Defendants' NEW YORK MARINE AND GENERAL INSURANCE COMPANY ("NYMAGIC"), FEDERAL INSURANCE COMPANY ("Federal") and AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY ("American") motions for Orders pursuant to CPLR § 3212 granting summary judgment and dismissing Plaintiff's complaint for a declaratory judgment are consolidated for decision herein.

NYMAGIC's motion is granted because Plaintiff failed to supply "prompt written notice of the [*2]. . . suit" stemming from the October 27, 2005 assault on K.M.

Federal's motion is denied because, although Plaintiff failed to timely provide it with "notice" of the "suit" stemming from the October 27, 2005 assault on K.M., this insurer's 73-day delay in disclaiming coverage based on this late notice was unreasonable as a matter of law.

As such, the Court has searched the record and awards summary judgment to Plaintiff as to Defendant Federal based on that insurer's unreasonable delay in disclaiming coverage based on Plaintiff's late notice of the October 27, 2005 assault.^[FN1]

American's motion is denied since there is a triable issue of fact as to whether its 28-day delay in disclaiming coverage based on Plaintiff's late notice of the October 27, 2005 assault was reasonable.

The Parties

Plaintiff, Zevrone Realty Corporation, was the corporation that owned the premises known as 1405 College Avenue, Bronx, New York ("the Building"). Non-party witnesses: Pedro Vasquez was the Building's Superintendent on October 27, 2005; Christopher Barbieri was the Building's Property Manager on October 27, 2005; and Mark Engle was President of the Corporation on October 27, 2005. Defendants NYMAGIC, Federal and American were insurance companies that each provided insurance policies to Plaintiff covering the Building on October 27, 2005.

The Incident

K.M., a young female, returned home to the apartment she shared with her family in the Building on October 27, 2005 at approximately 4:30 pm. (Trial Test. of K.M., dtd May 14, 2009, annexed American Aff. Supp. at Ex. J, at 3:13; 6:16.) The Building had a locked lobby, but a neighbor held the lobby door for her, as well as an unknown male, allowing both to enter the Building. (Id. at 7:10-24.) Since the Building's elevator was not working, K.M. decided to take the stairs up to her sixth floor apartment. (Id. at 8:2-15.) She noticed that the unknown male who had entered behind her, and whose face she did not see because he was wearing a hooded shirt, had taken another set of stairs. (Id. at 8:16-25.) When she got to her apartment, there was no one home so after knocking and waiting for a bit, she decided to walk back downstairs and wait for her brother to come home. (Id. at 9:6-11.) She testified that the unknown male was waiting on her floor when she approached her apartment, and that after she discovered no one was home, he grabbed her, brandished a knife and forced her to accompany him to the roof. (Id. [*3]at 9-11.) Once on the roof, the male forced her to undress and perform various sexual acts against her will. (Id. at 12-16.)

After the assault, K.M. went home, took a shower and called her mother. (Id. at 18:19.) Police were called to the Building, in addition to Detectives from the Special Victim's Unit (Trial Test. of Officer Sprague, dtd May 13, 2009, annexed to Federal Aff. Supp. at Ex. L, at 8:14-14), the Police Department's Crime Scene Unit (Trial Test. of Det. Perez, dtd May 20, 2009, annexed to Federal Aff. Supp. at Ex. K, at 5:22-24), and a Detective from the Police Department's Technical Assistance Unit (id. at 5:3-6). The units: processed the crime scene, which was located on the rooftop; interviewed K.M.'s mother; viewed surveillance footage; and took the Buildings computer system, which contained the surveillance footage, to try and capture data at the station.

Pedro Vasquez

Pedro Vasquez was the Superintendent of the Building on October 27, 2007. (P. Vasquez EBT dtd Jan. 20, 2009, at 8:4-11.) When the police arrived at his basement apartment, they asked him to take them to where the Building kept its surveillance footage. (See id. at 36:2-22.) The police told him that they were looking into an incident involving one of the Building's tenants, and wanted to look at the surveillance videos because they "wanted to see some person who had sexual relations with a girl." (Id. at 38:5-6, 13-25.) Mr. Vasquez stated that this prompted him to call Christopher Barbieri, the Property Manager, to let him known that the police were present and wanted to take the video equipment as part of an investigation, which Mr. Barbieri authorized. (Id. at 40:13-25; 41:2-5, 6-9.) Mr. Barbieri also came to the Building and spoke to police, who told him about what happened to K.M. (Id. at 79:18-25; 80:2-3.) Mr. Vasquez added that Mr. Barbieri was the person he was supposed to contact if the police ever came to the premises to investigate a criminal complaint, and that he would produce a report regarding the investigation if Mr. Barbieri asked him to. (Id. at 42:2-13, 16-24). He added that he did not fill out a report regarding this investigation because Mr. Barbieri did not ask him to do so. (Id. at 43:4-10.)

Mr. Vasquez did not talk to the police again regarding their investigation until six months to a year later. (Id. at 45:16-21.) During that conversation, the police told him that they were going to return the video equipment and that the individual they had in custody at the time was not the correct person. (Id. at 46:13-25.) When the police came and returned the equipment, Mr. Vasquez again called Mr. Barbieri and apprised him of such. (Id. at 48:24-25; 49:2-7.) He also told Mr. Barbieri that the police had the wrong individual in custody. (Id. at 49:16-21.) He further stated that he spoke to K.M.'s mother the day after the incident, and that she told him that, "they had her daughter perform oral sex." (Id. at 50:8-23.) Mr. Vasquez was not aware of who the "they" was that she was referring to. (Id. at 50:17-25.) He also stated that K.M.'s mother told him that her daughter "wasn't too well in the school. And that she felt bad living [in the Building]." (Id. at 52:2-3.)

Mr. Vasquez had several conversations with K.M.'s mother but he did not tell his superiors about [*4]these interactions. (id. at 53:6-11.) He also claims that he personally performed an investigation into the incident (id. at 52:12-16), however, it appears from the record that he did nothing more than assist the police with the video equipment and provide the police with a possible suspect (id. at 52:16-25; 54:7-14). As of the date of his deposition, Mr. Vasquez was not aware of the outcome of the investigation. (Id. at 55:23-25; 56:2-9.) Mr. Vasquez testified that he never discussed this incident with Mark Engle, the President of the Building's Management Company, (id. at 59:22-25; 60:2-3), yet he discussed it with Mr. Barbieri "[m]any times" (id. at 60:4-9). Mr. Vasquez never clarified Mr. Barbieri's title during his deposition yet he refered to him as "the boss." (Id. at 62:21-25.)

Christopher Barbieri

Christopher Barbieri was the Property Manager for the Building on October 27, 2007. (C. Barbieri EBT dtd Sept. 24, 2008, at 11:4-6.) He testified that the first time that he became aware of the assault was on December 8, 2006, when he received a letter from Fraiden & Palen notifying his employer, Zevrone Realty Corporation, of an impending lawsuit emanating from the October 27, 2005 assault. (Id. at 31:9-23.) He maintained at his deposition that he did not speak to Mr. Vasquez about the assault prior to receiving that December 8, 2006 letter (id. at 32:5-25; 50:2-7), which prompted him to perform an investigation (id. at 32:23-25; 33:2-6). This investigation consisted of contacting Mr. Vasquez and "asking him about the alleged incident." (Id. at 33:7-11.) He claimed that Mr. Vasquez told him that the incident involved a girl and her ex-boyfriend. (Id. at 33:16-22.) He stated that he knew that the police came to the Building during their investigation, but he did not recall at the deposition when or how many times that was. (Id. at 34:4-5.) Later on in his deposition, however, he admitted that he spoke to the police when they wanted to take the hard-drive containing the Building's surveillance tapes. (Id. at 34:13-25.) He said that the police told him that there was an incident in the building and that they needed the hard-drive to retrieve any photos it may have contained. (Id. at 35:16-25.) He did not ask the police who the incident involved or whether it involved a tenant. (Id. at 36:3-8.)

Mr. Barbieri further testified that: he did not speak to the police when they returned the hard-drive; he did not know how many times the police visited the building in connection with their investigation; and he did not speak to Mr. Vasquez during the times that the police did visit the Building. (Id. at 38-39.)

Mr. Barbieri stated that Mr. Vasquez was not required to create any written reports regarding police investigations, despite Mr. Vasquez's testimony stating otherwise. (Id. at 39:23-25; 40:2.) At the time of his deposition, Mr. Barbieri was unaware of the result of the police's investigation of the assault. (Id. at 40:6-8.) Additionally, he testified that: he did not have any internal meetings regarding the investigation; he did not have any internal communications regarding the police taking the hard-drive; he had only one conversation with Mr. Vasquez about the incident; [*5]he did not know whether Mr. Vasquez spoke to anyone else in the company about the incident, or whether any of the other tenants in the building were aware of the incident or whether Mr. Vasquez conducted any type of investigation into the incident. (Id. at 40:21-25; 41:2-6; 66-67.)

Mr. Barbieri stated that Mark Engle requested that he fill out an incident report based on the receipt of the December 8, 2006 letter. (Id. at 45:11-25; 46:2-6.) And that he prepared this report in January 2007 after talking "briefly" with Mr. Vasquez. (Id. at 46:9-24.) He also stated that Mark Engle was the individual involved in "notifying insurance companies of claims" on behalf of the Building (id. at 51:17-20), and that he did not have any involvement in this process (id. at 65:19-23). Mr. Barbieri contended that he understood the incident to be domestic in nature and that it did not involve a rape or any kind of assault. (Id. at 54-55.)

Mark Engle

Mark Engle was President of Zevrone Realty Corporation, the company that owned the Building on the date of the assault. (M. Engle EBT dtd Mar. 27, 2009, at 6:6.) He stated that the only individual that he had contact with regarding the incident was Christopher Barbieri (id. at 22-23), and that it was Mr. Barbieri that explained to him that there was a lawsuit pending regarding an incident in the Building (id. at 23:11-23). Mr. Engle stated that: he did not speak to the police about the incident; he did not know the results of their investigation; he did not know if there was a suspect; he did not give any statements regarding the incident; he did not speak to Mr. Vasquez about the incident; nor did he speak to anyone else within his company about the incident. (Id. at 24:2-20.)

He stated that when he received the December 8, 2006 letter from Fraiden & Palen, he gave it to Christopher Barbieri, and asked him to prepare a report for him, and then he sent the letter and the report to the insurance broker for them to notify the insurance company. (Id. at 27:10-16.) He added that he was the individual responsible for notifying insurers of incidents. (Id. at 33:11-13.) He further maintained that December 8, 2006 was the first time that his company received notice of the incident. (Id. at 29:13-17.) He testified that if the superintendent spoke to the police, that he would not have to report that contact to the Property Manager. (Id. at 36:3-9.)

When asked for examples of the types of incidents he believed should be reported to insurers, Mr. Engle answered, "crimes on the property that cause personal damage to our tenants or someone visiting a tenant," as well as "sexual assault[s]"—when he became aware of them. (Id. at 39:20-25; 41:2-4.)

Notifications

It is undisputed that: NYMAGIC, Federal and American each provided insurance policies covering the Building on October 27, 2005 (American Aff. Supp. at Ex. A; Federal Aff. Supp. at Ex. 1; American Aff. Supp. at Ex. C), each of which contained the standard duty to timely provide notice of an occurrence, claim or suit as a condition precedent to coverage; Plaintiff received a letter from the law offices of Fraiden & Palen on or about December 8, 2006, [*6]informing them of the impending lawsuit regarding the aforementioned assault (see Pl. Amend. Resp. Demand Ans. Interr. dtd May 29, 2007, at ¶¶ 5.Q. & 5.A; see also Federal Aff. Supp. at Ex. G); Plaintiff provided notice of this impending suit to NYMAGIC and Federal on January 25, 2007, and to American on February 27, 2007 (Pl. Amend. Resp Demand Ans. Interr. dtd May 29, 2007, at ¶¶ 9.Q. & 9.A; Pl. Amend. Resp Demand Ans. Interr. dtd Apr. 7, 2008, at ¶¶ 9.Q. & 9.A, 11.Q & 11.A); NYMAGIC acknowledges receiving the Summons and Complaint on February 20, 2007 (NYMAGIC Aff. Supp. at Ex. I); Federal acknowledges receiving the Summons and Complaint on February 21, 2007 (Reply Aff. of H. Williams at ¶ 6); American acknowledges receiving the Summons and Complaint on February 27, 2007 (American Aff. Supp. at Ex. K); NYMAGIC disclaimed coverage based on the late notification of the suit and sent Plaintiff a declination letter stating such on or about January 29, 2007 (NYMAGIC Aff. Supp. at Ex. H), and on or about February 20, 2007 (id. at Ex. I), when the Summons and Complaint were received; Federal disclaimed coverage based on late notification of the suit and provided Plaintiff with a declination letter stating such on or about May 7, 2007 (Reply Aff. of H. Williams, at Ex. A); and American disclaimed coverage based on late notification of the suit and provided Plaintiff with a declination letter stating such on or about March 27, 2007 (Pl. Obj. & Resp. Def. Not. D & I dtd Oct. 8, 2007, annexed to American Reply Aff. at Ex. A).

Arguments

Defendants declined coverage for the sexual assault based on Plaintiff's not notifying them of the occurrence until January 25, 2007 and February 27, 2007, respectively—over 14 to 15 months after the assault. This is also the basis for their instant applications. Plaintiff instituted this declaratory judgment action to force Defendants to defend and indemnify it pursuant to the applicable insurance policies on the same grounds that it bases its opposition to Defendants' applications—that it did not notify each Defendant sooner than it did because it had a good-faith belief in non-liability for the assault. Plaintiff is also claiming that it is entitled to summary judgment as to Defendants Federal and American based on their failure to provide proper disclaimer notices.

Brief Answer

Although the Court finds that the facts do not support Plaintiff's claim that it had a good-faith belief that the assault on K.M. would not result in liability, it holds that Defendant Federal may not disclaim coverage based on its unreasonable delay in notifying Plaintiff of its declination based on the late notice of the assault, and that a triable issue of fact exists as to whether Defendant American's delay in disclaiming was reasonable.

Notice

Notice provisions in insurance policies afford the insurer an opportunity to protect itself, and the giving of the required notice is a condition to the insurer's liability. Absent a valid excuse, a failure to satisfy the notice requirement vitiates the policy and the insurer need not show prejudice before it can assert the defense of noncompliance. Security Mut. Ins. Co. v. Acker-Fitzsimons Corp., 31 NY2d 436, 440 [1972] (citations omitted); see also Unigard Sec. Ins. Co. v. North River Ins. Co., 79 NY2d 576, 581 [1992] (reiterating that "[i]t is settled New York law that the notice provision for a primary insurer operates as a condition precedent and that the insurer need not show prejudice to rely on the defense of late notice"). (citations omitted).

Good-faith Belief in Nonliability

"A good-faith belief of nonliability may excuse or explain a seeming failure to give timely notice. But the insured's belief must be reasonable under all the circumstances, and it may be relevant on the issue of reasonableness, whether and to what extent, the insured has inquired into the circumstances of the accident or occurrence." Security Mut., supra, 31 NY2d at 441 (citations omitted). "When the facts of an occurrence are such that an insured acting in good faith would not reasonably believe that liability will result, notice of the occurrence is given as soon as possible' if given promptly after the insured receives notice that a claim will in fact be made." D'Aloia v. Travelers Ins. Co., 85 NY2d 825, 826 [1995]. "The proper focus of the inquiry . . . is on the insured's good-faith belief in nonliability, not whether the insured should have anticipated the lawsuit." Vradenburg v. Prudential Property & Casualty Ins. Co., 212 AD2d 913, 914 [3d Dept 1995] (citations omitted).

Although "[t]he existence of such a reasonable belief is a question of fact for the fact finder to decide," Public Serv. Mut. Ins. Co. v. Hollander, 228 AD2d 283, 285 [1st Dept 1996], "summary judgment may be awarded to the insurer if, construing all inferences in favor of the insured, the evidence establishes, as a matter of law, that the insured's belief in nonliability was unreasonable or in bad faith," Ponok Realty Corp. v. United Natl. Specialty Ins. Co., 69 AD3d 596, 596 [2d Dept 2010]. Plaintiff's claims of nonliability are unreasonable given the utter lack of investigation into the assault on the part of all concerned. Although Pedro Vasquez claims that he "did not see how the building owner was involved on October 27, 2005, and still do not understand how the building owner is involved," (P. Vasquez Aff. at ¶ 6), there is no evidence in the record that he conducted any type of investigation into the incident beyond speaking with [*7]K.M.'s mother or that he was an individual qualified to make such a determination.

Although he claims that "[a]s far as [he] was concerned, this was a domestic incident involving a minor," this assumption is in no way supported by the evidence in the record. He admitted that he ever followed up with the police about the incident to discover whether a crime had been committed, whether an individual had been arrested, questioned or charged, or whether K.M. had suffered any injuries. Regardless of whether Mr. Vasquez was ever told that the incident "was something forced upon [K.M.]," he made no effort to either establish or refute this fact. Additionally, there is absolutely no mention of K.M.'s ex-boyfriend being involved in the assault. Thus, his understanding of what the assault entailed was ludicrously misguided. Furthermore, the Court finds that he was not the only individual who should have conducted an investigation into the assault.

Despite his claims otherwise, the Court infers from the facts in the record that Christopher Barbieri should have also conducted some semblance of an investigation into this matter. Mr. Engle stated in his deposition that he called Mr. Barbieri and asked him to investigate the matter and write a report after he received the December 8, 2006 letter. Therefore, the Court finds that he should have been the one investigating the specifics of the assault after being made aware of the incident by the police on the day it occurred.

Additionally, the Court believes Mr. Vasquez when he testified that he was required to contact Mr. Barbieri if the police came to the Building to investigate any criminal complaints. The Court finds that he did speak to Mr. Barbieri on the day of the assault—regardless of Mr. Barbieri's specious claims to the contrary—and informed him that police were investigating an incident at the Building, given that Mr. Barbieri was his "boss" and the Building's Property Manager. The Court also believes Mr. Vasquez when he said that Mr. Barbieri was on the scene and spoke to police about the incident and the need to review the Building's surveillance footage—despite Mr. Barbieri's feigned ignorance. Finally, it is clear from Mr. Barbieri's testimony that he made no attempt whatsoever to inject himself into the matter at all. He did not speak to the police, he had no idea who was involved in the assault, nor was he aware of the outcome of the assault. The Court also finds that Mr. Barbieri should have forwarded word of the assault on to Mr. Engle, who stated that a sexual assault was the type of incident that should be reported to the insurer.

Based on these facts, the Court finds that Plaintiff failed to conduct any kind of investigation into the assault. Therefore, it finds that Plaintiff may not reasonably claim that it had a good-faith belief in nonliability for the assault. Ergo, it finds that Plaintiff's notification to Defendants on January 25, 2007 and February 27, 2007, were late as a matter of law. See, e.g., Heydt [*8]Contracting Corp. v. American Home Assurance Co., 146 AD2d 497, 499 [1st Dept 1989] (four month delay, late as a matter of law); Brownstone Partners/AF & F, LLC v. A. Aleem Constr., 18 AD3d 204, 205 [1st Dept 2005] (four month delay, late as a matter of law); Figueroa v. Utica Natl. Ins. Group, 16 AD3d 616, 617 [2d Dept 2005] (two months, late as a matter of law].

Late Disclaimer

"An insurer must give written notice of disclaimer on the ground of late notice as soon as is reasonably possible after it first learns of the accident or of grounds for disclaimer of liability,' and failure to do so precludes effective disclaimer'." Firemen's Fund Ins. Co. v. Hopkins, 88 NY2d 836, 837 [1996] (citations omitted). This maxim applies regardless of whether "the policyholder's own notice of the incident to its insurer is untimely." First Fin. Ins. Co. v. Jetco Contr. Corp., 1 NY3d 64, 67 [2003].

"[A]n insurer's delay in notifying the insured of a disclaimer may be excused when the insurer conducts an investigation into issues affecting its decision whether to disclaim coverage.' In that case, the burden is on the insurer to demonstrate that its delay was reasonably related to its completion of a thorough and diligent investigation." Tully Constr. Co., Inc. v. TIG Ins. Co., 43 AD3d 1150, 1152-53 [2d Dept 2007]. Nonetheless, this "explanation 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." Jetco Contr. Corp., 1 NY3d at 68-9. (citations omitted). Since the apparent basis of the disclaimer obviates any need to investigate. See W. 16th St. Tenants Corp. v. Pub. Serv. Mut. Ins. Co., 290 AD2d 278, 279 [1st Dept 2002]; see also City of New York v. N. Ins. Co., 284 AD2d 291, 292 [2d Dept 2001].

NYMAGIC Disclaimer

NYMAGIC acknowledged that it received notice of the assault on January 25, 2007, and the Summons and Complaint on February 20, 2007, and that it sent Plaintiff declination letters disclaiming coverage based on late notice of the assault four days after receipt of the notice on January 29, 2007, and on the same day as it received the Summons and Complaint, February 20, 2007. The Court finds that based on these facts, NYMAGIC disclaimed coverage "as soon as is reasonably possible after it first learn[ed] of the accident or of [the] grounds for disclaimer of liability." Thus, this Defendant's motion for summary judgment is granted.

[*9]Federal Disclaimer

The Court finds, however, that Federal may not decline coverage in this instance because that insurer failed to timely disclaim coverage. Although Federal outlines the various and sundry steps of its investigation into the claim, their sole basis for declining coverage was the late notice of the assault, which it was aware of as early as January 25, 2007 and as late as February 25, 2007, thus, there was no need to conduct an investigation. Thereupon, this Court finds that Federal's delay in providing its disclaimer to Plaintiff—measured from either first notice, which would be 98 days, or from receipt of the Complaint, which would be 73 days—was unreasonable as a matter of law. See, e.g., Jetco Contr. Corp., 1 NY3d at 66 (finding a 48-day delay unreasonable as a matter of law); Hartford Ins. Co. v. County of Nassau, 46 NY2d 1028, 1029-30 [1979] (finding a two-month delay unreasonable as a matter of law); W. 16th St. Tenants Corp., 290 AD2d at 279 (finding a 30-day delay unreasonable as a matter of law); Halali v. Evanston Ins. Co., 8 AD3d 431, 433 [2d Dept 2004] (finding a 48-day delay unreasonable as a matter of law); Transcontinental Ins. Co. v. Gold, 18 Misc 3d 1135A, *2 [Sup Ct. Nassau Cty 2008] (finding a 30-day delay unreasonable as a matter of law). Consequently, it may not decline to provide coverage as required under the applicable policy.

American Disclaimer

American failed to address the late disclaimer issue in its Reply. Therefore, it made no attempt to explain why it waited from February 27, 2007 until March 27, 2007—28 days—to forward its disclaimer letter. The Court was unable, however, to find guidance regarding this specific length of time. Although the facts regarding Federal's late disclaimer were readily applicable to available case-law, American's situation differs. Though the First Department has found that 30 days is an unreasonable delay under these facts, see W. 16 th St. Tenants Corp. above, there is no case-law directly on point regarding the 28 days involved here, see Jetco Contr. Corp., 1 NY3d at 70 (finding that the Legislature "scrupulously avoided" placing fixed time periods regarding providing disclaimer notices). Therefore, the Court finds that whether 28 days represents an unreasonable delay in providing a disclaimer notice based on late notice of an occurrence^[FN2] is an issue of fact that must be decided by a jury. See id.; see also Hartford Ins. Co., 46 NY2d at 1030; Allstate Ins. Co. v. Gross, 27 NY2d 263, 270 [1970].

The foregoing shall constitute the decision and order of this Court.

Dated: _________________J.S.C.