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. ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
INDIAN HARBOR INSURANCE COMPANY, Plaintiff‐Counter‐Defendant‐Appellee,
v. 13‐4244‐cv
THE CITY OF SAN DIEGO, Defendant‐Counter‐Claimant‐Appellant.
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
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.
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. ‐ 2 ‐
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
‐ 3 ‐
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
‐ 4 ‐
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).
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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. ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
INDIAN HARBOR INSURANCE COMPANY, Plaintiff‐Counter‐Defendant‐Appellee,
v. 13‐4244‐cv
THE CITY OF SAN DIEGO, Defendant‐Counter‐Claimant‐Appellant.
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
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.
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. ‐ 2 ‐
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
‐ 3 ‐
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
‐ 4 ‐
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
‐ 5 ‐
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).
‐ 6 ‐
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
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