SUPREME COURT OF THE STATE OF NEW YORK

Appellate Division, Fourth Judicial Department

616 

CA 12-00261 

PRESENT: SCUDDER, P.J., SMITH, CENTRA, LINDLEY, AND MARTOCHE, JJ. 

 

 

RLI INSURANCE COMPANY, PLAINTIFF-RESPONDENT, 

V MEMORANDUM AND ORDER

LESLIE SMIEDALA, ET AL., DEFENDANTS, 

AND REGIONAL INTEGRATED LOGISTICS, INC., 

DEFENDANT-APPELLANT. 

 

SLIWA & LANE, BUFFALO (KEVIN A. LANE OF COUNSEL), FOR

DEFENDANT-APPELLANT. 

HURWITZ & FINE, P.C., BUFFALO (DAN D. KOHANE OF COUNSEL), FOR

PLAINTIFF-RESPONDENT. 

 

Appeal from a judgment (denominated order) of the Supreme Court,

Niagara County (Frank Caruso, J.), entered May 23, 2011. The

judgment, insofar as appealed from, denied the motion of defendant

Regional Integrated Logistics, Inc. for a declaration. 

It is hereby ORDERED that the judgment insofar as appealed from

is unanimously reversed on the law without costs, the motion of

defendant-appellant is granted and judgment is granted in favor of

defendant-appellant as follows: 

It is ADJUDGED and DECLARED that plaintiff is obligated

to defend and indemnify defendant-appellant for the

obligations it assumed pursuant to its indemnification

agreement with defendant Michael J. Hale, and

It is further ADJUDGED and DECLARED that a hearing to

determine the legal services that should be apportioned

between defendant-appellant and defendant Michael J. Hale is

no longer necessary. 

Memorandum: Plaintiff commenced this action seeking judgment

declaring that it is not obligated to defend or indemnify defendant

Michael J. Hale and defendant-appellant, Regional Integrated

Logistics, Inc. (Regional), in the underlying personal injury action

and related third-party action under the commercial automobile

insurance policy issued by plaintiff to Regional. Defendant Leslie

Smiedala commenced the underlying personal injury action seeking

damages for injuries he allegedly sustained when the vehicle in which

he was a passenger collided with a vehicle driven by Hale, which Hale

had leased from Audi Financial Services and VW Leasing, Ltd.
-2- 616 

CA 12-00261 

(Audi/VW), defendants-third-party plaintiffs in the underlying action. 

Hale, an employee of Regional, was driving to the bank at the time of

the accident in order to make a deposit for Regional. Audi/VW

commenced the third-party action against Regional seeking contribution

and/or indemnification for any liability arising from Hale’s

negligence under the doctrine of respondeat superior.

Hale and Regional moved for summary judgment declaring that

plaintiff must defend and indemnify them under the policy. Before

that motion was decided, Regional and Hale entered into an

indemnification agreement (R-H Agreement) pursuant to which Regional

agreed to indemnify and hold harmless Hale “from and against any and

all claims, damages, losses, expenses, liability and exposure,

including, but not limited to, counsel fees, costs and disbursements,

imposed upon or awarded against Hale as a result of and/or in

connection with” the motor vehicle accident. Although Supreme Court

denied the initial motion of Hale and Regional, the court thereafter

granted their motion for leave to reargue and, upon reargument,

granted the initial motion and issued the requested declaration. On a

prior appeal, we concluded that the court should have granted the

declaration only in favor of Regional but not Hale. We thus modified

the judgment accordingly (RLI Ins. Co. v Smiedala, 71 AD3d 1553 [first

appeal]). 

While the first appeal was pending, Hale and Regional moved for

summary judgment declaring that plaintiff was obligated to pay the

costs and legal fees incurred by them in defending the declaratory

judgment action commenced by plaintiff. The court granted that motion

but, on appeal, we modified the judgment by denying that part of the

motion with respect to Hale, based on our earlier determination that

plaintiff was not obligated to defend or indemnify Hale in the

underlying personal injury action (RLI Ins. Co. v Smiedala, 77 AD3d

1293 [second appeal]). We also remitted the matter to Supreme Court

“to determine the amount of reasonable attorneys’ fees to which

Regional is entitled in the declaratory judgment action following a

hearing, if necessary,” on the ground that the same attorney

represented Hale and Regional in the declaratory judgment action, and

it was not possible on the record before us to determine that part of

the attorneys’ fees attributable to each (id. at 1295). 

Following our decision in the second appeal, Regional moved for

summary judgment seeking a declaration that plaintiff was “obligated

to provide coverage to [Hale] for the contractual indemnification

agreement that [Regional] entered into with [Hale].” Regional also

sought a declaration that a hearing was no longer needed to determine

the amount of attorneys’ fees that should be attributed to Hale and

Regional. Regional contended in support of the motion, as it does on

this appeal, that plaintiff was “obligated to provide coverage for the

[R-H] [A]greement that Regional entered into with [Hale],” including

coverage for Regional’s obligation “to pay the counsel fees of

[Hale].” We conclude that the court erred in denying Regional’s

motion.

We agree with Regional that our decision in the first appeal does
-3- 616 

CA 12-00261 

not preclude us from deciding the merits of the issues raised on this

appeal inasmuch as our earlier decision neither addressed nor resolved

the contention that plaintiff is obligated to defend and indemnify

Regional for liabilities it assumed under the R-H Agreement (see New

York State Thruway Auth. v KTA-Tator Eng’g Servs., P.C., 78 AD3d 1566,

1567; Matter of El-Roh Realty Corp., 74 AD3d 1796, 1798). 

We further agree with Regional that the insurance policy issued

by plaintiff to Regional would cover the liability assumed by Regional

but for a policy exclusion providing that the insurance does not apply

to “[l]iability assumed under any contract or agreement.” 

Nevertheless, the policy further provides that there is an exception

to that exclusion, which states that the exclusion does not apply to

liability “[a]ssumed in a contract or agreement that is an ‘insured

contract’ provided the ‘bodily injury’ or ‘property damage’ occurs

subsequent to the execution of the contract or agreement” (emphasis

added).

We reject plaintiff’s contention that the liability coverage

section in the policy is not triggered by the R-H Agreement. “It is

well settled that a contract must be read as a whole to give effect

and meaning to every term . . . Indeed, ‘[a] contract should be

interpreted in a way [that] reconciles all [of] its provisions, if

possible’ ” (New York State Thruway Auth., 78 AD3d at 1567; see El-Roh

Realty Corp., 74 AD3d at 1799). If the policy had not been intended

to cover indemnification agreements such as the one at issue herein,

there would be no need to include an express provision excluding from

coverage indemnification agreements that were entered into after the

bodily injury or property damage occurred. Therefore, we must

interpret the policy in such a way that indemnification agreements are

encompassed by the coverage section. Regional does not dispute the

fact that the liability it assumed in the R-H Agreement would normally

be excluded from coverage because the R-H Agreement was executed after

the bodily injury or property damage occurred. Regional likewise does

not dispute that it violated a provision of the policy by assuming an

obligation without plaintiff’s consent. Regional correctly contends,

however, that plaintiff is precluded from relying on the exclusion or

the policy condition violated by Regional because plaintiff did not

timely disclaim coverage or deny liability.

Insurance Law § 3420 (d) (2) requires an insurer who is seeking

to disclaim liability or to deny coverage to “give written notice as

soon as is reasonably possible of such disclaimer of liability or

denial of coverage to the insured.” The timely disclaimer requirement

applies whether the insurer is relying on a policy exclusion (see HBE

Corp. v Sirius Am. Ins. Co., 63 AD3d 1509, 1510) or the violation of a

policy condition (see Oster v Aetna Cas. & Sur. Co., 283 AD2d 409,

410), and “[t]he timeliness of an insurer’s disclaimer [or denial] is

measured from the point in time when the insurer first learns of the

grounds for disclaimer of liability or denial of coverage” (Matter of

New York Cent. Mut. Fire Ins. Co. v Steiert, 68 AD3d 1120, 1121; see

Continental Cas. Co. v Stradford, 11 NY3d 443, 449; Matter of Allcity

Ins. Co. [Jimenez], 78 NY2d 1054, 1056, rearg denied 79 NY2d 823;

George Campbell Painting v National Union Fire Ins. Co. of Pittsburgh,
-4- 616 

CA 12-00261 

PA, 92 AD3d 104, 106).

Regional established that plaintiff was notified as early as

April 2010 and on multiple occasions thereafter that Regional was

seeking coverage for the obligations it assumed under the R-H

Agreement. It is undisputed that plaintiff never formally disclaimed

liability or denied coverage, although we agree with plaintiff that

its opposition to the instant motion, which is dated December 10,

2010, may be deemed such a disclaimer or denial (see Allcity Ins. Co.,

78 NY2d at 1056; Matter of New York Cent. Mut. Fire Ins. Co. v

Gonzalez, 34 AD3d 816, 816). We conclude, however, that plaintiff’s

disclaimer and denial were untimely as a matter of law (see e.g. First

Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 70; Hartford Ins. Co. v

County of Nassau, 46 NY2d 1028, 1030, rearg denied 47 NY2d 951), and

thus plaintiff is obligated to defend and indemnify Regional for the

obligations Regional assumed in the R-H Agreement. Based on our

determination, we agree with Regional that a hearing is no longer

required to apportion the legal services associated with the defense

and indemnification of Regional and Hale.

 We note that we have not addressed Regional’s contention that a

potential third-party action by plaintiff against Hale would violate

the antisubrogation rule. That contention is not preserved for our

review inasmuch as Regional did not raise that contention in the

motion underlying this appeal. In view of our determination, we need

not address Regional’s remaining contention. 

Entered: June 8, 2012 Frances E. Cafarell

Clerk of the Court