TLSS Attorneys Eric D. Suben and Innessa S. Melamed Obtain Dismissal of Contribution Claim Against Insurer

TLSS Attorneys Eric D. Suben and Innessa S. Melamed successfully obtained dismissal of a contribution action against Arch Specialty Insurance Company based on late notice of the underlying occurrence and suit.  Illinois National sought contribution for an underlying settlement it paid on behalf of its insured, an additional inured under the Arch policy.

TLSS moved to dismiss the action on the grounds that the contribution action constituted Arch’s first notice of the underlying occurrence and suit and was not received until two and a half years after the underlying incident.  Under New York law as applicable to the Arch policy, such late notice is an absolute defense to coverage.  Moreover, as a defending insurer in the underlying personal injury lawsuit, Illinois National had the means at its disposal to obtain other insurance information at any time it chose.  In opposition, Illinois National argued that it was not aware of the Arch policy until shortly before giving notice of the underlying occurrence and suit.   Although Illinois National submitted affidavits from its claims professional and appointed defense counsel stating that they were not “made aware of” the Arch policy until shortly before giving notice, TLSS attorneys replied that the affidavits were insufficient to defeat the motion, as they did not set forth any affirmative steps taken by Illinois National to identify other insurance.

The court granted TLSS’s motion in full, dismissing the complaint because late notice of suit and occurrence vitiates coverage under the Arch policy.  The Court reasoned that passively waiting to be “made aware of” the Arch policy did not discharge Illinois National’s obligation of due diligence and did not constitute a reasonable excuse for late notice.

Illinois National Ins. Co. v. Arch Specialty Ins. Co., Index No. 109278/2011, Supreme Court of the State of New York, County of New York.