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A Night at the Opera

December 15, 2014
By: Frank Scahill

Manuel Mayo was at the Metropolitan Opera on September 16, 2008, working on a ladder on the sixth floor when he fell and was injured. His accident, and subsequent lawsuit, wound up in the Court of Appeals with a decision issued on November 24, 2014 on multiple issues including timely notice of a claim. Here, the Court reiterated a long line of decisions holding that notice to the broker does not qualify as timely notice to the carrier:

"We have long held that a policyholder's timely notice to a broker does not "constitute the notice contemplated by the [insurance] policy since a broker is normally the agent of the insured and notice to the ordinary insurance broker is not notice to the liability carrier." (Security Mut. Ins. Co. of N.Y. v. Acker-Fitzsimons Corp. 31 N.Y.2d 436, 442 n. 3 [1972]; see also Hartford Fire Ins. Co. v. Baseball Off. of Commr., 236 A.D.2d 334, 654 N.Y.S.2d 21 [1st Dept 1997] [late notice was not excused even though the policyholders "instructed their broker to inform (the primary and excess insurers) about the lawsuit shortly after its commencement"], lv denied 90 N.Y.2d 803 [1997]; Gershow Recycling Corp. v. Transcontinental Ins. Co., 22 A.D.3d 460, 462, 801 N.Y.S.2d 832 [2d Dept 2005] [a policyholder's "timely notice of the action to its broker is of no consequence" and thus does not excuse the failure to comply with notice obligations under an insurance policy] ). Our decision in Mighty Midgets does not alter this fundamental principle. Distinguishing the 1979 case of Mighty Midgets, Inc. v. Centennial Ins. Co. (47 N.Y.2d 12), the Court of Appeals held, "The record here does not support the proposition that the insurer and broker had a relationship sufficiently close to suggest that service to the broker was effectively service to the insurer."

In this case, Strauss Painting, Inc. (Strauss)/ Creative Finishes, Ltd. (Creative) contracted with the Metropolitan Opera Association, Inc. (the Met) to perform work on the Met's premises. The contract required Strauss/Creative to procure three types of insurance: (1) workers' compensation insurance (paragraph [a] ); (2) owners and contractors protective liability (OCP) insurance with a combined single limit of $5 million (paragraph [b] ); and (3) comprehensive general liability (CGL) insurance, with combined coverage for property and bodily injury with a minimum single limit of $5 million, which might be met by umbrella coverage (paragraph [c] ). Neither Strauss nor Creative actually purchased an OCP policy to protect the Met.

At the time Strauss/Creative contracted with the Met, Strauss had in place a CGL policy issued by Mt. Hawley Insurance Company (Mt. Hawley) for the policy period including the accident date. The Court also held the Mt. Hawley policy would not cover the Met as an additional insured, therefore the timing of Mt. Hawley's disclaimer was irrelevant, "we do not reach and need not decide the question of whether Mt. Hawley promptly notified the Met that it was disclaiming coverage under that policy due to untimely notice (see Zappone v. Home Ins. Co., 55 N.Y.2d 131, 134 [1982] ["failure to disclaim coverage does not create coverage which (a liability) policy was not written to provide"] )."

Read the decision here.

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