06/25/02: GENERALI-U.S. BRANCH v. ROTHSCHILD
New York State Supreme Court, Appellate Division, First Department
In Lead Paint Coverage Claim, Question of Reasonableness of Late Notice By Insured to Carrier is Question of Fact
When the Rothschilds received the tenant and social worker letters in 1992, Generali was not the insurer for the building. The Rothschilds further contended that there was no reason for them to believe that a claim would be made prior to receipt of the Eromosele suit since there is no official record of lead paint violation prior to 1997 and there was evidence that the apartment met acceptable lead levels in 1997. A good faith belief of nonliability may excuse or explain a seeming failure to give timely notice to the insurer. The reasonableness of an insured’s belief of nonliability is generally a question of fact. When notified by the tenants and social worker of a claimed lead paint problem, the Rothschilds were only asked to repaint, which they did. No further complaints were made for years and when made, there was evidence that the lead levels were safe. On this record, a question of fact existed as to whether the insureds’ belief was reasonable.
06/20/02: ARGONAUT INS. CO. v. TRAVELERS INS. CO.
New York State Supreme Court, Appellate Division, First Department
Carrier Not Entitled to Arbitration of Policy Dispute with Reinsurer
The underlying dispute between the parties concerns defendant’s entitlement to reimbursement from plaintiff reinsurers for a settlement paid by defendant to its insured for environmental pollution claims arising from the insured’s operation of industrial and waste disposal sites throughout the country. Reinsurers, whose obligations to defendant arise under certificates of reinsurance issued to defendant, alleged they were not obligated to reimburse defendant because defendant breached its contractual obligations by failing to furnish relevant information and records and because defendant improperly treated the numerous distinct pollution occurrences as a single occurrence and thereby sought to trigger plaintiffs’ reimbursement obligations under the reinsurance certificates. The arbitration clause at issue was contained in only some of the certificates, and provides for arbitration only in the event that “an irreconcilable difference of opinion arise[s] as to the interpretation of this Contract”. Although the Federal Arbitration Act enunciates a liberal policy in favor of arbitration, the duty to arbitrate is limited by the scope of the particular arbitration clause to which the parties have agreed. Here, the motion court correctly determined that the arbitration clause was narrow, since it expressly applies only to issues pertaining to interpretation of the reinsurance certificates, and correctly concluded that there had been no arbitrable matter identified, since defendant failed to specify any provision of the certificates requiring interpretation. The parties’ only dispute as to interpretation centers on whether the defendant's settlement allocation to the insured, under a single occurrence theory, was consonant with the terms of the underlying liability policies. That theory had already been decisively rejected in court and, therefore, was not an issue within the narrow scope of what the parties agreed to arbitrate.
06/20/02: DINNENY v. ALLSTATE INSURANCE COMPANY
New York State Supreme Court, Appellate Division, Third Department
Lizzy Borden Took An Axe but May Have Coverage for the 40 Whacks
Plaintiff raised question of fact about “intentional conduct” exclusion in homeowners policy where mental status of the insured, who attacked plaintiff with axe, was placed in issue.
06/17/02: BOZIC v. JC PENNY LIFE INS. CO.
New York State Supreme Court, Appellate Division, First Department
Since Liver Disease Contributed to Death, Trauma that Led to Death Two Days Later Doesn't Trigger Accidental Death Coverage
Bozic fell on the stairs in her residence on October 14, 1998, and fractured her left hip. Less than 48 hours later, she died. Bozic’s widower, and the beneficiary under an insurance policy issued by defendant, filed a claim to recover accidental death benefits pursuant to the policy. The defendant refused to make this payment, asserting that the death of the insured fell within an exclusion in the policy, i.e., that it resulted from “disease, bodily or mental infirmity or medical or surgical treatment of these.” The uncontroverted medical evidence in the record demonstrated that Bozic’s underlying cirrhosis of the liver at the time of the accident was a disease that contributed to her death. Under such circumstances, the insurer was relieved of liability.
New York State Supreme Court, Appellate Division, Fourth Department
Herniated Disk With Surgery NOT a Serious Injury Under New York No Fault Law
Defendants appeal from a judgment entered upon a jury verdict awarding plaintiff damages for injuries she sustained in a motor vehicle accident in September 1995. Supreme Court erred in denying defendants’ motion seeking to set aside the verdict on the ground that, as a matter of law, plaintiff failed to establish she sustained a “serious injury” under Insurance Law § 5102 (d). The verdict was based upon the jury’s finding that a herniated disc at the L5/S1 level resulted in a permanent consequential limitation of use of a body organ or member. Plaintiff, however, failed to prove that her back injury was both “permanent and consequential”. The evidence presented at trial established that surgery in July 1996 was successful and that plaintiff received no further treatment after June 1997. The evidence further established that plaintiff no longer experiences pain from the herniated disc and has resumed her normal daily activities. Therefore, the court found that there was no serious injury as a matter of law and dismissed the complaint.
06/14/02: ENRIGHT v. NATIONWIDE INSURANCE
New York State Supreme Court, Appellate Division, Fourth Department
Insurer’s Assurances To Insureds That They Could Take Their Time Did Not Negate Written Warning About Limitations Period
Plaintiffs purchased a homeowners insurance policy from defendant and subsequently discovered that their pipes had burst while away on vacation. Plaintiffs immediately notified Nationwide, which investigated and authorized repairs. Plaintiffs did not submit the receipts for payment until after the two-year limitations period had lapsed. Plaintiffs claimed that they were “lulled into sleeping on their rights” by Nationwide, which had assured them that they could take their time. The court rejected this argument, finding that Nationwide had advised plaintiffs in writing to submit their claim before the limitations period expired or payment could not be issued.
Prepared by Bruce Celebrezze of Celebrezze & Wesley in Los Angeles.
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Ohio Supreme Court
Ohio Drills Insurers in Landfill Cases
When a continuous occurrence of environmental pollution triggers claims under multiple primary insurance policies, the insured is entitled to secure coverage from a single policy of its choice that covers “all sums” incurred as damages “during the policy period,” subject to that policy’s limit of coverage. A pollution exclusion clause in an insurance contract that bars coverage for expected or intended “emission, discharge, seepage, release or escape” of contaminating materials is triggered when the policyholder expects or intends that the contaminants will migrate from the location in which they were first deposited.
New Jersey Supreme Court
New Jersey Clarifies “Continuous Trigger” Approach in Landfill Case
In this environmental pollution case between two insurers, the trial record established that, although dumping began during the first insurer’s policy, the contaminants could not have reached the groundwater until the second insurer was on the risk. Notwithstanding this record, the New Jersey Supreme Court held that the mere act of discharging wasted into a landfill triggered coverage under the continuous trigger theory because the property was contaminated as soon as the toxic material was dumped. The Court articulated three reasons to justify its adoption of this bright line rule. First, the rule is more consistent with Owens Illinois and subsequent toxic tort environmental pollution cases. Secondly, it brings simplicity to an already complicated area. Thirdly, it maximizes the amount of coverage available and spreads the costs of indemnification. On the issue of how to allocate the risk as between different insurers on the risk, the Court held that fairness dictated that when one of the insurers was only on the risk for a portion of the year included in the trigger period, the allocation formula should reflect days rather than years on the risk.
Prepared by Edward H. Starr, Jr., of Troutman Sanders LLP in Richmond, VA.
06/24/02: JEM v. WASHINGTON MUT.
California Court of Appeal
Who Controls the Proceeds of Earthquake Insurance?
A property owner and a lender dispute which party had the right to control earthquake insurance proceeds. The trial court concluded that the lender was entitled to control the disbursement of proceeds used to repair the property and granted summary judgment for the lender. Because the owner assigned insurance proceeds to the lender under a deed of trust, the lender had the right to control the disbursement.
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Order, Supreme Court, New York County (Louise Gruner Gans, J.), entered October 9, 2001, which granted plaintiff's motion for summary judgment declaring that it is not obligated to defend or indemnify defendants in an underlying negligence action and denied defendants' cross motion for summary judgment dismissing the complaint, unanimously modified, on the law, plaintiff's motion denied, and otherwise affirmed, without costs.
Plaintiff provided commercial general liability insurance coverage for the insureds, the Rothschild defendants, for premises located in the Bronx, which included an apartment rented by the Eromosele family. Generali insured the premises from October 1987 through October 1991. The Eromosele family were defendants' tenants from March 1986 through August 1997. In February and March 1992, the Eromoseles and a social worker notified the Rothschilds in writing that the Ermomoseles' children had consumed peeling paint in the apartment and had tested positive for lead poisoning. The Rothschilds were subsequently issued lead paint violations by the municipal Department of Housing Preservation and Development in 1992 and 1997. In October 1997, the Eromoseles commenced a negligence action against the Rothschilds alleging that their children suffered lead paint poisoning caused by chipping, flaking and peeling lead paint in the premises. Plaintiff insurer was notified of the Eromosele litigation on January 5, 1998 when its claims adjuster received a loss notice and a copy of the summons and complaint. By letter dated January 7, 1998, the claims adjuster notified the Rothschilds of receipt of the claim and expressly reserved plaintiff's right to disclaim coverage if it later determined that the Rothschilds had breached the timely [*2]notification requirement of the insurance policy.
Plaintiff received copies of the 1992 Eromosele letter and other relevant documents on January 14, 1998. During the next two weeks, the claims adjuster and plaintiff's coverage counsel reviewed those documents and coverage counsel was authorized to take any necessary steps to deny coverage and remove plaintiff from its involvement with the Eromosele litigation. The instant declaratory judgment action was served on the Rothschild defendants by March 13, 1998. The IAS court thereafter granted plaintiff summary judgment based on an agreed statement of facts, declared that plaintiff was not obligated to defend or indemnify defendants in the Eromosele negligence action and denied defendants' cross motion for summary judgment.
On this appeal, the Rothschilds claim that (1) Generali cannot offer a reasonable excuse for the delay in disclaiming coverage and (2) Generali was not entitled to disclaim coverage since defendants were not required to give Generali notice of the claim until late 1997 when it was served with the Eromosele action. While we agree that Generali's delay of two months in disclaiming was reasonable as a matter of law, we also find that an issue of fact exists whether the insureds were required to notify Generali in 1992 when they received the letters from the tenant and the social worker reporting lead poisoning of the children.
An insurer may not disclaim liability if it fails to give the insured timely notice of disclaimer (Hartford Ins. Co. v County of Nassau, 46 NY2d 1028). The reasonableness of any delay in disclaiming coverage must be judged from that point in time when the insurer is aware of sufficient facts to issue a disclaimer (Allcity Ins. Co. v Pioneer Ins. Co., 194 AD2d 424). Generali did not have possession of the information necessary to make a coverage determination until it received the documents on January 14, 1998. The decision to disclaim was made within the following two weeks and this action was commenced by mid-March. Commencement of a declaratory judgment action constitutes sufficient notice of disclaimer and commencement of such an action within two months after a decision to disclaim is reasonable and timely (Norfolk & Dedham Mutual Fire Insurance Company v Petrizzi, 121 AD2d 276, lv denied 68 NY2d 611). This is not a case of unexplained delay of two months, such as would render the disclaimer untimely as a matter of law (Hartford Ins. Co. v County of Nassau, supra; Mount Vernon Fire Insurance [*3]Company v City of New York, 236 AD2d 296; Ward v Corbally, Gartland & Rappleyea, 207 AD2d 342, lv denied 84 NY2d 812).
When the Rothschilds received the tenant and social worker letters in 1992, Generali was not the insurer for the building. The Rothschilds further contend, relying upon record evidence, that there was no reason for them to believe that a claim would be made prior to receipt of the Eromosele suit since there is no official record of lead paint violation prior to 1997 and there was evidence that the apartment met acceptable lead levels in 1997. A good faith belief of nonliability may excuse or explain a seeming failure to give timely notice to the insurer (Security Mut. Ins. v Acker-Fitzsimmons, 31 NY2d 436, 441). The reasonableness of an insured party's belief of nonliability is generally a question of fact (Seals v Powell, 236 AD2d 700). When notified by the tenants and social worker of a claimed lead paint problem, the Rothschilds were only asked to repaint, which they did. No further complaints were made for years and when made, there is evidence that the lead levels were safe. On the existing record, a question of fact exists as to whether the insureds' belief was reasonable.
Order, Supreme Court, New York County (Helen Freedman, J.), entered November 7, 2001, which, in this declaratory judgment action by plaintiff reinsurers, denied defendant's motion pursuant to the Federal Arbitration Act and CPLR 2201 and 7503(a) to stay the action and compel arbitration, unanimously affirmed, with costs.
The underlying dispute between the parties concerns defendant's entitlement to reimbursement from plaintiff reinsurers for a settlement paid by defendant to its insured Witco for environmental pollution claims arising from Witco's operation of industrial and waste disposal sites throughout the country. Plaintiff reinsurers, whose obligations to defendant arise under certificates of reinsurance issued to defendant, allege that they are not obligated to reimburse defendant because defendant breached its contractual obligations by failing to furnish relevant information and records and because defendant improperly treated the numerous distinct Witco pollution occurrences as a single occurrence and by that improper device seeks to trigger plaintiffs' reimbursement obligations under the reinsurance certificates. The arbitration clause at issue is contained in only some of the certificates, and provides for arbitration only in the event that "an irreconcilable difference of opinion arise[s] as to the interpretation of this Contract". Although the Federal Arbitration Act enunciates a liberal policy in favor of arbitration, the duty to arbitrate is limited by the scope of the particular arbitration clause to which the parties have agreed (see, Associated Indem. Corp. v Home Ins. Co., 19 F3d 1432, 1994). Here, the motion court correctly determined that the arbitration clause in question is narrow, since it expressly applies only to issues pertaining to interpretation of the reinsurance certificates, and correctly concluded that there had been no arbitrable matter identified, since defendant failed to specify any provision of the certificates requiring interpretation. The parties' only dispute as to interpretation centers on whether the defendant's settlement allocation to Witco, under a single occurrence theory, was consonant with the terms of the Travelers' underlying liability policies. While defendant is understandably desirous of having the viability of its single occurrence theory decided in an arbitral forum, the theory having already been decisively rejected in court (Travelers Cas. & Sur. Co. v Certain Underwriters at Lloyd's, 96 NY2d 583), it is manifestly not [*2]an issue within the narrow scope of what the parties agreed to arbitrate.
We have considered defendant's remaining arguments and find them unavailing.
Motion seeking leave to strike record and for other related relief denied.
Appeal from an order of the Supreme Court (Leaman, J.), entered December 21, 2001 in Ulster County, which denied defendant's motion for summary judgment dismissing the complaint.
Plaintiff commenced this action seeking compensation for injuries sustained on June 27, 1995, when Vincent Mazzone (now deceased) struck him about his neck and body with a hatchet after plaintiff had offered roses to Mazzone's wife, who was sitting with friends on the front porch of the Mazzone residence. At the time of the attack, Mazzone possessed a homeowner's insurance policy issued by defendant. Defendant issued a disclaimer letter [*2]to Mazzone dated July 13, 1995, citing policy exclusions denying coverage where the alleged bodily injury results from "an act or omission intended or expected to cause bodily injury" (hereinafter referred to as the intended or expected exclusion) or "an act or omission committed by an insured person while insane or while lacking the mental capacity to control his or her conduct or while unable to form any intent to cause bodily injury" (hereinafter referred to as the mental incapacity exclusion).[FN1]
After plaintiff commenced an action against Mazzone in 1996, defendant issued a second disclaimer letter dated July 2, 1996 which relied on the same policy exclusions cited in the 1995 disclaimer letter. Mazzone ultimately defaulted and Supreme Court entered a judgment against him for $349,207, which he failed to pay. Thereafter, plaintiff commenced this action seeking a declaration that defendant has a legal duty to indemnify Mazzone under the homeowner's policy.
Prior to the completion of discovery, defendant moved for summary judgment solely upon the ground that the incident was excluded from coverage by the intended or expected exclusion and the mental incapacity exclusion. Supreme Court found that defendant had set forth a prima facie case for summary judgment but denied the motion, reasoning that plaintiff had established triable questions of fact as to whether Mazzone possessed the mental capacity to form the requisite intent under the intended or expected exclusion and whether the mental incapacity exclusion was in effect at the time of the incident. Defendant appeals and we affirm.
Initially, we decline to address defendant's contention — raised for the first time in this Court — that, as a threshold matter, the event was not an accident and thus not covered by the policy, which covers "damages which an insured person becomes legally obligated to pay because of bodily injury or property damage arising from an accident" (emphasis supplied). In its disclaimer letter, defendant expressly referred to the incident as an accident, instead disclaiming coverage based on policy exclusions and, thus, should not now be permitted to state a different basis for denying coverage (see, Insurance Law § 3420 [d]; Agoado Realty Corp. v United States Intl. Ins. Co., 95 NY2d [*3]141, 144). Furthermore, defendant's failure to raise the issue in its motion for summary judgment prevented Supreme Court from considering the issue, which we will not address for the first time on appeal (see, Connecticut Natl. Bank v Peach Lake Plaza, 204 AD2d 909, 911).
Turning, therefore, to the policy exclusions, we agree with Supreme Court that plaintiff raised a triable issue of fact as to whether the intended or expected exclusion is applicable here. As a threshold matter, defendant clearly proffered evidence sufficient to state a prima facie case that Mazzone acted intentionally and that, given the nature of his act — striking another human being with a hatchet — the resultant injuries could be expected (see, Allstate Ins. Co. v Mugavero, 79 NY2d 153, 160; Pennsylvania Millers Mut. Ins. Co. v Rigo, 256 AD2d 769, 770-771; Doyle v Allstate Ins. Co., 255 AD2d 795, 796-797). However, relying on Mazzone's psychiatric records, Supreme Court found that, at the time of the attack on plaintiff, Mazzone may have been suffering from Alzheimer's-type dementia, with delusions. Although plaintiff submitted these records late, we cannot conclude that Supreme Court erred in considering them, given its finding that the records are otherwise admissible and that plaintiff had diligently pursued obtaining them in a timely manner (see, CPLR 2214 [c]; Pallette Stone Corp. v Mangino, 217 AD2d 738, 739). Viewing the facts in the light most favorable to plaintiff, we agree with Supreme Court that the medical records raise a triable issue of fact as to whether defendant had the capacity to form the requisite intent to harm plaintiff (see, Matijiw v New York Cent. Mut. Fire Ins. Co., 292 AD2d 865, ___, 740 NYS2d 177, 178; Green v Allstate Ins. Co., 177 AD2d 871, 872).
Defendant argues that even if Mazzone lacked the mental capacity to form the necessary intent to assault plaintiff, coverage is nevertheless barred by the mental incapacity exclusion. Defendant established that the homeowner's policy in effect for the Mazzone residence when Mazzone attacked plaintiff in June 1995 was defendant's form number AU2069, entitled "Allstate Deluxe Homeowners Policy", which provided coverage from July 15, 1994 through July 15, 1995 and contained both of the exclusionary provisions upon which defendant relies on this motion. The record evidence reveals, however, that in August 1994, the State Insurance Department (hereinafter Department) commented on these exclusionary provisions in the context of reviewing an updated deluxe policy form, number AP316, entitled "Allstate Deluxe Policy", which defendant had submitted to the [*4]Department for approval. The Department issued a letter to defendant stating that "in our view, exclusion for acts committed by insureds who lacks [sic] mental capacity deprives insureds of appropriate protection under the homeowners policy and may place the entire household in jeopardy for acts committed by those excluded members who are innocent of any conscious wrongdoing". In a letter dated August 16, 1994, defendant responded, "We propose to amend the exclusion to remove [the mental incapacity exclusion] which will delete the language pertaining to insured persons lacking the mental capacity." Form AP316 was thereafter approved for sale in New York without the mental incapacity exclusion.
Defendant contends that regardless of the Department's reaction to the mental incapacity exclusion and its decision to omit that exclusion from its current deluxe policy, the Mazzones did not receive the added protection from that change until their policy was renewed and form AP316 was issued to them on July 15, 1995, several weeks after the attack on plaintiff. We disagree. It is undisputed that form AP316 was approved for sale as of February 15, 1995 and that, thereafter, defendant immediately began issuing that form for any new business [FN2]. Form AU2069 contains a provision entitled "Coverage Changes", which states, "When [defendant] broadens coverage during the premium period without charge, you have the new features if you have the coverage to which they apply." Given this clear language and the "hornbook rule that policies of insurance, drawn as they ordinarily are by the insurer, are to be liberally construed in favor of the insured" (Miller v Continental Ins. Co., 40 NY2d 675, 678; see, Slayko v Security Mut. Ins. Co., 285 AD2d 875, 877, lv granted 97 NY2d 605), combined with the public policy of providing adequate protection to insureds (see, Insurance Law § 3420), we find untenable defendant's position that its existing policy holders would not be entitled to the benefit of the agreed-upon change recommended by the Department until their respective renewal dates.
We hold, therefore, that the mental incapacity exclusion was not in effect for the coverage that defendant provided to Mazzone in July 1995 and that plaintiff has established a triable issue of fact as to whether the intended or expected exclusion applies to this matter. Accordingly, defendant's motion for [*5]summary judgment was properly denied.
Mercure, J.P., Carpinello, Mugglin and Lahtinen, JJ., concur.
ORDERED that the order is affirmed, with costs.
Footnote 1:The letter also referred to exclusions based on conduct criminal in nature, but those exclusions are not at issue on this appeal.
Footnote 2:Notably, in response to a notice to produce information regarding the policy at issue, defendant initially provided plaintiff with form AP316.
In an action to recover the proceeds of a life insurance policy, the plaintiff appeals from an order of the Supreme Court, Westchester County (LaCava, J.), entered September 4, 2001, which, [*2]inter alia, granted the defendant's cross motion for summary judgment dismissing the complaint.
ORDERED that the order is affirmed, with costs.
Constance Bozic, the 51 year-old deceased, fell on the stairs in her residence on October 14, 1998, and fractured her left hip. Less than 48 hours later, she died. The plaintiff, Bozic's widower and the beneficiary under an insurance policy issued by the defendant, filed a claim to recover accidental death benefits pursuant to the policy. The defendant refused to make this payment, asserting that the death of the insured fell within an exclusion to the policy, i.e., that it resulted from "disease, bodily or mental infirmity or medical or surgical treatment of these."
The plaintiff moved for summary judgment and the defendant cross moved for summary judgment dismissing the complaint. The Supreme Court granted the defendant's cross motion and dismissed the complaint. We affirm.
The uncontroverted medical evidence in the record demonstrated that the decedent's underlying cirrhosis of the liver at the time of the accident was a disease which contributed to her death. Under such circumstances, the insurer is relieved of liability (see McMartin v Fidelity & Casualty Co. of New York, 264 NY 220; cf. Silverstein v Metropolitan Life Ins. Co., 254 NY 81; Beece v Guardian Life Ins. Co. of Am., 128 AD2d 493).
The plaintiff's remaining contention is without merit.
FEUERSTEIN, J.P., SCHMIDT, ADAMS and CRANE, JJ., concur.
It is hereby ORDERED that the judgment so appealed from be and the same hereby is unanimously reversed on the law without costs, the motion is granted and the complaint is dismissed.
Memorandum: Defendants appeal from a judgment entered upon a jury verdict awarding plaintiff damages for injuries that she sustained in a motor vehicle accident in September 1995. Supreme Court erred in denying defendants' motion seeking to set aside the verdict on the ground that, as a matter of law, plaintiff failed to establish that she sustained a serious injury under Insurance Law § 5102 (d). The verdict is based upon the jury's finding that a herniated disc at the L5/S1 level resulted in a permanent consequential limitation of use of a body organ or member (see id.). Plaintiff, however, failed to prove that her back injury "was both permanent and consequential" (Kordana v Pomellito, 121 AD2d 783, 784, appeal dismissed 68 NY2d 848). The evidence presented at trial establishes that surgery in July 1996 was successful and that plaintiff received no further treatment after June 1997. The evidence further establishes that plaintiff no longer experiences pain from the [*2]herniated disc and has resumed her normal daily activities. We therefore reverse the judgment, grant defendants' motion and dismiss the complaint.
It is hereby ORDERED that the order so appealed from be and the same hereby is unanimously modified on the law by granting defendant's motion for summary judgment in its entirety and dismissing the complaint and as modified the order is affirmed without costs.
Memorandum: Plaintiffs, who purchased homeowner's insurance from defendant, discovered upon returning home from a vacation on March 12, 1996 that their water pipes had burst. The next day, they notified defendant of the incident, and defendant sent a general contractor to plaintiffs' home to inspect the damage. According to plaintiffs, defendant authorized them to proceed with repairs and to submit the receipts for payment. Plaintiffs thereafter submitted the final receipts for the repairs, and defendant denied payment in September 1999. Plaintiffs commenced this action in March 2000, and defendant moved for summary judgment dismissing the complaint on the ground that the action was not timely commenced and, alternatively, sought summary judgment dismissing the third cause of action alleging that defendant breached the contract in bad faith. Supreme Court initially denied the motion in its entirety but, upon defendant's motion for reargument [*2]and renewal, the court granted reargument and granted that part of defendant's motion seeking summary judgment dismissing the third cause of action. We conclude that the court should have granted defendant's motion for summary judgment in its entirety and dismissed the complaint.
Defendant met its initial burden on the motion by establishing that plaintiffs commenced this action after the two-year limitations period in the policy had expired (see Gilbert Frank Corp. v Federal Ins. Co., 70 NY2d 966, 967-968; Compis Servs. v Hartford Steam Boiler Inspection & Ins. Co., 272 AD2d 886, 887). In opposition to the motion, plaintiffs failed to raise an issue of fact concerning the applicability of the defenses of waiver or estoppel. Waiver is the intentional relinquishment of a known right (see Gilbert Frank Corp., 70 NY2d at 968). Here, plaintiffs failed to establish "a clear manifestation of intent by defendant to relinquish the protection of the contractual limitations period" (id.; see Blitman Constr. Corp. v Insurance Co. of N. Am., 66 NY2d 820, 822-823). To establish the applicability of estoppel, plaintiffs had to establish that defendant, by its conduct, lulled plaintiffs into sleeping on their rights (see Gilbert Frank Corp., 70 NY2d at 968; Procco v Kennedy, 88 AD2d 761, 761, affd 58 NY2d 804). According to William P. Enright (plaintiff), he explained to representatives of defendant insurer that certain family members were very ill and that he did not have the time to complete the repairs, and those representatives assured him that he could "take [his] time" in repairing the property and submitting receipts for payment. Plaintiff, however, admitted receiving a letter from a representative of defendant in December 1997 advising him of the limitations period and advising him to submit his claim before the limitations period expired or payment could not be issued. It thus cannot be said that defendant lulled plaintiffs into sleeping on their rights (see Blitman Constr. Corp., 66 NY2d at 823; see also Gongolewski v Travelers Ins. Co., 252 AD2d 569, 570). Plaintiffs further contend in support of their estoppel defense that they submitted some receipts before the limitations period expired, but they never received payment. Plaintiffs contend that they postponed commencing this action because they were waiting to see if they would be paid, and thus defendant should be estopped from relying on the limitations period in the policy. To protect their rights under the policy, plaintiffs should have commenced this action before the limitations period expired or obtained a waiver from defendant of that provision in the contract (see Blitman Constr. Corp., 66 NY2d at 822; Grumman Corp. v Travelers Indem. Co., 288 AD2d 344, 345). Finally, we reject plaintiffs' contention that defendant's motion should have been denied as premature.