Great Canal Realty Corp. v. Seneca Ins. Co., 10 N.Y.3d 742 (2008)
An insured’s failure to provide timely notice of an occurrence to its insurer, as required by the insurance policy, constitutes a failure to comply with a condition precedent, which vitiates the contract unless the insured had a reasonable, good-faith belief of non-liability.
Summary
Great Canal Realty Corp. sought a declaration that Seneca Insurance Company was required to defend and indemnify it in an underlying personal injury action. The Court of Appeals reversed the Appellate Division, holding that Great Canal failed to provide timely notice of the accident to Seneca, as required by the insurance policy. The court emphasized that timely notice is a condition precedent to coverage and that a good-faith belief of non-liability must be reasonable, considering the extent to which the insured inquired into the circumstances of the occurrence. Because Great Canal failed to raise a triable issue of fact regarding the reasonableness of its delay, Seneca was not obligated to defend or indemnify.
Facts
A person was injured on Great Canal Realty Corp.’s property on January 2, 2000. Great Canal did not notify its insurer, Seneca Insurance Company, of the accident until October 2002, more than two and a half years later, when it received notice of a lawsuit filed by the injured party. Great Canal claimed a good-faith belief of non-liability because its manager believed the injury was minor. However, the insurance policy required notice of an occurrence be given “as soon as practicable.”
Procedural History
Great Canal sought a declaratory judgment that Seneca was obligated to defend and indemnify it in the underlying personal injury action. The Supreme Court ruled in favor of Seneca, but the Appellate Division reversed, finding that there was a question of fact as to whether Great Canal had a good-faith belief in non-liability. Seneca appealed to the Court of Appeals.
Issue(s)
Whether Great Canal Realty Corp. raised a triable issue of fact as to whether its delay in notifying Seneca Insurance Company of the occurrence was reasonably founded upon a good-faith belief of non-liability, thereby excusing its failure to comply with the “as soon as practicable” notice provision in the insurance policy.
Holding
No, because under the facts and circumstances of this case, Great Canal failed to raise a triable issue of fact as to whether its delay in giving notice was reasonably founded upon a good-faith belief of non-liability.
Court’s Reasoning
The Court of Appeals stated that when a liability insurance policy requires notice of an occurrence to be given “as soon as practicable,” the notice must be provided within a reasonable time. Failure to do so constitutes a breach of a condition precedent, vitiating the contract. The insurer does not need to demonstrate prejudice to disclaim coverage based on late notice. The court acknowledged that a good-faith belief of non-liability may excuse a delay in providing notice, but such belief must be reasonable under all the circumstances. As the court explained, “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.” The insured bears the burden of proving the reasonableness of the excuse. Here, Great Canal failed to demonstrate that its belief in non-liability was reasonable, especially considering the lack of inquiry into the circumstances of the injury. The court cited White v. City of New York, 81 N.Y.2d 955, 958 (1993), stating that, “where a reasonable person could envision liability, that person has a duty to make some inquiry”.