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Admiral Indemnity Co. v. Pancas Restaurant10/3/2005
that a "disclaimer is based on concrete evidence" in order to avoid "piecemeal disclaimer". Public Serv. Mut. Ins. Co. v Harlen Hous Assocs., 7 AD3d 421, 440 (1st Dep't. 2004). While Admiral cited Pancas's breach of policy conditions as grounds for its liability disclaimer, namely late notification of the occurrence, claim, and lawsuit, Admiral could not come to this determination without an investigation of the Bendenzu accident, the legal events following thereafter and all potential grounds for disclaimers. Under these circumstances, the Court finds Admiral's delay in issuing the disclaimer from September to July reasonable.
Pancas and PSM argue in their cross motion for summary judgment that Admiral is equitably estopped from disclaiming a primary coverage obligation to Pancas because Admiral rescinded its disclaimer and provided defense and indemnity to Pancas. However, estoppel applies only "where [an insurer] undertakes the defense of the case without reserving its rights, 'in reliance on which the insured suffers the detriment of losing the right to control its own defense'". Brooklyn Hosp. Ctr. v Centennial Ins Co., 258 AD2d 491 (2d Dep't 1999).
Admiral's rescission letter states in pertinent parts: "We hereby rescind our November 4, 2003 coverage disclaimer. We will share in the defense of this claim on its merits with Magna Carta Insurance Company ." Admiral did not reserve its rights. While primary coverage by Admiral is not dependent upon the condition that PSM share in the obligation to defend Pancas, as argued by Admiral, the rescission following Pancas's defense does not prejudice Pancas. PSM did not lose complete control of the defense. As the aforementioned letter provides, PSM was able to share in Pancas's defense and Admiral only assumed part of the defense of the claim in conjunction with PSM. Therefore, the estoppel doctrine does not apply to Admiral; Admiral can disclaim their primary coverage obligation after having rescinded their original disclaimer.
Accordingly, it is
ORDERED that Admiral's motion for summary judgment (mot. Seq. 001) is granted and that Admiral is not obligated to defend or indemnify Pancas in the underlying personal injury action; and it is further
ORDERED that defendants', PSN and Pancas, cross motion for summary judgment is denied; Admiral effectively disclaimed coverage of Pancas in the underlying personal injury action; and it is further
ORDERED that the Clerk is directed to enter judgment accordingly.
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