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City of New York v. Continental Casualty Co.12/13/2005
Published by New York State Law Reporting Bureau pursuant to Judiciary Law ยง 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Joseph P. Sullivan, J.P., Betty Weinberg Ellerin, Eugene Nardelli and John W. Sweeny, Jr., JJ.
Index 401841/03
In this declaratory judgment action, plaintiff City of New York appeals from a judgment of the Supreme Court, New York County, which denied its motion for summary judgment and granted summary judgment in favor of defendant, Continental Casualty Company, declaring and adjudging that Continental did not owe a duty to defend or indemnify the City in connection with an underlying personal injury lawsuit. For the reasons stated herein, we now reverse, grant plaintiff's motion and make a declaration in its favor.
Plaintiff entered into a contract with Welsbach Electric Corp. to provide labor and materials for the maintenance of illuminated traffic signals in Queens. The contract required Welsbach to obtain automobile liability coverage for all vehicles to be used in connection with the contract, as well as coverage for personal injury and property damage arising from performance of this work. It also required Welsbach to indemnify and hold the City harmless for any loss, damage, injury or death.
Welsbach purchased an insurance policy as required by the contract from defendant, naming the City as an additional insured.
On April 4, 2001, an employee of Welsbach named Kraker, working in a "cherry picker" attached to one of Welsbach's trucks, was injured while repairing a defective light on a utility pole. In November 2001, Kraker and his wife commenced a personal injury action against Con Edison, alleging he was electrocuted due to Con Edison's negligence. In September 2002, Con Edison commenced a third-party action against Welsbach, seeking indemnification or contribution based upon unspecified negligence on Welsbach's part. Continental assumed Welsbach's defense of this action in November 2002.
In December 2002, Con Edison commenced a second third-party action against the City, and sought indemnification by and contribution from the City for allegedly failing to provide Kraker with a safe place to work, as well as the necessary training and safety equipment to perform his work. A copy of this second third-party complaint was served on Continental's counsel who was handling Welsbach's defense.
On April 1, 2003, more than three months after this action was commenced, the City faxed the second third-party complaint to Welsbach, requesting that Welsbach forward it, as well as the City's request for defense and indemnification, to Continental. Although the City contends that Kraker's work arose from and was in connection with performance under the contract, and hence within the coverage of Continental's policy, it never directly forwarded the suit papers or demand to Continental.
By letter dated April 29, 2003, Continental acknowledged receipt, on April 2, 2003, of plaintiff's demand for defense and indemnification. However, it declined coverage on the basis that the City had not given prompt notice of the accident and did not immediately send copies of the suit papers.
The City commenced an action seeking a declaration that Continental is obligated to defend and indemnify it with respect to the second third-party action, as well as to recover the defense costs incurred in defending itself in that action. The City thereafter moved for summary judgment, arguing that since Continental was timely notified of the accident by Welsbach and coverage was provided to Welsbach under the policy, it was e
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