Opinion
2003-05065.
Decided April 19, 2004.
In a proceeding pursuant to CPLR article 75 to stay arbitration of an uninsured motorist claim, New York Central Mutual Fire Insurance Company and Rose Ford appeal from an order of the Supreme Court, Kings County (Silverman, J.H.O.), dated May 7, 2003, which, upon a decision of the same court dated May 7, 2003, made after a hearing, granted the petition and permanently stayed the arbitration.
Jacobson Schwartz, Rockville Center, N.Y. (Eric P. Tosca and Charles Weitman of counsel), for appellants.
Diamond, Cardo, King, Peters Fodera, New York, N.Y. (Deborah F. Peters of counsel), for petitioner-respondent.
Before: MYRIAM J. ALTMAN, J.P., NANCY E. SMITH, SONDRA MILLER, STEPHEN G. CRANE, JJ.
DECISION ORDER
ORDERED that the order is reversed, on the law, with costs, and the matter is remitted to the Supreme Court, Kings County, for a new hearing and a new determination on the petition.
The petitioner Liberty Mutual Insurance Company (hereinafter Liberty Mutual) established a prima facie case that New York Central Mutual Fire Insurance Company (hereinafter Central Mutual) insured the alleged offending vehicle by producing the police accident report which contained the vehicle's insurance code ( see Matter of Eagle Ins. Co. v. Beauvil, 297 A.D.2d 736, 737; Matter of Liberty Mut. Ins. Co. v. Bohl, 262 A.D.2d 645, 646; Matter of Eagle Ins. Co. v. Sadiq, 237 A.D.2d 605; Matter of Centennial Ins. Co. v. Capehart, 220 A.D.2d 499). The burden then shifted to Central Mutual to establish noncoverage or the applicability of some exclusion to coverage and that it timely disclaimed on the basis of such exclusion.
Central Mutual argued before the Supreme Court that the use of its insured's vehicle on the date of the accident was nonpermissive, and therefore, its insurance did not cover the loss. Liberty Mutual argued that the issue of nonpermissive use was irrelevant if the court determined that Central Mutual's delay in issuing the notice of disclaimer was unreasonable as a matter of law. The Supreme Court agreed with Liberty Mutual and, rather than hearing evidence to determine, inter alia, whether the use of the vehicle was in fact nonpermissive, the court focused solely on the issue of the timeliness of the disclaimer. This was error.
Where an insurer attempts to disclaim coverage under a policy of liability insurance by invoking the terms of an exclusion, including an exclusion for nonpermissive use, it must do so "as soon as is reasonably possible" after learning of the grounds for disclaimer (Insurance Law § 3420[d]; see Moirano v. Aetna Cas. Sur. Co., 259 A.D.2d 470, 471; Nigro v. General Acc. Ins. Co. of N.Y., 239 A.D.2d 474, 475). However, where the nonpermissive use falls outside the policy's coverage and the denial of the claim is based upon lack of coverage, estoppel may not be used to create coverage regardless of whether or not the insurance company was timely in issuing its disclaimer ( see Zappone v. Home Ins. Co., 55 N.Y.2d 131, 135-136; Matter of Allstate Indem. Co. v. Nelson, 285 A.D.2d 545; Government Empls. Ins. Co. v. Pagano, 251 A.D.2d 452, 454; Wausau Ins. Cos. v. Feldman, 213 A.D.2d 179, 180; Matter of Lumbermens Mut. Cas. Co. v. Aggesen, 209 A.D.2d 415; Greater N.Y. Mut. Ins. Co. v. Clark, 205 A.D.2d 857, 858).
The Supreme Court erred in declining to permit Central Mutual to submit evidence that the use of its insured's vehicle at the time of the accident was nonpermissive. If nonpermissive use is established, the court must determine whether nonpermissive use falls within an exclusion to Central Mutual's insurance policy or whether it falls outside the ambit of coverage altogether. If nonpermissive use falls outside of the policy coverage, the timing of Central Mutual's issuance of its disclaimer is irrelevant. Only if the nonpermissive use falls within a policy exclusion must the court address the timeliness of the disclaimer. In making this determination, the court should hear testimony from witnesses with personal knowledge of the facts regarding when Central Mutual became aware of sufficient facts to issue its disclaimer ( see Matter of Allstate Ins. Co. v. Ferrone, 232 A.D.2d 479, 480; Matter of State Farm Mut. Auto. Ins. Co. v. Cote, 200 A.D.2d 622). In addition, because the record in this case contains several notices of disclaimer bearing different dates, testimony should be taken to establish when the notice of disclaimer was first issued. After all of these rulings are made, the court can assess, if necessary, whether Central Mutual delayed unreasonably in issuing its disclaimer.
Accordingly, we remit the matter to the Supreme Court, Kings County, for a new hearing and a new determination on the petition.
ALTMAN, J.P., SMITH, S. MILLER and CRANE, JJ., concur.