New York State Court of Claims

New York State Court of Claims

LARSON v. NEW YORK STATE THRUWAY AUTH., #2000-010-022, Claim No. 96629


Insured did not give timely notice of claim for defense and answer timely disclaimed.

Case Information

Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):
Third-party defendant(s):
Claim number(s):
Motion number(s):

Cross-motion number(s):

Terry Jane Ruderman
Claimant's attorney:
Defendant's attorney:
Attorney General for the State of New YorkBy: Michael Rosas, Assistant Attorney General
Third-party defendant's attorney:
MELITO AND ADOLFSEN, P.C.By: Amy C. Clauss, Esq.
Signature date:
July 12, 2000
White Plains

Official citation:

Appellate results:

See also (multicaptioned case)

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 agreement (
see, United Talmudical Academy of Kiryas Joel v Cigna Prop. & Cas. Co., 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. v Machado, 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 Parker,[1]
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 expected.

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 signature.

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 Larsons.

Exhibit C is a signed letter to Allied Coverage Group ("Allied")[2]
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.[3]

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 file.

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 (
see, Nassau Ins. Co. v Murray, 46 NY2d 828). Thus, the Authority failed to establish even a rebuttable presumption of receipt (see, L. Z. R. Raphaely Galleries v Lumbermens Mut. Cas. Co., 191 AD2d 680).
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 address.

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 (
see, 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).


July 12, 2000
White Plains, New York

Judge of the Court of Claims

[1] Prior to her marriage in 1999, Parker was known as Kathy Del Fuoco.
[2] Allied is the Authority's agent, not Zurich's agent (see, Serravillo v Sterling, 261 AD2d 384 [insurance broker is agent of insured, not agent of carrier]).
[3] It is apparent that Parker recreated a document which did not mirror what would have been in the file.