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NY Appellate Court Refuses To Deny Summary Judgment On Lengthy Delay Of Notice In Insurance Case
May 5, 2023
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The Supreme Court of New York, Appellate Division, First Department, recently denied opposing motions for summary judgment in a coverage declaratory judgment action, holding that despite a several-year delay in providing notice, there existed issues of fact as to whether the plaintiffs gave notice as soon as reasonably proper under the circumstances.
The action involves plaintiffs National Interstate Insurance Company (“National”) and New York Crane & Equipment Corporation (“NY Crane”)<em> <a href="https://www.wcmlaw.com/wp-content/uploads/2023/05/National-Interstate-v.-Interstate-Indemnity.pdf">National Interstate v. Interstate Indemnity</a>,</em> who sought an order declaring that NY Crane is entitled to defense and indemnification in an underlying action from defendant Interstate Indemnity Company (“Interstate”), who insured 1690 Broadway Concrete Corp. (“Broadway”). Interstate had disclaimed coverage to NY Crane on the basis that NY Crane had failed to provide timely notice.
In this appellate action, the First Department held that the trial court had properly denied both motions for summary judgment. The First Department reiterated the standard that where an insurance policy requires that the insured provide notice as soon as practicable, that notice must be provided within a reasonable time under the circumstances of the case.
Although the First Department categorized the several-year delay in this action as “lengthy,” it noted that the record raised issues of fact as to when the plaintiffs, with due diligence, should have known that Interstate was Broadway’s insurer. The First Department also held that there were issues of fact as to whether the plaintiffs gave notice to Interstate as soon as reasonably practicable under the specific circumstances of the case.
This decision is problematic for insurers because it shows that even a several-year delay in providing notice to an insurer can be considered “reasonable” depending on the circumstances of the case. This opens insurers up to potentially lengthy discovery and litigation regarding the specific circumstances of notice in cases where it may appear clear that the delay was unreasonably long. Further, it lengthens the tail of claims.
Thanks to Erin Gallagher for her assistance in this post. Should you have any questions, please contact <a href="tbracken@wcmlaw.com">Tom Bracken</a>.