Key Fat Corp. v. Rutgers Casualty Insurance

In an action, inter alia, for a judgment declaring that the plaintiffs are entitled to be reimbursed by the defendant for attorney’s fees and litigation costs incurred by the plaintiff Key

Ordered that the order is affirmed, with costs, and the matter is remitted to the Supreme Court, Queens County, for entry of a judgment declaring that the defendant is obligated to reimburse the plaintiffs for attorney’s fees and litigation costs incurred in the underlying action.

While working as a construction worker for his employer, Bando Construction, Inc. (hereinafter Bando), at a property Bando leased from the plaintiff Key Fat Corp. (hereinafter Key Fat), on June 30, 2006, Manuel Guallpa allegedly fell from a ladder, sustaining injuries. He commenced an action to recover damages for personal injuries against Key Fat (hereinafter the underlying action), which instituted a third-party action against Bando. Key Fat’s insurer, Seneca Insurance Company (hereinafter Seneca), informed Bando and its insurer, Rutgers Casualty Insurance Company (hereinafter Rutgers Casualty), that although it was providing defense and indemnification for the underlying action, it was requesting that Rutgers immediately assume those obligations. On March 26, 2007, Rutgers Casualty informed Bando that it was disclaiming coverage based upon a certain exclusion in the commercial general liability insurance policy it had issued to Bando (hereinafter the Policy). By letter dated April 17, 2007, Rutgers Casualty informed Seneca of the disclaimer. Key Fat was not so informed. A judgment was ultimately entered in favor of Guallpa and against Key Fat, awarding damages for his injuries, and Key Fat was awarded summary judgment on its third-party claims against Bando for common-law and contractual indemnification. Following an inquest, the Supreme Court entered a judgment on September 16, 2011, in favor of Key Fat and against Bando in the total sum of $90,502.87 for attorney’s fees and costs incurred in the underlying action.

Key Fat and Seneca together commenced the instant action against Rutgers Casualty. The complaint alleged that Rutgers Casualty was not entitled to disclaim coverage based on the Policy exclusion of certain injuries sustained by an employee of

Pursuant to Insurance Law § 3420 (d), an insurance carrier is required to provide its insured and any other claimant with timely notice of its disclaimer or denial of coverage on the basis of a policy exclusion, and will be estopped from disclaiming liability or denying coverage if it fails to do so (see Brighton Cent. School Dist. v American Cas. Co. of Reading, Pa., 19 AD3d 528 , 529 [2005]; Moore v Ewing, 9 AD3d 484 , 487 [2004]). Although Insurance Law § 3420 (d) (2) does not apply if the underlying claim does not involve death or bodily injury (see Incorporated Vil. of Pleasantville v Calvert Ins. Co., 204 AD2d 689 , 690 [1994]), contrary to Rutgers Casualty’s contention, this provision is applicable where, as here, the coverage the defendant seeks to disclaim is for defense costs incurred in connection with an underlying personal injury action. Accordingly, the plaintiffs made a prima facie showing of their entitlement to judgment as a matter of law, inter alia, declaring that Rutgers Casualty was estopped from disclaiming insurance coverage under the Policy by submitting evidence that it failed to provide a timely written notice of this disclaimer to Key Fat, a claimant in this litigation (see Insurance Law § 3420 [d] [2]; 233 E. 17th St., LLC v L.G.B. Dev., Inc., 78 AD3d 930 , 932 [2010]; Bovis Lend Lease LMB, Inc. v Royal Surplus Lines Ins. Co., 27 AD3d 84 , 90 [2005]). In opposition, Rutgers Casualty failed to raise a triable issue of fact.

The parties’ remaining contentions either are without merit or need not be reached in light of our determination.

Accordingly, Rutgers Casualty’s motion for summary judgment was properly denied, and the plaintiffs’ cross motion for summary judgment was properly granted.

Since this is, in part, a declaratory judgment action, we remit the matter to the Supreme Court, Queens County, for the entry of a judgment declaring that Rutgers Casualty is obligated to reimburse the plaintiffs for attorney’s fees and litigation costs incurred in the underlying action (see Lanza v Wagner, 11 NY2d 317 , 334 [1962]).

Dillon, J.P, Hall, Sgroi and Barros, JJ., concur.