Upon the foregoing papers it is ORDERED that the motion and cross-motion are disposed of as follows: On consent, that part of the cross-motion by defendant First Mercury Insurance Company is granted and it is declared that First Mercury has no obligation to defend or indemnify plaintiff in the underlying action.

Defendant SEB was obligated under its contract with plaintiff to have plaintiff named as an additional insured. The contract further provided that SEB would indemnify and hold plaintiff harmless for negligence. The contract is dated June 4, 2001 and was to remain in effect for two years. The underlying incident occurred in August 2003 resulting in a lawsuit for personal injuries asserted against plaintiff.

Defendant SEB had obtained a Commercial General Liability Policy from defendant Hannover, with a Blanket Additional Insured Endorsement, covering the period July 5, 2003 to July 5, 2004. The Endorsement provides that it does not apply to a situation where the insured (SEB) would have liability "in the absence of (a) contract or agreement". The contract between plaintiff and SEB provides for renewals for one-year periods as follows: "This agreement may be renewed for successive (1) one year periods by written notice from (plaintiff) to (SEB) prior to the expiration". It is Hannover's position that the contract was not renewed in writing and, therefore, the exclusion in the Endorsement applies. Plaintiff and SEB argue that the contract was orally extended.

There is no legal prohibition to an oral extension or renewal of a contract, particularly where, as here, the language for renewal in writing is preceded by the word "may", not "shall". The best [*2]evidence of the intention of the parties to the contract is the practical construction placed on it by the conduct of the parties. City of New York v. New York City Ry. Co., 193 NY 543, 548 (1908); Div. of Triple T v. Mobil Oil Corp., 60 Misc 2d 720, 732 (Supreme Ct. Westchester 1969), aff'd, 34 AD2d 618 (2d Dep't 1970), app. den. 26 NY2d 614 (1970), rearg. den. 26 NY2d 1020 (1970). Thus, it is clear that a contract existed between plaintiff and SEB in August 2003.

Consequently, the motion is granted to the following extent: it is declared that defendant Hannover is obligated to defend plaintiff in the underlying action and to reimburse plaintiff for the defense costs to date; it is also declared that defendant SEB has met its obligation to provide insurance but remains obligated to plaintiff for indemnification if coverage is not applicable by reason of an exclusion in the policy or if insufficient in monetary terms.

The cross-motion is granted to the extent previously indicated. The balance of the motion and cross-motion is denied.

Submit order on notice containing decretal declaratory relief.

DATED:May 29, 2007ENTERED:/s/

JOAN B. LEFKOWITZ, J.S.C.