Vermont Mut. Ins. Co., Inc. v. Mowery Constr. Inc., 2014 N.Y. App. Div. LEXIS 7558 (N.Y. App. Div. Nov. 6, 2014)

Summary judgment in declaratory judgment action warranted where insurer failed to disclaim coverage “as soon as reasonably possible.”

The plaintiff appealed the entry of summary judgment in favor of the defendant, James Ciuffo, who had sustained personal injury while working on a construction project operated by the defendant-insured, Mowery Construction, Inc. Mowery’s owner and president became aware of Mr. Ciuffo’s accident on the day it occurred but failed to report the accident to its insurer until Mr. Ciuffo filed a negligence action more than two years after the accident. Mr. Mowery allegedly believed that he was not required to report the claim because Mr. Ciuffo was a subcontractor. Upon receipt of the claim, the plaintiff hired an adjuster to investigate when Mowery first learned of the injury. The court found that the plaintiff had sufficient information to disclaim coverage to Mowery based on the adjuster’s investigation, but the plaintiff failed to do so. Instead, the plaintiff issued a reservation of rights letter to its insured. The court held that the reservation of rights letter was not a sufficient substitute for a notice of disclaimer and, thus, found that the plaintiff failed to notify its insured of the disclaimer as soon as reasonably possible and failed to raise a fact issue as to whether the delay was justified by the need for additional investigation. Therefore, the court affirmed the lower court’s entry of summary judgment in favor of Mr. Ciuffo, dismissing the plaintiff’s declaratory judgment claim against him.

Case Law Alerts, 1st Quarter, January 2015