Dunn Centennial’s
existed between was also claim) receipt here of notice of and Centennial. record does support proposition had a not relationship sufficiently insurer broker suggest bro- that service to the
close By effectively in a situ- contrast, ker service to the insurer. Midgets might possible Mighty be for even
ation more akin to relatively sophisticated representative an insured to have a good faith, is suf- reasonable belief that notice to broker if broker to be ficient the insurer’s own actions hold the out its *15 agent purpose giving for the case, notice. In such a if the ef- representations fect of the insurer’s is to lull the insured into a provided through agent, false belief that notice had been insurer should not be able to raise the insured’s failure to provide coverage. an earlier notice as a defense to unsophis-
Further, it should be noted that Drewes was not an year unusually dependent upon ticated old like Halle, Dunn, guidance. broker, insurance for advice and Rather, Drewes longtime day-to-day operations manager was the of two City. by construction in contractors New York Indeed, virtue of experience industry, Drewes’s in the construction it is a wonder grasp overwhelming probability that he did not that Strauss immediately upon would be drawn into a Labor Law lawsuit learning Mayo injury that had suffered an elevation-related job. Mighty Midgets while short, on the In the outcome in extenuating remotely compar- turned on facts, unusual and able to the circumstances of this case. Hawley’s Appeal
Mt. Cross Under the additional insured endorsement of Strauss’s CGL policy, hinges whether the Met was an additional insured agreed writing whether Strauss and the Met “have in a agreement [the Met] contract or be added anas additional [Strauss’s] policy.” argues insured on The Met that the second (b) paragraph sentence of of the D contract’s exhibit contains requisite agreement writing. (b), Paragraph the tirety, requires in its en- procure following insur-
Strauss/Creative ance: protective liability
“b. Owners and contractors in- single surance with a combined limit Liability Metropolitan $5,000,000.00. should add the Opera Association as an additional insured and completed should include contractual added). operations coverage” (emphasis (b) Hawley paragraph simply
Mt. counters that reflects the require purchase Met’s considered choice to Strauss to OCP coverage protect arising the Met from risks out of Strauss’s mandating work, rather than that Strauss include the Met as policy. an additional insured on its CGL observes policy specified paragraph the OCP in this would have provided the Met with an limit; contrast, unshared million $5 anas additional CGL, insured on Strauss’s the Met would have any in- other limits with Strauss shared
to have policy. sureds on agree sentence that the second with We (b) only that Strauss
paragraph refer to the OCP can purchase promised in the first sentence —but for the Met actually acquired. is buttressed This conclusion never paragraph (c) Strauss’s insurance D, sets out of exhibit which coverage, stating respect to CGL to the commitments as follows: *16 Liability.
“Comprehensive cover- Combined General bodily injury age property a minimum with and for (Limits may single met be $5,000,000.00 limit of Policy’D].” an ‘Umbrella with only paragraph
Notably, provision in exhibit D ad- this —the respect obligations dressing to CGL insurance Strauss’s including nothing coverage says the Met as an additional about — policy. that the therefore conclude CGL We insured on Strauss’s policy issued to insured on the CGL Met is not an additional Hawley. Strauss
Finally, insured under Met is not an additional because the policy, need not decide the do not reach and CGL we Strauss’s question Hawley promptly the Met that notified whether untimely policy disclaiming coverage due to it was notice [“failure (see to disclaim Zappone v Home Ins. does Co., not create 55 NY2d coverage 131, 134 which [1982] (a provide”]). liability) policy was not written Appellate
Accordingly, be Division should the order of Metropolitan by denying costs, defendant modified, without summary judgment Opera first its motion for Association’s ques- affirmed, and the certified and, modified, cross claim as so negative. in the tion answered (dissenting part). of exhibit The second sentence J. Read, (b) September paragraph contract in the 2008 construction
D, contract) (hereafter, “Liability add should states as follows: Opera Metropolitan insured Association as an additional liability completed opera- and include contractual and should awkwardly phrased coverage.” be this sentence tions While ambiguous infelicitously placed D,1it is not within exhibit marketplace. light Given the realities of the insurance REQUIREMENTS,” in its en- D, states entitled “INSURANCE 1. Exhibit tirety as follows: protective liability differences between owners and contractors (OCP) (CGL) comprehensive general liability policies, (Strauss) clearly obligates Painting, sentence Inc. place policy protecting Metropolitan Opera have in a CGL (the Met)
Association, Inc. as an additional insured. With all respect my colleagues, simply way due there is no other Accordingly, respectfully read it. I dissent from so much of the majority’s decision as determined that the Met is not an ad- ditional insured on the CGL issued Mt. Insur- (Mt. Company Hawley) ance to Strauss. For the reasons question follow,I would therefore answer the certified in the af- firmative.
I liability bodily An OCP covers the named insured’s injury property damage part, by caused, in whole or in designated specified contractor’s work for the insured on a project. purchases policy, construction The contractor the OCP protects the insured from vicarious incurred as a project, result of the contractor’s acts or omissions on the liability arising out of the insured’s own acts or omissions in “general supervision” performed connection with its of the work *17 (see generally the contractor al., Donald S. Malecki et The Management Book, Additional Insured International Risk [IRMI] [7th 2013] [hereafter Institute at ed Malecki]; 202-217 Compensation covering “a. Workman’s Insurance contractors employees meeting statutory requirements prescribed all in New York State. protective liability “b. Owners and contractors insurance with a single $5,000,000.00. Liability combined limit of should add the
Metropolitan Opera Association as an additional insured and liability completed operations should include contractual and coverage. Comprehensive Liability. “c. General Combined for property bodily injury single and with a minimum limit of (Limits $5,000,000.00 Policy!)], be met with an ‘Umbrella supply Metropolitan Opera “d. Contractor will the Association indemnify against any with a Hold Harmless them and all arising agreement. claims from their work relative to this Metropolitan Opera “e. Contractor will furnish the Association Original policy. provide Owners and Contractors Also will cer- Compensation, tificates of insurance for the Workman’s Policy, Comprehensive Liability prior and the General ‘Umbrella’ to the commencement of the contract. policies “f. All insurance must contain a that insures the clause
Metropolitan Opera day Association written notification of policy.” cancellation or non-renewal of Liability Craig Insured Stanovich, versus Additional F. OCP [hereafter Coverage, [Oct. 2009] 2009], Stanovich IRMI www.irmi.com/expert/articles/2009/stanovichl0-cgl-general- liability-insurance.aspx). (b) paragraph Hawley that the second sentence of insists
obligated the Met an additional insured on Strauss to include as policy sentence directed Strauss the OCP purchase first Performing Lincoln Center for the for the benefit of Center). (Lincoln Hawley reason, criti- Arts, Inc. For “failing recognize Appellate for the critical cizes the Division Policy, on which the Contractor between the OCP distinction required expressly Met named as an additional to have the Policy, requirement for which no such insured, and the CGL argues property, existed”; that “as the owner of the Lincoln Policy. any listed as the owner on OCP Center would have been policy” have been an additional insured on that would omitted).2 explain (emphasis This is how Mt. tries to away requirement make the Met an additional insured. opera
Lincoln Center owns the house is the Met’s pointed however, landlord; responding as Mt. itself out when letter, to Travelers’ December 29th Lincoln Center (the entity) contract, mentioned in the which identi- is nowhere project Thus, there is no basis fies the Met as owner. within (b) interpreting paragraph the four corners of contract requiring purchase an Strauss to OCP issued And it is not how such a name of Lincoln Center. obvious party been obtained since Lincoln Center was not the could have perform Strauss contracted to work. which (b) paragraph Next, the second sentence of states policy the Met is to be included as an additional liability provide completed insured must “contractual operations coverage.” liability” “Contractual in this context refers to the assumed Strauss under contract’s *18 provision, “completed hold and indemnification while harmless coverage injuries damages occurring operations” for or refers to Inc.) (Insurance Office, Apparently, only 2. ISO Services endorsement adding policy an “Ad- available for use in an additional insured to OCP is the (CG 31)” Engineers, Surveyors Architects or endorse- ditional Insured — (see B), obviously Appendix here. ment Malecki at which is relevant words, thing policy language In other is no such as standard for a lessee there project who contracts a contractor for a construction on the leased with policy. premises an additional insured on an OCP This is not to become circumstances, surprising is the since lessee under such as case with here, policy. Met would be the named insured on the project coverage been the construction has finished. These after (i.e., options liability completed operations) and contractual are policy; they not, available to an additional insured on a CGL are (see Craig policy e.g. on an F. however, Stanovich, available OCP Liability Policy, [May Contractual and CGL 2002], IRMI www.irmi.com/expert/articles/2002/stanovich05.aspx7cmd liability [explaining insurance, how contractual found in the policy, [“The applies]; CGL insurance Stanovich 2009 OCP bodily policy injury damage property for or if excludes damage injury place such operation or takes after the earlier of when the put completed been or has to its intended use anyone working other another or than contractor subcontractor Designated project. for the Contractor on that The ISO CG 20 many independently and insurers’ additional insured filed provide coverage endorsements additional insured for bodily injury property damage products or within the completed operations coverage option hazard. This is not avail- policy” added)]; (emphasis able on the 58-60, OCP Malecki at 202). (b) paragraph In short, second sentence of cannot required purchase mean that Strauss was an OCP with liability operations coverage completed contractual for the benefit Met of the as an additional insured because no such policy option agreed-to coverages pair only exists. This could provided by including be the Met as an additional insured on policy. Strauss’s CGL sought in exhibit D to transfer or shift to in Strauss
every way possible bodily injuries the risk of financial loss due to property damages occurring or connection with construc- (1) project by requiring place tion Strauss have workers’ (2) compensation insurance; OCP an favor of the Met (3) insured; as the named a contractual hold harmless and provision whereby indemnification assumed Met’s (4) liability arising operations; tort out of construction policy including CGL an insured, the Met as additional provided liability completed operations for contractual coverage. suspenders” approach, adding
Known as the “belt and an Met) (here, the indemnitee additional insured on the Strauss’s) (here, gives indemnitor’s protection insurance “some problem back on in to fall the event there is a (id. enforceability agreement” of the hold harmless at 59- [“(M)ost using 60, 69 contractual risk transfers . . . involve indemnity both an clause and status to additional insured work *19 Insureds, on Additional hand-in-hand”]; also The Handbook see Menapace [Michael et al. ed Bar Association at 38-39 American party multiple 2012] [“There a to insist on both reasons for are requirements provisions in a and insurance indemnification (T)he protection single indemnifica afforded contract . . . provisions, hand, and ad on the one hold harmless tion and many coverage, other, on the are instances insured ditional complimentary (sic) Thus, to maximize and not co-extensive. party protection, in the contract both an should include
one’s a requirement and an ad and hold harmless indemnification “[i]n requirement”]). Further, the construction ditional insured project industry, general ad owners who seek contractors receiving [ISO upon protection insist insured often will ditional endorsements ongoing operations allowing] coverage for both (id. 51). operations” completed at policy Hawley points alterna out, an OCP be an Mt. As adding insured to the as an additional the owner tive advantages policy. are But while there contractor’s CGL disadvantages (see generally approach 214- Malecki at each 217), policy not, status are as and additional insured an OCP mutually “[i]t Hawley implies, Indeed, is not Mt. exclusive. policy request indemnitee to both an OCP
unusual for an expectation in the that one of the additional coverages insured status (id. 216). apply at in the event of a claim or suit” will bargaining power) Nothing (except perhaps cost relative and/or seeking prevents project itself of the a owner from to avail coverages, clearly advantages complementary the Met of both as did this case. sought
Finally, that the Met OCP cover- contends part age of a “well- in lieu of additional insured status policy “[t]he since OCP would reasoned insurance scheme” arising [Strauss’s] protection provide the Met out work with importantly, whereas, limit,” an unshared and, more ... $5M policy, [Strauss’s] “[a]s the Met an additional insured on CGL policy on the limits with all other insureds would . . . share beyond wasting Policy exposing Met limits — project Again, that a owner assumes its control.” only bargain provide its contractor to OCP would policy, the contractor’s or additional insured status on CGL certainly policy provides the named true that an OCP both. It is policy separate are limits, limits set of while CGL insured advantages that an insureds; all that is one of the shared Hawley disputes that the Met was offers. But Mt. OCP the intended named insured on OCP that Strauss agreed purchase; Hawley’s therefore, but failed to under Mt. in- terpretation (b), paragraph D, of exhibit would not, *20 enjoyed fact, have benefit of unshared limits that Mt.
Hawley contradictorily claims also motivated the Met to choose coverage an under OCP rather than additional insured policy. status under Strauss’s CGL
II I Because conclude that the Met was an additional insured on policy, Hawley I
Strauss’s promptly reach issue CGL of whether Mt. disclaiming coverage notified the Met that it was (see untimely § [d] account of notice Insurance Law former 3420 [an wishing deny coverage insurer to on account of late notice give reasonably possible “shall written notice as soon is of liability coverage such of disclaimer or denial of to the insured claimant”]). injured person any February and the or other On Hawley 3, stated, 2009 Mt. Travelers, in a letter sent to that it attempting qualified to determine whether the Met as an policy.3 additional insured The word “disclaim” does appear up only not letter, in this word “denial” shows nonparty in the context of Strauss or the Lincoln Center. As to Hawley Met, advised Travelers “we need that to Painting actually determine whether Strauss involved in Met] [the this work in whether order determine is added as point [Mt. Hawley] an additional insured. At in time, this right [the Met] reserves the an assert that is additional insured.” In 4, 2009, its letter to Travelers dated March with a copy investigating Met, to the stated it was early Mayo how the Met was aware of incident. While this policy’s merely letter recited conditions, notice it cautioned, “[sjhould tense, the conditional the information that we provided coverage apply” have been be correct, no would to the added). (emphases In sum, the two letters constituted ineffective notice because they coverage; they right instead, did not disclaim reserved the (see coverage County to disclaim in the future Co. v Ins. Hartford rights [1979] [“A Nassau, 1029 of NY2d reservation of question letter has no relevance to the whether the insurer has case, 3. In the Met did not the issue of an insurer raise whether validly coverage by sending disclaim written notice to the insured’s own car- (see Park, LLC, only rier v [2014] [decided Sierra 4401 Sunset 24 NY3d 514 today]). liability
timely or denial of cover- sent a notice of disclaimer age”]; Petrizzi, Fire v & Dedham Mut. Ins. Co. Norfolk [“A Dept [1st 1986] 276, 277 letter from insurance AD2d company policyholder of the to its which contains reservation company’s rights disclaim under its insurance requirements satisfy is a notice of disclaimer as not such Law”]). Because Mt. never disclaimed the Insurance (see notice, the late notice defense late waived Hartford give [“A the insurer to such Ins. at 1029 failure notice as reasonably possible after it learns of the soon as is first accident grounds coverage, or for disclaimer of or denial of denial”]). precludes effective disclaimer or
Judges and Abdus-Salaam Pigott, Graffeo, Smith, Rivera part Judge opinion concur; dissents in an Read Judge Lippman *21 Chief concurs. by denying Metropolitan Opera modified, costs,
Order without summary judgment Association, Inc.’s motion for on its first question and, modified, as so affirmed, cross claim and certified negative. in the answered