The Travelers Indemnity Company v. Patino

Background

The Travelers Indemnity Company issued ASNF, LLC, two insurance policies: a general liability policy covering July 3, 2013, through June 11, 2014, and a commercial excess liability policy covering June 11, 2013, through June 11, 2014. Both policies required prompt notice of an occurrence that might lead to a claim and separate prompt notice if a lawsuit was filed. The policies also restricted an insured from assuming obligations or incurring expenses without Travelers’s consent.

Javier Patino sued ASNF in New York state court after alleging that a scaffold collapsed while he was working at premises allegedly connected to ASNF. ASNF failed to appear, and a default judgment was entered on April 22, 2015. After a later inquest, judgment was entered against ASNF on June 7, 2019. Travelers received notice of the lawsuit from another insurer on October 8, 2015, and then disclaimed coverage. Travelers had previously received notice of an accident involving Patino and another injured worker, Luis Aveiga, but the court found that this was notice of an occurrence, not notice that a lawsuit had been filed.

Patino argued that Travelers had sufficient notice because it knew about Aveiga’s separate lawsuit and agreed to defend ASNF in that action. He also argued that Travelers could not show prejudice because it might have challenged the default or damages and because ASNF allegedly had no meritorious defense.

Ruling and reasoning

The court applied New York law, under which timely notice is a condition of insurance coverage. For policies issued after 2009, an insurer generally must show prejudice from late notice, but New York Insurance Law provides an irrebuttable presumption of prejudice when the insured’s liability was determined by a court before the insurer received notice.

The court held that notice was untimely because Travelers did not receive notice from ASNF and first learned of the Underlying Action approximately one year after ASNF had been sued. The court also held that the presumption of prejudice applied because Travelers received notice after the default judgment had been entered. Patino’s response did not cite evidence contradicting Travelers’s account of when it received notice, so the court treated that fact as admitted.

The Aveiga Action did not provide notice of the Underlying Action because the two lawsuits were separate actions in different New York counties. The earlier notice concerning the accident also did not satisfy the policies’ separate requirement for notice of a suit, and ASNF had not yet been named as a defendant when Travelers sent its August 2014 letter. Because the presumption of prejudice was irrebuttable, the court rejected Patino’s arguments about the possible defenses or challenges ASNF might have pursued.

Disposition

Travelers’s motion for summary judgment was granted. Patino’s motion for summary judgment was denied. The court declared that Travelers had no coverage obligation to ASNF under either the Travelers Policy or the Umbrella Policy in connection with the Underlying Action and no duty to pay the judgment obtained against ASNF. Judgment was entered in favor of Travelers and against Patino and ASNF. Travelers’s applications for a pre-motion conference concerning proposed motions to strike Patino’s materials were denied as moot, and the case was closed.

The opinion contains an apparent date inconsistency: it identifies the first notice as October 8, 2015 in several places, but later states that the first notice was received on October 8, 2018. The ruling relies on the notice having been received after the April 2015 default judgment.