     12-5117
     Illinois National Ins. Co. v. Tutor Perini Corp.

                          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 COURT’S 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 “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Thurgood Marshall United
 3       States Courthouse, 40 Foley Square, in the City of New York,
 4       on the 6th day of May, two thousand fourteen.
 5
 6       PRESENT: AMALYA L. KEARSE,
 7                DENNIS JACOBS,
 8                GERARD E. LYNCH,
 9                              Circuit Judges.
10
11       - - - - - - - - - - - - - - - - - - - -X
12       METROPOLITAN TRANSIT AUTHORITY,
13                     Plaintiff,
14
15       ILLINOIS NATIONAL INSURANCE CO.,
16       NATIONAL UNION FIRE INSURANCE COMPANY
17       OF PITTSBURGH, PA, INSURANCE COMPANY
18       OF THE STATE OF PENNSYLVANIA,
19                Plaintiffs-Counter-
20                Defendants-Appellees,
21
22       CERTAIN UNDERWRITERS AT LLOYD’S
23       LONDON,
24                Third-Party Defendant-
25                Appellee,
26
27                    -v.-                                               12-5117
28

                                                  1
 1   TUTOR PERINI CORPORATION,
 2            Defendant-Counter-Claimant-
 3            Third-Party Plaintiff-
 4            Appellant.
 5   - - - - - - - - - - - - - - - - - - - -X
 6
 7   FOR APPELLANT:             ALEXANDER D. HARDIMAN (with
 8                              Finley T. Harckham on the
 9                              brief), Anderson Kill & Olick,
10                              P.C., New York, New York.
11
12   FOR APPELLEES:             BARBARA MICHAELIDES (with Josh
13                              Gardnerr on the brief), Bates
14                              Carey Nicolaides LLP, Chicago,
15                              Illinois.
16
17   FOR THIRD-PARTY-
18   DEFENDANT-APPELLEE:        GEORGE C. ROCKAS (with Kara
19                              Thorvaldsen on the brief),
20                              Wilson, Elser, Moskowitz,
21                              Edelman & Dicker LLP, Boston,
22                              Massachusetts.
23
24        Appeal from a judgment of the United States District
25   Court for the Southern District of New York (Forrest, J.).
26
27        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
28   AND DECREED that the judgment of the district court be
29   AFFIRMED.
30
31        Defendant-appellant Tutor Perini Corporation (“Tutor
32   Perini”) appeals from the judgment of the United States
33   District Court for the Southern District of New York
34   (Forrest, J.), granting summary judgment in favor of
35   plaintiffs-counter-defendants-appellees Illinois National
36   Insurance Company, the Insurance Company of the State of
37   Pennsylvania, and National Union Fire Insurance Company of
38   Pittsburgh, PA (collectively, the “Chartis Insurers”), and
39   third-party-defendant-appellee Certain Underwriters at
40   Lloyd’s, London (“Lloyd’s”). We assume the parties’
41   familiarity with the underlying facts, the procedural
42   history, and the issues presented for review.
43
44        Tutor Perini was the general contractor of an
45   Metropolitan Transit Authority (“MTA”) bus depot (the
46   “Depot”) that suffered collapse of its facade (the “Facade

                                  2
 1   Failure”). Insurance coverage was denied based on, inter
 2   alia, late notice.
 3
 4        The Depot’s construction was finally completed in 2007,
 5   but it was put into use in 2003. The facade collapsed on
 6   April 17, 2008. Tutor Perini concedes that certain of its
 7   own employees knew of the collapse immediately, that the
 8   work did not conform to the construction contract, and that
 9   the faulty work was performed by a subcontractor hired by
10   Tutor Perini.
11
12        John Loftus, president of Tutor Perini’s civil
13   division, a senior executive and the most senior person
14   among the 100 to 150 New York-based Tutor Perini employees,
15   was aware of the Facade Failure the day after it occurred,
16   and went to the site that day with others from the company.
17   At least as of November 2008, Tutor Perini’s risk management
18   department was formally made aware of the loss. In January
19   2009, an individual in Tutor Perini’s risk management
20   department notified the MTA Owner Controlled Insurance
21   Program’s (“OCIP”) Administrator of a potential claim. At
22   that time, Tutor Perini made a proposal to the MTA that
23   included repairing the Depot’s facade, paying the MTA $1
24   million, and tolling the statute of limitations as to claims
25   relating to the work required to repair the facade.
26
27        On January 6, 2009, Tutor Perini notified the Chartis
28   Insurers of the loss. On January 14, 2009, it notified the
29   MTA’s on-site OCIP Administrator of the Facade Failure.
30
31        In June 2009, Tutor Perini and the MTA entered into an
32   agreement to remedy the defects. As part of that agreement,
33   Tutor Perini conceded that a demand had been made as of
34   April 17, 2008, and agreed to cover all costs due to its
35   defective workmanship by placing $5 million into a fund out
36   of which the MTA (via the New York City Transit Authority)
37   would pay for costs and expenses for repair of the facade.
38
39        On January 1, 2011, the Chartis Insurers sued defendant
40   Tutor Perini for a declaratory judgment that certain
41   policies they issued did not provide coverage for the loss.
42   On February 24, 2012, Tutor Perini filed a third-party
43   complaint against Lloyd’s, which issued a policy (the
44   “Lloyd’s Policy”) to the MTA that provided coverage to Tutor
45   Perini through owner controlled insurance endorsements.
46   Tutor Perini sought a declaration that Lloyd’s must provide
47   defense and/or indemnity coverage under the Lloyd’s Policy.

                                  3
 1        The Chartis Insurers and Lloyd’s moved, and were
 2   granted, summary judgment. See Ill. Nat’l Ins. Co. v. Tutor
 3   Perini Corp., 2012 U.S. Dist. LEXIS 165939 (S.D.N.Y. Nov.
 4   15, 2012). After its motion for reconsideration was denied,
 5   Tutor Perini timely filed this appeal.
 6
 7        The district court ruled that “[e]ven assuming that the
 8   Facade Failure constituted an ‘occurrence’ under the
 9   Policies, the Chartis Insurers and Lloyd’s would be entitled
10   to summary judgment on the basis that Tutor Perini failed to
11   comply with the Policies’ requirement that Tutor Perini have
12   notified the insurers of a potential claim based upon an
13   ‘occurrence’ ‘as soon as practicable.’” Id. at *19. We
14   affirm on that ground only, and do not decide whether the
15   Facade Failure was a covered event.
16
17        In the absence of a valid excuse, an insured’s failure
18   to provide timely notice of a claim to an insurer is a
19   complete defense. See Am. Home Assurance Co. v Int’l Ins.
20   Co., 90 N.Y.2d 433, 440 (2002) (“[A]bsent a valid excuse, a
21   failure to satisfy the notice requirements vitiates the
22   policy and the insurer need not show prejudice before it can
23   assert the defense of noncompliance.”) (quotation marks and
24   alterations omitted).1 Notice must be given within a
25   reasonable time under all the circumstances. See Sec. Mut.
26   Ins. Co. of N.Y. v. Acker-Fitzsimons Corp., 31 N.Y.2d 436,
27   441 (1972).
28
29        The notice obligation is triggered when the
30   “circumstances known to the insured at the time would have
31   suggested to a reasonable person the possibility of a
32   claim.” Commercial Union Ins. Co. v. Int’l Flavors &
33   Fragrances, Inc., 822 F.2d 267, 272 (2d Cir. 1987). Whether
34   notice is given within a reasonable time may be determined
35   as a matter of law if “(1) the facts bearing on the delay in
36   providing notice are not in dispute and (2) the insured has
37   not offered a valid excuse for the delay.” New York v.
38   Blank, 27 F.3d 783, 795 (2d Cir. 1994) (citation omitted).
39



         1
              New York law now requires insurers to prove
     prejudice in order to assert a late notice defense. See
     N.Y. Ins. Law § 3420(a)(5). But that statute applies only
     to policies issued after January of 2009, and therefore does
     not apply here.
                                  4
 1        The insurance contracts required notice “as soon as
 2   practicable” after a covered event. Broad form endorsements
 3   state that “[k]nowledge of an ‘occurrence’ by your agent,
 4   your servant, or your employee shall not in itself
 5   constitute knowledge to you unless the Director of Risk
 6   Management (or one with similar or equivalent title) or
 7   his/her designee, at the address shown in the policy
 8   declarations, will have received such notice.”
 9
10        Notice was delayed until long after several executives
11   of Tutor Perini knew of the loss, conceded responsibility
12   for it, and engaged in negotiations to resolve the claim.
13   Tutor Perini argues that, since its risk management
14   personnel were not on formal notice until November 2008 and
15   notice was given in early January, notice was timely.
16   However, even assuming arguendo that the relevant interval
17   is November 2008 to January 2009, that two-month delay is
18   unreasonable as a matter of New York law. See, e.g., Am.
19   Ins. Co. v. Fairchild Indus., Inc., 56 F.3d 435, 440 (2d
20   Cir. 1995) (“Under New York law, delays for one or two
21   months are routinely held ‘unreasonable.’”); see also Am.
22   Home Assurance Co. v. Republic Ins. Co., 984 F.2d 76, 78 (2d
23   Cir. 1993) (collecting New York cases); Deso v. London &
24   Lancashire Indem. Co., 3 N.Y.2d 127, 130 (1957) (holding
25   delay of 51 days to be unreasonable).
26
27        For the foregoing reasons, and finding no merit in
28   Tutor Perini’s other arguments, we hereby AFFIRM the
29   judgment of the district court.
30
31                              FOR THE COURT:
32                              CATHERINE O’HAGAN WOLFE, CLERK
33




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