In National Specialty Ins. Co. v. Vida Cafe Inc., National sought a declaration that it did not owe its insured Vida Café defense or indemnification in an underlying dram shop lawsuit arising out of a July 2007 accident. National’s first notice of the lawsuit was on June 17, 2009. On June 29, 2009, National sent a Reservation of Rights letter to Vida Café with a courtesy copy to the underlying plaintiff based on “late notice.” On July 6, 2009 the underlying plaintiff wrote to National to provide its own notice pursuant to N.Y. Ins. Law § 3420(a). On July 16, 2009, National issued a disclaimer to Vida Café based on late notice with a courtesy copy to the underlying plaintiff. The disclaimer did not mention the underlying plaintiff’s notice letter of July 6, 2009.
The underlying plaintiff moved for summary judgment arguing that National’s disclaimer to Vida Café was ineffective as against it–the injured party. The court held that an insurer’s disclaimer to an insured based on late notice is effective as against injured parties who failed to provide section 3420(a) notice. However, in this case, National’s disclaimer came after the injured party’s notice, and failed to address it. Accordingly, the court held that National had a duty to defend and indemnify Vida in the underlying lawsuit, notwithstanding the fact that the underlying plaintiff’s notice may have been late.
Thanks to Cheryl Fuchs for her contribution to this post.