Upon the foregoing papers in this action by plaintiff Mohammed Gofranullah (Gofranullah) to recover damages for personal injuries allegedly sustained by him in a construction accident, third-party defendant Utica First Insurance Co. (Utica) moves for an order, pursuant to CPLR 3211(a) and (7), dismissing the third-party summons and complaint and all cross claims as against it. Utica requests that the court treat its motion as one for summary judgment, pursuant to CPLR 3211(c), and declare, pursuant to CPLR 3001, that it has no obligation to defend or indemnify defendant/third-party plaintiff 630 Realty, LLC (630 Realty) in the underlying action commenced by Gofranullah against, among others, 630 Realty (the underlying action), or to defend or indemnify third-party defendant Islam Contracting Co. (Islam) in Utica's third-party action as against Islam (the third-party action). Utica, in the alternative, moves for an order, pursuant to CPLR 603 and 1010, severing the third-[*2]party action from the underlying action. 630 Realty cross-moves for summary judgment declaring that Utica must provide it with a defense and indemnification in the underlying action.

Gofranullah was an employee of Islam, a subcontractor, which was hired by the general contractor, AMI Development, LLC (AMI), to perform painting at premises located at 35 Underhill Avenue, in Brooklyn, New York. The premises at which the work was performed consisted of a multiple dwelling under construction. 630 Realty was the owner of the premises, and S & J Industrial Corp. (S & J) was the construction manager for the construction project. On July 3, 2005, during the course of Gofranullah's employment performing construction work at the construction site, he sustained personal injuries when he accidentally fell from an elevated height. On November 10, 2005, Gofranullah commenced the underlying action against 630 Realty, AMI, and S & J, alleging negligence and violations of the Labor Law, and seeking to recover damages for his injuries.

Islam was the named insured under a commercial liability insurance policy issued by Utica, effective between November 3, 2004 and November 3, 2005 (the Utica policy). According to Jeff Mountz, a claims representative for Utica, AMI provided Utica with its first notice of Gofranullah's accident and the underlying action on September 6, 2006. A disclaimer letter dated September 8, 2006 from Utica to Islam, however, states that Utica had received a February 7, 2006 letter from Isaac Fischman of AMI, wherein it was demanded that Utica assume AMI's defense and indemnify it in the underlying action. Utica's September 8, 2006 letter disclaimed coverage to Islam on the basis of exclusion 8., an employee exclusion (the Employee Exclusion), noting that Gofranullah was Islam's employee at the time he was injured and that his injuries arose out of, and during the course of that employment. It also disclaimed coverage to Islam on the basis of exclusion 3., a contractual liability exclusion (the Contractual Liability Exclusion).

On November 20, 2006, 630 Realty filed the third-party action against Islam, Utica, and two other insurance companies, i.e., Sirius America Insurance Co. (Sirius) and Nationwide Mutual Fire Insurance Co. (Nationwide). 630 Realty's third-party complaint, which was served on Utica on December 4, 2006, alleges that Islam agreed to indemnify and hold it harmless pursuant to contract for the claim alleged by Gofranullah, and that Islam failed to procure the insurance required by the contract. 630 Realty's third-party complaint seeks indemnification from Islam. With respect to Utica, 630 Realty's third-party complaint alleges that it was an additional insured under the comprehensive general liability insurance policy issued to Islam by Utica. 630 Realty's third-party complaint also alleges that it was an additional insured under insurance policies issued by Sirius and Nationwide. 630 Realty seeks a declaratory judgment that Utica and these other insurance companies are required to defend and indemnify it. [*3]

By stipulation dated January 8, 2007, 630 Realty agreed to extend Utica's time to respond to its third-party summons and complaint until February 9, 2007. By notice of motion dated and served on February 8, 2007, Utica brought the instant motion to dismiss and for summary judgment, and 630 Realty, in response, pursuant to CPLR 3211(c), has cross-moved for summary judgment. Nationwide opposes Utica's motion. Since both Utica and 630 Realty have specifically requested summary judgment and have made clear that they are charting a summary judgment course, the court will treat Utica's motion and 630 Realty's cross motion as ones for summary judgment (see CPLR 3211[c]; Shah v Shah, 215 AD2d 287, 289-290 [1995]).

In support of its motion, Utica argues that 630 Realty is not an additional insured under the Utica policy. It points out that the Utica policy does not contain any endorsement specifically naming 630 Realty as an additional insured, and that 630 Realty could, therefore, only be an additional insured if the Blanket Additional Insured Endorsement (the Blanket Endorsement), contained in the Utica policy, is triggered. The Blanket Endorsement, in pertinent part, provides as follows:

"BLANKET ADDITIONAL INSURED

(CONTRACTORS)

Item 7.d is added to the ADDITIONAL DEFINITIONS of COMMERCIAL

LIABILITY COVERAGES of the Contractors special Policy form AP-100.

7. Insured also includes:

d. Any person or organization whom you are required to

name as an additional insured on this policy under a written

contract or written agreement.

The written contract or written agreement must be:

(1) Currently in effect or becoming effective during the terms

of this policy; and

(2) Executed prior to the bodily injury,' property damage,'

personal injury,' or advertising injury.'"

Utica argues that 630 Realty does not fall within the definition of an "insured" under the Blanket Endorsement because Islam was not a party to any written contract or written agreement, obligating Islam to name 630 Realty as an additional insured under the Utica policy. Utica contends that it, thus, has no insurance coverage obligations to 630 Realty.

Utica's argument is completely refuted by 630 Realty's submission, in its cross motion, of a copy of a written Hold Harmless Agreement between Islam, as subcontractor, and AMI, as contractor (the Islam-AMI contract). The Islam-AMI contract, in relevant part, expressly provides:

"INSURANCE: The subcontractor shall procure and

shall maintain until final acceptance of the Work, such [*4]

insurance as will protect the Subcontractor, the Builder,[and]

the Owner . . . for claims arising out of or resulting from

Subcontractor's Work under this Subcontract Agreement,

whether performed by the Subcontractor, or by anyone

directly or indirectly employed by Subcontractor, of by

anyone for whose acts Subcontractor may be liable . . .

The Subcontractor's insurance shall include contractual

liability coverage and additional insured coverage for the

benefit of the Builder and Owner . . . Subcontractor

shall provide Builder with certificate(s) of insurance evidencing

the required insurance coverage."

The Islam-AMI contract is dated May 24, 2005. It thus falls within the Utica policy's effective dates and precedes the date of Gofranullah's accident. A Certificate of Insurance was issued to 630 Realty, as the certificate holder, which stated that 630 Realty was an additional insured under the Utica policy.

Utica, in response, contends that the Islam-AMI contract is insufficient to trigger the Blanket Endorsement because it only generally requires Islam to procure additional insured coverage for the benefit of "the Owner" but fails to identify "the Owner" therein, and the name 630 Realty does not appear in the Islam-AMI contract. Such contention lacks merit. The Utica policy's Blanket Endorsement contains no language requiring that the additional insured be specifically named in the contract or that the additional insured be a party to the contract, but, rather, it provides insurance coverage to "any person or organization" whom Islam was required to name as an additional insured on the Utica policy under such written contract. Moreover, it is undisputed that the Islam-AMI contract was executed with respect to the construction project at which Gofranullah was injured and that 630 Realty was the owner of the premises upon which the work was performed. Thus, it cannot be disputed that the owner to which the Islam-AMI contract referred was 630 Realty.

Utica further argues that since the underlying action is still ongoing and no liability has yet been attributed to Islam, any finding as to whether Gofranullah's claim was one "arising out of" Islam's work under Islam's subcontract agreement with AMI, pursuant to the Islam-AMI contract, so as to require it to name it as an additional insured on the Utica policy and, thus, cause it to fall under the Blanket Endorsement is premature. This argument is rejected. The fact that litigation in the underlying action is still ongoing does not render 630 Realty's claim for a defense premature. The duty of an insurer to defend is broad and is triggered where the allegations of the complaint form a factual and legal basis on which the insurer might eventually be required to indemnify the insured under any provision of the insurance policy (see BP Air Conditioning v One Beacon Ins. Co., __NY3d__, 2007 NY Slip Op 05581, *4 [2007]). [*5]

Utica asserts that Gofranullah did not sue Islam, and it contends that there is no allegation against Islam in the complaint in the underlying action so as to bring 630 Realty's claim within the ambit of the insurance coverage purchased. Such contention is without merit. Gofranullah's complaint specifically alleges that Gofranullah was employed by Islam, and that he was caused to have an accident "while [he] was employed performing construction or related work at the . . . job site." Indeed, Utica, in its opposition papers, concedes that "it is undisputed that Gofranullah was injured during the course of his employment with . . . Islam." Thus, 630 Realty falls within the definition of an "insured" under the terms of the Blanket Endorsement.

Utica additionally argues that even if the Blanket Endorsement is triggered, coverage for 630 Realty from it is subject to the "Other Insurance" provisions of the Utica policy and any other policy that may also cover 630 Realty for the loss, including the insurance policies issued by Sirius and Nationwide. Utica claims that it is entitled to assert a defense based upon these "Other Insurance" provisions. In so claiming, Utica does not cite any particular provision of the Utica policy. However, "Conditions"4. of the Utica policy provides that "[i]nsurance under this Commercial Liability Coverage is primary," and "[t]he amount of our liability is not reduced because of other insurance which applies to the loss on other than a primary basis." The Utica policy further provides that "[i]f the other insurance is also primary, we will share in the loss." Thus, the issue of the priority of insurance coverage vis-a-vis Utica and the other insurance companies and Utica's speculation that it may be able to succeed with cross claims against Sirius or Nationwide does not justify a delay of its obligations to 630 Realty, as its additional insured.

Utica further contends that it is nevertheless entitled to summary judgment based upon exclusionary provisions contained in the Utica policy which, it claims, applies to preclude coverage to 630 Realty. One of these exclusions is the Contractual Liability Exclusion, which provides:

"3.We do not pay for bodily injury, property damage,

personal injury or advertising injury which is assumed

under a contract or an agreement. This exclusion does

not apply to:

a. an incidental contract; or

b. liability for damages that an insured would have

in the absence of the contract or agreement."

When denying coverage based upon an exclusion in an insurance policy, however, the language in the exclusion must be clear and unmistakable and not subject to any other reasonable interpretation (see Pepsico, Inc. v Winterthur Intl. Am. Ins. Co., 13 AD3d 599, 600 [2004]; Village Mall at Hillcrest Condominium v Merrimack Mut. Fire Ins. Co., 309 AD2d 857, 857 [2003]; Consolidated Edison Co. of NY v Hartford Ins. Co., 203 AD2d 83, 84 [1994]). Ambiguities as to the existence [*6]of insurance coverage must be resolved in favor of the party seeking coverage and strictly construed against the insurer (see Westview Assocs. v Guaranty Natl. Ins. Co., 95 NY2d 334, 340 [2000]; Pepisco, Inc. 13 AD3d at 600; Village Mall at Hillcrest Condominium, 309 AD2d at 858; Consolidated Edison Co. of NY, 203 AD2d at 84).

Here, an ambiguity in the Utica policy with respect to the Contractual Liability Exclusion exists as it is inconsistent with and would negate the terms of the Blanket Endorsement. The only logical resolution of this ambiguity is that the Blanket Endorsement, which appears as a separately added endorsement, overrides and prevails over the Contractual Liability Exclusion, which appears under the "Exclusions That Apply to All Liability Coverages" section in the general policy, since to find otherwise would render the terms of the Blanket Endorsement meaningless and ineffective. Thus, the court does not find that the Contractual Liability Exclusion is applicable to exclude coverage under the Utica policy (see Pepsico, Inc., 13 AD3d at 600; Village Mall at Hillcrest Condominium, 309 AD2d at 857-858; Consolidated Edison Co. of NY, 203 AD2d at 84).

Utica also argues that coverage to 630 Realty is excluded by the Employee Exclusion, which precludes coverage for "bodily injury to an employee of an insured if it occurs in the course of employment," and exclusion 10., which precludes coverage "for bodily injuries if benefits are provided or are required to be provided by an insured under a workers' compensation . . . or like law"(the Workers' Compensation Exclusion). 630 Reatly does not dispute that the Employee Exclusion and the Workers' Compensation Exclusion would be applicable to exclude its coverage under the Utica policy. It argues, however, that Utica failed to timely disclaim coverage to it so as to permit its reliance upon these exclusions.

As discussed above, 630 Realty's third-party summons and complaint seeking a declaratory judgment with respect to insurance coverage by Utica was served upon Utica on December 4, 2006. Utica, however, did not attempt to claim coverage to 630 Realty until the onset of the instant motion, which was served on February 8, 2007, 66 days after service of 630 Realty's third-party summons and complaint and five months after its receipt of the September 6, 2006 notice of the underlying action and its issuance of the September 8, 2006 disclaimer based on the same exclusions now raised by it.

It is well settled that a notice of disclaimer is required where the policy covers the claim, but for the applicability of the exclusion (see Squires v Robert Marini Bldrs., 293 AD2d 808, 810 [2002]; Greater NY Mut. Ins. Co. v Clark, 205 AD2d 857, 858 [1994]). Insurance Law § 3420(d) requires an insurer to provide a written disclaimer "as soon as is reasonably possible." An insurer must give notice of its intention to deny coverage after it first learns of the accident or reason for disclaimer (see Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1029 [1979]; Matter of Nationwide Mut. Ins. Co. v Steiner, 199 AD2d 507, 507 [1993]). [*7]

"The insurer bears the burden of justifying any delay"(Schulman v Indian Harbor Ins. Co., 40 AD3d 957, 958 [2007]; see also First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 69 [2003]). The reasonableness of a delay is measured from the time when the insurer "has sufficient knowledge of facts entitling it to disclaim, or knows that it will disclaim coverage" (First Fin. Ins. Co., 1 NY3d at 66; see also Consolidated Edison Co. of NY, 203 AD2d at 84-85).

"While Insurance Law § 3420(d) speaks only of giving notice as soon as is reasonably possible,' investigation into issues affecting an insurer's decision whether to disclaim coverage obviously may excuse delay in notifying the policyholder of a disclaimer" (First Fin. Ins. Co., 1 NY3d at 69). "[T]he burden is upon the insurance carrier to establish that the delay . . . was reasonably related to its completion of a thorough and diligent investigation" (Schulman, 40 AD3d at 958). An insurer's explanation of such a delay "is insufficient as a matter of law where the basis for denying coverage was or should have been readily apparent before the onset of the delay" (First Fin. Ins. Co., 1 NY3d at 69; see also Matter of Allstate Ins. Co. v Cruz, 30 AD3d 511, 512 [2006]).

Utica concedes that it received notice of the circumstances giving rise to the underlying action and the third-party action by, at least, September 6, 2006, when it received AMI's letter seeking defense and indemnification from it based upon a certificate of insurance provided by Islam. In opposition to 630 Realty's argument, however, Utica argues that it had no obligation to disclaim coverage to 630 Realty since 630 Realty is not a named additional insured under the Utica policy and a failure to properly disclaim cannot be utilized to create coverage where none otherwise exists (see generally Zappone v Home Ins. Co., 55 NY2d 131, 136-137 [1982]). Such argument must be rejected, however, since (as discussed above) 630 Realty has established that it is an additional insured pursuant to the Blanket Endorsement.

Utica further relies upon the principle that an insurance company's obligation to disclaim coverage only begins when it is provided with sufficient information to make a good faith determination as to whether a disclaimer is required (see Matter of Allcity Ins. Co. [Jiminez], 78 NY2d 1054, 1056 [1991]; Ace Packing Co. v Campbell Solberg Assocs., 41 AD3d 12, 14 [2007]; DeSantis Bros. v Allstate Ins. Co., 244 AD2d 183, 184 [1997]). Utica admits that it became aware of the fact that 630 Realty would be seeking coverage from it for the underlying action when it received a copy of the complaint in the third-party action on December 4, 2006. Utica asserts, however, that the information provided to it in the third-party complaint did not give it sufficient information to determine if 630 Realty was an additional insured under the Utica policy because such third-party complaint did not specifically allege that 630 Realty's claimed entitlement to additional insured coverage was based upon a "written contract" or "written agreement" so as to trigger 630 Realty's additional insured status under the Blanket Endorsement. Utica states that 630 Realty did not [*8]attach the written Islam-AMI contract to its third-party complaint or otherwise inform it that there was a written contract. Utica argues that due to the fact that it was not in possession of this contract, its time to disclaim did not begin to run.

Utica's argument is unavailing. 630 Realty, in its third-party complaint, specifically refers to the Utica policy issued to Islam and states that Utica provided coverage to it pursuant to an additional insured endorsement. 630 Realty's third-party complaint also expressly alleges that there was a contract in full force and effect on July 3, 2005, and that under that contract, Islam agreed to hold 630 Realty harmless in relation to claims arising out of Islam's services under the contract, and that Islam agreed and was required to maintain insurance covering 630 Realty for injuries to a person. These allegations were sufficient to apprise Utica that such a contract existed and of the contract's terms requiring Islam to maintain additional insurance coverage for 630 Realty's benefit. Thus, Utica had knowledge of the circumstances and available exclusions upon which to deny coverage as early as September 6, 2006.

Utica, however, failed to promptly disclaim coverage within a reasonable amount of time after learning of facts or circumstances which might provide a reasonable basis for a disclaimer (see First Fin. Ins. Co., 1 NY3d at 68-69; Schulman, 40 AD3d at 958). Utica also has failed to satisfactorily establish that the delay in disclaiming was occasioned by its need to conduct a thorough and diligent investigation (see Schulman, 40 AD3d at 958). All relevant facts supporting Utica's disclaimer based upon these policy exclusions were immediately apparent upon its receipt of notice of the accident (see Matter of Allstate Ins. Co., 30 AD3d at 513). No investigation was needed to determine the existence of these grounds for disclaimer. In fact, as noted above, Utica had already disclaimed coverage to Islam by its September 8, 2006 letter based upon the Employee Exclusion and the Contractual Liability Exclusion now raised in its instant motion as against 630 Realty.

Despite Utica's knowledge of the circumstances and available exclusions, Utica failed to issue a written disclaimer of coverage under the Utica policy, and only first attempted to disclaim coverage by bringing this motion. Even construing this motion as a valid disclaimer of coverage (see generally American Mfrs. Mut. Ins. Co. v CMA Enters., 246 AD2d 373, 373 [1998]; Thomson v Power Auth. of State of NY, 217 AD2d 495, 497 [1995]), it was issued 66 days after Utica had notice of 630 Realty's claim. Based upon the above, Utica has failed to establish that such 66-day delay in issuing a disclaimer was reasonable under the circumstances (see First Fin. Ins. Co., 1 NY3d at 70; Hartford Ins. Co., 46 NY2d at 1030; Schulman, 40 AD3d at 959).

Utica argues, however, that 630 Realty, by its January 8, 2007 stipulation, waived its ability to object to the untimeliness of its disclaimer. Such argument is rejected. The January 8, 2007 stipulation merely extended Utica's time to respond to 630 Realty's third-party summons and complaint; it did not address the issue of [*9]a disclaimer nor was it apparent that Utica intended to disclaim coverage to 630 Realty at that time. Thus, 630 Realty's granting to Utica the courtesy of such an extension cannot be reasonably construed as a knowing waiver of 630 Realty's right to object to an untimely attempt to disclaim coverage by Utica by way of this subsequent motion. Therefore, based upon Utica's failure to give timely notice to 630 Realty that it was denying coverage, it is precluded from denying coverage to 630 Realty under the policy exclusions (see First Fin. Ins. Co., 1 NY3d at 70; Schulman, 40 AD3d at 959).

With respect to Utica's motion insofar as it seeks a declaratory judgment that it has no obligation to defend or indemnify Islam in the third-party action against it, Islam does not oppose Utica's motion nor does Utica assert that there is any cross claim by Islam against it. Furthermore, there is no evidence that Islam ever gave Utica notice of the third-party action or requested a defense from Utica, and Utica has shown that it disclaimed coverage to Islam by its September 8, 2006 disclaimer letter, which asserted the applicable exclusions under the Utica policy. Thus, Utica timely disclaimed coverage to Islam, and it must be declared that Utica has no obligation to defend or indemnify Islam (see Hernandez v American Tr. Ins. Co., 31 AD3d 343, 343 [2006]).

Utica's alternative motion for severance of the third-party action from the underlying action must be granted (see CPLR 603, 1010; Cruz v Taino Constr. Corp., 38 AD3d 391, 392 [2007]; Dreizen v Morris I. Stoler, Inc., 98 NY2d 759, 759 [1983]). The injection of the issue of insurance coverage into the underlying action would be inherently prejudicial to Utica (see Cruz, 38 AD3d at 392; Emmetsberger v Mitchell, 7 AD3d 483, 483 [2004]; Schorr Bros. Dev. Corp. v Continental Ins. Co., 174 AD2d 722, 722 [1991]; Schwartz v Woodner & Co., 40 AD2d 1027, 1027 [1972]).

Accordingly, Utica's motion insofar as it seeks summary judgment, pursuant to CPLR 3211(c), declaring that it has no obligation to defend or indemnify 630 Realty in the underlying action is denied, and 630 Realty's cross motion for summary judgment declaring that Utica must provide it with a defense and indemnification under the Utica policy is granted. Utica's motion insofar as it seeks summary judgment declaring that it has no obligation to defend or indemnify Islam in the third-party action is granted. Utica's alternative motion for an order severing the third-party action from the underlying action is granted.

This constitutes the decision and order of the court.

E N T E R,

J. S. C.