New York Marine and General Insurance Company v. Travelers Property Casualty…

Background

New York Marine and General Insurance Company (NY Marine) and Travelers Property Casualty Company of America (Travelers) each issued insurance policies to D’Onofrio General Contractors Corp. The policies covered, to some extent, personal-injury risks connected with construction work at Hudson River Park involving the MOBRO 94 crane barge.

Matthew Lenio, an employee of D’Onofrio’s wholly owned subsidiary, Diego Construction, Inc., claimed that he was injured on the MOBRO 94 on February 11, 2013. He alleged that he slipped on snow or ice while moving between the crane barge and a materials barge. Lenio and his wife filed a lawsuit in New York Supreme Court on April 29, 2014.

D’Onofrio notified NY Marine and sought a defense under the NY Marine policy. NY Marine eventually agreed to defend D’Onofrio while reserving its rights. NY Marine’s managing general agent reported the lawsuit to Travelers’ wholesale broker in December 2014, and the broker reported it to Travelers in January 2015. Travelers later denied coverage because it understood that Lenio had not fallen on a barge insured under its policy. D’Onofrio did not challenge that denial or separately notify Travelers of the injury or lawsuit.

NY Marine later demanded that Travelers confirm coverage and reimburse NY Marine for defending D’Onofrio. NY Marine then filed this action, seeking a declaration that Travelers had to provide coverage and a defense, reimbursement of past and future defense costs, and payment of any reasonable settlement or judgment from Lenio’s lawsuit. The parties filed cross-motions for summary judgment, which asks whether the undisputed record requires judgment for one side without a trial.

Ocean-going-vessel exception

The court applied New York law to the insurance-policy issues. New York Insurance Law § 3420 generally provides that late notice does not invalidate an insurance claim unless the insurer was prejudiced by the delay. But the statute does not apply to certain marine insurance connected with ocean-going vessels.

The court held that the MOBRO 94 was an ocean-going vessel for purposes of this insurance-law exception. It focused on the policy’s Navigation Warranty, which allowed the vessel to operate in New York Harbor and the coastal and inland waters of New York, New Jersey, and Connecticut. The court concluded that the reference to coastal waters authorized operation beyond solely inland waterways and could include the Atlantic Ocean. It rejected NY Marine’s argument that the exception should not apply because the barge was largely immobile and used mainly as a work and storage platform.

Because § 3420 did not apply, the court applied New York’s common-law rule that an insurer may disclaim coverage for late notice without showing prejudice. The policy required D’Onofrio to promptly notify Travelers of an occurrence that might create liability and to forward related legal papers as soon as practicable.

Notice

The court held that the notice was insufficient as a matter of law because D’Onofrio never notified Travelers of the injury or lawsuit and never requested a defense under the Travelers policy. Notice from another insurance company did not satisfy the policy’s requirement that the insured provide notice.

The court also held that the notice was untimely. Travelers received information about the injury and lawsuit nearly two years after the injury and more than seven months after the lawsuit was filed. Neither D’Onofrio nor NY Marine offered a justification for the delay or for D’Onofrio’s failure to provide notice. The court therefore concluded that the policy’s notice requirement was not excused.

Waiver

NY Marine argued that Travelers waived the late-notice defense by initially denying coverage on a different ground. The court rejected that argument. Travelers’ denial letter broadly reserved the right to assert additional coverage positions and all rights under the policy and applicable law. The court held that this reservation preserved Travelers’ ability to rely on insufficient or untimely notice, even though Travelers knew about the notice issue when it sent the letter.

Disposition

Judge Andrew L. Carter, Jr. denied NY Marine’s motion for summary judgment and granted Travelers’ motion for summary judgment. The court held that D’Onofrio’s notice was insufficient and untimely, that the delay was not excused, and that Travelers’ obligation under its policy was therefore excused. The court did not proceed to analyze the parties’ respective insurance coverage and liability issues beyond the notice grounds. The Clerk was directed to close the case.