Golden Insurance Company v. Ingrid House, Inc.

Background

Golden Insurance issued a claims-made liability policy to Ingrid House for a construction project at premises in New York. The project expanded a four-story building to six stories. On December 24, 2015, Luis Alberto Pomboza Chicaiza, an employee of a subcontractor, fell from the fourth floor after a wall collapsed and later died.

The policy covered sums the insured became legally obligated to pay because of bodily injury or property damage and gave Golden Insurance a duty to defend covered suits. Two endorsements excluded certain losses: Endorsement #30 excluded bodily injury or property damage arising from work on the exterior of a building more than three stories high, and Endorsement #10 excluded losses arising from earth movement or subsidence.

Golden Insurance received notice of the accident in January 2016. In March 2016, its counsel stated that Endorsement #30 applied and that Golden would provide no coverage, defense, or indemnity. After the estate’s lawsuit was filed in December 2017, Golden provided a defense under reservations of rights in January 2018, while reserving the ability to deny coverage based on the two exclusions. Golden did not issue what the court treated as a valid disclaimer before filing this federal action in February 2020.

Claims and Arguments

Golden Insurance sought a declaration that the exclusions barred coverage, permission to withdraw from defending the underlying lawsuit, and reimbursement of defense costs, expenses, and indemnity payments. Ingrid House moved for summary judgment, arguing that New York Insurance Law § 3420(d)(2) required Golden to give written notice of its disclaimer as soon as reasonably possible.

Golden argued that the accident was outside the policy’s coverage terms rather than within the policy but excluded, that it had no duty to continue investigating during portions of the period, that the facts supporting the exterior-operations exclusion were not established until later depositions, and that its reservation-of-rights letters and federal lawsuit were not disclaimers.

Court’s Analysis

The court held that Endorsements #10 and #30 were policy exclusions, not limitations on the basic scope of coverage. The policy’s structure and wording placed the endorsements in the exclusions section, and Golden could not avoid the timely-disclaimer requirement by characterizing them as part of the coverage grant.

Under New York law, an insurer relying on a policy exclusion must provide written notice of disclaimer as soon as reasonably possible. A reservation-of-rights letter does not itself serve as a disclaimer. The insurer bears the burden of explaining any delay, including showing why an investigation was necessary and diligent.

The court concluded that Golden knew, or should have known, the basis for relying on Endorsement #30 no later than January 2018. Golden’s own arguments relied on information indicating that the accident involved demolition of an exterior parapet wall. Golden offered no evidence explaining why it could not have obtained or evaluated the relevant information earlier. Its delay of more than two years after January 2018 was therefore unreasonable as a matter of law.

The same reasoning applied to Endorsement #10. Golden reserved its rights under that endorsement in January 2018 but did not disclaim coverage before filing this action. The court also rejected Golden’s argument that the federal lawsuit did not implicate the timely-disclaimer requirement, because the lawsuit sought to avoid paying defense and liability costs based on the exclusions.

Disposition

The court held that Golden Insurance could not rely on Endorsements #10 or #30 as a basis for disclaiming liability for defense costs and indemnification. It granted Ingrid House’s motion for summary judgment and denied Golden Insurance’s motion for summary judgment.