12-5117 Illinois National Ins. Co. v. Tutor Perini Corp.



### UNITED STATES COURT OF APPEALS **FOR THE SECOND CIRCUIT**



## SUMMARY ORDER

**R ULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT**  **. C**  **ITATION TO A SUMMARY ORDER FILED**
**ON OR AFTER J** **ANUARY 1,**  **2007, IS PERMITTED AND IS GOVERNED BY**  **F EDERAL**  **R ULE OF**  **A PPELLATE**  **P ROCEDURE**  **32.1 AND THIS COURT**  **’ S**  **L OCAL**  **R ULE**  **32.1.1. W**  **HEN CITING A SUMMARY ORDER IN A**
**DOCUMENT FILED WITH THIS COURT ,**  **A PARTY MUST CITE EITHER THE F**  **EDERAL A** **PPENDIX OR AN**
**ELECTRONIC DATABASE (**  **WITH THE NOTATION “**  **SUMMARY ORDER ”).**  **A PARTY CITING A SUMMARY ORDER MUST** 
**SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL .** 
**At a stated term of the United States Court of Appeals** 1 **for the Second Circuit, held at the Thurgood Marshall United** 2 **States Courthouse, 40 Foley Square, in the City of New York,** 3 **on the 6 th** **day of May, two thousand fourteen.** 4 5 **PRESENT: AMALYA L. KEARSE,** 6 **DENNIS JACOBS,** 7 **GERARD E. LYNCH,** 8 **Circuit Judges**

**.** 9 10
- - - - - - - - - - - - - - - - - - - -X 11 **METROPOLITAN TRANSIT AUTHORITY,** 12 **Plaintiff ,**  13 14 **ILLINOIS NATIONAL INSURANCE CO.,** 15 **NATIONAL UNION FIRE INSURANCE COMPANY** 16 **OF PITTSBURGH, PA, INSURANCE COMPANY** 17 **OF THE STATE OF PENNSYLVANIA,** 18 **Plaintiffs-Counter** 19 **Defendants-Appellees ,**  20 21 **CERTAIN UNDERWRITERS AT LLOYD’S** 22 **LONDON,** 23 **Third-Party Defendant** 24 **Appellee ,**  25 26 **-v.- 12-5117** 27 28

1**TUTOR PERINI CORPORATION,** 1 **Defendant-Counter-Claimant** 2 **Third-Party Plaintiff** 3 **Appellant**

**.** 4
- - - - - - - - - - - - - - - - - - - -X 5 6 **FOR APPELLANT:** ALEXANDER D. HARDIMAN (with 7 Finley T. Harckham on the 8 brief ), Anderson Kill & Olick, 9 P.C., New York, New York. 10 11 **FOR APPELLEES:** BARBARA MICHAELIDES (withJosh 12 Gardnerr on the brief ), Bates 13 Carey Nicolaides LLP, Chicago, 14 Illinois. 15 16 **FOR THIRD-PARTY** 17
**DEFENDANT-APPELLEE:** GEORGE C. ROCKAS (withKara 18 Thorvaldsen on the brief ), 19 Wilson, Elser, Moskowitz, 20 Edelman & Dicker LLP, Boston, 21 Massachusetts. 22 23 Appeal from a judgment of the United States District 24 Court for the Southern District of New York (Forrest, J. ). 25 26 **UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED** 27 **AND DECREED**that the judgment of the district court be 28
**AFFIRMED**

. 29 30 Defendant-appellant Tutor Perini Corporation (“Tutor 31 Perini”) appeals from the judgment of the United States 32 District Court for the Southern District of New York 33 (Forrest, J. ), granting summary judgment in favor of 34 plaintiffs-counter-defendants-appellees Illinois National 35 Insurance Company, the Insurance Company of the State of 36 Pennsylvania, and National Union Fire Insurance Company of 37 Pittsburgh, PA (collectively, the “Chartis Insurers”), and 38 third-party-defendant-appelleeCertain Underwriters at 39 Lloyd’s, London (“Lloyd’s”). We assume the parties’ 40 familiarity with the underlying facts, the procedural 41 history, and the issues presented for review. 42 43 Tutor Perini was the general contractor of an 44 Metropolitan Transit Authority (“MTA”) bus depot (the 45 “Depot”) that suffered collapse of its facade (the “Facade 46

2Failure”). Insurance coverage was denied based on, inter 1 alia , late notice. 2 3 The Depot’s construction was finally completed in 2007, 4 but it was put into use in 2003. The facade collapsed on 5 April 17, 2008. Tutor Perini concedes that certain of its 6 own employees knew of the collapse immediately, that the 7 work did not conform to the construction contract, and that 8 the faulty work was performed by a subcontractor hired by 9 Tutor Perini. 10 11 John Loftus, president of Tutor Perini’s civil 12 division, a senior executive and the most senior person 13 among the 100 to 150 New York-based Tutor Perini employees, 14 was aware of the Facade Failure the day after it occurred, 15 and went to the site that day with others from the company. 16 At least as of November 2008, Tutor Perini’s risk management 17 department was formally made aware of the loss. In January 18 2009, an individual in Tutor Perini’s risk management 19 department notified the MTA Owner Controlled Insurance 20 Program’s (“OCIP”) Administrator of a potential claim. At 21 that time, Tutor Perini made a proposal to the MTA that 22 included repairing the Depot’s facade, paying the MTA $1 23 million, and tolling the statute of limitations as to claims 24 relating to the work required to repair the facade. 25 26 On January 6, 2009, Tutor Perini notified the Chartis 27 Insurers of the loss. On January 14, 2009, it notified the 28 MTA’s on-site OCIP Administrator of the Facade Failure. 29 30 In June 2009, Tutor Perini and the MTA entered into an 31 agreement to remedy the defects. As part of that agreement, 32 Tutor Perini conceded that a demand had been made as of 33 April 17, 2008, and agreed to cover all costs due to its 34 defective workmanship by placing $5 million into a fund out 35 of which the MTA (via the New York City Transit Authority) 36 would pay for costs and expenses for repair of the facade. 37 38 OnJanuary 1, 2011, the Chartis Insurers sued defendant 39 Tutor Perini for a declaratory judgment that certain 40 policies they issued did not provide coverage for the loss. 41 On February 24, 2012, Tutor Perini filed a third-party 42 complaint against Lloyd’s, which issued a policy (the 43 “Lloyd’s Policy”) to the MTA that provided coverage to Tutor 44 Perini through owner controlled insurance endorsements. 45 Tutor Perini sought a declaration that Lloyd’s must provide 46 defense and/or indemnity coverage under the Lloyd’s Policy. 47

3The Chartis Insurers and Lloyd’s moved, and were 1 granted, summary judgment. SeeIll. Nat’l Ins. Co. v. Tutor 2 Perini Corp. , 2012 U.S. Dist. LEXIS 165939 (S.D.N.Y. Nov. 3 15, 2012). After its motion for reconsideration was denied, 4 Tutor Perini timely filed this appeal. 5 6 The district court ruled that “[e]ven assuming that the 7 Facade Failure constituted an ‘occurrence’ under the 8 Policies, the Chartis Insurers and Lloyd’s would be entitled 9 to summary judgment on the basis that Tutor Perini failed to 10 comply with the Policies’ requirement that Tutor Perini have 11 notified the insurers of a potential claim based upon an 12 ‘occurrence’ ‘as soon as practicable.’” Id. at *19. We 13 affirm on that ground only, and do not decide whether the 14 Facade Failure was a covered event. 15 16 In the absence of a valid excuse, an insured’s failure 17 to provide timely notice of a claim to an insurer is a 18 complete defense. SeeAm. Home Assurance Co. v Int’l Ins. 19 Co. , 90 N.Y.2d 433, 440 (2002) (“[A]bsent a valid excuse, a 20 failure to satisfy the notice requirements vitiates the 21 policy and the insurer need not show prejudice before it can 22 assert the defense of noncompliance.”) (quotation marks and 23 alterations omitted). 1Notice must be given within a 24 reasonable time under all the circumstances. SeeSec. Mut. 25 Ins. Co. of N.Y. v. Acker-Fitzsimons Corp. , 31 N.Y.2d 436, 26 441 (1972). 27 28 The notice obligation is triggered when the 29 “circumstances known to the insured at the time would have 30 suggested to a reasonable person the possibility of a 31 claim.” Commercial Union Ins. Co. v. Int’l Flavors & 32 Fragrances, Inc. , 822 F.2d 267, 272 (2d Cir. 1987). Whether 33 notice is given within a reasonable time may be determined 34 as a matter of law if “(1) the facts bearing on the delay in 35 providing notice are not in dispute and (2) the insured has 36 not offered a valid excuse for the delay.” New York v. 37 Blank , 27 F.3d 783, 795 (2d Cir. 1994) (citation omitted). 38 39

1 New York law now requires insurers to prove prejudice in order to assert a late notice defense. See N.Y. Ins. Law § 3420(a)(5). But that statute applies only to policies issued after January of 2009, and therefore does not apply here.

4The insurance contracts required notice “as soon as 1 practicable” after a covered event. Broad form endorsements 2 state that “[k]nowledge of an ‘occurrence’ by your agent, 3 your servant, or your employee shall not in itself 4 constitute knowledge to you unless the Director of Risk 5 Management (or one with similar or equivalent title) or 6 his/her designee, at the address shown in the policy 7 declarations, will have received such notice.” 8 9 Notice was delayed until long after several executives 10 of Tutor Perini knew of the loss, conceded responsibility 11 for it, and engaged in negotiations to resolve the claim. 12 Tutor Perini argues that, since its risk management 13 personnel were not on formal notice until November 2008 and 14 notice was given in early January, notice was timely. 15 However, even assuming arguendothat the relevant interval 16 is November 2008 to January 2009, that two-month delay is 17 unreasonable as a matter of New York law. See, e.g. , Am. 18 Ins. Co. v. Fairchild Indus., Inc. , 56 F.3d 435, 440 (2d 19 Cir. 1995) (“Under New York law, delays for one or two 20 months are routinely held ‘unreasonable.’”); see alsoAm. 21 Home Assurance Co. v. Republic Ins. Co. , 984 F.2d 76, 78 (2d 22 Cir. 1993) (collecting New York cases); Deso v. London & 23 Lancashire Indem. Co. , 3 N.Y.2d 127, 130 (1957) (holding 24 delay of 51 days to be unreasonable). 25 26 For the foregoing reasons, and finding no merit in 27 Tutor Perini’s other arguments, we hereby AFFIRM the 28 judgment of the district court. 29 30 FOR THE COURT: 31 CATHERINE O’HAGAN WOLFE, CLERK 32 33

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