GARY L. SHARPE, Senior District Judge.
Plaintiff/insured J. Peter McPartlon commenced this diversity action, which arises out of an alleged breach of an insurance contract, against defendant/insurer Continental Casualty Company (CCC) for damages and a declaratory judgment ordering CCC to indemnify and defend him against claims in an underlying state court personal injury lawsuit. (See generally Am. Compl., Dkt. No. 5.
McPartlon has owned numerous rental properties in the City of Albany and the greater Capital District area, including 72 Park Avenue, Albany, New York, which is the property at issue. (Def.'s Statement of Material Facts (SMF) ¶ 1, Dkt. No. 23, Attach. 2.) McPartlon operated his rental property business under various business organizations, including Parkland Management, Parkland Rentals, Parkland Development Corporation, and Kingsway Arms. (Def.'s SMF, Dkt. No. 10, Attach. 2 ¶¶ 8-9, 1:15-cv-1520.
As indicated by CCC's issued insurance policies, the insured, here McPartlon, had a duty to notify CCC in the event of an "occurrence" or "suit" against him "as soon as practicable." (Dkt. No. 23, Attach. 9 at 7-8.) Under the policy, an "occurrence" is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." (Dkt. No. 10, Attach. 10 ¶ 11, 1:15-cv-1520.) The policy defines "suit" as "a civil proceeding in which damage because of `bodily injury' . . . to which this insurance applies are [sic] alleged." (Id.) Additionally, "bodily injury" is defined in the policy as "injury, sickness or disease sustained by a person, including death resulting from any of these at any time." (Id.)
Following a 1993 environmental investigation at 72 Park Avenue, Albany, New York, the Albany County Department of Health (DOH) notified Donna Witko of Parkland Management that "an elevated blood lead level has been verified in a child."
On or about July 24, 2013, McPartlon was served in the underlying state court lawsuit commenced by Nakira Haynes. (Def.'s SMF ¶ 3.) Among other things, Nakira Haynes alleged that McPartlon was negligent in failing to abate lead paint hazards, which caused her injuries. (Dkt. No. 23, Attach. 7 ¶¶ 56-73.) McPartlon did not notify CCC about the underlying lawsuit until June 17, 2014 by letter from his corporate counsel addressed to "CNA Insurance." (Def.'s SMF ¶ 5.) As a result of McPartlon's untimely notice, CCC denied coverage as to Nakira Haynes' underlying state court lawsuit. (Id. ¶ 7.)
After service of Nakira Haynes' lawsuit, McPartlon's son, Michael, realized that he had not kept the pertinent insurance policies. (Id. ¶ 15.) In order to identify his then-unknown insurance carrier, Michael testified that a "week or two" after being served: (1) he searched McPartlon's property for boxes labeled "do not destroy," which would likely contain the oldest corporate documents; (2) he contacted a former business colleague and Witko; (3) he telephoned three out of five of his insurance brokers; and (4) McPartlon searched his personal records. (Id.) All attempts were unsuccessful. (Id.) Ultimately, by June 2014, Michael remembered that another family business had insurance through CNA, an affiliate of CCC, and this prompted his letter tendering a claim to CCC about the underlying Nakira Haynes state court lawsuit. (Id. ¶ 17.)
Rashiek Haynes filed suit against McPartlon in December 2014 for personal injuries related to lead exposure. (Dkt. No. 10, Attach. 13 at 4-30, 1:15-cv-1520.) After McPartlon tendered notice of the claim to CCC in January 2015, CCC has defended McPartlon in that suit. (Id. at 2-3; Dkt. No. 10, Attach. 15 at 2-3, 1:15-cv-1520; Def.'s SMF ¶ 3, 1:15-cv-1520.) Spurred by its receipt of the 1994 DOH report in or around August 2015, CCC seeks a declaration in this action that it has no duty to indemnify or defend McPartlon in Rashiek Haynes' lawsuit. (Compl. ¶ 29, 1:15-cv-1520; Def.'s SMF ¶ 12, 1:15-cv-1520.)
The standard of review pursuant to Fed. R. Civ. P. 56 is well established and will not be repeated here. For a full discussion of the standard, the court refers the parties to its decision in Wagner v. Swarts, 827 F.Supp.2d 85, 92 (N.D.N.Y. 2011), aff'd sub nom. Wagner v. Sprague, 489 F. App'x 500 (2d Cir. 2012).
CCC argues that it does not have a duty to defend or indemnify McPartlon in the underlying state court lawsuit brought by Nakira Haynes because he failed to provide timely notice of the 1994 DOH report, which is an "occurrence" under the policy. (Dkt. No. 23, Attach. 1 at 5, 7-8.) CCC also argues that McPartlon failed to provide timely notice of Nakira Haynes' lawsuit itself. (Id. at 5-6, 9-15.) Specifically, CCC contends that McPartlon's failure to provide notice of the 1994 DOH report for approximately twenty years or of Nakira Haynes' lawsuit for almost eleven months bars his insurance coverage as to that suit. (Id. at 5-15.) Additionally, CCC asserts that McPartlon has failed to satisfy his burden that his untimely notice was justified or excused. (Id. at 10-15.)
In response, McPartlon argues that CCC has a broad duty to defend unless there is no factual or legal basis for indemnity. (Dkt. No. 28, Attach. 23 at 6-10.) McPartlon also maintains that the 1994 DOH report is not an "occurrence" that triggers a notice requirement. (Id. at 10-13; Dkt. No. 12 at 5-7, 1:15-cv-1520.) Further, McPartlon asserts that his delayed notice was excusable because, among other things: (1) he did not know who his insurance carrier was; (2) he did not own the property for approximately twenty years before the underlying state court lawsuit; (3) his insurance agent passed away; and (4) the insurance agency closed. (Dkt. No. 28, Attach. 23 at 3-4, 15.) In any event, McPartlon contends that CCC was not prejudiced by his late notice. (Id. at 7-9.)
An insurance contract stating that the insured must notify the insurer of an occurrence or claim "as soon as practicable" requires that notice be provided within a reasonable time under the circumstances. See Travelers Ins. Co. v. Volmar Constr. Co., 300 A.D.2d 40, 42 (1st Dep't 2002). Failure to give timely notice vitiates the contract as a matter of law. See Argo Corp. v. Greater N.Y. Mut. Ins. Co., 4 N.Y.3d 332, 339 (2005).
McPartlon essentially argues that the 1994 DOH report did not specifically identify information that would put him on notice of a potential claim. (Dkt. No. 28, Attach. 23 at 10-13.) In support, McPartlon cites readily distinguishable authority. (Id.) For instance, he relies on cases that hold that generalized notice of a code violation does not trigger an insured's duty to notify an insurer. See, e.g., Chama Holding Corp. v. Generali-U.S. Branch, 22 A.D.3d 443 (2d Dep't 2005); Scharf v. Generali-U.S. Branch, 259 A.D.2d 349 (1st Dep't 1999). However, that is not the case here. The 1994 DOH report specifically identified a minor with an elevated blood lead level who resided at the apartment and conditions that violated Public Health Law. (Dkt. No. 23, Attach. 12 at 2.) Further, the report required that repairs to remedy the violations be completed within fourteen days or "legal action w[ould] be initiated by [DOH]." (Id.) Undoubtedly, the 1994 DOH report allowed McPartlon to "glean a reasonable possibility of the [insurance] policy's involvement." Paramount Ins. Co., 293 A.D.2d at 239-40.
Furthermore, McPartlon failed to satisfy his burden to present a question of fact regarding whether his late notice was justified. First, McPartlon argues that his delay is excusable because he lacked documentation of the insurance policies, the insurance agent passed away, and the insurance agency closed. (Dkt. No. 28, Attach. 23 at 4, 15.) All of these excuses rest on the premise that an insurer bears the burden of an insured's own negligence in maintaining his records and, therefore, fail as a matter of law. Indeed, it is "the responsibility of the insured, not the insurance company, to keep track of which carriers have provided it with liability insurance." Olin Corp., 966 F.2d at 725; see Eagle Ins. Co. v. Garcia, 280 A.D.2d 476, 477 (2d Dep't 2001) ("An insured's ignorance of his or her insurance carrier constitutes gross negligence and is not a valid excuse for the failure to provide the carrier with timely notice.").
Furthermore, McPartlon failed to make diligent efforts to identify his insurance carrier once he received notice of the underlying state court lawsuit. See GJF Const., Inc. v. Sirius Am. Ins. Co., 89 A.D.3d 622, 625 (1st Dep't 2011) (holding insured did not proffer justifiable excuse for late notice of suit when it failed to make "reasonably diligent efforts to ascertain whether coverage existed . . . in order to promptly notify [insurer]"). CCC first learned of Nakira Haynes' state court lawsuit on June 17, 2014, when McPartlon sent a letter from his corporate counsel to "CNA Insurance." (Def.'s SMF ¶¶ 5-6.) This was almost one year since McPartlon had been served in that underlying state court action on July 24, 2013. (Id. ¶ 3.) At no point before his tender letter did McPartlon consult counsel or an insurance broker.
For these reasons, McPartlon's proffered excuses for his delayed notice fail as a matter of law.
As with Nakira Haynes' lawsuit, CCC contends that it does not have a duty to defend or indemnify McPartlon in the underlying state court lawsuit brought by Rashiek Haynes because McPartlon failed to provide timely notice of the 1994 DOH report, which is an "occurrence" under the policy. (Dkt. No. 10 at 10-13, 16-17, 1:15-cv-1520.) The same reasoning articulated above applies to Rashiek Haynes' lawsuit, and accordingly CCC has no duty to defend or indemnify McPartlon as to that action.
McPartlon claims that CCC acted in bad faith in denying coverage as to the underlying state court lawsuit brought by Nakira Haynes. (Am. Compl., ¶ 36.) CCC argues that McPartlon's bad faith claim fails as a matter of law because there is no cognizable claim for the denial of insurance in New York where an insurer has an arguable basis to disclaim coverage. (Dkt. No. 23, Attach. 1 at 15-16 (citing Nouveau Elevator Indus., Inc. v. Cont'l Cas. Ins. Co., No. 05-CV-0813, 2006 WL 1720429, at *8 (E.D.N.Y. June 21, 2006)).) In response, McPartlon cites no evidence that CCC lacked an arguable basis to disclaim coverage or otherwise acted in bad faith. (Dkt. No. 28, Attach. 23 at 15-16.)
As evidenced above, the court concurs that CCC had a basis to deny coverage regarding Nakira Haynes' underlying lawsuit because McPartlon failed to provide timely notice of the suit. CCC also had a basis to deny coverage based on McPartlon's failure to provide timely notice of an "occurrence." Thus, CCC is entitled to summary judgment on McPartlon's bad faith claim.
