11-3182-cv
         Britt v. General Star Indemnity Co.

                                 UNITED STATES COURT OF APPEALS
                                     FOR THE SECOND CIRCUIT

                                              SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1,
2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.


 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Daniel Patrick Moynihan
 3       United States Courthouse, 500 Pearl Street, in the City of
 4       New York, on the 30th day of August, two thousand twelve.
 5
 6       PRESENT: ROBERT A. KATZMANN,
 7                RICHARD C. WESLEY,
 8                PETER W. HALL,
 9                         Circuit Judges.
10
11       ANDREW BRITT,
12
13                                     Plaintiff-Appellee,
14
15                      v.                                           11-3182
16
17       GENERAL STAR INDEMNITY COMPANY,
18
19                                     Defendant-Appellant.*
20
21
22
23       FOR APPELLANT:                CARA TSENG DUFFIELD (Daniel J. Standish,
24                                     on the brief), Wiley Rein LLP,
25                                     Washington, D.C.
26
27       FOR APPELLEES:                EDWARD B. FLINK, Flink Smith LLC, Albany,

30
31


                *
                The Clerk of Court is respectfully instructed to amend the
         caption to conform with the caption above.
1         Appeal from the United States District Court for the
2    Northern District of New York (Hurd, J.).
3
4        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED

5    AND DECREED that the judgment of United States District

6    Court for the Northern District of New York is REVERSED.

7        Defendant-Appellant General Star Indemnity Company

8    (“General Star”) appeals from an April 4, 2011, Decision and

9    Order of the United States District Court for the Northern

10   District of New York (Hurd, J.), declaring that General Star

11   was estopped from denying coverage under a commercial

12   umbrella policy (the “Policy”) General Star issued to

13   Pharmalogic Services, LLC (“Pharmalogic”) for an auto

14   accident involving Plaintiff-Appellee Andrew Britt (“Britt”)

15   and Dennis Bridges (“Bridges”), then an employee of

16   Pharmalogic.   See Britt v. Gen. Star Indem. Co., 

   Supp. 2d 454 (N.D.N.Y. 2011)(the “Order”).          In its Order,

18   the district court noted that the Policy did not cover the

19   accident because Bridges did not have Pharmalogic’s

20   permission to drive the auto.       Nevertheless, it concluded

21   that General Star was estopped from denying coverage because

22   it failed to timely notify Britt under New York Insurance

23   Law section 3420(d)(2) that it was disclaiming coverage

24   because of a policy exclusion.       We disagree.


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1        New York Insurance Law section 3420(d)(2) provides:

 2              If under a liability policy issued or
 3              delivered in this state, an insurer shall
 4              disclaim liability or deny coverage for
 5              death or bodily injury arising out of a
 6              motor vehicle accident . . . it shall
 7              give written notice as soon as is
 8              reasonably possible of such disclaimer of
 9              liability or denial of coverage to the
10              insured and the injured person or any
11              other claimant.
12
13       Failure to provide a Section 3420(d) disclaimer

14   precludes denial of coverage based on a policy exclusion.       A

15   Section 3420(d)(2) disclaimer is unnecessary, however, when

16   a claim falls outside the scope of the policy's definition

17   of coverage.     Zappone v. Home Ins. Co., 

, 135-

18   36 (1982).     In that situation, “the insurance policy does

19   not contemplate coverage in the first instance, and

20   requiring payment of a claim upon failure to timely disclaim

21   would create coverage where it never existed."      Worcester

22   Ins. Co. v. Bettenhauser, 

, 188 (2000).

23       Here, the district court erred in concluding that the

24   permissive use provision “operated as a policy exclusion.”

25   Britt, 755 F. Supp. 2d at 470.      The Policy is a general

26   commercial umbrella policy issued to named insureds

27   Pharmalogic and its subsidiaries; Bridges is not a named

28   insured.     (Joint Appendix (“J.A.”) 141, 161.)   As Britt


                                     3
1    concedes, the permissive use provision, which is contained

2    in the section of the Policy titled “Who Is An Insured,” is

3    the only portion of the Policy that can possibly grant

4    coverage to a non-named insured involved in an auto

5    accident.    (J.A. 148-49.)   It provides:   “With respect to

6    any (i) auto . . ., any person is an insured while driving

7    such auto . . . with [Pharmalogic’s] permission.”     (J.A.

8    149.)    The definition of “auto” includes any “land motor

9    vehicle” that is not “mobile equipment.”      (J.A. 155.)   The

10   Policy does not include a rider or declaration that

11   specifies whether only certain autos, e.g., those registered

12   to Pharmalogic, are covered by the policy.     Exclusions are

13   set forth in a separate section of the Policy.     (J.A. 142-

14   45.)

15          The permissive use provision is a fundamental grant of

16   Policy coverage, not an exclusion.    Therefore, the district

17   court erred in concluding that General Star was required to

18   issue a Section 3420(d) disclaimer.     Because the Policy does

19   not insure specific autos, specific individuals, or

20   employees generally for auto accidents, permissive use is

21   the only way to define the scope of the Policy’s coverage

22   for auto accidents.    Indeed, it is the only language in the

23   clause tying coverage to Pharmalogic, the named insured.        To

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1   interpret permissive use as a Policy exclusion would mean

2   that all accidents involving any autos are covered by the

3   Policy in the first instance—there would be no limit to the

4   Policy’s coverage.

5       For the foregoing reasons, the judgment of the district

6   court is hereby REVERSED.

7                               FOR THE COURT:

8                               Catherine O’Hagan Wolfe, Clerk

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