Third-party defendant, Zurich-American Insurance Group ("Zurich"), moved for
summary judgment dismissing the claim of the third-party claimant, New York
State Thruway Authority (the "Authority"), and the Authority cross-moved for
summary judgment. The third-party claim seeks a judgment declaring that Zurich
is obligated to defend the Authority in the claim of Steven Larson and Joyce
Larson against the Authority. The Court denied both the motion and cross-motion
and found that the Authority failed to notify Zurich as soon as practicable and
thereby failed to satisfy a condition precedent under the terms of the insurance
, United Talmudical Academy of Kiryas Joel v Cigna Prop. &
, 253 AD2d 423). However, resolution of this issue alone did not
entitle Zurich to summary judgment dismissing the Authority's claim because the
Authority's untimely notice is not considered in determining whether Zurich's
delay in disclaiming coverage was unreasonable (see
, Allstate Ins. Co.
, 210 AD2d 274). Accordingly, the Court set the matter down for a
trial on the factual issues of 1) when Zurich received notice of the Authority's
claim and 2) whether Zurich unreasonably delayed before sending its disclaimer
letter dated January 21, 1998 (Ex. 3) (Ruderman, J., Decision and Order file
stamped 09/09/99). A critical issue in determining whether the delay was
unreasonable is whether Zurich received notice by the November 13, 1997 letter
allegedly mailed to Zurich or whether Zurich received the letter by facsimile on
December 30, 1997.
The Authority presented the testimony of Morgan
a legal assistant in the office of the Attorney General ("AG"). Parker began
her employment on October 27, 1997. Her duties included: drafting pleadings;
responding to discovery requests; scheduling EBTS; and sending vouch-in letters
to insurance companies. She was trained by an investigator and was given form
letters to use.
Upon receipt of a claim, Parker would ascertain if there was insurance. She
would then contact the State agency at issue and request the certificate of
insurance for the purpose of ascertaining the parties to be vouched-in to the
lawsuit. Parker would then notify the contractor, agent, and insurance company
that a claim had been commenced against the State and that a defense was
Parker maintained that it was her custom and practice to send the insurance
company a vouch-in letter on the AG's letterhead with her original signature.
To memorialize that the original had been signed and sent, Parker would print a
copy of the letter from her computer on plain paper, without the AG's letterhead
and the letter would be unsigned with a check mark. If the letter had a "cc,"
she would photocopy the original letter with the AG's letterhead and her
Parker did not have a secretary and would handwrite the address on the
envelope and affix the certified mail sticker on the envelope. She then placed
the appropriate postage on the letter and deposited the letter in a mailbox at
140 Grand Street, White Plains, the same day that the letter was written.
Parker testified that, although the first vouching-in letters she had ever
drafted were the ones at issue, she had no recollection of preparing or sending
them. According to Parker, she used a form letter given to her and enclosed a
copy of the insurance certificate and claim. The letter referred to an attached
copy of the claim, but did not indicate that the certificate of insurance was
attached (Exs, A, B, C).
Three letters were received into evidence, which purportedly demonstrate the
custom and practice of the AG's office (Exs. A, B, C). Exhibit A is a letter to
Zurich dated November 13, 1997. It is addressed to Thomas Kerwin, Zurich's
regional executive named in the certificate of insurance, in Hauppauge, New
York. It is unsigned on plain paper bearing a check mark. The letter bears a
handwritten cc to the law firm representing the Larsons. Parker did not recall
why the cc and firm name were handwritten. There was no photocopy of the
original letter to show that it was mailed to the law firm.
Exhibit B is a letter to NAB Construction Corporation ("NAB"), the company
that contracted with the Authority for the work performed by claimant, Steven
Larson. It is on the AG's letterhead and bears a check mark, rather than a
signature. There is also a typewritten cc to the law firm representing the
Exhibit C is a signed letter to Allied Coverage Group
on plain paper, with a typed cc to the law firm representing the Larsons.
According to Parker's purported practices, this letter should have been
unsigned, on plain paper, with a check mark, indicating that an original had
been sent, or it should have been signed and on the AG's letterhead, indicating
that a cc had been sent.
Parker testified that exhibit C may have been recreated in 1998 to complete
the attorney's file that had been lost. She explained that an investigator's
file was created in 1997, when the claim was received in the AG's office, and an
attorney's file was later created. She testified that the attorney's file was
lost; therefore it became necessary to recreate the file in 1998, when the
third-party claim was commenced. Some of the original papers were in the
investigator's file; thus only some of the documents had to be recreated.
Parker testified that copies of the vouch-in letter were usually maintained in
the attorney's file, but nonetheless, exhibit B, the letter to NAB on
letterhead, was in existence and did not need to be recreated. Parker assumed
that the NAB letter had been erroneously placed in the investigator's file,
instead of the attorney's file. She further assumed that she signed the
recreated letter to Allied in 1998 (Ex. C), rather than use a check mark
because, by 1998, the AG's practices had changed and check marks were no longer
used. Parker conceded that, had the original letter been found, it would have
been unsigned with a check mark.
While conceding the possibility of recreating other letters after November 13,
1997, Parker maintained that she had no recollection of recreating the letter to
Zurich (Ex. A) and she insisted that she would never put a check mark on a
recreated document. Despite her indignance on this issue, the Court does not
see a distinction in the propriety of signing a recreated document as compared
to placing a check mark on a recreated document. The Court is not convinced
that the Zurich letter with the check mark was prepared on November 13, 1997.
Parker further testified that pursuant to her custom and practice, the letter
to Zurich would have been mailed by certified mail return receipt requested.
She could not, however, ascertain if she had done so here because of the lost
In sum, Parker's testimony was filled with inexplicable discrepancies and
contradictions. Her account of the lost file, misfiled papers, and recreated
documents evidence that the only custom and practice of the AG's office was
sloppy record keeping. It did not establish an office practice and procedure
that was designed to ensure that letters sent to the insurer are always properly
addressed and mailed and that such procedure was followed in the regular course
of business (
, Nassau Ins. Co. v Murray
, 46 NY2d 828). Thus, the Authority
failed to establish even a rebuttable presumption of receipt (see
Z. R. Raphaely Galleries v Lumbermens Mut. Cas. Co.
, 191 AD2d
Patricia Manero testified on behalf of Zurich. Manero is Zurich's litigation
specialist for construction claims and works in Zurich's Hauppauge office.
Manero maintained that Zurich received notice of the Larson claim on December
30, 1997, when Allied faxed a copy of a transmission, dated December 18, 1997,
that had been faxed to Allied by the AG's office (Ex. 2). The fax from Parker
to Allied contained: a copy of the letter to NAB from Parker; the Larson claim;
and the AG's answer to the Larson claim. Manero was not in the office on
December 30, 1997 and first saw the papers on January 5, 1998. Upon review of
the faxed documents, Manero determined that the request for a defense was
untimely and she drafted a disclaimer letter to be signed by Zurich's claims
manager, Patricia Grady. (Ex. 3). According to Zurich's practice, the letter
had to be reviewed by Manero's supervisor before it reached Grady for her
approval and signature. The disclaimer letter was signed by Grady and mailed
January 21, 1998.
Manero also testified that exhibit A was addressed to Kerwin, a construction
underwriter for Zurich who works in Zurich's New York office, however, it was
addressed to the Hauppauge office. Manero stated that it was Zurich's practice
to forward incorrectly addressed mail to its employees at their proper
Upon listening to the witnesses testify and observing their demeanor as they
did so, the Court finds that Zurich received notice on December 30, 1997 when
the fax from the AG's office was transmitted by Allied to Zurich and that, under
the facts and circumstances presented, Zurich did not unreasonably delay in
sending its disclaimer letter on January 21, 1998 (
, Hartford Ins. Co. v County of Nassau
, 46 NY2d 1028; Matter
of [Mathieu] Prudential Prop. & Cas. Ins. Co.
, 213 AD2d 408 [slightly
more than two month delay not unreasonable]).
Accordingly, Zurich effectively disclaimed on the basis of the Authority's
untimely notice; therefore Zurich is not obligated to defend the Authority
(Insurance Law § 3420(d).
LET JUDGMENT BE ENTERED DISMISSING THE THIRD-PARTY CLAIM.