Visit the HOT CASES section of the Federation of Insurance and Corporate Counsel website for cases covering a broad range of legal issues from other jurisdictions: www.thefederation.org.

09/29/00: MATTER OF ARBITRATION BETWEEN STATE FARM MUTUAL AUTOMOBILE INS. CO. and HERNANDEZ
New York State, Appellate Division, Fourth Department
SUM: Delay in Providing Notice of SUM Claim raises Issue of Fact whether Insured acted with Diligence in Ascertaining Tortfeasor’s Coverage
Insured was injured in a motor vehicle accident in June 1996 but did not provide the insurer notice of a SUM claim until October 1998. The insured filed for arbitration and the insurer moved for a stay, which the lower court denied. The appellate court reversed and remitted the matter for further proceedings, concluding that there was an issue of fact whether the insured acted with due diligence. The notice provision of the policy required that notice of a SUM claim be given "as soon as practicable" or "with reasonable promptness after the insured knew or should reasonably have known that the tortfeasor was underinsured." A delay of over two years is unreasonable as a matter of law. The burden shifted to the insured to provide a reasonable excuse for the delay or establish due diligence in ascertaining the insurance coverage of the vehicles involved in the accident. The respondent contended that he had a reasonable excuse for the delay, as he did not know the seriousness of his injuries immediately following the accident. The court rejected this argument noting that, while plaintiff did not have a second surgery until 17 months after the accident, that did not explain the additional nine-month delay in giving notice. The court found, however, there was an issue whether the insured acted diligently in attempting to ascertain the existence of insurance coverage.

09/29/00: USF&G v. NEW YORK SUSQUEHANNA AND WESTERN RAILWAY CORP.
New York State, Appellate Division, Fourth Department
Prejudice from Late Disclaimer Sufficient to Estop Insurer from Asserting No Coverage.
An employee of the defendant/insured was injured and brought suit. The insured presented the claim to its insurer, who assumed the defense and paid the insured’s attorney’s fees. The insurer never sent a reservation of rights letter nor a disclaimer until the eve of settlement, when the insurer announced that it was considering disclaiming coverage on the grounds that the insured failed to provide prompt notice, that the vehicle was no a covered auto, and that an exclusion in the policy barred coverage. The insurer agreed to pay the settlement only if the insured agreed to litigate the coverage issues and, in the event no coverage is found, to reimburse the insurer. The insured agreed and a settlement was paid to the injured employee. The insurer then commenced this declaratory judgment action arguing that it was not obligated to defend or indemnify and that Insurance Law §3420(d) does not apply because the accident occurred in New Jersey. The lower court denied the insurer’s motion for summary judgment and dismissed the complaint concluding that Insurance Law §3420(d) applied despite the occurrence of the accident outside of New York. The appellate court found that the insurer was obligated to defend and indemnify, but for different reasons. The appellate court found that Insurance Law §3420(d) did not apply to accidents occurring outside New York. However, the court concluded that the insurer was equitably estopped from asserting that the policy did not cover the claim. The insurer undertook the defense of the action and did not reserve its rights under the policy. Although the insured was represented by the attorneys of its choice, the attorneys shared information with the insurer, provided the insurer with status reports, conducted depositions with the approval of the insurer, and entered into settlement discussions with the insurer’s knowledge. The insurer’s first assertion of a possible disclaimer on the eve of the settlement conference placed in jeopardy a favorable settlement negotiated by the insured’s attorneys, and forced the insured to agree to litigate the coverage issues in order to save the settlement. Thus, the insured demonstrated prejudice from the late disclaimer sufficient to estop the insurer from asserting that there was no coverage under the policy.

09/28/00: FRIEDMAN v. PRUDENTIAL INS. CO. of AMERICA
New York State, Appellate Division, First Department
Trustee only has Standing to seek Rescission or Damages Attributable to Issuance of Policies
This action arising out of the purchase of certain life insurance policies, in which the plaintiffs claim that the insurer engaged in fraudulent or negligent acts prior to the issuance of the policies, was dismissed on the ground that the plaintiffs lacked standing to sue – the named plaintiffs were not named insureds. The policies were owned by a trust and only the trustee could seek rescission or damages attributable to their issuance. The court rejected plaintiffs’ argument that the trust was not validly formed because a complete trust agreement was never executed. The court found sufficient evidence that an express trust was created by the actions of the trustee in purchasing the policies, acknowledging receipt of the policies, paying the premiums and certifying to the insurer the existence of the trust. The plaintiffs’ alleged failure to complete a formal trust document did not invalidate it. The court also rejected plaintiffs’ argument that. Since the claims were based on conduct done prior to the issuance of the policies, the claims were independent of the trust. The court found that all of the transactions and occurrences had meaning only within the context of the creation of the 1994 Trust and purchase of the policies.

09/28/00: HOWE v. WILKINSON
New York State, Appellate Division Third Department
Serious Injury Threshold: Court Upholds Jury Verdict Finding Plaintiff Did Not Sustain Serious Injury
Plaintiff commenced this action for injuries to her right shoulder that she sustained in a rear end collision. After jury trial, a verdict was rendered in favor of the defendant finding that the plaintiff did not sustain a serious injury. The plaintiff appealed contending that the verdict was against the weight of the evidence. The court held that a verdict in favor of a defendant will only be set aside as against the weight of the evidence if it can be shown that a preponderance of evidence presented at trial so strongly favored the plaintiff’s case that a contrary verdict could not have been reached upon fair interpretation of that evidence. If there is evidence to support the jury verdict, the verdict will not be disturbed. Here, there was conflicting medical evidence as to whether the injury was caused by the accident. It is for the jury to weigh the conflicting medical evidence and credit the opinion of one expert over another. The verdict in this case was predicated upon a fair interpretation of the evidence and, therefore, the court refuse to disturb the finding.

09/25/00: SLASOR v. ELFAIZ
New York State, Appellate Division Second Department
Serious Injury Threshold: Plaintiff Must Set Forth Objective Findings to Sustain a Finding Of Serious Injury

Plaintiff commenced this action for personal injuries following an automobile accident Defendants sought summary dismissal on the ground that plaintiff did not sustain a "serious injury" as required by Insurance Law §5102(d). The court dismissed the claim finding that defendant made a prima facie showing that plaintiff did not sustain a serious injury. While plaintiff submitted a doctor’s affidavit, the affidavit failed to set forth what objective tests, if any, were used to examine the plaintiff and failed to specify the degree of the plaintiff’s limitation of motion. Further, the doctor failed to explain a 2-½ year gap in treatment between the accident and the most recent medical exam.

09/19/00: MATTER OF INS. CO. OF NORTH AMERICA v. KAPLUN
New York State Supreme Court, Appellate Division, Second Department
While NY Does Not Permit Rescission of Auto Liability Policies Based on Fraud, NY Will Permit Denial of Insured's UIM and First Party Benefits for Same Reason
New York courts have long prohibited an auto liability carrier from rescinding an auto policy, ab initio, when it learns that its policyholder has committed fraud, because it would deprive an innocent third-party of a recovery for the claim. However, in this case, the appellate division held that an insurer may deny first-party benefits to an insured that has committed fraud in inducement of the policy.

09/18/00: CENTRONE v. STATE FARM FIRE & CASUALTY
New York State, Appellate Division Second Department
Injured Party Against Must Demonstrate Reasonableness of Delay in Notice to Insurer
Plaintiff was injured on September 24, 1990, while riding an ATV owned by Montero, who was insured under homeowners’ policy issued by State Farm. The policy required the insured to provide written notice of an accident or occurrence as soon as practicable. The insurer first received notice of the occurrence on April 20, 1993, when it received a copy of the summons and complaint. The insurer promptly disclaimed coverage on the ground that the insured failed to provide timely written notice. Judgment was entered against Montero in the underlying action and the plaintiff commenced this action to recover the amount of judgment from the insurer. The insurer sought summary dismissal of the complaint, which the court granted. Compliance with the notice requirements of an insurance policy is a condition precedent to coverage. The insurer received notice two years and seven months after the occurrence. While the court found that there might be circumstances that will excuse delay, here the plaintiff failed to come up with any evidence demonstrating the delay was reasonable.

09/18/00: MORALES v. ALLCITY INS. CO.
New York State, Appellate Division Second Department
Court Upholds Policy Exclusion for Damage Caused by Frozen Pipes Damaged by Vandals
Plaintiffs owned a four family residence and were insured under a "special total owners protection policy." Vandals broke into the unoccupied property and caused extensive damage, including damage to the plumbing and heating systems. The damage to the plumbing systems resulted in additional damage because pipes froze. The insurer disclaimed coverage based on an exclusion for that portion of the loss caused by the freezing pipes. The court upheld the disclaimer, finding that the exclusion clearly and unambiguously excluded coverage for loss caused by a change in temperature resulting from vandalism or malicious mischief.

ACROSS BORDERS

From time to time we highlight significant cases of interest from other jurisdictions. This week we offer a decision from Illinois:

09/28/00: AMERICAN FAMILY MUTUAL INS. CO. v. SAVICKAS
Illinois Supreme Court
Illinois High Court Finds Murder Conviction Binds Insured Seeking Coverage Arising Out of Same Incident
The insured was convicted of the first-degree murder. The victim's estate had sued him for wrongful death and survival -- alleging both intentional tort and negligence -- and the insured tendered the defense of his suit to his insurer. The insurer filed a declaratory judgment action to determine whether it must defend or indemnify him, contending that it should be excused from doing so because the policy did not apply to bodily injury "expected or intended by any insured." In reversing 22 year-old precedent, the Supreme Court held that the murder conviction estopped the insured from re-litigating the issue of intent. Moreover the victim -- the Estate -- had no greater rights in the policy than the insured. Because of the derivative nature of her rights, the Estate is likewise bound by the prior criminal action just as is insured in this litigation against the carrier.

AND IN DEFENSE . . .

09/19/00: BOND v. YORK HUNTER CONSTRUCTION, INC.
New York State Court of Appeals
Alighting from Construction Vehicle not Elevation-Related Risk under Labor Law §240(1)
After completing his work for the day, plaintiff, a demolition worker employed by third-party defendant, began to alight from his demolition vehicle. The vehicle was equipped with a track system on each side to maneuver it through the construction site. The vehicle was not equipped with a step to assist operators in their entry or exit from the vehicle. Plaintiff stepped down from the cab of the vehicle and placed his foot onto the vehicle's track, using it like a step. Plaintiff claimed his foot slipped off the track because grease had previously leaked onto the track's surface. Plaintiff fell approximately three feet to the ground and suffered injury. As a matter of law, the risk of alighting from the construction vehicle was not an elevation-related risk which calls for any of the protective devices of the types listed in Labor Law § 240(1).

Hurwitz & Fine, P.C. is a full-service law firm
providing legal services throughout the State of New York.


Newsletter Editor
Kevin T. Merriman
[email protected]

Insurance Coverage Team
Dan D. Kohane, Team Leader
[email protected]
Sheldon Hurwitz
Carolyn M. Henry
Kevin T. Merriman

Fire, First Party & Subrogation Team

James D. Gauthier, Team Leader
[email protected]
Donna L. Burden
Andrea Schillaci
Jody E. Briandi

© COPYRIGHT 2000 Hurwitz & Fine, P.C., ALL RIGHTS RESERVED.

REPORTED DECISIONS

SLASOR v. ELFAIZ

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Nassau County (Phelan, J.), dated September 29, 1999, which granted the defendants ' motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed, with costs.

The defendants made a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see , Turchuk v Town of Wallkill, 255 AD2d 576). In opposition, the plaintiff failed to raise a triable issue of fact that she sustained a serious injury (see, Gaddy v Eyler, 79 NY2d 955, 956-957). The plaintiff 's doctor failed to set forth what objective tests, if any, were used to examine the plaintiff (see, Grossman v Wright, 268 AD2d 79), and failed to specify the degree of the plaintiff's limitation of motion (see, Tabacco v Kasten, 229 AD2d 526; Ahmed v Yoo, 255 AD2d 345). In addition, the doctor did not explain the almost 2 1/2-year gap in treatment between the accident and the most recent medical exam (see, Grossman v Wright, supra).

MANGANO, P.J., KRAUSMAN, FLORIO and SCHMIDT, JJ., concur.

CENTRONE v. STATE FARM FIRE & CASUALTY

In an action pursuant to Insurance Law § 3420(b )(1) to recover the amount of a judgment obtained against the defendant's insured, the plaintiff appeals , as limited by his brief, from so much of an order of the Supreme Court, Suffolk County (Catterson, J.), entered October 27, 1999, as denied that branch of his cross motion which was for summary judgment on the complaint and granted the defendant's cross motion for summary judgment dismissing the complaint .

ORDERED that the order is affirmed insofar as appealed from, with costs.

On September 24, 1990, the plaintiff was injured while riding an all-terrain vehicle (hereinafter ATV). The ATV had been purchased by Robert Montero for his son, Jeffrey. At the time of the occurrence, the Monteros were insured under a homeowners' policy issued by the defendant which required the insured to provide written notice of an accident or occurrence "as soon as practicable" and to "immediately " forward any legal process relating to the accident or occurrence.

The defendant first received notice of the occurrence on April 20, 1993, when it received a summons and complaint from the Monteros in an action brought by the plaintiff against Sonia Montero. It promptly sent notices of disclaimer to each of the Monteros, disclaiming coverage, on the ground, inter alia, that they had failed to provide written notice of the occurrence as soon as practicable.

After a judgment was entered in that action against Sonia Montero upon her failure to appear or answer the complaint, the plaintiff commenced the instant action pursuant to Insurance Law § 3420(b)(1) to recover the amount of the judgment from the defendant.

Compliance with the notice requirements of an insurance policy is a condition precedent to coverage (see, Government Empls. Ins. Co. v Fasciano, 212 AD2d 579). The defendant first received notice approximately two years and seven months after the occurrence. While there may be circumstances, such as lack of knowledge that an accident has occurred or a good faith belief in nonliability , that will excuse a delay in giving notice, the plaintiff failed to come forward with any evidence demonstrating the reasonableness of the delay in this case. Consequently, the defendant was entitled to summary judgment (see, Government Empls. Ins. Co. v Fasciano, supra; Zadrima v PSM Ins. Cos., 208 AD2d 529).

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

RITTER, J.P., THOMPSON, KRAUSMAN and GOLDSTEIN , JJ., concur.

MORALES v. ALLCITY INSURANCE COMPANY

In an action to recover on an insurance policy, the plaintiffs appeal from so much of a judgment of the Supreme Court, Rockland County (Meehan, J.), dated June 15, l999, as, upon, inter alia, granting the motion of the defendant Allcity Insurance Company for summary judgment dismissing the complaint insofar as asserted against it, is in favor of that defendant and against them.

ORDERED that the judgment is affirmed insofar as appealed from, with costs.

The plaintiffs own a four-family residence in Garnerville, New York, and purchased a "special total owners protection policy" from the defendant Allcity Insurance Company (hereinafter Allcity). Sometime in 1994 vandals broke into the unoccupied residence and caused extensive damage, including damage to the plumbing and heating systems, which allegedly resulted in additional damage because pipes froze. Allcity denied that portion of the plaintiffs' claim which was for damage caused by the freezing and an alleged loss of business income, and the plaintiffs commenced this action against Allcity, among others.

It is well settled that whenever an ambiguity is found in the provisions of an insurance policy, any doubt as to the existence of coverage should be resolved in favor of the insured and against the insurance carrier (see, Lavanant v Gen. Acc. Ins. Co. of Am., 79 NY2d 623). However, where the provisions are clear and unambiguous, "the courts should not strain to superimpose an unnatural or unreasonable construction" (Maurice Goldman & Sons v Hanover Ins. Co., 80 NY2d 986, 987), and should not "construe a clause in a way that drains it of its only intended meaning" (Commissioners of the State Ins. Fund v Insurance Co. of N. Am., 80 NY2d 992, 994). The courts should not find an ambiguity where none in fact exists (see, Soundview Assocs. v New Hampshire Ins. Co., 215 AD2d 370; Acorn Ponds v Hartford Ins. Co., l05 AD2d 723).

The policy of insurance here clearly and unambiguously excludes from coverage the loss caused by a "change in temperature * * * resulting from * * * vandalism or malicious mischief". This provision excludes coverage for damage by freezing caused to the plaintiffs' plumbing and heating systems (see, Reinhart v Terra Nova Ins. Co., 124 AD2d 795). Nor can the plaintiffs recover for the loss of business income when, at the time of the loss, the building was under reconstruction and was not being used for business purposes.

The plaintiffs' remaining contentions are without merit.

FRIEDMANN, J.P., KRAUSMAN, LUCIANO and SCHMIDT, JJ., concur.

HOWE v. WILKINSON

Appeal from a judgment of the Supreme Court (Relihan Jr., J.), entered September 17, 1999 in Tioga County, upon a verdict rendered in favor of defendant.

Plaintiff Myrtle E. Howe (hereinafter plaintiff) and her husband, derivatively , commenced this action to recover for injuries allegedly sustained in a rear-end collision on November 24, 1995 while waiting to make a left-hand turn. Following a jury trial, a verdict was rendered in favor of defendant on the ground that plaintiff did not suffer a serious injury as defined by Insurance Law § 5102 (d). Plaintiffs appeal, contending that the verdict was against the weight of the evidence . We disagree and, accordingly, affirm.

It is well settled that "[a] verdict in favor of a defendant, particularly in the context of a negligence action, will only be set aside as against the weight of the evidence if it can be shown that a preponderance of the proof presented at trial so strongly favored the plaintiff's case 'that a contrary verdict could not have been reached upon any fair interpretation of that evidence'" (Savage v Snell, 257 AD2d 794, 794, quoting Maisonet v Kelly, 228 AD2d 780, 781). If there is credible evidence sufficient to support the jury's interpretation, it will be afforded great deference and will not be disturbed even if there is evidence in the record to support a contrary conclusion (see, Monahan v Devaul, 271 AD2d 895, , 706 NYS2d 521, 522).

Here, although there is no dispute that plaintiff sustained an injury to her right shoulder, there was conflicting medical evidence as to the competent producing cause of such injury. Farouq Al-Khalidi, an orthopedic surgeon who examined plaintiff on behalf of defendant, opined that plaintiff's right shoulder injury was not causally related to the accident but, rather, was the result of a preexisting degenerative condition. In addition to finding no objective evidence that plaintiff was impaired by the accident, Al-Khalidi also noted that plaintiff's treating physician did not document any complaints of pain regarding her right shoulder until January 1998. Although plaintiff's treating physician offered contrary testimony, it is for the jury to weigh the conflicting medical evidence and credit the opinion of one expert over that of another (see, Rivera v Majuk, 263 AD2d 841; Moxley v Givens, 255 AD2d 632). In addition to the medical evidence, defendant testified that he was traveling at approximately five miles an hour at the time of impact and not 30 to 35 miles per hour as reported to plaintiff's physician by her husband. In view of the foregoing, we conclude that the verdict was predicated upon a fair interpretation of the evidence and, consequently, it will not be disturbed (see, Rosabella v Fanelli, 225 AD2d 1007, 1008).

Cardona, P.J., Crew III, Spain and Carpinello, JJ., concur.

ORDERED that the judgment is affirmed, with costs.

FRIEDMAN v. PRUDENTIAL INS. CO. OF AMERICA

Order, Supreme Court, New York County (Barry Cozier, J.), entered November 13, 1998, which, in an action arising out of the purchase of certain life insurance policies , inter alia, granted defendants’ motions to dismiss the complaint on the ground that plaintiffs lack standing to sue, unanimously affirmed, without costs.

The action was properly dismissed on the ground that since the policies in question are owned by a trust, only the trustee, who was not named as a plaintiff in that capacity, may seek their rescission or damages attributable to their issuance (see, Restatement [Second] of Trusts, §§ 280-282). Plaintiffs’ argument that the 1994 Trust was not validly formed because a complete trust agreement was never executed is not persuasive. An express trust may be created orally or in writing; no particular form of words is necessary, and it may arise by implication from the settlor’s conduct (see, Agudas Chasidei Chabad v Gourary, 833 F2d 431, 434 [2d Cir]). All of the essential elements of a trust –- a designated beneficiary, a designated trustee, a clearly identifiable res, and delivery of the res by the settlor to the trustee with the intent of vesting legal title in the trustee (id., at 433-434) -- have been demonstrated. All three policies were sold to Klar as trustee of the 1994 Trust and Klar acknowledged receiving them in his capacity as the trustee thereof; the applications identified the trust, its trustee, purpose and beneficiaries ; the 1994 Trust paid premiums on all of the policies from a checking account in its name; Klar certified to defendants Prudential and Metlife that the 1994 Trust was formed as of December 15, 1994 and was authorized to purchase the insurance; defendant Massachusetts Mutual was provided with excerpts of the purported trust agreement, including Klar’s acceptance of trusteeship on a page signed by the Orentreichs and Klar ; and Klar identified himself as trustee of the 1994 Trust in correspondence seeking to cancel the policies . These circumstances clearly show more than mere intent to create a trust, and plaintiffs’ alleged failure to complete a formal trust document does not invalidate the trust so created.

It would not avail plaintiffs even if a trust instrument had been executed prior to trustee Klar’s designation as beneficiary of the life insurance policies. Such a circumstance would merely make it improper to pay the proceeds of the policy to Klar (EPTL 13-3.3[b]; see, Matter of Stein, 131 AD3d 68, 69, lv dismissed 72 NY2d 840; Matter of Stein, 150 AD2d 700; Matter of Stewart , 158 Misc 2d 349); it would not invalidate the trust or its ownership of the policies.

Nor are we persuaded by plaintiffs’ argument that their claims based on defendants’ various fraudulent or negligent acts prior to the issuance of the policies are independent of the policies and 1994 Trust. The essence of plaintiffs’ complaint is that because of defendants’ wrongful advice, given to them before the formation of the 1994 Trust, the size of the Orentreichs’ estate will not be as large as it otherwise would have been. Plaintiffs’ claim is thus merely one to recover estate assets and, as such , is maintainable by the trustee, notwithstanding the fact that plaintiffs, as individuals, may have participated in the negotiations or received the wrongful advice (see, Wierdsma v Markwood Corp., 53 AD2d 581; Levine v Gross, 177 AD2d 290, 291-292). Indeed, all of the transactions and occurrences alleged have meaning only within the context of the creation of the 1994 Trust and purchase of the policies. We have considered plaintiffs’ other arguments and find them unavailing.

UNITED STATES FIDELITY AND GUARANTY COMPANY v. THE NEW YORK SUSQUEHANNA AND WESTERN RAILWAY CORP.

Judgment unanimously modified on the law and as modified affirmed without costs in accordance with the following Memorandum: In September 1987, James VanFleet, an employee of defendant, sustained injuries in Oakland, New Jersey, when he was pinned between a Gradall and a Chevrolet pick-up truck, both owned by defendant. Plaintiff, which issued a business auto policy to defendant’s parent corporation, was notified of the accident in April 1989. In August 1990, VanFleet commenced an action under the Federal Employers' Liability Act (45 USC § 51 et seq.) in Federal district court against defendant and its parent corporation. Upon being served with the summons and complaint in that action, defendant forwarded them to its insurance agent and to its attorneys. Plaintiff assumed the cost of defendant’s defense in the VanFleet action by paying the fees of defendant’s attorneys. Plaintiff communicated regularly with defendant’s attorneys, requesting information and documents. Plaintiff never sent a reservation of rights or disclaimer letter.

Trial of the VanFleet action was scheduled to commence in late September 1991. Defendant’s attorneys engaged in settlement discussions with VanFleet’s attorney. Six days before trial was to commence and on the eve of a settlement conference with the court, plaintiff indicated that it was considering disclaiming coverage on the grounds that defendant failed to provide prompt notice of the accident, the policy excludes coverage for injuries to employees of the insured, and the Gradall is not a covered auto within the policy definition. Defendant’s attorney objected on the ground that plaintiff had not reserved its rights to disclaim on any ground and that plaintiff’s late notice of disclaimer was jeopardizing a favorable settlement of the case. Plaintiff indicated that it would pay the settlement amount only if defendant agreed to litigate the coverage issues and, if coverage was not found, to reimburse plaintiff for the amount of the settlement as well as the costs of defending the action. Defendant signed the agreement and the VanFleet action was settled.

Plaintiff then commenced this declaratory judgment action, seeking a declaration that it was not obligated to defend or indemnify defendant in the VanFleet action. Defendant contended that plaintiff had failed to comply with Insurance Law § 3420 (d) and therefore had waived its right to assert defendant’s late notice and the policy exclusions as grounds for disclaimer. Plaintiff countered that Insurance Law § 3420 (d) does not apply because the accident occurred in New Jersey, and that it could not be equitably estopped from asserting lack of coverage because defendant had failed to demonstrate prejudice.

Supreme Court denied plaintiff’s motion for summary judgment, granted defendant’s cross motion for summary judgment and dismissed the complaint. The court concluded that Insurance Law § 3420 (d) applied despite the occurrence of the accident outside of New York and that plaintiff’s failure to provide a timely disclaimer precluded plaintiff from contending that defendant’s notice was untimely, that the employee exclusion applies and that the Gradall is not a covered auto.

We agree with the court that plaintiff is obligated to defend and indemnify defendant, but our reasoning differs. We conclude, however, that the court erred in dismissing the complaint (see, Boyd v Allstate Life Ins. Co., 267 AD2d 1038, 1039; Tumminello v Tumminello, 204 AD2d 1067). We modify the judgment, therefore, by vacating the provision dismissing the complaint.

The court erred in concluding that Insurance Law § 3420 (d) applies. That section, by its terms, applies only to accidents "occurring within this state" (see, American Ref-Fuel Co. of Hempstead v Employers Ins. Co. of Wausau, 265 AD2d 49, 52; Brennan v Liberty Mut. Fire Ins. Co., 204 AD2d 675, 676; Kamyr, Inc. v St. Paul Surplus Lines Ins. Co., 152 AD2d 62, 67). We conclude, however, that plaintiff is equitably estopped "from asserting that the policy does not cover the claim" (O’Dowd v American Sur. Co. of N. Y., 3 NY2d 347, 355; see also, Schiff Assocs. v Flack, 51 NY2d 692, 699; Monroe County Water Auth. v Travelers Ins. Co., 195 AD2d 1043, 1044). Plaintiff undertook the defense of the VanFleet action and did not reserve its rights under the policy. Although defendant was represented by the attorneys of its choice, the attorneys shared information with plaintiff, provided plaintiff with status reports, conducted depositions with the approval of plaintiff and entered into settlement discussions with plaintiff’s knowledge.

Plaintiff’s first assertion of a possible disclaimer on the eve of the settlement conference placed in jeopardy a favorable settlement negotiated by defendant’s attorneys, and forced defendant to agree to litigate the coverage issues in order to save the settlement. In our view, defendant demonstrated prejudice from the late disclaimer sufficient to estop plaintiff from asserting that there was no coverage (see, Monroe County Water Auth. v Travelers Ins. Co., supra, at 1044; cf., Fairmont Funding v Utica Mut. Ins. Co., 264 AD2d 581). (Appeal from Judgment of Supreme Court, Onondaga County, Stone, J. ‑ Declaratory Judgment.) PRESENT: PIGOTT, JR., P. J., HAYES, HURLBUTT, SCUDDER AND LAWTON, JJ. (Filed Sept. 29, 2000.)

MATTER OF THE ARBITRATION BETWEEN STATE FARM MUTUAL AUTOMOBILE INS. CO. AND IBRAHIM HERNANDEZ

Order unanimously reversed on the law without costs and matter remitted to Supreme Court for further proceedings in accordance with the following Memorandum: Petitioner contends that Supreme Court erred in denying its petition seeking a permanent stay of arbitration. Respondent was injured in a motor vehicle accident in June 1996, but did not provide petitioner with notice of a supplemental uninsured motorist (SUM) claim until October 1998. The notice provision of the policy requires that notice of a SUM claim be given "as soon as practicable", i.e., "with reasonable promptness after the insured knew or should reasonably have known that the tortfeasor was underinsured" (Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, 93 NY2d 487, 495). A delay of over two years is unreasonable as a matter of law (see, Matter of Nationwide Ins. Co. v Montopoli, 262 AD2d 647; Matter of Travelers Ins. Co. [DeLosh], 249 AD2d 924; see also, Matter of State Farm Mut. Auto Ins. Co. [Tremaine], 270 AD2d 962) and shifts the burden to the insured to provide a reasonable excuse for the delay or establish due diligence in ascertaining the insurance coverage of the vehicles involved in the accident (see, Matter of Eagle Ins. Co. v Bernardine, 266 AD2d 543, 544; Matter of Nationwide Ins. Co. v Montopoli, supra, at 647). We conclude that there is an issue of fact whether respondent acted with due diligence, and thus we reverse the order and remit the matter to Supreme Court for a hearing on that issue.

Respondent contends that he did not know the seriousness of his injuries immediately following the accident and thus that he established a reasonable excuse for the delay. We disagree. The second surgery was not until 17 months after the accident but, "[e]ven assuming, arguendo, that [respondent] was excused from providing timely notice until the true extent of his injury was known * * * (see, Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, [93 NY2d 487, 493])", we conclude that the additional delay of nine months without excuse would vitiate the insurance contract (Ciaramella v State Farm Ins. Co., ___ AD2d ___ [decided June 16, 2000]).

Respondent further contends that he acted with due diligence in attempting to ascertain other policy limits. We note that his SUM coverage is excess after deduction of any amounts recovered from the tortfeasor or other SUM carrier. Further, the carrier insuring the vehicle respondent was driving went into bankruptcy and its obligations were taken over by the Liquidation Bureau of the New York State Insurance Department. The record indicates that respondent’s second attorney was retained in May 1998, but the record fails to demonstrate what, if any, efforts the previous attorney made to ascertain the policy limits. "Whether [respondent] acted diligently in attempting to ascertain the existence of insurance coverage and whether he thereafter pursued his claim expeditiously [citation omitted] are issues of fact requiring a hearing [citation omitted] and cannot be determined on the meager record before us [citation omitted]" (Allstate Ins. Co. v Gomez, 263 AD2d 481, 482). Thus, a hearing is required to determine whether respondent acted with due diligence.

We reject petitioner’s further contention that the petition should have been granted on the ground that respondent persistently failed to comply with certain policy conditions. There is no support in the policy language for petitioner’s contention that respondent was required to provide both a recorded statement and an examination under oath. Petitioner’s further contention that written proof of loss must be given by the insured personally, not by a letter from counsel, is not supported by Gizzi v State Farm Mut. Ins. Co. (56 AD2d 973), on which petitioner relies. (Appeal from Order of Supreme Court, Erie County, Notaro, J. ‑ Arbitration.) PRESENT: GREEN, J. P., PINE, WISNER, KEHOE AND BALIO, JJ. (Filed Sept. 29, 2000.)