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Bovis Lend Lease LMB12/15/2005
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Milton L. Williams, JJ.
Index 106637/03
In this insurance coverage case, the main issue before us is whether defendant Royal Surplus Lines Insurance Company complied with the mandate of Insurance Law § 3420(d), which requires that an insurer intending to disclaim liability or deny coverage under a liability policy give prompt written notice of such disclaimer of liability or denial of coverage "to the insured and the injured person or any other claimant." A related issue, although not of dispositive consequence in the instant case, is whether § 3420(d) applies vis-a-vis an insurer intending to disclaim liability against another insurer who covers the same insured.
This action has its genesis in an earlier suit brought by Dennis Winter, an employee of nonparty Millennium Masonry, Inc. (Millennium), who was injured on September 14, 2002, when he fell from a height while working on the construction of a new faculty residence for plaintiff The Trustees of Columbia University in the City of New York (Columbia) at 110th Street and Broadway. Plaintiff Bovis Lend Lease LMB, Inc. (Bovis) was the construction manager, pursuant to agreement with Columbia, and had contracted with Millennium for the masonry and brick work on the project. Two commercial general liability insurance policies were in effect at the time of Winter's fall: one issued by plaintiff National Union Fire Insurance Company of Pittsburgh, PA (National Union), to Bovis, naming Columbia as an additional insured, and the other issued by defendant Royal Surplus Lines Insurance Company (Royal) to Millennium, naming Bovis and Columbia as additional insureds. Each policy, written on a standard Insurance Services Offices form, contains the following "Insuring Agreement," in pertinent part:
"We will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury' or property damage' to which this insurance applies. We will have the right and duty to defend the insured against any suit' seeking those damages even if the allegations of the suit' are groundless, false or fraudulent. However, we will have no duty to defend the insured against any suit' seeking damages for bodily injury' or property damage' to which this insurance does not apply."
On November 12, 2002, Winter, the injured employee, commenced an action against both Bovis and Columbia alleging negligence and violations of the Labor Law. In March 2003, Bovis and Columbia commenced a third-party action against Millennium. National Union undertook the defense of Bovis and Columbia in the Winter action. By letter dated February 28, 2003, National Union tendered the defense and indemnification of Bovis and Columbia to Royal. Royal acknowledged the claim on March 3, 2003 and advised that it was commencing its investigation. Two and a half months later, by undated letter received by plaintiffs on May 21, 2003, Royal rejected the tender, disclaiming liability based on a "New Residential Work or Products Exclusion" in the Millennium policy. The letter was addressed to Millennium and National Union's claim representative, with copies to counsel for Winter, the injured employee and plaintiff in the underlying action, and to counsel for the insureds Bovis and Columbia. The letter stated that "Royal will not provide a defense or indemnification to Millenium in connection with the third-party action, nor will Royal provide a defense or indemnification to Bovis or Columbia in connection with the Underlying Action and
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