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Too Little, Too Late: Appellate Division Upholds Disclaimer for Untimely Notice (NY)
February 28, 2020
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In <a href="https://www.wcmlaw.com/wp-content/uploads/2020/02/Dritsanos-v-Mt.-Hawley-Ins.-Co..pdf">Dritsanos v Mt. Hawley Ins. Co.</a>, the New York Appellate Division, Second Department, addressed the issue of whether plaintiffs can collect judgements from insurers where the insurer did not receive timely notice of the claim.
The underlying case involved liability over a personal injury. In July 2008, the plaintiff was allegedly stabbed in a nightclub in Brooklyn owned and operated by the insured, Ambela Corp. The plaintiff sued on December 9, 2008 to recover for personal injuries, naming Ambela as one of the defendants. The insurer, Mt. Hawley did not receive any notice of the lawsuit until June 2009, when the insured’s broker sent a letter enclosing the summons and complaint.
Although Mt. Hawley disclaimed coverage for untimely notice, the plaintiff eventually won a judgment against Ambela and the assailant. The plaintiff then commenced an action against Mt. Hawley under Insurance Law § 3420(a)(2), which expressly permits an injured party to recover any unsatisfied judgment against an insured, directly from the insurer. Mt. Hawley moved for summary judgment, arguing that disclaimer was valid since they did not have timely notice from the plaintiff.
In reviewing this issue, the Appellate Division agreed with the insurer. While normally the insurer disclaiming for untimely notice would have to demonstrate that it was prejudiced by the delay, such showing was not needed in this case since the policy predated that requirement in the insurance code. Rather, the Second Department held that merely hiring an attorney and commencing the lawsuit was insufficient as a legal matter to notify the insurer. Thus, because the plaintiff did not act diligently to notify Mt. Hawley, their disclaimer was valid and the plaintiff could not recover on the judgment.
The decision underscores the importance for insurers to investigate claims and provide timely disclaimers.
Thanks to Andrew Debter on his contribution to this post. Please email <a href="mailto:gcoats@wcmlaw.com">Georgia Coats</a> with any questions.