SPOLETA CONSTRUCTION, LLC v. ASPEN INSURANCE UK LIMITED

SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
352
CA 13-01387
PRESENT: SCUDDER, P.J., PERADOTTO, CARNI, LINDLEY, AND VALENTINO, JJ.
SPOLETA CONSTRUCTION, LLC, PLAINTIFF-APPELLANT,
V MEMORANDUM AND ORDER
ASPEN INSURANCE UK LIMITED, C/O ASPEN SPECIALTY
INSURANCE MANAGEMENT COMPANY, DEFENDANT-RESPONDENT,
1255 PORTLAND, LLC, HUB-LANGIE PAVING, INC., AND
SHANE VANDERWALL, DEFENDANTS.
WHITE FLEISCHNER & FINO, LLP, NEW YORK CITY (JANET P. FORD OF
COUNSEL), FOR PLAINTIFF-APPELLANT.
LEWIS BRISBOIS BISGAARD & SMITH LLP, NEW YORK CITY (STEPHANIE A.
NASHBAN OF COUNSEL), FOR DEFENDANT-RESPONDENT.
Appeal from a judgment (denominated order) of the Supreme Court,
Monroe County (Thomas A. Stander, J.), entered November 26, 2012 in a
declaratory judgment action. The judgment granted the motion of
defendant Aspen Insurance UK Limited, c/o Aspen Specialty Insurance
Management Company to dismiss plaintiff’s complaint against it.
It is hereby ORDERED that the judgment so appealed from is
reversed on the law without costs, the motion is denied, and the
complaint is reinstated against defendant Aspen Insurance UK Limited,
c/o Aspen Specialty Insurance Management Company.
Memorandum: Defendant Shane VanDerwall commenced the underlying
negligence action against plaintiff and others seeking damages for
injuries he sustained on October 20, 2008, during the course of his
employment on a construction project. Plaintiff, the general
contractor on the project, subcontracted with VanDerwall’s employer,
defendant Hub-Langie Paving, Inc. (Hub-Langie), to perform paving work
on the project. Pursuant to the subcontract, Hub-Langie agreed to
defend and indemnify plaintiff for all claims arising out of Hub-
Langie’s work. Hub-Langie also agreed to name plaintiff as an
additional insured on its commercial general liability insurance
policy, which it did by an endorsement to its policy with Aspen
Insurance UK Limited, c/o Aspen Specialty Insurance Management Company
(defendant). The endorsement covered “any person or organization . .
. when you and such person or organization have agreed in writing in a
contract or agreement that such person or organization be added as an
additional insured on your policy.”
It is undisputed that plaintiff did not receive notice of the
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accident until late December 2009 in a letter from VanDerwall’s
attorney. On January 27, 2010, plaintiff’s liability carrier sent a
letter to Hub-Langie notifying it of VanDerwall’s “claim,” noting Hub-
Langie’s contractual agreement to defend and indemnify plaintiff, and
requesting that Hub-Langie put its own insurance carrier on notice to
allow the carrier to conduct its own investigation. On February 9,
2010, Hub-Langie sent defendant a “General Liability Notice of
Occurrence/Claim” form regarding VanDerwall’s alleged injury, with the
January 2010 letter attached. By February 22, 2010, defendant had
requested and received a copy of the contract between Hub-Langie and
plaintiff containing the defense, indemnification and additional
insured requirements. After VanDerwall commenced the underlying
action on April 15, 2010, plaintiff’s counsel demanded that defendant
defend and indemnify it in the underlying action by letter dated May
27, 2010. Defendant disclaimed coverage to plaintiff on the basis of
untimely notice by letter dated June 2, 2010.
Plaintiff thereafter commenced this declaratory judgment action
seeking a declaration that defendant is obligated to provide insurance
coverage to plaintiff in the underlying action. Defendant moved to
dismiss the complaint against it pursuant to CPLR 3211 (a) (1) and
(7), and Supreme Court granted the motion. We reverse, deny the
motion, and reinstate the complaint against defendant.
It is well settled that, “[i]n determining a dispute over
insurance coverage, we first look to the language of the policy”
(Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208,
221). “As with any contract, unambiguous provisions of an insurance
contract must be given their plain and ordinary meaning . . . , and
the interpretation of such provisions is a question of law for the
court” (White v Continental Cas. Co., 9 NY3d 264, 267). “If the terms
of a policy are ambiguous, however, any ambiguity must be construed in
favor of the insured and against the insurer” (id.; see
Christodoulides v First Unum Life Ins. Co., 96 AD3d 1603, 1604-1605).
Further, “[n]otice requirements are to be liberally construed in favor
of the insured, with substantial, rather than strict, compliance being
adequate” (Greenburgh Eleven Union Free Sch. Dist. v National Union
Fire Ins. Co. of Pittsburgh, PA, 304 AD2d 334, 335-336).
Here, under the heading “Duties in The Event Of Occurrence,
Offense, Claim Or Suit,” the policy provides that the insured “must
see to it that we are notified as soon as practicable of an
‘occurrence’ or an offense which may result in a claim. To the extent
possible, notice should include: (1) How, when and where the
‘occurrence’ or offense took place; (2) The names and addresses of any
injured persons and witnesses; and (3) The nature and location of any
injury or damage arising out of the ‘occurrence’ or offense” (emphasis
added). The policy further provides that, “[i]f a claim is made or
‘suit’ is brought against any insured, you must: (1) Immediately
record the specifics of the claim or ‘suit’ and the date received; and
(2) notify [defendant] as soon as practicable. You must see to it
that we receive written notice of the claim or ‘suit’ as soon as
practicable” (emphasis added).
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CA 13-01387
Initially, we conclude that the December 2009 letter was a notice
of an “occurrence . . . which may result in a claim” and not a “claim”
under the policy. The terms “occurrence,” “claim,” and “suit” are
separately used in the policy, and thus each term must be “ ‘deemed to
have some meaning’ ” (Bretton v Mutual of Omaha Ins. Co., 110 AD2d 46,
49, affd 66 NY2d 1020; see generally American Ins. Co. v Fairchild
Indus., Inc., 56 F3d 435, 439). The policy defines “[o]ccurrence” as
“an accident.” The term “[c]laim” is not defined in the policy, but
such term has been interpreted to mean “ ‘an assertion of legally
cognizable damage,’ ” i.e., “ ‘a type of demand that can be defended,
settled and paid by the insurer’ ” (Matter of Reliance Ins. Co., 55
AD3d 43, 47, affd 12 NY3d 725; see generally American Ins. Co., 56 F3d
at 439). Here, the December 2009 letter “neither makes any demand for
payment nor advises that legal action will be forthcoming” (Reliance
Ins. Co., 55 AD3d at 44). Rather, the letter advised plaintiff that
VanDerwall had retained an attorney in connection with personal
injuries he had sustained during the course of his work on the
construction project, requested that plaintiff forward the letter to
its insurance carrier, and warned plaintiff that failure to notify its
carrier could result in a denial of coverage and “personal
responsibility for any obligations that may arise” from VanDerwall’s
accident.
We further conclude that the January 2010 letter and form that
Hub-Langie sent to defendant at plaintiff’s request satisfied the
insured’s duty under the policy to “see to it” that defendant was
notified of the occurrence “as soon as practicable” (see United States
Underwriters Ins. Co. v Falcon Constr. Corp., ___ F Supp 2d ___, ___;
2003 WL 22019429, *5). Contrary to the court’s conclusion, the policy
did not require that written notice of an occurrence come directly
from plaintiff; it simply required that plaintiff “see to it” that
defendant was “notified” (see id.; see also New York Tel. Co. v
Travelers Cas. & Sur. Co. of Am., 280 AD2d 268, 268). Moreover, to
the extent that the phrase “see to it that we are notified” is
ambiguous, that ambiguity must be construed in plaintiff’s favor (see
White, 9 NY3d at 267). Inasmuch as the January 2010 letter
constituted notice of an “occurrence,” we conclude that the May 2010
letter constituted notice of a “claim” or “suit” based upon
VanDerwall’s April 15, 2010 commencement of the underlying action. We
therefore agree with plaintiff that the court erred in dismissing the
complaint against defendant inasmuch as the documentary evidence does
not conclusively establish a defense to plaintiff’s claim as a matter
of law (see Beal Sav. Bank v Sommer, 8 NY3d 318, 324; Leon v Martinez,
84 NY2d 83, 87-88).
All concur except LINDLEY and VALENTINO, JJ., who dissent and vote
to modify in accordance with the following Memorandum: We
respectfully dissent. In our view, plaintiff failed to provide timely
notice of an occurrence to Aspen Insurance UK Limited, c/o Aspen
Specialty Insurance Management Company (defendant) and, as a result of
that failure, plaintiff is not entitled to coverage as an additional
insured under the policy issued by defendant to the subcontractor,
defendant Hub-Langie Paving, Inc. (Hub-Langie). We would therefore
modify the judgment by denying that part of defendant’s motion seeking
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CA 13-01387
to dismiss the declaratory judgment cause of action, reinstating that
cause of action, and granting judgment to defendant by declaring that
defendant has no duty to defend or indemnify plaintiff, and otherwise
affirm.
“As an additional insured under the policy issued by defendant,
plaintiff had, in the absence of an express duty, an implied duty,
independent of the named insured’s obligation, to provide defendant
with timely notice of the occurrence for which it seeks coverage”
(City of New York v Investors Ins. Co. of Am., 89 AD3d 489, 489; see
23–08–18 Jackson Realty Assoc. v Nationwide Mut. Ins. Co., 53 AD3d
541, 542; Structure Tone v Burgess Steel Prods. Corp., 249 AD2d 144,
145). Where, as here, a contract of primary insurance requires notice
“as soon as practicable” after an occurrence, “the absence of timely
notice of an occurrence is a failure to comply with a condition
precedent which, as a matter of law, vitiates the contract” (Argo
Corp. v Greater N.Y. Mut. Ins. Co., 4 NY3d 332, 339; see Great Canal
Realty Corp. v Seneca Ins. Co., Inc., 5 NY3d 742, 743; Security Mut.
Ins. Co. of N.Y. v Acker–Fitzsimons Corp., 31 NY2d 436, 440-443).
We agree with the majority that the December 2009 letter to
plaintiff from the attorney of defendant Shane VanDerwall was, under
the terms of the policy in question, “notice of an occurrence . . .
which may result in a claim,” and not notice of a claim, inasmuch as
VanDerwall’s attorney did not make a demand for payment or advise that
legal action against plaintiff would be forthcoming (see Matter of
Reliance Ins. Co., 55 AD3d 43, 47, affd 12 NY3d 725). We further
agree with the majority that, pursuant to the policy, notice of
occurrence need not be provided directly from the insured to the
insurer; rather, as the majority points out, the insured need only
“see to it” that the insurer is notified of the occurrence. We do not
agree with the majority, however, that the January 27, 2010 letter
from plaintiff’s liability carrier to Hub-Langie, which was
subsequently sent to defendant by Hub-Langie, constituted notice of an
occurrence under the terms of the policy.
As the majority points out, the policy provides that the insured
“must see to it that we are notified as soon as practicable of an
‘occurrence’ or an offense that may result in a claim.” In our view,
however, the January 27, 2010 letter received by defendant via Hub-
Langie did not notify defendant of an occurrence that may result in a
claim under the policy. Instead, the letter merely stated that
plaintiff was seeking defense and indemnification from Hub-Langie
pursuant to the indemnification provision of the subcontract. The
letter does not indicate that plaintiff is seeking coverage directly
from defendant as an additional insured on the policy issued by
defendant to Hub-Langie, nor does it ask Hub-Langie to provide notice
of any kind to defendant on plaintiff’s behalf. Moreover, there is no
indication in the record that plaintiff knew that the January 27, 2010
letter had been forwarded to defendant by Hub-Langie.
It is clear from the record that, when the January 27, 2010
letter was sent to Hub-Langie, plaintiff and its liability carrier did
not realize that plaintiff was an additional insured on the policy
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CA 13-01387
issued by defendant to Hub-Langie. The letter repeatedly refers to
“your insurance carrier,” not our insurance carrier, and, as noted,
sought indemnification coverage only. Upon receipt of the January 27,
2010 letter, defendant disclaimed coverage to Hub-Langie because of
Hub-Langie’s failure to comply with the notice provisions of the
policy, and then notified plaintiff’s liability carrier of such
disclaimer. In the letter to plaintiff’s liability carrier notifying
it of the disclaimer to Hub-Langie, defendant stated that it had
received the January 27, 2010 letter “making a claim of contractual
indemnity” against Hub-Langie, and advised that plaintiff had not
provided a copy of the contract containing the “claimed indemnity
provision.” Plaintiff’s liability carrier did not respond to that
letter or otherwise advise defendant that plaintiff was seeking
coverage directly from defendant as an additional insured.
Further, there is no evidence in the record that defendant knew
that plaintiff was an additional insured under the policy, which did
not name plaintiff as an additional insured. Plaintiff was an
additional insured simply by virtue of the blanket additional insured
endorsement and its subcontract with Hub-Langie, a copy of which was
not provided to defendant. We note that, in the accord form sent to
defendant along with the January 27, 2010 letter by Hub-Langie, the
insured party was identified as Hub-Langie only.
It was not until May 27, 2010—more than four months after
plaintiff was informed of VanDerwall’s injury, and a month after
plaintiff had been sued by VanDerwall—that plaintiff, through its
attorney, notified defendant that it was seeking coverage directly
from defendant as an additional insured. Defendant promptly
disclaimed coverage because of plaintiff’s failure to comply with the
notice provisions of the policy, among other reasons. We conclude
that, inasmuch as plaintiff clearly did not intend for the January 27,
2010 letter to serve as notice of an occurrence under the policy, and
in fact did not even then realize that it was an additional insured
under the Hub-Langie policy, the January 27, 2010 letter cannot serve
as sufficient notice to defendant of an occurrence that might result
in a claim for coverage under the policy by plaintiff (see Liberty
Ins. Underwriters, Inc. v Great Am. Ins. Co., ___ F Supp 2d ___, ___,
2010 WL 3629470, *5-*8). We therefore agree with Supreme Court that
defendant properly disclaimed coverage to plaintiff.
Entered: July 11, 2014 Frances E. Cafarell
Clerk of the Court