Opinion ID: 6985048
Heading Depth: 2
Heading Rank: 1

Heading: Reasonable Chance

Text: Whether NYCHA was obligated to cooperate with HARRG’s settlement efforts in February 1997 depends on whether it appeared that Sanchez had a reasonáble chance of recovering more than NYCHA’s $500,000 self-insured retention. In the Policy, HARRG made clear that it would provide coverage only if given wide latitude to settle lawsuits with a “reasonable chance” of success: We may investigate any occurrence and settle any claim or “suit” at our discretion in excess of $250,000 if there is a reasonable chance that the claim, suit or suits wjll exceed the self-insured retention [i.e. $500,000]. You will promptly reimburse us if we pay an amount that is within your self-insured retention. The Policy does not further define reasonable chance. In past cases, we have employed an objective standard and limited our inquiry to the information available at the time of decision. See, e.g., Unigard Sec. Ins. Co. v. North River Ins. Co., 4 F.3d 1049, 1065 (2d Cir.1993). We adopt that approach here. Under New York common law, to hold a landlord liable for torts committed by third parties, a plaintiff must demonstrate that the third parties were intruders with no right or privilege to be on the premises, and that they gained entry because of the landlord’s negligence. See, e.g., Perry v. New York City Hous. Auth., 222 A.D.2d 567, 635 N.Y.S.2d 661, 662-63 (2d Dep’t.1995). 2 Sanchez was unable to specifically identify his assailants and had a reasonable chance of prevailing only if New York law at the time allowed circumstantial evidence to show that attackers were intruders and not tenants or guests. Because we must examine the objective circumstances known to NYCHA when it refused to convey the settlement offer, our analysis differs from that of the district court, which relied on the jury verdict and its subsequent affirmance. NYCHA asserts that it was well settled in early 1997 that a plaintiff could not demonstrate that an assailant was an intruder merely by showing that the assailant was unfamiliar. Therefore, “[bjeeause Sanchez’s assailants were not identified, let alone apprehended, Sanchez failed to establish that his assailants were intruders with no right or privilege to be on the premises, and this case should not have reached the jury.” NYCHA admits that as New York law now stands, Sanchez would have had a reasonable chance of prevailing, but it contends, and HARRG agrees, that only the case law as it existed at the time of Sanchez’s suit is relevant. 3 The cases NYCHA relies upon, however, do not preclude the use of circumstantial evidence to establish intruder status. Two cases cited by NYCHA concern an identified person and turn on whether that person was an intruder. See Pitchon v. City of New York, 243 A.D.2d 548, 664 N.Y.S.2d 559, 560 (2d Dep’t 1997) (postdating Sanchez); Perry, 635 N.Y.S.2d at 662 (2d Dep’t 1995) (assailant was ex-boyfriend). In four other cases, the victim either never saw the attacker or did not live to testify. See Gleaton v. New York City Hous. Auth., 221 A.D.2d 504, 633 N.Y.S.2d 399, 400 (2d Dep’t 1995); Bajana v. Presbyterian Hosp., 231 A.D.2d 464, 647 N.Y.S.2d 465 (1st Dep’t 1996); Wright v. New York City Hous. Auth., 208 A.D.2d 327, 624 N.Y.S.2d 144 (1st Dep’t.1995); Rojas v. Lynn, 218 A.D.2d 611, 631 N.Y.S.2d 15 (1st Dep’t 1995). In those cases, the defendants prevailed because not even circumstantial evidence indicated that the assailant or assailants were intruders. The plaintiff in another case upon which NYCHA relies lacked credibility, because he first testified that his attacker was from the same housing project and then recanted, conveniently asserting that the attacker was actually an intruder. See Melville v. New York City Hous. Auth, 242 A.D.2d 244, 661 N.Y.S.2d 632, 634 (1st Dep’t 1997). In two additional cases in which the plaintiffs did not recover, the court addressed the related issue of entry, rather than whether the attacker was an intruder. See Hargett v. New York City Hous. Auth, 244 A.D.2d 459, 664 N.Y.S.2d 348, 349 (2d Dep’t 1997) (postdating Sanchez), rev’d, 92 N.Y.2d 975, 683 N.Y.S.2d 754, 706 N.E.2d 742 (1998) (summary reversal based on Burgos); Shinn v. Lefrak Organization, Inc., 239 A.D.2d 335, 657 N.Y.S.2d 1005 (2d Dep’t 1997) (postdating Sanchez). Finally, NYCHA cites Fowler v. New York City Hous. Auth, 243 A.D.2d 284, 663 N.Y.S.2d 32 (1st Dep’t 1997) and Tolliver v. New York City Hous. Auth, 238 A.D.2d 187, 655 N.Y.S.2d 534 (1st Dep’t 1997). These cases have little relevance as they were decided both after Sanchez and by another department. In addition, both cases are distinguishable on their facts. There is no indication that the plaintiff in Fowler actually saw the attackers enter the building, as did Sanchez. See Fowler, 663 N.Y.S.2d at 32. The plaintiff in Tolliver was assaulted as he was leaving his apartment, and so he could not say how his assailant gained entry. See Tolliver, 655 N.Y.S.2d at 535. 4 HARRG relies upon Sherman v. Concourse Realty Corp., 47 A.D.2d 134, 365 N.Y.S.2d 239 (2d Dep’t 1975). In Sherman, the plaintiff testified that seconds after he entered the lobby, through a door with a broken lock, someone came in behind him and attacked him. See id. at 241, 47 A.D.2d 134. The court concluded that “the tenant’s testimony, if credited by the jury, constituted sufficient circumstantial evidence from which the jury could reasonably infer that the assailant was an intruder who entered the lobby by pushing open the lockless lobby entrance door.” Id. at 242, 47 A.D.2d 134: NYCHA contends that the case is too old to be of much value in light of later decisions, that the court focused on entry rather than intruder status, and that the court did not explicitly discuss the admissibility of circumstantial evidence to establish whether an assailant was an intruder. The latter criticisms apply with equal force to the cases NYCHA relies upon. In fact, none of the cases decided before Sanchez appear to address squarely the issue of circumstantial evidence eventually resolved in Burgos. While the pre-Sanchez cases may reflect a certain hostility toward negligence suits by a victimized tenant against a landlord, they never preclude the use of circumstantial evidence. In short, a lawyer working in the common-law tradition could have made a good faith argument that New York case law stood for the proposition that an intruder must be positively identified as such, but a lawyer might also have argued that the cases merely required sufficient evidence (of whatever kind) to show that the assailant was an intruder. 5 Because the law was unsettled on the issue of circumstantial evidence, we hold that Sanchez had a reasonable chance of recovering more than NYCHA’s $500,000 self-insured retention and that NYCHA breached the Policy by preventing HARRG from settling. HARRG was, therefore, entitled to disclaim. See, e.g., Coleman v. New Amsterdam Casualty Co., 247 N.Y. 271, 276-77, 160 N.E. 367 (1928) (Cardozo, J.). However, as discussed below, HARRG’s disclaimer was ineffective.