Plaintiff The City of New York (the "City") commenced this action seeking a declaratory judgment that defendants StarNet Insurance Company ("StarNet") and Berkley Insurance Company ("Berkley") have a duty to defend the City and to reimburse the City for attorneys' fees incurred in relation to a personal injury action against the City. In the alternative, the City seeks damages against Aay-Zee Contracting Corporation ("Aay-Zee") for its breach of contract to provide insurance coverage for the City. The City moves for summary judgment on all of its claims stated above and StarNet moves for summary judgment dismissing the Complaint and any and all cross-claims against it. The motions have been consolidated for disposition. As will be explained more fully below, the City's motion against StarNet is granted, StarNet's motion against the City is denied and StarNet's motion against Aay-Zee is granted without opposition.

The relevant facts are as follows. In or around May 2006, Aay-Zee entered into a contract with the City of New York's Department of Parks & Recreation ("Parks") for "the reconstruction of Clark Playground located south of Third Ave. between East 144th & 145th Streets, in the borough of the Bronx" (the "Contract"). The Contract, in relevant part, required Aay-Zee to obtain a commercial general liability insurance in Aay-Zee's name and to name the City as an additional insured throughout the term of the Contract, insuring the City against [*2]liability "from claims for property damage and/or bodily injury, including accidental death, which may arise from operations under this Contract." As per its agreement with the City, Aay-Zee, through its principal agent Zia Chaudry ("Chaudry") obtained an insurance policy (the "Policy") through Anthony Naccarato ("Naccarato"), an agent at an insurance brokerage Bay Park Brokerage, Inc. ("Bay Park"). In May 2006, Bay Park submitted an application for a commercial general liability insurance policy on behalf of Aay- Zee to Weisburger Insurance Brokerage ("Weisburger"). Weisburger, an insurance broker, acting as StarNet's agent, underwrote, issued and bound the policy on behalf of and in the name of StarNet. In the course of communication between Weisburger and Bay Park, Naccarato sent a fax on May 11, 2006 to Linda Morano of Weisburger, which stated, "PLEASE BIND EFF 05/12/06 [line break] WHAT HAPPENS TO ADDITIONAL INSURED LIKE THE PARKS DEPARTMENT OF NY." Weisburger on behalf of StarNet issued a commercial general liability insurance policy to Aay-Zee, policy number PSP0005406 (the "Policy") effective May 12, 2006 to May 12, 2007.

On October 15, 2006, Harminder Singh ("Singh"), an employee of Aay-Zee became injured when he allegedly fell from a ladder while working on the Clark Playground project, the site of Aay-Zee's work for the City. Singh then initiated the underlying action Harminder Singh and Davinder Kaur v. City of New York and New York City Parks & Recreation, New York Supreme Court, Kings County, Index No. 2918/07 ("Singh") against the City. On or around March 27, 2007, the City notified StarNet of the Singh action and requested that StarNet defend against the City's loss. StarNet, through its agent Midlands, sent the City a letter declining to cover the City as an additional insured, as the certificate of insurance ("COI") (dated May 11, 2006) submitted by the City in its request referenced an inaccurate policy number. The City responded by fax rejecting Midlands' disclaimer. On July 16, 2007, Midlands sent a final letter to the City disclaiming coverage. In this letter, Midlands informed the City that the Policy had been rescinded and voided ab initio in light of Aay-Zee's material misrepresentation in procuring the Policy. Midlands further claimed that neither the City nor Parks would be covered as additional insureds as (1) there was not a COI or other document on file with StarNet; and (2) the City was late in notifying StarNet of its receipt of Singh's notice of claim. Aay-Zee was notified of the rescission by letter on the same date. The City does not dispute the material misrepresentations of Aay-Zee alleged by StarNet, which included misrepresentation of the scope of work Aay-Zee contracted to perform at Clark playground, misrepresentation of its total gross sales and payroll and the nature of its business (which Aay-Zee represented as lawn care).

In the course of the City's communication with StarNet (through its claims administrator Midlands) regarding its request that StarNet defend the City in the Singh matter, the City produced COIs dated May 11, 2006 and April 7, 2007, which were identical with the exception of a corrected policy number on the latter COI. Bay Park provided Midlands with a third COI dated May 31, 2006.

The City moves for summary judgment requesting a declaratory judgment that StarNet is obligated under the Policy to defend the City and reimburse the City for costs incurred thus far in the Singh action as it has met the prerequisite conditions under the policy triggering StarNet's obligation to defend against the City's loss. StarNet moves for a declaratory judgment that there is no coverage from StarNet for the losses allegedly sustained by the City.

To determine whether StarNet is obligated under the Policy to defend and indemnify the City, an initial determination must be made as to whether the City is an additional insured under the Policy. As will be explained more fully below, the court finds that the City is an additional [*3]insured under the Policy. Under an endorsement of the Policy titled "Additional Insured — Owners, Lessees or Contractors — Scheduled Persons or Organization", the Policy provides additional insured coverage to "any person or organization required to be named as an additional insured under a contract and evidenced by certificate of insurance or document on file with company." It is undisputed that the City was "required to be named as an additional insured" under its Contract with Aay-Zee. However, the parties disagree as to whether either a COI or a "document" was on file with StarNet. The City's position is that a fax dated May 11, 2006, sent by Naccarato, on behalf of Bay Park, to StarNet's agent Weisburger, which reads "PLEASE BIND EFF 05/12/06 [line break] WHAT HAPPENS TO ADDITIONAL INSURED LIKE THE PARKS DEPARTMENT OF NY" constitutes a document under the terms of the policy. The City further argues that since this document was undisputedly on file with StarNet at the time of loss, the clause "evidenced by (certificate of insurance) or document on file with company" has been satisfied.

The court finds that the fax at issue qualifies as a "document" under the terms of the Policy. Generally, it is the law in New York that "ambiguities in an insurance policy must be construed against the insurer." Thomas J. Lipton, Inc. v. Liberty Mut. Ins. Co., 34 NY2d 356, 357 (1974). The Court of Appeals in State of NY v. Home Indemnity Co., 66 NY2d 669 (1985) expanded upon this principle by adding if "the language in the insurance contract is ambiguous and susceptible to two reasonable interpretations, the parties may submit extrinsic evidence as an aid in construction, and the resolution of the ambiguity is for the trier of fact. On the other hand, if the tendered extrinsic evidence is itself conclusory and will not resolve the equivocality of the language of the contract, the issue remains a question of law for the court. Under these circumstances, the ambiguity must be resolved against the insurer which drafted the contract (internal citations omitted)."

Here, the court finds that the definition of the word "document" is ambiguous as it is unclear whether the fax would qualify as a document under the terms of the policy. Since the term document is ambiguous, the parties normally would be permitted to submit extrinsic evidence to aid in construction and the trier of fact would determine the meaning of the term. State, 66 NY2d at 671. However, the parties here have failed to submit any extrinsic evidence that would resolve the equivocality of the word "document". Therefore, the issue remains a question of law for the court and the ambiguity will be resolved against StarNet, the drafter of the Policy. Id. Based on the foregoing, the court finds that the fax qualifies as a "document" under the terms of the Policy. Accordingly, as the City was undisputedly required to be named as an additional insured under its contract with Aay-Zee (the primary insured) and the fax letter was on file with StarNet prior to the claimed loss, the City has met the requirements triggering additional insured status under the Policy.

Although the court need not determine the issue of whether a COI was on file with StarNet, the court finds that there was not a COI on file with StarNet. The City alleges that three COIs were "on file" with StarNet, since the City provided the COIs to StarNet through its administrator Midlands "in the course of its correspondence with Midlands regarding the Singh claim." However, the City did not turn over the COIs to StarNet until after the alleged loss.

Under the "known loss" doctrine, "an insured may not obtain insurance to cover a loss that is known before the policy takes effect." Nat'l Union Fire Ins. Co. v. Stroh Cos., 265 F.3d 97, 106 (2d Cir. NY 2001).Since it is undisputed that there was no COI on file with StarNet prior to the date of the loss, the terms of the policy triggering coverage were not met until after the [*4]alleged loss. At that point, under the "known loss" doctrine, no coverage would be created.

The court now turns to the parties' arguments regarding StarNet's rescission of the Policy. StarNet argues that even if the City were an additional insured under the Policy, it is not required to defend against the loss because it rescinded the Policy ab initio against Aay-Zee. The City does not contest the validity of StarNet's rescission against Aay-Zee. However, it argues that the City must be treated as if it had a separate policy of its own. In Lufthansa Cargo v. NY Marine and General Ins. Co., 40 AD3d 444 (1st Dep't 2007), the First Department held that "each individual additional insured ... must be treated as if separately covered by the policy and indeed as if he ... had a policy of his own" even where "the policy is based on a material representation by the primary insured. (internal citations omitted)." Lufthansa is directly on point and controlling law in this action. As in Lufthansa, the parties here are faced with a situation where Aay-Zee, the primary insured, procured the Policy based on material representations. As per the Lufthansa holding, StarNet must treat the City as if it is separately covered by the Policy, as if it had a policy of its own. Accordingly, StarNet must defend against the City's loss.

The City is also entitled to summary judgment declaring that StarNet waived its right to invoke late notice as a ground for disclaiming coverage. "The question of whether a notice of disclaimer of liability or denial of coverage has been sent as soon as is reasonably possible' is a question of fact which depends on all the facts and circumstances, especially the length of and the reason for the delay. It is only in the exceptional case that it may be decided as a matter of law (internal citations omitted)." Hartford Ins. Co. v. Nassau Cty., 46 NY2d 1028, 1029 (1979). The court in Hartford held that a two-month delay in notification with absolutely no explanation for the delay provided by the insurer is unreasonable as a matter of law. Here, StarNet waited more than three months after receiving notice from the City to disclaim liability based on late notice of claim. Thus, the court grants the City's motion and finds as a matter of law that StarNet has waived its right to invoke late notice as a ground for disclaiming coverage.

Additionally, the court grants the City's motion for summary judgment requesting a finding that the City is entitled to reimbursement from StarNet for the cost of defending itself in the underlying Singh action to date, as StarNet has failed to advance any arguments in opposition.

Since the court finds that StarNet has a duty to defend the City in the underlying Singh action, the court need not reach a conclusion on the City's summary judgment motion against Aay-Zee. Finally, StarNet's motion for summary judgment requesting a judicial declaration that Aay-Zee is not entitled to coverage for defense or indemnification in the underlying action and its request for dismissal of Aay-Zee's cross-claims against StarNet is granted without opposition.

Therefore, the City's summary judgment motion seeking a judicial declaration that StarNet has a duty to defend the City and to reimburse the City for attorney's fees and expenses incurred to date in the underlying Singh action is granted, StarNet's motion for summary judgment to dismiss the Complaint against StarNet in its entirety is denied, StarNet's motion for summary judgment requesting a judicial declaration that there is no coverage from StarNet for the losses sustained by the City is denied, StarNet's motion for summary judgment requesting a judicial declaration that there is no coverage from StarNet for the losses sustained by Aay-Zee is granted, and StarNet's motion for summary judgment requesting dismissal of all cross-claims against it by Aay-Zee is granted without opposition.

This constitutes the decision and order of the court. [*5]

Dated:_____May 27, 2010____________________________________________________________

J.S.C.