MATTER OF ALLCITY INSURANCE COMPANY, JIMENEZ, N.Y., Judgment, Law, casemine.com

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Attorney(S)

Joseph Greene and Kenneth F. Popper for appellant. Isabella Natale and Stacy R. Seldin for Allcity Insurance Company, respondent.

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Smart Summary

Factual and Procedural Background

Appellant (an insured) notified his carrier, Allcity Insurance Company, that he was making an "uninsured motorist claim" and requested no-fault forms. Some months later he demanded arbitration, classifying the accident as a "hit-and-run." Allcity petitioned for a permanent stay of arbitration, alleging among other things that appellant failed to provide a required notice statement under oath and thus breached a condition precedent to coverage. Supreme Court granted the petition and permanently stayed arbitration. The Appellate Division affirmed and granted leave to appeal on a certified question. The Court of Appeals affirmed the Appellate Division's order, with costs, and did not answer the certified question as unnecessary.

Legal Issues Presented

Whether Allcity was required to issue a timely disclaimer despite appellant's conceded failure to submit the required sworn statement.
Whether failure to satisfy an insurance policy notice requirement vitiates coverage absent a valid excuse, and whether an insurer who fails to timely disclaim under Insurance Law § 3420(d) waives the affirmative defense of late notice.
When timeliness of an insurer's disclaimer is measured—specifically, whether it is measured from the point the insurer first learns of the grounds for disclaimer or denial of coverage.

Arguments of the Parties

Appellant's Arguments

Allcity was required to issue a timely disclaimer even though appellant conceded he failed to submit the required sworn statement.

Respondent (Allcity Insurance Company) Arguments

Appellant breached a condition precedent to coverage by failing to provide the required notice statement under oath.
Allcity filed a petition for a permanent stay of arbitration within 20 days after the arbitration demand was served and thereby timely disclaimed or gave sufficient notice as a matter of law under Insurance Law § 3420(d), assuming a disclaimer was required.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Security Mut. Ins. Co. v Acker-Fitzsimons Corp., 31 N.Y.2d 436	Failure to satisfy an insurance policy notice requirement vitiates coverage absent a valid excuse.	Accepted as authority for the proposition that breach of notice requirement can vitiate coverage.
Matter of Cuzdey [American Motorists Ins. Co.], 45 A.D.2d 134, affd 37 N.Y.2d 939	Failure to satisfy notice requirement vitiates coverage (as cited alongside other cases).	Grouped with other cases to support that principle.
Eveready Ins. Co. v Saunders, 149 A.D.2d 456	Failure to satisfy notice requirement vitiates coverage (as cited alongside other cases).	Grouped with other cases to support that principle.
Matter of Allstate Ins. Co. [Frank], 44 N.Y.2d 897	An insurer who fails to timely disclaim liability or deny coverage "as soon as is reasonably possible," when required by Insurance Law § 3420(d), waives its affirmative defense of late notice.	Applied to explain that an insurer may waive late-notice defenses by failing to timely disclaim under § 3420(d).
Zappone v Home Ins. Co., 55 N.Y.2d 131	Authority relating to whether a sworn-statement requirement in an endorsement is an exclusion requiring issuance of a disclaimer.	The court assumed without deciding that the sworn statement requirement could be an exclusion requiring disclaimer, citing Zappone.
Matter of Prudential Prop. Cas. Ins. Co. [Hobson], 67 N.Y.2d 19	Comparative authority regarding whether a sworn-statement requirement constitutes an exclusion requiring disclaimer.	Cited for comparison while the court expressly assumed without deciding the status of the sworn-statement requirement.
Hartford Ins. Co. v County of Nassau, 46 N.Y.2d 1028	Timeliness of an insurer's disclaimer is measured from when the insurer first learns of the grounds for disclaimer or denial of coverage.	Applied to hold that Allcity could not have timely disclaimed until it knew appellant asserted a hit-and-run claim; Allcity's petition 20 days after the arbitration demand was therefore timely.

Court's Reasoning and Analysis

The court began by noting appellant's concession that he failed to submit the required sworn statement. It acknowledged precedent that failure to satisfy a notice requirement can vitiate coverage but also recognized that an insurer who fails to timely disclaim under Insurance Law § 3420(d) may waive the late-notice defense. The court assumed, without deciding, that the sworn-statement requirement could be an exclusion requiring a disclaimer. It then applied Hartford Ins. Co. v County of Nassau to measure timeliness from when the insurer first learned the grounds for disclaimer: Allcity had no basis to disclaim upon receipt of appellant's initial letter asserting an "uninsured motorist claim" because it did not know the claim was being asserted as a hit-and-run until nine months after the accident, when it received the arbitration demand. Allcity filed its petition for a permanent stay of arbitration 20 days after that demand, in compliance with CPLR 7503(c); the court concluded that this petition constituted sufficient and timely notice of disclaimer under Insurance Law § 3420(d), assuming a disclaimer was required. On that basis the court affirmed the Appellate Division's order and deemed answering the certified question unnecessary.

Holding and Implications

The Appellate Division's order is affirmed, with costs; the certified question is not answered as unnecessary.

Direct effect: The permanent stay of arbitration granted by Supreme Court and affirmed by the Appellate Division is upheld; Allcity's petition filed 20 days after the arbitration demand was treated as timely notice of disclaimer (assuming disclaimer was required). The opinion does not answer the certified question and does not announce a broader new precedent beyond its application of existing authority to these facts.

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In the Matter of the Arbitration between ALLCITY INSURANCE COMPANY, Respondent, and SERGIO JIMENEZ, Appellant, et al., Respondents.

MEMORANDUM.

The order of the Appellate Division should be affirmed, with costs, and the certified question not answered as unnecessary.

Appellant insured notified his carrier, Allcity Insurance Company (Allcity), that he was making an "uninsured motorist claim" in connection with an automobile accident and was requesting no-fault forms. Some months later, appellant demanded arbitration, classifying the accident as a "hit-and-run". Allcity promptly petitioned for a permanent stay of arbitration, alleging in part that appellant failed to provide the required notice statement under oath, and thus breached a condition precedent to coverage.

Supreme Court granted the petition and permanently stayed arbitration. The Appellate Division affirmed and granted leave to appeal on a certified question, although the order is final for our jurisdictional purposes.

Appellant's sole argument is that Allcity was required to issue a timely disclaimer, despite his own conceded failure to submit the required sworn statement. Absent a valid excuse, failure to satisfy an insurance policy notice requirement vitiates coverage (Security Mut. Ins. Co. v Acker-Fitzsimons Corp., 31 N.Y.2d 436; Matter of Cuzdey [American Motorists Ins. Co.], 45 A.D.2d 134, affd 37 N.Y.2d 939; Eveready Ins. Co. v Saunders, 149 A.D.2d 456). However, an insurer who fails to timely disclaim liability or deny coverage "as soon as is reasonably possible," when required by Insurance Law § 3420 (d), waives its affirmative defense of late notice (Matter of Allstate Ins. Co. [Frank], 44 N.Y.2d 897).

Assuming without deciding that the sworn statement requirement in the uninsured motorist endorsement Allcity issued to appellant was an exclusion from coverage which required issuance of a disclaimer (Zappone v Home Ins. Co., 55 N.Y.2d 131; compare, Matter of Prudential Prop. Cas. Ins. Co. [Hobson], 67 N.Y.2d 19), we agree with Supreme Court that on the facts of this case Allcity timely disclaimed. The timeliness of an insurer's disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage (Hartford Ins. Co. v County of Nassau, 46 N.Y.2d 1028). As the Supreme Court held, Allcity had no basis upon which to disclaim when it received appellant's letter notifying it that he was asserting an "uninsured motorist claim." As appellant concedes, Allcity had no knowledge that he was asserting a hit-and-run claim until nine months after the accident, when it received the demand for arbitration on that precise basis. Allcity filed a petition for a permanent stay of arbitration 20 days after the demand for arbitration was served, in compliance with CPLR 7503 (c). The petition was sufficient and timely notice of disclaimer as a matter of law under Insurance Law § 3420 (d), assuming a disclaimer was required.

Chief Judge WACHTLER and Judges SIMONS, KAYE, ALEXANDER, TITONE, HANCOCK, JR., and BELLACOSA concur in memorandum.

On review of submissions pursuant to section 500.4 of the Rules of the Court of Appeals (22 N.Y.CRR 500.4), order affirmed, etc.

MATTER OF ALLCITY INSURANCE COMPANY, JIMENEZ