Opinion
16961 Index No. 656930/19 Case No. 2022–02309
12-22-2022
CITY UNIVERSITY OF NEW YORK et al., Plaintiffs–Appellants, v. UTICA FIRST INSURANCE COMPANY, Defendant–Respondent.
Law Office of Eric D. Feldman, New York (Michael J. Kozoriz of counsel), for appellants. Farber Brocks & Zane L.L.P., Garden City (Lester Chanin of counsel), for respondent.
Law Office of Eric D. Feldman, New York (Michael J. Kozoriz of counsel), for appellants.
Farber Brocks & Zane L.L.P., Garden City (Lester Chanin of counsel), for respondent.
Webber, J.P., Friedman, Gesmer, Shulman, JJ.
Order, Supreme Court, New York County (Erika Edwards, J.), entered January 3, 2022, which denied plaintiffs’ motion for summary judgment declaring that defendant Utica First Insurance Company is required to defend and indemnify plaintiffs in an underlying action on a primary and noncontributory basis, and for a judgment in their favor for defense costs incurred, unanimously affirmed, with costs.
Plaintiffs commenced this action seeking a declaration that Utica, which had issued an insurance policy to nonparty AIM Builders Corp., was required to defend and indemnify them as additional insureds on AIM's policy on a primary and noncontributory basis, in an action against them commenced by an employee of AIM. Plaintiff Stalco Construction Inc.’s primary insurer has assumed plaintiffs’ defense in the underlying action. Stalco's insurer, Travelers Indemnity Company, originally tendered coverage to Utica in December 2015, but Utica denied coverage in March 2016 citing, among other things, an employee exclusion contained in AIM's policy. Plaintiffs contend that Utica's denial of coverage based on its employee exclusion was untimely, and that Utica is therefore estopped from denying coverage pursuant to Insurance Law § 3420(d)(2).
As a preliminary matter, Utica's contention that Travelers is the only real party in interest in this action is unavailing. We find that plaintiffs have standing to pursue their claims, as there has been no settlement of the underlying action paid by Travelers within its policy limits (see Harco Constr., LLC v. First Mercury Ins. Co., 190 A.D.3d 831, 833, 140 N.Y.S.3d 553 [2d Dept. 2021] ; Greater N.Y. Mut. Ins. Co. v. Chubb Indem. Ins. Co., 105 A.D.3d 523, 525, 963 N.Y.S.2d 218 [1st Dept. 2013] ; George Campbell Painting v. National Union Fire Ins. Co. of Pittsburgh, PA, 92 A.D.3d 104, 118–119, 937 N.Y.S.2d 164 [1st Dept. 2012] ).
Nevertheless, we find that the court properly denied plaintiffs’ motion for summary judgment. While Insurance Law § 3420(d)(2) requires that an insurer provide written notice of a denial of coverage as soon as reasonably possible, the timeliness of such a disclaimer generally presents a question of fact unless "the basis for denying coverage was or should have been readily apparent before the onset of the delay" ( First Fin. Ins. Co. v. Jetco Contr. Corp., 1 N.Y.3d 64, 69, 769 N.Y.S.2d 459, 801 N.E.2d 835 [2003] ; see also City of New York v. Greenwich Ins. Co., 95 A.D.3d 732, 733, 945 N.Y.S.2d 83 [1st Dept. 2012] ). In the original tender letter, Travelers represented to Utica that the individual injured was an employee of AIM and had been working on a masonry wall when he fell. But no complaint had been filed and provided to Utica for its review, and no other evidence was submitted to Utica substantiating that he was an employee injured during the course of his employment. Contrary to plaintiffs’ contention, the application of Utica's employee exclusion was not readily apparent, such that no investigation by Utica into the relationship between the parties and whether the exclusion would apply would have been warranted (see Imperium Ins. Co. v. Utica First Ins. Co., 130 A.D.3d 574, 574–575, 10 N.Y.S.3d 898 [2d Dept. 2015], lv denied 26 N.Y.3d 918, 2016 WL 635009 [2016] ; see also Netherlands Ins. Co. v. United Specialty Ins. Co., 276 F. Supp. 3d 94, 108 [S.D.N.Y.2017] ; cf. Squires v. Marini Bldrs., 293 A.D.2d 808, 810, 739 N.Y.S.2d 777 [3d Dept. 2002], lv denied 99 N.Y.2d 502, 752 N.Y.S.2d 589, 782 N.E.2d 567 [2002] [insurer unreasonably delayed in disclaiming based on employee exclusion where the notice letter included a complaint and copy of the subcontract, and those documents "unambiguously provided" the information necessary]). In opposition to plaintiffs’ motion, Utica submitted evidence sufficient to raise factual issues as to the reasonableness of its delay in denying coverage.
We have considered plaintiffs’ remaining arguments, including their argument that Utica never denied coverage as to City University of New York, and find them unavailing.