Fourth Department Holds That Insurer Was Timely Notified of the "Occurrence," "Claim" and "Suit"
New York’s Appellate Division, Fourth Department, in analyzing particular policy provisions, found that a letter from plaintiff’s attorney constituted notice of an occurrence on behalf of the insured and the additional insured. Spoleta Constr., LLC v. Aspen Ins. UK Ltd., 2014 NY Slip Op 5250 (4th Dep’t July 11, 2014).
In October 2008, Shane VanDerwall (“VanDerwall”) was injured while performing paving work for Hub-Langie Paving, Inc. (“Hub”), a subcontractor. Spoleta Construction, LLC (“Spoleta”) was the general contractor and a named additional insured on Hub’s commercial general liability policy, provided by Aspen Insurance company (“Aspen”). The Aspen policy provided that the insured “must see to it that we are notified as soon as practicable of an occurrence…”
More than a year later, in December 2009, Spoleta first learned of the incident by a letter from VanDerwall’s attorney. The letter advised Spoleta that VanDerwall had retained an attorney and requested that Spoleta forward the letter to its insurer and warned that failure to do so could result in a denial of coverage. The court found that the letter “neither makes any demand for payment nor advises that legal action will be forthcoming.”
In January 2010, Spoleta’s own insurer sent a letter to Hub notifying it of VanDerwall’s claim, noting Hub’s contractual agreement to defend and indemnify Spoleta, and requesting that Hub “see to it” that Aspen was notified “as soon as practicable.” The court found these terms ambiguous and that such ambiguity “must be construed in plaintiff’s favor.”
In February 2010, Hub sent Aspen a “General Liability Notice of Occurrence/Claim” form and Aspen requested and received a copy of the contract between Hub and Spoleta.
In April 2010, VanDerwall commenced the underlying personal injury action against Spoleta. In May 2010, Spoleta demanded that Aspen defend and indemnify it in the underlying action. Aspen disclaimed coverage on the ground of late notice in June 2010. Thereafter, Spoleta commenced a declaratory judgment action and Aspen moved for summary judgment on the basis of late notice. Supreme Court found the notice to Aspen was untimely and granted Aspen’s motion.
On appeal, the Fourth Department reversed, holding that Supreme Court “erred inasmuch as the documentary evidence does not conclusively establish a defense to Spoleta’s claim as a matter of law.” The Court noted that the January 2010 letter and February 2010 form satisfied the insured’s duty to “see to it” that defendant was notified of the occurrence.
The Court explained that the Aspen policy did not require that written notice come directly from plaintiff, it simply required that plaintiff “see to it” that defendant was “notified.” Accordingly, the Court concluded that the January 2010 letter and form constituted notice of an “occurrence” and the May 2010 letter was sufficient to establish notice of a “claim” or “suit.”
Two judges dissented and took the position that Aspen properly disclaimed coverage. The dissent considered that in the January 2010 letter, plaintiff was seeking defense and indemnification from Hub, not directly from Aspen as an additional insured. Therefore, the dissent found that the letter did not constitute notice of an occurrence.
The Spoleta decision is among the long line of cases interpreting particular policy terms and construing ambiguity in favor of an insured. This case demonstrates that courts have continually emphasized the rule of liberal construction when interpreting policy provisions that could restrict coverage.
Should you have questions regarding the information presented in this alert, please contact Anthony J. Piazza, Chair of the firm’s Insurance Coverage & Regulation Practice Area, at (585) 295-4420 or firstname.lastname@example.org.