Coverage Pointers - Volume I, No. 9

Cross appeals from an order of the Supreme Court (Donohue, J.), entered April 8, 1 998 in Sullivan County, which, inter alia, partially granted defendant Mutual of Omaha Insurance Company's motion to dismiss the complaint in action No. 1 insofar as it seeks damages for fraud.

Plaintiff Anthony Carpinone (hereinafter plaintiff) and his wife, derivatively, commenced an action (action No. 1) alleging causes of action sounding in breach of contract and fraud to recover money damages resulting from the refusal by defendant Mutual of Omaha Insurance Company (hereinafter Mutual) to pay benefits pursuant to a disability insurance policy issued to plaintiff on November 17 , 1988 and a major medical policy issued on February 24, 1989. Mutual thereafter commenced two actions (action Nos. 2 and 3) against plaintiffs seeking to rescind these two policies based upon plaintiff' s alleged material misrepresentations, including concealment of facts, on both applications or, in the alternative, to reform the policies.[1] Plaintiff had filed a claim under the disability policy based upon a neck injury sustained in April 1990. After making one payment, Mutual denied plaintiff's claim based upon his misrepresentations. There was and is no dispute that plaintiff made misrepresentations on both insurance applications regarding his health and annual salary (see, Insurance Law § 3105 [a]). The dispute centered on whether Mutual demonstrated, as a matter of law, that plaintiff's misrepresentations were "material", establishing its right to rescind the insurance policies and defeat recovery thereunder (see, Insurance Law § 3105 [b]).

Specifically, plaintiff answered in the negative nearly identical health questions on both his 1988 and 1989 applications as to whether he had suffered or been treated for a back or spine injury or disorder during the previous five years when, in fact, he had injured his lower back in September 1985 and had continued to be treated by a physician for this injury until September 1988 -- just two months prior to filling out the disability policy application . Plaintiff made similar misrepresentations on the paramedical questionnaire which he also signed. Plaintiff made a second type of misrepresentation on his disability insurance application where he listed his annual salary of $33,000 as his "actual prior calendar year" salary and "two-year prior annual income", but failed to disclose that he had only been employed for one month prior to the date of the application and had earned only $2,800 in the prior two-year period. Plaintiff signed both applications, attesting that his answers were "true and complete" to the best of his knowledge and belief.

Mutual thereafter moved for summary judgment seeking dismissal with prejudice of plaintiffs' complaint and answers, and a declaration rescinding these two insurance policies and restraining plaintiffs from bringing suit on them. Supreme Court partially granted Mutual's motion by dismissing plaintiffs' fraud claim in action No. 1, and otherwise denied the motion. The parties cross -appealed, but plaintiffs failed to submit a brief despite two extensions of time and, accordingly, plaintiffs' appeal is deemed abandoned (see, Renaud v St. Lawrence County, 233 AD2d 710, 711 n 3; Transamerica Commercial Fin. Corp. v Matthews of Scotia, 178 AD2d 691, 692 n 1).

We affirm. An insurer is entitled to rescind an insurance policy if it establishes that the misrepresentations in the application for insurance were material to the risk to be insured (see, Vander Veer v Continental Cas. Co., 34 NY2d 50, 52-53; Kulikowski v Roslyn Sav. Bank, 121 AD2d 603, 604, appeal dismissed 69 NY2d 705). The materiality of an applicant's misrepresentation is ordinarily a factual question unless the insurer proffers clear and substantially uncontradicted evidence concerning materiality, in which event the matter is one of law for the court to determine (see, Process Plants Corp. v Beneficial Natl. Life Ins. Co., 53 AD2d 214, 216, affd 42 NY2d 928 ; see also, Kroski v Long Is. Sav. Bank FSB, AD2d , , 689 NYS2d 92, 93; Aguilar v United States Life Ins. Co. in City of N.Y., 162 AD2d 209, 210).

For an insurer such as Mutual to establish the materiality of a misrepresentation as a matter of law, it was required to present documentation concerning its underwriting practices such as its underwriting manuals, rules or bulletins which pertain to insuring similar risks (see, Insurance Law § 3105 [c]; Cutrone v American Gen. Life Ins. Co., 199 AD2d 1032; see also, Shapiro v Allstate Life Ins. Co. of N.Y., 202 AD2d 659; Sonkin Assocs. v Columbian Mut. Life Ins. Co., 150 AD2d 764, 765; Wittner v IDS Ins. Co., 96 AD2d 1053; Di Pippo v Prudential Ins. Co. of Am., 88 AD2d 631). The insurer's proof must establish that it would not have issued the same policies if the correct information had been disclosed in the applications (see, Insurance Law § 3105 [b], [c] [refer to "such contract" rather than to any contract]; Vander Veer v Continental Cas. Co., supra, at 53; Gugleotti v Lincoln Sec. Life Ins. Co., 234 AD2d 514; Process Plants Corp. v Beneficial Natl . Life Ins. Co., supra, at 217-218; ; Barrett v State Mut. Life Assocs. Co., 58 AD2d 320, 323, affd 44 NY2d 872, cert denied 440 US 912).

In support of its motion, Mutual submitted the affidavit of its Risk Director and Chief Underwriter, who merely asserted that -- based upon its underwriting guidelines then in effect -- Mutual would not have issued either of these policies if plaintiff had truthfully disclosed his back injury and earnings. He averred that -- based upon plaintiff's treatment for a spinal disorder within five years -- Mutual would have added an exclusion in the disability policy denying any future benefits for claims associated with "Disease of or Injury to the Back or Spine" , and would have declined to issue the policy if plaintiff had only been working for one month during the two years prior to that application. The Risk Director also indicated that based upon plaintiff' s adverse medical history, Mutual would have charged an additional premium for the major medical policy and would not have issued a "standard" policy, but would have excluded benefits for 12 months for "Disease of or Injury to the Back or Spine".

However, these conclusory statements by an insurance company employee, which are not supported by documentary evidence, are insufficient to establish that plaintiff's misrepresentations were material as a matter of law (see, Cutrone v American Gen. Life Ins. Co., supra; Wittner v IDS Ins. Co., supra; Campese v National Grange Mut. Ins. Co., ___ AD2d ___, 689 NYS2d 313; Di Pippo v Prudential Life Ins. Co. of Am., supra; cf., Kroski v Long Is. Sav. Bank FSB, ___ AD2d ___, ___, 689 NYS2d 92, 94; Gugleotti v Lincoln Sec. Life Ins. Co., supra; Gentile v Continental Am. Life Ins. Co., 215 AD2d 626, 627; Shapiro v Allstate Life Ins. Co. of N.Y., supra, at 660; Kulikowski v Roslyn Sav. Bank, supra, at 605-60 6). The Risk Director's affidavit, like the papers submitted on Mutual's motion for summary judgment and brief on appeal, make no reference to the applicability of any particular provision in its underwriting manual, excerpts of which are included in the record. Indeed, it is not possible for this court to determine, on this record, which classification in the "Diseases of the Skeletal and Muscular Systems " section of the underwriting manual -- which is nowhere described or explained (see, Di Pippo v Prudential Ins. Co. of Am., supra) -- encompasses plaintiff's condition, and Mutual has not submitted any proof to guide this analysis Bloom v Mutual of Omaha Ins. Co., 161 AD2d 1047, 1049; see also, Cutrone v American Gen. Life Ins. Co., supra). Further, Mutual fails to cite any provision establishing that this disability policy would not have been issued had plaintiff accurately revealed his prior earnings (cf., Naghavi v New York Life Ins. Co., ___ AD2d ___, 688 NYS2d 530) or what limitations would have attached to these policies. Accordingly, Mutual's motion for summary judgment was properly denied insofar as appealed from.

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, the petitioner appeals from an order of the Supreme Court, Kings County (Barasch, J.), dated December 3, 1998, which denied the petition.

ORDERED that the order is reversed, on the law, with costs, and the matter is remitted to the Supreme Court, Kings County, for a hearing on the issue of whether the respondent is an "insured person", as that term is defined in the subject automobile insurance policy; and it is further,

ORDERED that arbitration is temporarily stayed pending the hearing and new determination.

The Supreme Court erred in failing to hold a hearing on the issue of whether the respondent is an "insured person" as that term is defined in his parents' automobile insurance policy. The petitioner has raised an issue of fact as to whether the respondent qualifies as a "relative", which the policy defines as "a person living with you and related to you by blood, marriage, or adoption". The petitioner contends that the respondent was not living in the same household as his parents at the time of the accident. The petitioner met its burden of establishing the existence of evidentiary facts sufficient to conclude that there is a genuine preliminary issue which requires a hearing and justifies a stay (see, National Grange Mut. Ins. Co. v Diaz, 111 AD2d 700). Evidence that the respondent's driver's license , voter's registration card, and the previous year's income tax returns listed his parents' home address as his own residence address is insufficient to establish that the respondent was "living with" his parents at the time of the accident (see, Matter of Aetna Cas. & Surety Co. v Gutstein, 80 NY2d 773; Matter of Aetna Cas. & Surety Co. v Panetta, 202 AD2d 662; D'Amico v Pennsylvania Millers Mut. Ins. Co., 72 AD2d 783, affd 52 NY2d 1000; cf., Dutkanych v United States Fid. & Guar. Co., 252 AD2d 537; Nationwide Ins. Co. v Allstate Ins. Co., 181 AD2d 1022).

In an action, inter alia, to recover damages for breach of a contract to procure insurance, (1) the defendant International Bus Services, Inc., appeals, as limited by its brief, from so much of an order of the Supreme Court, Kings County (Shaw, J.), dated August 10 , 1998, as granted the plaintiffs' motion for summary judgment against it to the extent of declaring that International Bus Services, Inc., breached its contractual obligation to procure insurance coverage for the plaintiffs and has a duty to pay any damages the plaintiffs have incurred and will incur including the amount of any judgment or settlement in an action entitled Barker v Adirondack Transit Lines, pending in the Supreme Court, Kings County, under Index No. 3557/94, and the amount of legal fees and expenses incurred in defending that action, and (2) the defendant Agricultural Excess & Surplus Insurance Company appeals from the same order.

ORDERED that the appeal of the defendant Agricultural Excess & Surplus Insurance Company is dismissed for failure to perfect the same in accordance with the rules of this court (see, 22 NYCRR 670.8[e]); and it is further,

ORDERED that the order is affirmed insofar as appealed from by the defendant International Bus Services, Inc.; and it is further,

ORDERED that the plaintiffs are awarded one bill of costs payable by the defendant International Bus Services, Inc.

The Supreme Court properly concluded that the defendant International Bus Services, Inc. (hereinafter International), breached its obligations under a lease and "Service Agreement " to procure general liability insurance naming the plaintiffs as additional insureds. Contrary to International 's contention, the plaintiffs did not waive their right to enforce the insurance procurement provisions of the lease and agreement. International submitted no proof that the plaintiffs were aware of its failure to obtain the required coverage or any proof from which the plaintiffs' intent to relinquish their contractual rights could be inferred (see, Gilbert Frank Corp. v Federal Ins. Co., 70 NY2d 966; Santamaria v 1125 Park Ave. Corp., 238 AD2d 259).

International's remaining contentions are either unpreserved for appellate review or without merit.

THOMPSON, J.P., SULLIVAN , ALTMAN, and FEUERSTEIN, JJ., concur.

In an action to recover damages for personal injuries, the plaintiffs Janie Ramsey and Cynthia Manning appeal from a judgment of the Supreme Court , Suffolk County (Henry, J.), entered August 8, 1997, which, upon an order of the same court dated May 5, 1997, granting the respective motions of the defendants for summary judgment dismissing the complaint insofar as asserted against them on behalf of the appellants on the ground that neither appellant sustained a serious injury within the meaning of Insurance Law § 5102(d), dismissed the complaint insofar as asserted by the appellants and severed the action.

ORDERED that the judgment is affirmed, with one bill of costs.

The Supreme Court properly granted the respective motions of the defendants for summary judgment dismissing the complaint insofar as asserted against them by the appellants. The defendants established a prima facie case that neither appellant sustained a serious injury within the meaning of Insurance Law § 5102(d) in the subject collision (see, Gaddy v Eyler, 79 NY2d 955). Thus, the burden shifted to the appellants to come forward with sufficient evidence that they sustained a serious injury (see, Gaddy v Eyler, supra; Licari v Elliot, 57 NY2d 230, 235; Lopez v Senatore, 65 NY2d 1017).

The appellants' evidence was insufficient. The unsworn medical reports which they submitted in opposition to the motions were inadmissible (see, Grasso v Angerami, 79 NY2d 813, 814; Mobley v Riportella, 241 AD2d 443, 444). With respect to the appellant Cynthia Manning, the affirmed report of Dr. Michael O. Sauter did not raise a triable issue of fact as to whether she sustained a serious injury. Without admissible evidence to support their claims of injuries, the appellants' respective affidavits, consisting merely of self-serving, subjective complaints of pain, were without probative value (see, Rum v Pam Transp., 250 AD2d 751; Lincoln v Johnson, 225 AD2d 593; Barrett v Howland, 202 AD2d 383; LeBrun v Joyner, 195 AD2d 502).

The appellants' opposition papers contained an affirmation by the appellant Manning's treating chiropractor. This court has held that affirmations by chiropractors which are not subscribed before a notary or other authorized official do not constitute evidence in admissible form (see, CPLR 2106; Doumanis v Conzo, AD2d [2d Dept. , Oct. 4, 1999]; Rum v Pam Transp., supra; McNeil v Crutchley, 250 AD2d 655; Gill v O.N.S. Trucking, 239 AD2d 463). The case of Semler v Molinelli (245 AD2d 363) is not to the contrary, as the affirmation by the plaintiff's chiropractor in that case was sworn to before a notary public.

MANGANO, P.J., RITTER, JOY, McGINITY, and SMITH , JJ., concur.

Appeal from a decision of the Workers' Compensation Board, filed November 25, 1997, which ruled that claimant's injuries did not arise out of his employment and denied his claim for workers' compensation benefits.

Claimant was injured in the employer's parking lot while assisting a co- worker whose motorcycle would not start . Claimant's shift had ended and he was proceeding to his vehicle when he stopped to help the co-worker jump- start the motorcycle. During the process, the motorcycle jerked forward, causing claimant to fall and injure his arm. The Workers' Compensation Board concluded that claimant was engaged in a purely personal pursuit when he was injured and denied his claim for workers' compensation benefits. Claimant appeals.

An injury is compensable under the Workers' Compensation Law if it arose out of and in the course of employment (see, Matter of Neacosia v New York Power Auth., 85 NY2d 471, 474-475). The parking lot maintained by the employer constituted precincts of claimant's employment, and the course of his employment encompassed a reasonable time for claimant to leave his place of employment (see, Matter of Lawton v Eastman Kodak Co., 206 AD2d 813). Thus, as found by the Board, claimant was entitled to the presumption that an injury which occurs in the course of employment also arises out of that employment, which can only be rebutted by substantial evidence to the contrary (see, Matter of Torio v Fisher Body Div. - General Motors Corp., 119 AD2d 955, 956).

Activities which are purely personal pursuits are not within the scope of employment and are not compensable under the Workers' Compensation Law, with the test being whether the activities are both reasonable and sufficiently work related under the circumstances (see, Matter of Richardson v Fiedler Roofing, 67 NY2d 246). The Board concluded that claimant's efforts to assist his co-worker in the parking lot were reasonable but not sufficiently work related to make his injury compensable. In Matter of Purdy v Savin Corp. (135 AD2d 975), while walking through her employer's parking lot on the way to work, the claimant noticed a vehicle parked with its headlights on, opened the vehicle 's door, reached in and turned the lights off. In so doing, she sustained an injury to her back, which the Board ruled compensable and this court affirmed. In view of the factual similarity of this case and the Purdy case, "it was incumbent upon the Board to either follow the precedent established by its decision in the prior case or provide an explanation for its failure to do so" ( Matter of Paolucci v Capital Newspapers, 197 AD2d 811, 812). Based upon the Board's failure to comply with this requirement, the matter must be remitted to the Board (see, Matter of Waters v City of New York, 256 AD2d 680).

Mercure, Crew III, Yesawich Jr. and Carpinello, JJ., concur.

ORDERED that the decision is reversed , without costs, and matter remitted to the Workers' Compensation Board for further proceedings not inconsistent with this court's decision.

Appeal from an order of the Supreme Court (Demarest, J.), entered August 24, 1998 in St. Lawrence County, which granted defendants' motions for summary judgment dismissing the complaint.

In May 1995, plaintiff, the operator of an aluminum reduction plant located in the Town of Massena, St. Lawrence County (hereinafter the Massena site), commenced this declaratory judgment action against defendants, the issuers of numerous primary and excess liability insurance contracts covering the period 1959 to 1986, seeking coverage for three "environmental actions" brought by the State Department of Environmental Conservation (hereinafter DEC), the Federal Environmental Protection Agency (hereinafter EPA) and the St. Regis Mohawk Tribe. The environmental actions involved contamination of groundwater, surface waters and soil at the Massena site (the DEC action), the sediments in the St. Lawrence River (the EPA action) and the natural resources owned by the St. Regis Tribe, New York State and the United States -- the natural resources damages or "NRD" action. Plaintiff seeks indemnification for $150 million in costs expended or to be expended to clean up portions of the Massena site and the sediments in the St. Lawrence river adjacent to the Massena site. It also seeks a declaration that the issuers of primary liability insurance policies, defendants The Travelers Indemnity Company and Travelers Casualty and Surety Company (formerly known as The Aetna Casualty and Surety Company) (hereinafter collectively referred to as Travelers), the Insurance Company of North America (hereinafter INA) and Liberty Mutual Insurance Company , are obligated to pay defense costs.

Following discovery, defendants moved for summary judgment contending, inter alia, that plaintiff breached its contractual duties to its insurers by failing to provide timely notices of claims and occurrences. Supreme Court found that a December 6, 1983 letter sent to plaintiff by DEC constituted a "notice of claim" under the terms of the insurance policies in effect requiring notice be given to defendants "forthwith". Additionally , the court found that plaintiff had knowledge of events occurring prior to December 1986 from which it should have reasonably concluded that it was likely to incur remediation costs within its insurance coverage requiring it to provide notice by that time.[1] Supreme Court granted summary judgment in favor of defendants dismissing the complaint resulting in this appeal.

Initially, plaintiff contends that the December 6, 1983 "Potentially Responsible Party" or "PRP" letter it received from DEC did not constitute a claim within its insurance coverage.

The letter provides , in pertinent part, as follows:

Re: Reynolds Metals, Massena

Sites: #645009 A - Black Mud Lagoon

#645009B - Reynolds Metals Landfill

Dear Sir or Madam:

In accordance with the provisions of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §9601 et, seq., the Department of Environmental Conservation has determined that you may be responsible for the release or threatened release of hazardous substances at the above -referenced site. As a potentially responsible party, you may be liable for the present and future costs of response, removal and remediation and for damages to the natural resources of the State of New York at and around the referenced site.

In view of the foregoing, this letter constitutes a claim by the State of New York pursuant to 42 U.S.C. §9612 (a) for all costs, damages and claims recoverable now and in the future under federal and state law, including CERCLA. Unless, in a timely fashion, all investigative, removal and remedial work necessary at the site and its environs is performed and unless the State is reimbursed for all damages to its natural resources and for all past, present and future response, removal and remediation costs, this claim will not have been satisfied. In such event, the State of New York may hold you liable and subject to New York's claims under federal and state law through legal action.

Noting that its insurance policies excluded coverage for damages to its own property, plaintiff argues that the December 1983 letter referred only to contamination of the six-acre lagoon and 11.5- acre landfill on its 1,600- acre Massena site and made no reference to damage to the St. Lawrence River or property of third parties. Therefore, it contends that the letter did not trigger its obligation under the policies to provide notice.

On the other hand, defendants point to language in the letter which they argue shows that it not only covered the landfill and the lagoon at the Massena site but also the St. Lawrence River by reference to "its environs" including "the natural resources of the State of New York at and around the referenced site". Defendants also contend that the language used asserted a claim by a third party, namely, the State: "this letter constitutes a claim * * * for all costs, damages and claims recoverable now and in the future under federal and state law" and "unless the State is reimbursed for all damages to its natural resources and for all past, present and future response, removal and remediation costs * * * the State of New York may hold you liable * * * through legal action".

Under New York law, compliance with the notice provisions of a liability insurance policy is a condition precedent to coverage ( see, American Home Assur. Co. v International Ins. Co., 90 NY2d 433, 442-443; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 440). Thus, "'[a]bsent a valid excuse, a failure to satisfy the notice requirement vitiates the policy * * * and the insurer need not show prejudice before it can assert the defense of noncompliance'" (American Home Assur. Co. v International Ins. Co., supra, at 440, quoting Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., supra, at 440). However, "an insured's good-faith belief in nonliability, when reasonable under the circumstances, may excuse a delay in notifying an insurer of an occurrence or potential claim" (Marinello v Dryden Mut. Ins. Co., 237 AD2d 795, 796; see, D'Aloia v Travelers Ins. Co., 85 NY2d 825, 826; Empire City Subway Co. v Greater N.Y. Mut. Ins. Co., 35 NY2d 8, 13; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., supra, at 44 1; Vradenburg v Prudential Prop. & Cas. Ins. Co., 212 AD2d 913). The same holds true for a reasonably held belief of noncoverage (see, Deso v London & Lancashire Indem. Co. of Am., 3 NY2d 127, 130-131 [discussing Gluck v London Lancashire Indem. Co. of Am., 2 AD2d 751, affd 2 NY2d 953]; Sparacino v Pawtucket Mut. Ins. Co., 50 F3d 141, 143; cf., Empire City Subway Co. v Greater N.Y. Mut. Ins. Co., supra, at 13-14).

Addressing noncoverage first, we note that in his deposition testimony, plaintiff' s risk management manager, Bill Murphy, maintained that based upon his reading of the "owned property " exclusions[2] contained in plaintiff's insurance policies, he did not believe there was any insurance coverage for clean-up of any plant sites owned by plaintiff. The claims manual of Travelers and also the deposition testimony of their claims handlers lend support to that belief. Under this view, any potential damage to the State's natural resources, e.g., groundwater (see, Navigation Law § 172 [12], [18]), at and around the two waste disposal sites located at the Massena site and referenced in the December 1983 letter would not have been covered.

As for the good-faith belief in nonliability, the December 1983 letter did not identify the St. Lawrence River or any other third-party property as a possible contamination site. Additionally, in January 1 984 DEC sent plaintiff notification that the Black Mud Pond and the lagoon waste disposal locations were classified a "3" on the EPA's ranking system for inactive waste sites. A "3" ; signified that action at the two sites might be deferred because they did not then present "a significant threat to public health or environment".

Whether plaintiff's belief of nonliability and noncoverage under the relevant circumstances was reasonable is ordinarily a question of fact (see, Argentina v Otsego Mut. Fire Ins. Co., 86 NY2d 748, 750; G.L.C. Contr. Corp. v Aetna Cas. & Sur. Co., 215 AD2d 821; Kreger Truck Renting Co. v American Guar. & Liab. Ins. Co., 213 AD2d 453). In our view, plaintiff has tendered sufficient evidentiary facts to raise a material question as to whether it held a reasonable good-faith belief in noncoverage and nonliability excusing its failure to "immediately forward" the letter to defendants.[3]

Defendants also argue that Supreme Court properly precluded plaintiff from raising its reasonable belief in nonliability or noncoverage as a defense for noncompliance with the late notice of claim provisions contained in its policies. Relying on the rationale of American Ins. Co. v Fairchild Indus. (56 F3d 435), which noted that "[a]n assertion of possible liability, no matter how baseless, is * * * all that is needed to trigger a notice of claim provision" (id., at 439), defendants contend that a defense grounded upon the reasonableness of a belief of nonliability or noncoverage is only permitted in cases involving late notices of occurrence but not late notices of claim. We disagree and note that there is no New York case which specifically upholds such a distinction . In Empire City Subway Co. v Greater N.Y. Mut. Ins. Co. (35 NY2d 8, supra), the defendant insurer alleged that the plaintiff , its insured, breached both a notice of occurrence provision and a notice of claim provision after a 16-month delay in notifying it of a third-party complaint. We find it significant that the court considered the merits of the plaintiff's excuse instead of simply holding that any excuse for a failure to serve a notice of claim was irrelevant.

Moreover, despite the analysis in American Ins. Co. v Fairchild Indus. (supra, at 439-440) differentiating between the foci of a notice of occurrence provision versus a notice of claim provision, we perceive no reason why a failure to give a timely notice of claim should not be excused by an insured's good-faith belief in nonliability or noncoverage. It appears illogical that insureds should be required to promptly notify insurers of every claim no matter how remote the possibility of liability or coverage but be excused from doing so if a reasonable evaluation of an occurrence yields the same conclusion. Accordingly, we hold that plaintiff's "good-faith belief of nonliability * * * [or noncoverage] may excuse or explain [its] seeming failure to give timely notice of [the December 1983 claim] against it as long as the belief is reasonable under the circumstances "(Town of Smithtown v National Union Fire Ins. Co., 191 AD2d 426, 427).

Plaintiff also contends, and we agree , that Supreme Court erred when it concluded, as a matter of law, that plaintiff was required to give notice of an occurrence or occurrences no later than December 1986. Initially, we note "that plaintiff , as the nonmoving party, is entitled to the benefit of every favorable inference which can be drawn from the documents submitted on [its] behalf" (Shay v Palombaro, 229 AD2d 697, 700). Plaintiff contends through depositions and documentary evidence that it lacked knowledge in 1986 or in prior years of an occurrence giving rise to its possible liability within its insurance coverage so as to require it to give notice to defendant primary insurers no later than December 1986. Plaintiff's supporting proof shows that it was first notified in December 1982 that the lagoon and the landfill at the Massena site were being classified as possible hazardous waste disposal sites for inclusion in the State's Superfund program because of the possibility of groundwater contamination; however, no such contamination was confirmed at either site. Furthermore, plaintiff states that its own study at the time did not reveal surface or groundwater contamination from the lagoon .

As previously noted, the classification of the lagoon and the landfill by DEC as not posing significant threats to the public health or to the environment supported plaintiff's expressed belief that there had not been any release of contamination that threatened the property of any third party.[4] By 1985 plaintiff states that it needed to obtain a new DEC permit for the landfill and a permit to build a new lagoon, as the existing lagoon was reaching capacity. DEC would not issue the permits without plaintiff agreeing to a consent order which committed it to perform an environmental investigation of the Massena plant. Although earlier drafts of the consent order referred to the need for development of a remedial program and noted the presence of PCB contaminated sediments in the St . Lawrence River in the vicinity of the Massena plant, DEC dropped that language from the final consent order. Plaintiff states that at that time it was unaware of any PCB releases to the river caused by its operations and believed that any PCB contamination came from already confirmed sources at plants operated by its downstream and upstream neighbors, the General Motors Corporation and Alcoa. The consent order executed in September 1987 required an investigation of the entire plant site and development of a remediation program if any inactive hazardous waste sites were discovered. However, no remediation was specifically ordered and there was no requirement for an investigation of the river.

On or about September 10, 1987 DEC sent plaintiff another letter informing it for the first time that it was a potential responsible party for the contamination of the St. Lawrence-Grasse River System (hereinafter the September 1987 letter) and that it was nominating a portion of that river system for inclusion on the EPA's National Priorities List. Plaintiff sent a copy of the September 1 987 letter to each of the primary insurers, Travelers, Liberty Mutual and INA, referring to it as a "potential claim" inasmuch as it made no demand that plaintiff pay anything. Subsequently, in January 1988, plaintiff furnished each of the primary insurers with a package of materials concerning the negotiations leading up to the September 1987 consent order and a close-to-final draft of it. Thereafter , in June and July 1988 all of the excess insurers were notified of the hazardous waste sites with potential exposure to plaintiff and that DEC was alleging that plaintiff was a potentially responsible party for contamination of the St. Lawrence-Grasse River System. Based upon the record before us, and considering that this is a motion for summary judgment, we find that plaintiff made a sufficient evidentiary showing to establish the existence of material triable issues of fact as to whether it had knowledge of on-site contamination causing third-party property damage that was subject to insurance coverage prior to the service of its notices to defendants in September 1987 and January 1988.

Furthermore, we do not agree with Supreme Court's grant of summary judgment to defendant excess insurers after finding that plaintiff's notices to those insurers in the summer of 1988 were, as a matter of law, untimely. As previously noted, the September 1987 consent order did not require remediation of any third-party property. Our examination of the record reveals no evidence that plaintiff had any actual estimates for clean-up costs prior to its service of the notices in the summer of 1988. Thus, defendant excess insurers failed to tender sufficient evidentiary facts demonstrating plaintiff's knowledge prior to the summer of 1988 that its primary policies would be exhausted implicating the excess insurance coverage (see, American Home Assur. Co. v International Ins. Co., 90 NY2d 433, 443, supra) and requiring notice to the excess insurers .

Next, we address plaintiff's contention that Supreme Court erred when it determined that plaintiff's May 18, 1995 notice to defendants of a potential NRD claim was untimely as a matter of law. It is undisputed that in May 1989, counsel for the St. Regis Mohawk Tribe wrote plaintiff, Alcoa and General Motors a letter giving notice that the St. Regis Mohawk Tribe "intends to file suit for damages to its rights and interest in and around the St. Lawrence River, including, but not limited to fish, wildlife, land, surface and ground waters, air and other natural resources caused by your companies' operation in Massena, New York".

Some five months later in October 1 989, the New York Attorney-General's office also sent plaintiff a "notice of intent to sue" ;. These letters were received subsequent to plaintiff's discovery during the summer of 1988 of elevated levels of PCBs in St. Lawrence River sediments close to one of its outfalls, in one of its outfall ditches , and significant contamination at the Massena site, particularly in the North Yard. Also, in early October 1989, plaintiff received a unilateral administrative order by the EPA directing it and Alcoa to investigate and remediate PCB contamination in portions of the St. Lawrence River. We find that by October 1989 plaintiff possessed all the knowledge it needed to give defendants notice with respect to the NRD claims. We agree with Supreme Court that the fact that no natural resources lawsuit had been commenced[5] is irrelevant and presents no excuse for plaintiff's failure in 1989 to provide notice under the terms of its insurance policies. Accordingly, we find that plaintiff's unexcused delay in providing notice of the natural resources damages claims until May 1995 was untimely as a matter of law.

Finally, we find unpersuasive plaintiff's arguments urging rejection of defendants ' late notice defense because they did not suffer any prejudice as a result of the timing of the notices of occurrences or claims. We note that "[n]oncompliance with the notice provision of an insurance policy will vitiate the contract regardless of whether the insurer[s] suffered any prejudice as a result of the delay"(Vradenburg v Prudential Prop. & Cas. Ins. Co., 212 AD2d 913, 913, supra [emphasis supplied]; see, American Home Assur. Co. v International Ins. Co., 90 NY2d 433, 440, supra; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 440, supra).

Mercure, Peters , Spain and Carpinello, JJ., concur.

**FOOTNOTES**

1 The typical notice of occurrence provisions provide, in pertinent part, as follows:

When an occurrence takes place written notice shall be given by or on behalf of

the insured to the company * * * as soon as practicable * * *.

[2]: Typically, such exclusions state:

This insurance does not apply:

* * *

E. to property damage to

1. property owned, occupied or transported by the insured

* * *

3. property used by the insured

* * *

3 The typical notice of claim provisions provide, in pertinent part, as follows:

If a claim is made or suit is brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by it or its representative.

4 Although in June 1986 DEC reclassified the lagoon a "2a" ; in its registry of inactive hazardous waste disposal sites, a temporary classification assigned to sites that have inadequate and/or insufficient data for inclusion in any other classification, no remedial action was required.

5 In January 1991, the St. Regis Mohawk Tribe, DEC and agencies of the US Department of the Interior and the US Department of Commerce, as trustees under section 7 of the Comprehensive Environmental Response, Compensation and Liability Act (42 USC § 9607 [f]), signed a "Natural Resources Funding Agreement" with plaintiff, General Motors and Alcoa to develop a "Natural Resource Damage Assessment Plan". A covenant in that agreement precludes the trustees from asserting a claim for natural resource damages under Federal, State or Tribal law as long as the agreement remains in full force and effect.

ORDERED that the order is modified, on the law, without costs, by reversing so much thereof as granted defendants' motions in their entirety; motion granted to the extent that defendants are awarded partial summary judgment dismissing all causes of action against them with respect to the natural resources damages claims and motions otherwise denied; and, as so modified, affirmed.

ENTER:

Michael J. Novack

Clerk of the Court

Appeal from an order of the Supreme Court (Ferradino, J.), entered September 17, 1998 in Fulton County, which granted defendants' motions for summary judgment dismissing the complaint.

Plaintiff is the owner of certain property located in the City of Gloversville, Fulton County, which he operated as a bowling alley from 1983 to 1989, at which time he sold the premises to a third party. In 1993, the mortgage holder contacted plaintiff, advised of the then-impending foreclosure and inquired as to whether plaintiff would be interested in reacquiring the property. Plaintiff subsequently assumed the underlying mortgage and, in conjunction therewith, contacted defendant Salvione Insurance Agency, an agent of defendant Exchange Insurance Company, about obtaining insurance coverage for the parcel. After speaking with John Samples, an agent employed by Salvione, plaintiff purchased a policy from Exchange insuring the subject premises for a period of one year commencing in September 1993.[1]

In March 1994, the roof of the bowling alley collapsed -- purportedly due to the accumulation of ice and snow and/or a defective support beam. When plaintiff advised Salvione of this loss, he was informed that he was "not covered" as the policy in question excluded coverage for losses due to, inter alia, snow and ice. Plaintiff thereafter commenced this action against defendants alleging that they had negligently failed to procure appropriate insurance coverage for the property and, further, that defendants should be estopped from denying coverage based upon representations they allegedly made regarding the extent of the coverage provided and the repairs that had been made to the defective support beam. Following joinder of issue and discovery, defendants moved for summary judgment dismissing the complaint. Supreme Court granted the respective motions, prompting this appeal by plaintiff.

We affirm. As a general rule, "insurance agents have a common-law duty to obtain requested coverage for their clients within a reasonable time or inform the client of the inability to do so; however, they have no continuing duty to advise, guide or direct a client to obtain additional coverage" (Murphy v Kuhn, 90 NY2d 266, 270; see, M & E Mfg. Co. v Reis Inc., ___ AD2d ___, ___, 692 NYS2d 191, 193; Hennessey v General Acc. Ins. Co. of Am., 257 AD2d 750, ___, 683 NYS2d 342, 343). In this regard, plaintiff testified at his examination before trial that he requested the same insurance coverage as had been provided to the property's previous owners, and the record makes clear that this is precisely the coverage that plaintiff received. Additionally plaintiff, who admittedly never read the underlying policy, conceded that he did not initially request a specific type of coverage (except to advise Samples that "money was tight"), nor did he subsequently request any policy changes or upgrades (see, M & E Mfg. Co. v Reis Inc., supra, at 193-194). Under such circumstances, it cannot seriously be argued that defendants failed to obtain appropriate coverage for plaintiff.

To the extent that plaintiff contends that he had a special relationship with defendants such that he was entitled to rely upon Samples' representations that he was purchasing a "good policy", we find this argument to be equally unpersuasive. Assuming, without deciding, that the "special relationship" theory applies in a customer-agent commercial insurance coverage setting such as the one at issue here,[2] we find, as a matter of law, that the record before us fails to demonstrate the existence of such a relationship between plaintiff and defendants. Even accepting that Samples indeed represented to plaintiff that he was purchasing a "good policy" and/or that the defective support beam had been repaired, there is nothing in the record to suggest that either Samples or Carl Golas, the loss control representative who inspected the premises for Exchange prior to the issuance of the policy, possessed any unique or specialized expertise regarding the structural aspect of the premises, or that either was in a special position of confidence with plaintiff such that plaintiff's reliance upon any representations made by them was justified (see, Murphy v Kuhn, supra, at 271; M & E Mfg. v Reis Inc., supra, at 194- 195).

Finally, we find no merit to plaintiff's contention that defendants should be estopped from denying coverage. Again, even accepting that Samples misrepresented that the defective support beam had in fact been repaired and, further, that because such beam was encased in plywood plaintiff could not, simply by looking at the beam, verify that such repairs had been accomplished, the fact remains that plaintiff was aware that there had been problems with the support beam in the past and, significantly, observed that the floor around the base of the beam was sagging. As plaintiff readily could have ascertained the extent of the repairs made to and the condition of the beam itself by insisting that a structural inspection be performed prior to closing, which he admittedly did not do, Supreme Court correctly concluded that plaintiff could not meet the "lack of knowledge" prong of the equitable estoppel test (see, e.g., Michaels v Travelers Indem. Co., 257 AD2d 828, ___, 683 NYS2d 640, 641-642). Plaintiff's remaining arguments have been examined and found to be lacking in merit.

**FOOTNOTES**

CENTENNIEL INSURANCE COMPANY v. HOFFMAN