Coverage Unit's Success Continues
April 22, 2009
In February, 2009, CM Partners Steven Fried (New York) and Edward Kay (Chicago), and Associate Joseph J. Ferrini (Chicago), won an appeal in the Appellate Division, Second Judicial Department in the State of New York.
In March, 2003, CM's client received its first notice of a May 11, 2002 accident where a person ("injured person") was rendered quadriplegic after falling off of an ATV he was joyriding with his brother in law, who was the President of a construction company. CM's client insured the construction company under a general liability policy in effect on the date of the accident. On the day after receiving notice of the incident, CM's client commenced an investigation, but was unable to meet with the injured person, unable to confirm ownership of the ATV by the construction company, and encountered resistance from the construction company's attorney, who refused to provide facts about the incident. CM's client's investigator was able to meet with the injured person approximately two and a half weeks after CM's client first received notice of the incident. The President of the construction company asserted at his interview that the ATV in question was owned by the construction company, but that the accident happened when he and the injured person were joyriding on a Saturday afternoon in a field near their homes.
Within ten days of receiving a report from that interview, CM's client disclaimed coverage, asserting, among other things, that the commercial general liability policy it issued to the construction company for its carpentry business did not cover an accident that took place on a Saturday afternoon when the injured person was joyriding an ATV in a field near his home. CM's client also asserted that the construction company's notice of the injured person's claim was untimely - - the President of the construction company admitted to receiving a phone call in January, 2003, from the injured person's attorney, advising that the injured person will be filing suit against the construction company, and received a letter to that effect shortly thereafter, but did not report the claim to CM's client until the end of March, 2003.
CM's client moved for summary judgment. The construction company opposed the motion, and cross-moved for summary judgment, arguing that, despite the fact that the President of the construction company witnessed the accident, and was aware of the injured person's quadriplegia on May 11, 2002, its March, 2003 notice of the accident was timely because it had no reason to expect a claim against it, and that CM's client's disclaimer was untimely, voiding the disclaimer.
The trial court granted CM's client's motion for summary judgment, holding that the construction company's notice of the May 11, 2002 incident was untimely, and that its notice of the claim was late, voiding coverage under the Policy. The trial court did not address CM's client's argument that the incident fell outside of the coverage provided by the Policy, but noted that CM's client's investigation was prompt and reasonable, and that its disclaimer was timely. The construction company appealed.
The Second Department affirmed the trial court's decision. The Appellate Court concluded that: the construction company's notice of the incident was late and its notice of the injured person's claim was late; the construction company failed to demonstrate a goof faith belief in non-liability so as to excuse the lateness of its notice of the incident; the injured person's injury did not fall within the coverage provided by CM's client's policy, and CM's client's disclaimer was timely under the circumstances.
