13‐4244‐cv

Indian Harbor Ins. v. San Diego

      

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

          

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.  CITATION TO A

SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY

FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1.  

WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST

CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION

ʺSUMMARY ORDERʺ).  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 for the Second

Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in

the City of New York, on the 2nd day of October, two thousand fourteen.

PRESENT: PIERRE N. LEVAL,

    DENNY CHIN,

    SUSAN L. CARNEY,

     Circuit Judges.        

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INDIAN HARBOR INSURANCE COMPANY,

    Plaintiff‐Counter‐Defendant‐Appellee,

           

    v.             13‐4244‐cv

           

THE CITY OF SAN DIEGO,      

    Defendant‐Counter‐Claimant‐Appellant.

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FOR PLAINTIFF‐APPELLEE: MAX H. STERN (Jessica E. La Londe, Sheila

Raftery Wiggins, on the brief), Duane Morris

LLP, San Francisco, California, and New York,

New York.
   

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FOR DEFENDANT‐APPELLANT: JEFFREY E. GLEN (Caroline Hurtado Ford,

Finley T. Harckham, Michael J. Stoner, David

P. Bender, on the brief), Anderson Kill, P.C.,

New York, New York and Ventura, California;

Christine M. Leone, City Attorneyʹs Office, San

Diego, California.

    Appeal from the United States District Court for the Southern District of

New York (Koeltl, J.).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.

Defendant‐appellant The City of San Diego (the ʺCityʺ) appeals from a

final judgment filed on October 3, 2013 granting declaratory judgment in favor of

plaintiff‐appellee Indian Harbor Insurance Co. (ʺIndian Harborʺ) in this lawsuit as well

as in two related cases.1  By Opinion and Order dated September 25, 2013, the district

court granted Indian Harborʹs motion for summary judgment.  We assume the partiesʹ 

familiarity with the facts, the procedural history, and the issues on appeal, which we

briefly summarize before addressing the merits.

Indian Harbor issued a pollution and remediation legal liability insurance

policy to the City in 2009 (the ʺPolicyʺ).  The Policy contained a New York choice of law

provision2 and required the City to notify Indian Harbor ʺas soon as practicableʺ about

any liability claims relating to ʺpollution conditions.ʺ  Just prior to the issuance of the

                                                            

1   Three related lawsuits were filed below, and the parties agreed that all three

cases would be governed by the district courtʹs decision in this case.  

2   The parties agree that New York law applies in this case.
   

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Policy, the New York legislature amended the New York Insurance Law effectively to

bar liability insurers, on policies ʺissued or deliveredʺ in New York after January 17,

2009, from denying claims by reason of late notice unless the insurer suffered prejudice

thereby.  See N.Y. Ins. Law § 3420(a)(5).  Until this amendment, New York common law

did not require the insurer to demonstrate prejudice before denying coverage based on

a policyʹs timely notice provision.  See Briggs Ave. LLC v. Ins. Corp. of Hannover, 11

N.Y.3d 377, 381‐82 (2008) (ʺ[A]n insurer that does not receive timely notice in

accordance with a policy provision may disclaim coverage, whether it is prejudiced by

the delay or not.ʺ).  

Indian Harbor filed for a declaratory judgment that it had no duty to

indemnify the City on three late‐notified claims, including one where the City waited

fifty‐eight days to notify Indian Harbor of an insurance claim filed by Centex Homes

(the ʺCentex claimʺ).  Indian Harbor did not assert that it was prejudiced by the Cityʹs

late notification.  The City opposed declaratory judgment, arguing that (1) Section

3420(a)(5) applied, which would require Indian Harbor to show prejudice, and (2) the

three notifications were not late as a matter of law.  The district court rejected the Cityʹs

arguments and granted judgment for Indian Harbor.  This appeal followed.

On appeal, the City argues that issues of fact should have precluded

summary judgment and that the district court misconstrued New York law.  

Specifically, the City contends that a reasonable factfinder could conclude that the
   

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Policy was ʺissuedʺ in New York, so that the policy is governed by § 3420(a)(5).  

Alternatively, it argues that the amendment to § 3420 implicitly abrogated the common‐

law ʺno prejudiceʺ rule even as to policies issued outside New York.  The City has also

moved for certification to the New York Court of Appeals on the question whether New

York common law has changed.  Finally, the City argues that summary judgment was

not warranted as to the Centex claim.  We address each argument in turn.

We review a district courtʹs grant of summary judgment de novo, drawing

all inferences in favor of the nonmoving party.  See Terry v. Ashcroft, 336 F.3d 128, 137

(2d Cir. 2003).  Certification to the New York Court of Appeals is discretionary.  See

McCarthy v. Olin Corp., 119 F.3d 148, 153 (2d Cir. 1997).

First, we agree with the district court that no reasonable factfinder could

conclude that the Policy was ʺissuedʺ in New York, under either of two accepted

definitions of the term ʺissuedʺ ‐‐ ʺprepared and signed,ʺ Taggert v. Sec. Ins. Co. of New

Haven, 100 N.Y.S.2d 563, 564 (2d Depʹt 1950), or ʺsen[t] out or distribute[d] officially,ʺ 

Rosner v. Metro. Prop. & Liab. Ins. Co., 96 N.Y.2d 475, 480 (2001).  The City argues for the

former definition and avers that because the president of Indian Harbor, Dennis Kane,

whose signature on behalf of Indian Harbor was on the Policy, had his office in New

York, the Policy should be deemed ʺissuedʺ in New York.  But Kaneʹs signature was a

pre‐existing electronic signature, and it was affixed to the Policy in Exton, Pennsylvania,

without his being present there.  The Policy was created and mailed from the
   

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Pennsylvania office and all transmittal paperwork bore the Pennsylvania officeʹs

letterhead.  The City has proffered no evidence to show that the Policy was issued, or

even signed, in New York.  Accordingly, because the Policy was not ʺissued or

deliveredʺ in New York, by its terms § 3420(a)(5) does not apply.

Next, we reject the Cityʹs argument that the amendment to § 3420 created

a new public policy, and thus changed the common‐law no‐prejudice rule.  If the New

York legislature had intended to change the common law for all policies, it could have

done so.  We have previously declined to apply § 3420 outside the geographic scope

dictated by the statutory language.  In Marino v. N.Y. Tel. Co., we declined to apply

§ 3420(d) ‐‐ a provision dealing with notification requirements for liability policies for

claims arising out of ʺdeath or bodily injuryʺ ‐‐ to a policy issued outside New York.  

944 F.2d 109, 113 (2d Cir. 1991).  In so holding, we stated:  ʺWe see no reason to expand

section 3420(d) beyond its terms in the instant case. . . .  [A]bsent an applicable and

appropriate statute, New York common law should be applied.ʺ  Id. at 114.  Similarly,

here, we are presented with no applicable statute, and thus the common‐law no‐

prejudice rule should apply.  Moreover, numerous cases have continued to apply the

common‐law no‐prejudice rule after § 3420(a)(5) came into effect on January 17, 2009,

where the criteria under the statute had not been met.  See, e.g., Ponok Realty Corp. v.

United Nat. Specialty Ins. Co., 893 N.Y.S.2d 125, 127 (2d Cir. 2010); Sevenson Envtl. Servs.,

Inc. v. Sirius Am. Ins. Co., 883 N.Y.S.2d 423, 425 (4th Depʹt 2009).  In all of these cases
   

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where one of the requirements of § 3420(a)(5) was not met, the court found there was no

coverage based on late notice without requiring a showing of prejudice.

We also deny the Cityʹs motion to certify the question to the New York

Court of Appeals.  ʺCertification is warranted only when applicable state law is unclear

or nonexistent,ʺ Olin Corp. v. Ins. Co. of N. Am., 929 F.2d 62, 64 (2d Cir. 1991), and not

ʺwhere precedent is clear and application of law to fact requires no grand or novel

pronouncements of New York law.ʺ  Doyle v. Am. Home Prods. Corp., 583 F.3d 167, 172

(2d Cir. 2009).  Here, there is no split of authority on the issue and no court has

suggested that public policy or common law principles have changed.  Certification to

the New York Court of Appeals is thus unnecessary.3   

    Finally, the district court correctly held that the Cityʹs 58‐day delay on the

Centex claim was unreasonable as a matter of law.  ʺThe test for determining whether

the notice provision has been triggered is whether the circumstances known to the

insured at that time would have suggested to a reasonable person the possibility of a

claim.ʺ  Sparacino v. Pawtucket Mut. Ins. Co., 50 F.3d 141, 143 (2d Cir. 1995).  Under New

York law, delays of one or two months are routinely held unreasonable.  See Am. Home

Assur. Co. v. Republic Ins. Co., 984 F.2d 76, 78 (2d Cir.) (collecting New York cases), cert.

                                                            

3   Briggs Ave. involved a policy issued before the § 3420 amendment took effect.  

There, the Court of Appeals could have considered the effect of the amendment on public

policy, but chose not to do so.  11 N.Y.3d at 381‐82 (ʺWe have long held, and recently

reaffirmed, that an insurer that does not receive timely notice in accordance with a policy

provision may disclaim coverage, whether it is prejudiced by the delay or not.ʺ).
   

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denied, 508 U.S. 973 (1993).  The City has adduced no evidence to demonstrate that its

58‐day delay was reasonable.  First, it argues that Centex did not initially seek

reimbursement specifically for a ʺpollution conditionʺ and thus the duty to notify was

not triggered.  But this contention is belied by the wording of the Centex claim, which

asserted damage from ʺhydrochloric gas emissions.ʺ  (App. at 150).  Next, the City

suggests that its delay was inconsequential because a California court ruled that

Centexʹs legal claim did not accrue until after Indian Harbor knew of the insurance

claim.  The purpose of these notification requirements, however, is to permit the

insurance company to investigate promptly.  See New York v. Blank, 27 F.3d 783, 795‐96

(2d Cir. 1994) (ʺThe opportunity to conduct . . . investigation and research is the very

reason for the notification requirement.ʺ).  Summary judgment was therefore

appropriate as to the Centex claim.

    We have considered the Cityʹs remaining arguments and conclude they

are without merit.  Accordingly, we AFFIRM the judgment of the district court.

     FOR THE COURT:

     Catherine OʹHagan Wolfe, Clerk