        SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

210
CA 10-01460
PRESENT: SMITH, J.P., PERADOTTO, LINDLEY, SCONIERS, AND MARTOCHE, JJ.


IN THE MATTER OF THE ARBITRATION BETWEEN NGM
INSURANCE COMPANY, PETITIONER-RESPONDENT,

                    AND                           MEMORANDUM AND ORDER

DOUGLAS E. HAAK AND CARMELA HAAK,
RESPONDENTS-APPELLANTS.


VIOLA, CUMMINGS & LINDSAY, LLP, NIAGARA FALLS (MICHAEL J. SKONEY OF
COUNSEL), FOR RESPONDENTS-APPELLANTS.

BROWN & KELLY, LLP, BUFFALO (CAROLYN M. HENRY OF COUNSEL), FOR
PETITIONER-RESPONDENT.


     Appeal from an order of the Supreme Court, Niagara County
(Richard C. Kloch, Sr., A.J.), entered April 13, 2010. The order
granted the application of petitioner for a permanent stay of
arbitration.

     It is hereby ORDERED that the order so appealed from is
unanimously affirmed without costs.

     Memorandum: Douglas E. Haak (respondent) is a police officer who
was involved in an accident during a high-speed chase of a vehicle
operated by John J. Davis, Jr. and owned by Snorac, Inc. (Snorac), a
rental car company. Respondent’s vehicle struck another police
vehicle while pursuing Davis, causing respondent to sustain, inter
alia, an orbital fracture. Other officers continued the chase, and
Davis later crashed into a building and was apprehended after he fled
on foot. Approximately 22 months after the incident, respondent
notified petitioner, his automobile insurance carrier, of his accident
and potential claim for supplementary uninsured/underinsured motorist
(SUM/UM) benefits. Respondent and his wife, respondent Carmela Haak,
simultaneously commenced a personal injury action against Davis and
Snorac. Petitioner disclaimed coverage on the ground that respondent
failed to provide notice of the claim “as soon as practicable,” as
required by the policy, prompting respondents to serve a notice of
intention to arbitrate. Petitioner thereafter commenced this
proceeding seeking a permanent stay of arbitration. Supreme Court
properly granted the petition.

     It is well settled that “[t]he requirement that an insured notify
its liability carrier of a potential claim ‘as soon as practicable’
operates as a condition precedent to coverage” (White v City of New
                                 -2-                           210
                                                         CA 10-01460

York, 81 NY2d 955, 957). “[I]n the SUM[/UM] context, the phrase ‘as
soon as practicable’ means that ‘the insured must give notice with
reasonable promptness after the insured knew or should reasonably have
known that the tortfeasor was underinsured’ ” (Rekemeyer v State Farm
Mut. Auto. Ins. Co., 4 NY3d 468, 474). Whether an insured has given
notice as soon as practicable should be determined on a case-by-case
basis, taking into account all of the relevant circumstances (see
Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, 93 NY2d 487,
494-495). Factors to consider include the seriousness and nature of
the insured’s injuries, and the extent of the tortfeasor’s coverage
(see id. at 493; Matter of Allstate Ins. Co. [Earl], 284 AD2d 1002,
1004), as well as “the time within which an insured’s injuries
manifest themselves” (Unwin v New York Cent. Mut. Fire Ins. Co., 268
AD2d 669, 670).

     Here, we conclude that respondent’s notice of the potential
claim, given almost two years after the accident, was untimely under
the circumstances of this case. It was obvious from the outset that
respondent had sustained a serious injury within the meaning of
Insurance Law § 5104 (see § 5102 [d]), and respondent knew or should
have known shortly after the accident that Davis was uninsured.
Respondents contend that respondent was not required to provide notice
of the claim until the court in the underlying personal injury action
had granted Snorac’s motion for summary judgment dismissing the
complaint against it based upon the Graves Amendment (49 USC § 30106),
which generally exempts rental car companies from the vicarious
liability provisions of Vehicle and Traffic Law § 388. Until then,
respondents assert, they did not know that the Davis vehicle was
uninsured or underinsured. We reject that contention. The Graves
Amendment unequivocally applies to Snorac unless Davis’s use of the
vehicle was not “during the period of the rental or lease” (49 USC §
30106 [a]). In our view, that information could have been ascertained
by respondents well before the court granted Snorac’s motion in the
underlying action and, in any event, there is no indication in the
record before us that respondents made any efforts to obtain such
information. We thus conclude that respondents failed to meet their
burden “of establishing a reasonable excuse for the [almost] two-year
delay in giving notice” (Matter of State Farm Mut. Auto. Ins. Co.
[Cybulski], 1 AD3d 905, 906).

     Finally, we reject respondents’ further contention that the
decision of the Court of Appeals in Rekemeyer (4 NY3d at 475-476)
requires that petitioner show prejudice before disclaiming coverage.
In Rekemeyer, the insured provided timely notice of the accident but
not the claim, and the insurer thus had an opportunity to investigate
the accident. Here, in contrast, respondent provided notice of the
accident at the same time that he provided notice of the claim,
approximately 22 months after the accident occurred (see Matter of
Progressive Northeastern Ins. Co. [Heath], 41 AD3d 1321, 1322). Thus,
the limited no-prejudice rule set forth in Rekemeyer does not apply.

Entered:   February 18, 2011                    Patricia L. Morgan
                                                Clerk of the Court
