                          State of New York
                   Supreme Court, Appellate Division
                      Third Judicial Department
Decided and Entered: November 6, 2014                   517986
________________________________

VERMONT MUTUAL INSURANCE
   COMPANY, INC.,
                    Appellant,
      v                                     MEMORANDUM AND ORDER

MOWERY CONSTRUCTION, INC.,
                    Defendant,
      and

JAMES CIUFFO,
                    Respondent.
________________________________


Calendar Date:   September 8, 2014

Before:   McCarthy, J.P., Rose, Egan Jr., Devine and Clark, JJ.

                             __________


      Brennan & White, LLP, Queensbury (Daniel J. Stewart of
counsel), for appellant.

      Conway & Kirby, LLP, Latham (Andrew Kirby of counsel), for
respondent.

                             __________


Devine, J.

      Appeal from an order of the Supreme Court (Krogman, J.),
entered February 13, 2013 in Warren County, which granted a
motion by defendant James Ciuffo for, among other things, summary
judgment dismissing the complaint against him.

      In 2005, defendant James Ciuffo sustained a personal injury
while he worked on a construction project operated by defendant
Mowery Construction, Inc. (hereinafter defendant). Although
defendant's owner and president, Bruce Mowery (hereinafter
                              -2-                517986

Mowery), became aware of the incident on the date that it
occurred, he did not report it to plaintiff, defendant's
liability insurer, until Ciuffo commenced a negligence action
against defendant more than two years later. After plaintiff
received notice of defendant's claim and the negligence action
from defendant's insurance agent, it conducted an investigation
into the circumstances underlying defendant's failure to timely
notify it of the claim under the liability policy and,
thereafter, sent defendant a reservation of rights letter stating
that it would provide a defense in the negligence action, but was
reserving its right to disclaim coverage and discontinue its
defense if it determined that Mowery did not have a good faith
belief that defendant was not obligated to notify plaintiff of
the accident. Less than a month later, plaintiff commenced this
declaratory judgment action seeking, among other things, a
declaration that it was not required to defend or indemnify
defendant due to Mowery's untimely notice of claim. Issue was
joined and plaintiff moved to amend the complaint to assert a new
ground to justify its disclaimer, the denial of which motion by
Supreme Court was affirmed by this Court (96 AD3d 1218 [2012]).
Ciuffo subsequently moved for, and was granted, summary judgment
dismissing the complaint against him and a declaration requiring
plaintiff to indemnify and defend defendant in his negligence
action.1 Plaintiff appeals, and we now affirm.

      Plaintiff argues that Supreme Court erred in finding that
its disclaimer was untimely as a matter of law, inasmuch as its
investigation of Mowery's contention of defendant's nonliability
provided a reasonable basis for such delayed notice to its
insured. An insurer's decision to disclaim liability insurance
coverage must be given to the insured, in writing, as soon as is
reasonably practicable, "failing which the disclaimer or denial
will be ineffective" (Mohawk Minden Ins. Co. v Ferry, 251 AD2d
846, 847 [1998]; see Insurance Law § 3420 [d] [2]; One Beacon


    1
        Supreme Court's order granting Ciuffo's motion for
summary judgment dismissing the complaint rendered that part of
Ciuffo's motion to compel disclosure moot (see e.g. Manculich v
Dependable Auto Sales & Serv., Inc., 39 AD3d 1070, 1071 [2007];
Henness v Lusins, 229 AD2d 873, 873 [1996]).
                              -3-                517986

Ins. v Travelers Prop. Cas. Co. of Am., 51 AD3d 1198, 1200
[2008]; Hess v Nationwide Mut. Ins. Co., 273 AD2d 689, 690
[2000]). While the timeliness of an insurer's notice of
disclaimer generally raises an issue of fact for a jury to
decide, where, as here, the basis for a disclaimer "was or should
have been readily apparent before the onset of the delay," the
delay will be found to be unreasonable as a matter of law (First
Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 69 [2003]; see
Continental Cas. Co. v Stradford, 11 NY3d 443, 449 [2008]; Scott
McLaughlin Truck & Equip. Sales, Inc. v Selective Ins. Co. of
Am., 68 AD3d 1619, 1620 [2009]). "Reasonableness of delay is
measured from the time when the insurer learns of sufficient
facts upon which to base the disclaimer" (McEachron v State Farm
Ins. Co., 295 AD2d 685, 685 [2002] [citation ommitted]; see First
Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d at 68-69; Hunter
Roberts Constr. Group, LLC v Arch Ins. Co., 75 AD3d 404, 409
[2010]).

      After it received written notice of defendant's general
liability insurance claim on January 4, 2008, upon which claim
form the date of Ciuffo's accident was circled and an annotation
was included that "Late Notice" of such claim was at issue,
plaintiff retained adjuster Walter Quillinan to conduct an
investigation to determine when Mowery first learned of Ciuffo's
injury. Quillinan interviewed Mowery and provided plaintiff with
a written report, dated January 15, 2008, which confirmed that,
although Mowery knew that Ciuffo had been injured on the date
that the accident occurred, he did not believe that plaintiff
needed to be notified of the incident because Ciuffo was a
subcontractor and not defendant's employee. Quillinan's report
further indicated that Mowery's attorney had "pressed" him to
confirm whether plaintiff would be providing defendant with a
defense in Ciuffo's personal injury action, and specifically
requested that plaintiff "review the facts presented" and make a
prompt decision. Although Quillinan's report provided plaintiff
with sufficient information upon which a disclaimer would be
soundly based (see Pav-Lak Indus., Inc. v Arch Ins. Co., 56 AD3d
287, 287-288 [2008]; Those Certain Underwriters at Lloyds, London
v Gray, 49 AD3d 1, 5 [2007]; Squires v Marini Bldrs., 293 AD2d
808, 810 [2002], lv denied 99 NY2d 502 [2002]), plaintiff made no
disclaimer, but instead retained an attorney to further
                              -4-                  517986

investigate the circumstances of Mowery's untimely notice of
claim. This was wholly unnecessary as defendant's claim was not
factually complicated, nor did plaintiff encounter any obstacles
in conducting its investigation such that further inquiries were
required (see Raner v Security Mut. Ins. Co., 102 AD3d 485, 486
[2013]; Hunter Roberts Constr. Group v Arch Ins. Co., 75 AD3d at
410). Even after receiving the attorney's summary, which
ostensibly equipped it with sufficient facts to issue a written
disclaimer, plaintiff instead sent defendant a reservation of
rights letter, which does not serve as "a substitute for the
required notice of disclaimer" (Allcity Ins. Co. v Pioneer Ins.
Co., 194 AD2d 424, 424 [1993]; see Hartford Ins. Co. v County of
Nassau, 46 NY2d 1028, 1029-1030 [1979]). Under these
circumstances, we find that Ciuffo established his entitlement to
summary judgment by demonstrating that plaintiff failed to notify
defendant of its disclaimer "'as soon as is reasonably possible'"
(Okumus v National Specialty Ins. Co., 112 AD3d 797, 798 [2013],
quoting Insurance Law § 3420 [d] [2]). We further find that
plaintiff failed to raise a triable issue of fact regarding
whether the delay in disclaiming coverage was justified by the
need for further investigation and, thus, was not unreasonable as
a matter of law (see First Fin. Ins. Co. v Jetco Contr. Corp., 1
NY3d at 70; Okumus v National Specialty Ins. Co., 112 AD3d at
798; Scott McLaughlin Truck & Equip. Sales, Inc. v Selective Ins.
Co. of Am., 68 AD3d at 1620-1621; Schulman v Indian Harbor Ins.
Co., 40 AD3d 957, 958-959 [2007]; Squires v Marini Bldrs., 293
AD2d at 810).

     McCarthy, J.P., Rose, Egan Jr. and Clark, JJ., concur.


     ORDERED that the order is affirmed, with costs.




                             ENTER:




                             Robert D. Mayberger
                             Clerk of the Court
