Continental Casualty Company v. McPartlon

Filing 18

MEMORANDUM-DECISION and ORDER - That CCC's cross motion for summary judgment (Dkt. No. 10) is GRANTED and therefore CCC owes no defense or indemnity coverage to McPartlon in the underlying state court lawsuit filed by Rashiek Haynes. That McPartlon's motion to dismiss (Dkt. No. 8) is DENIED AS MOOT. That the Clerk close this case. Signed by Senior Judge Gary L. Sharpe on 9/26/2017. (jel, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
________________________________
J. PETER MCPARTLON,
Plaintiff,

1:15-cv-299
(GLS/CFH)

v.
CONTINENTAL CASUALTY
COMPANY,
Defendant.
________________________________
CONTINENTAL CASUALTY
COMPANY,

1:15-cv-1520
(GLS/CFH)

Plaintiff,
v.
J. PETER MCPARTLON,
Defendant.
________________________________
APPEARANCES:
FOR J. PETER MCPARTLON:
Burke, Scolamiero Law Firm
7 Washington Square
Albany, NY 12212
FOR CONTINENTAL CASUALTY
COMPANY:
Elenius Frost & Walsh
120 White Plains Road, Suite 220
Tarrytown, NY 10591

OF COUNSEL:

THOMAS J. MORTATI, ESQ.

WILLIAM P. LALOR, ESQ.

Gary L. Sharpe
Senior District Judge
MEMORANDUM-DECISION AND ORDER
I. Introduction
Plaintiff/insured J. Peter McPartlon commenced this diversity action,
which arises out of an alleged breach of an insurance contract, against
defendant/insurer Continental Casualty Company (CCC) for damages and
a declaratory judgment ordering CCC to indemnify and defend him against
claims in an underlying state court personal injury lawsuit. (See generally
Am. Compl., Dkt. No. 5.1) McPartlon also alleges that CCC acted in bad
faith. (Id. at 10.) Thereafter, CCC commenced a related action seeking a
declaration that it has no duty to indemnify or defend McPartlon in a
separate but related underlying state court personal injury lawsuit. (See
generally Compl., Dkt. No. 1, 1:15-cv-1520.) Pending are CCC’s motion
for summary judgment and cross motion for summary judgment in both
actions as well as McPartlon’s cross motion for summary judgment and
motion to dismiss. (Dkt. Nos. 23, 28; Dkt. Nos. 8, 10, 1:15-cv-1520.) For
the reasons that follow, CCC’s motions are granted, McPartlon’s motion to

1

Unless otherwise noted, all citations are to documents filed in 1:15-cv-299.

dismiss is denied as moot, and his cross motion for summary judgment is
denied.2
II. Background3
McPartlon has owned numerous rental properties in the City of
Albany and the greater Capital District area, including 72 Park Avenue,
Albany, New York, which is the property at issue. (Def.’s Statement of
Material Facts (SMF) ¶ 1, Dkt. No. 23, Attach. 2.) McPartlon operated his
rental property business under various business organizations, including
Parkland Management, Parkland Rentals, Parkland Development
Corporation, and Kingsway Arms. (Def.’s SMF, Dkt. No. 10, Attach. 2
¶¶ 8-9, 1:15-cv-1520.4) By approximately 2005, McPartlon had delegated
the day-to-day business operations to his son, Michael McPartlon, and he
consented to be bound by his son’s deposition testimony in the actions
before this court. (Def.’s SMF ¶ 1 n.1.) CCC issued insurance policies to

2

CCC’s complaint includes a request for attorney’s fees. (Dkt. No. 1 at 11, 1:15-cv-1520).
The court does not reach that issue here, as such a request must be made by motion in
accordance with Rule 54 of the Federal Rules of Civil Procedure.
3

The court recognizes the different standards of review under the Federal Rules of Civil
Procedure for a Rule 12 motion to dismiss and a Rule 56 motion for summary judgment. At
this juncture, the case can be adjudicated on the Rule 56 standard and, thus, the facts
presented are undisputed unless otherwise noted.
4

Technically, CCC is the plaintiff in 1:15-cv-1520. However, for uniformity and to avoid
confusion, the court refers to each of CCC’s statements of material facts as “Def.’s.”

3

McPartlon on his rental properties that were in effect between 1992 and
1996. (Id. ¶ 19; Dkt. No. 23, Attach. 9 at 3-7.)
As indicated by CCC’s issued insurance policies, the insured, here
McPartlon, had a duty to notify CCC in the event of an “occurrence” or
“suit” against him “as soon as practicable.” (Dkt. No. 23, Attach. 9 at 7-8.)
Under the policy, an “occurrence” is defined as “an accident, including
continuous or repeated exposure to substantially the same general harmful
conditions.” (Dkt. No. 10, Attach. 10 ¶ 11, 1:15-cv-1520.) The policy
defines “suit” as “a civil proceeding in which damage because of ‘bodily
injury’ . . . to which this insurance applies are [sic] alleged.” (Id.)
Additionally, “bodily injury” is defined in the policy as “injury, sickness or
disease sustained by a person, including death resulting from any of these
at any time.” (Id.)
Following a 1993 environmental investigation at 72 Park Avenue,
Albany, New York, the Albany County Department of Health (DOH) notified
Donna Witko of Parkland Management that “an elevated blood lead level
has been verified in a child.”5 (Def.’s SMF ¶ 9; Dkt. No. 23, Attach. 12 at

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Witko “sort of managed [McPartlon’s rental] properties at that time,” including dealing with
tenants, collecting rent, and being the point of contact for building maintenance issues. (Dkt.
No. 23, Attach. 5 at 24, 29.)

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2.6) The affected child was Rashiek Haynes, who is the plaintiff in one of
the underlying state court lawsuits. (Def.’s SMF ¶ 2, 1:15-cv-1520; Dkt.
No. 10, Attach. 13 at 4-30, 1:15-cv-1520.) Rashiek Haynes is a sibling of
Nakira Haynes, the plaintiff in the other underlying state court lawsuit.
(Def.’s SMF ¶ 10; Dkt. No. 23, Attach. 7 at 2-46.) McPartlon did not
disclose the results of this investigation to CCC until approximately August
2015.7 (Def.’s SMF ¶ 11; Def.’s SMF ¶ 12, 1:15-cv-1520.)
On or about July 24, 2013, McPartlon was served in the underlying
state court lawsuit commenced by Nakira Haynes. (Def.’s SMF ¶ 3.)
Among other things, Nakira Haynes alleged that McPartlon was negligent
in failing to abate lead paint hazards, which caused her injuries. (Dkt. No.
23, Attach. 7 ¶¶ 56-73.) McPartlon did not notify CCC about the underlying
lawsuit until June 17, 2014 by letter from his corporate counsel addressed
to “CNA Insurance.” (Def.’s SMF ¶ 5.) As a result of McPartlon’s untimely
notice, CCC denied coverage as to Nakira Haynes’ underlying state court
lawsuit. (Id. ¶ 7.)
6

This notification letter, (Dkt. No. 23, Attach. 12 at 2), is hereinafter referred to as the 1994
DOH Report.
7

McPartlon received the 1994 DOH report in discovery in Nakira Haynes’ state court action by
letter dated September 20, 2013, but failed to notify CCC about the 1994 DOH report until
approximately August 2015. (Def.’s SMF ¶ 11; Def.’s SMF ¶ 12, 1:15-cv-1520.)

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After service of Nakira Haynes’ lawsuit, McPartlon’s son, Michael,
realized that he had not kept the pertinent insurance policies. (Id. ¶ 15.) In
order to identify his then-unknown insurance carrier, Michael testified that a
“week or two” after being served: (1) he searched McPartlon’s property for
boxes labeled “do not destroy,” which would likely contain the oldest
corporate documents; (2) he contacted a former business colleague and
Witko; (3) he telephoned three out of five of his insurance brokers; and (4)
McPartlon searched his personal records. (Id.) All attempts were
unsuccessful. (Id.) Ultimately, by June 2014, Michael remembered that
another family business had insurance through CNA, an affiliate of CCC,
and this prompted his letter tendering a claim to CCC about the underlying
Nakira Haynes state court lawsuit. (Id. ¶ 17.)
Rashiek Haynes filed suit against McPartlon in December 2014 for
personal injuries related to lead exposure. (Dkt. No. 10, Attach. 13 at 4-30,
1:15-cv-1520.) After McPartlon tendered notice of the claim to CCC in
January 2015, CCC has defended McPartlon in that suit. (Id. at 2-3; Dkt.
No. 10, Attach. 15 at 2-3, 1:15-cv-1520; Def.’s SMF ¶ 3, 1:15-cv-1520.)
Spurred by its receipt of the 1994 DOH report in or around August 2015,
CCC seeks a declaration in this action that it has no duty to indemnify or
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defend McPartlon in Rashiek Haynes’ lawsuit. (Compl. ¶ 29, 1:15-cv-1520;
Def.’s SMF ¶ 12, 1:15-cv-1520.)
III. Standard of Review 8
The standard of review pursuant to Fed. R. Civ. P. 56 is well
established and will not be repeated here. For a full discussion of the
standard, the court refers the parties to its decision in Wagner v. Swarts,
827 F. Supp. 2d 85, 92 (N.D.N.Y. 2011), aff’d sub nom. Wagner v.
Sprague, 489 F. App’x 500 (2d Cir. 2012).
IV. Discussion
A.

Timeliness of Notice
1.

Nakira Haynes’ Underlying State Court Lawsuit

CCC argues that it does not have a duty to defend or indemnify
McPartlon in the underlying state court lawsuit brought by Nakira Haynes
because he failed to provide timely notice of the 1994 DOH report, which is
an “occurrence” under the policy. (Dkt. No. 23, Attach. 1 at 5, 7-8.) CCC
also argues that McPartlon failed to provide timely notice of Nakira Haynes’
lawsuit itself. (Id. at 5-6, 9-15.) Specifically, CCC contends that
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As noted above, the court appreciates the difference between the standards of review for a
motion to dismiss and a summary judgment motion. Because the parties have fully briefed
their arguments based on the summary judgment standard, the court denies McPartlon’s
motion to dismiss, (Dkt. No. 8, 1:15-cv-1520), as moot.

7

McPartlon’s failure to provide notice of the 1994 DOH report for
approximately twenty years or of Nakira Haynes’ lawsuit for almost eleven
months bars his insurance coverage as to that suit. (Id. at 5-15.)
Additionally, CCC asserts that McPartlon has failed to satisfy his burden
that his untimely notice was justified or excused. (Id. at 10-15.)
In response, McPartlon argues that CCC has a broad duty to defend
unless there is no factual or legal basis for indemnity. (Dkt. No. 28, Attach.
23 at 6-10.) McPartlon also maintains that the 1994 DOH report is not an
“occurrence” that triggers a notice requirement. (Id. at 10-13; Dkt. No. 12
at 5-7, 1:15-cv-1520.) Further, McPartlon asserts that his delayed notice
was excusable because, among other things: (1) he did not know who his
insurance carrier was; (2) he did not own the property for approximately
twenty years before the underlying state court lawsuit; (3) his insurance
agent passed away; and (4) the insurance agency closed. (Dkt. No. 28,
Attach. 23 at 3-4, 15.) In any event, McPartlon contends that CCC was not
prejudiced by his late notice. (Id. at 7-9.)
An insurance contract stating that the insured must notify the insurer
of an occurrence or claim “as soon as practicable” requires that notice be
provided within a reasonable time under the circumstances. See Travelers
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Ins. Co. v. Volmar Constr. Co., 300 A.D.2d 40, 42 (1st Dep’t 2002). Failure
to give timely notice vitiates the contract as a matter of law. See Argo
Corp. v. Greater N.Y. Mut. Ins. Co., 4 N.Y.3d 332, 339 (2005).9 An insured
has a duty to give notice when he or she “could glean a reasonable
possibility of the policy’s involvement” based on “the information available
relative to the accident.” Paramount Ins. Co. v. Rosedale Gardens, Inc.,
293 A.D.2d 235, 239-40 (1st Dep’t 2002). Although a delay may be
excused in some circumstances, the insured bears the burden of proof.
See Sec. Mut. Ins. Co. v. Acker-Fitzsimons Corp., 31 N.Y.2d 436, 441
(1972); Olin Corp. v. Ins. Co. of N.A., 966 F.2d 718, 724 (2d Cir. 1992).
Generally, the reasonableness of an excuse is a jury question, but a court

9

Contrary to McPartlon’s argument, the policies relevant to this case, which were in effect
between 1992 and 1996, do not require CCC to show it was prejudiced by McPartlon’s
untimely notice before it can deny coverage. (Dkt. No. 28, Attach. 23 at 7-9.) Under New York
common law, an insurer does not need to show that it is prejudiced by the insured’s untimely
notice. See Argo Corp. v. Greater N.Y. Mut. Ins. Co., 4 N.Y.3d 332, 339 (2005). In 2008, New
York amended its insurance law statute to alter the state’s common law rule and now reads
that the “failure to give any notice required to be given by [an insurance] policy within the time
prescribed therein shall not invalidate any claim made by the insured, injured person or any
other claimant, unless the failure to provide timely notice has prejudiced the insurer.” N.Y. Ins.
Law § 3420(a)(5). This provision “became effective on January 17, 2009, and it does not
apply retroactively to policies issued before that date.” Indian Harbor Ins. Co. v. City of San
Diego, 972 F. Supp. 2d 634, 648 (S.D.N.Y. 2013). “Thus, the no-prejudice rule governs
policies that were issued prior to January 17, 2009 . . . while Section 3420(a)(5) governs
policies ‘issued or delivered’ in New York on or after January 17, 2009 and requires an
insurance carrier to show prejudice before a claim can be barred for late notice.” Id.
Accordingly, Section 3420(a)(5) does not govern the policies at issue here, which were issued
before January 17, 2009. CCC thus does not need to demonstrate that McPartlon’s untimely
notice was prejudicial.

9

may decide the question as a matter of law where “either no excuse is
advanced or a proffered excuse is meritless.” Olin Corp., 966 F.2d at 724.
McPartlon essentially argues that the 1994 DOH report did not
specifically identify information that would put him on notice of a potential
claim. (Dkt. No. 28, Attach. 23 at 10-13.) In support, McPartlon cites
readily distinguishable authority. (Id.) For instance, he relies on cases that
hold that generalized notice of a code violation does not trigger an
insured’s duty to notify an insurer. See, e.g., Chama Holding Corp. v.
Generali-U.S. Branch, 22 A.D.3d 443 (2d Dep’t 2005); Scharf v. GeneraliU.S. Branch, 259 A.D.2d 349 (1st Dep’t 1999). However, that is not the
case here. The 1994 DOH report specifically identified a minor with an
elevated blood lead level who resided at the apartment and conditions that
violated Public Health Law. (Dkt. No. 23, Attach. 12 at 2.) Further, the
report required that repairs to remedy the violations be completed within
fourteen days or “legal action w[ould] be initiated by [DOH].” (Id.)
Undoubtedly, the 1994 DOH report allowed McPartlon to “glean a
reasonable possibility of the [insurance] policy’s involvement.” Paramount
Ins. Co., 293 A.D.2d at 239-40.10 Accordingly, the 1994 DOH report was
10

McPartlon contends that he did not receive notice of the 1994 DOH report because it was
addressed to Donna Witko of Parkland Management. (Dkt. No. 23, Attach. 12 at 2). However,
this contention is contradicted by his son’s deposition testimony admitting that Witko “sort of

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an “occurrence” under the policy, which would trigger McPartlon’s notice
requirements to CCC.
Furthermore, McPartlon failed to satisfy his burden to present a
question of fact regarding whether his late notice was justified. First,
McPartlon argues that his delay is excusable because he lacked
documentation of the insurance policies, the insurance agent passed
away, and the insurance agency closed. (Dkt. No. 28, Attach. 23 at 4, 15.)
All of these excuses rest on the premise that an insurer bears the burden
of an insured’s own negligence in maintaining his records and, therefore,
fail as a matter of law. Indeed, it is “the responsibility of the insured, not
the insurance company, to keep track of which carriers have provided it
with liability insurance.” Olin Corp., 966 F.2d at 725; see Eagle Ins. Co. v.
Garcia, 280 A.D.2d 476, 477 (2d Dep’t 2001) (“An insured’s ignorance of
his or her insurance carrier constitutes gross negligence and is not a valid
excuse for the failure to provide the carrier with timely notice.”).
managed the properties at the time,” including dealing with tenants, collecting rent, and being
the point of contact for building maintenance issues. (Dkt. No. 23, Attach. 5 at 24, 29.) And
McPartlon asserted that Parkland Management was “his management company.” (Dkt. No.
12, Attach. 4 ¶ 18, 1:15-cv-1520.) Thus Witko’s knowledge of the 1994 DOH report is imputed
to McPartlon. See Center v. Hampton Affiliates, Inc., 66 N.Y.2d 782, 784 (1985)
(“[K]nowledge acquired by an agent acting within the scope of h[er] agency is imputed to h[er]
principal and the latter is bound by such knowledge although the information is never actually
communicated to [the principal].”). Finally, McPartlon’s other attacks on the 1994 DOH report
are meritless for the reasons set forth by CCC. (Dkt. No. 10 at 16 n.7, 1:15-cv-1520; Dkt. No.
16 at 4-5, 1:15-cv-1520.)

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Furthermore, McPartlon failed to make diligent efforts to identify his
insurance carrier once he received notice of the underlying state court
lawsuit. See GJF Const., Inc. v. Sirius Am. Ins. Co., 89 A.D.3d 622, 625
(1st Dep’t 2011) (holding insured did not proffer justifiable excuse for late
notice of suit when it failed to make “reasonably diligent efforts to ascertain
whether coverage existed . . . in order to promptly notify [insurer]”). CCC
first learned of Nakira Haynes’ state court lawsuit on June 17, 2014, when
McPartlon sent a letter from his corporate counsel to “CNA Insurance.”
(Def.’s SMF ¶¶ 5-6.) This was almost one year since McPartlon had been
served in that underlying state court action on July 24, 2013. (Id. ¶ 3.) At
no point before his tender letter did McPartlon consult counsel or an
insurance broker.11 (Id. ¶¶ 15-18.) Rather, Michael, McPartlon’s son who
ran the day-to-day business operations, realized sometime after his search
for the missing policies that CNA had issued insurance policies to another
family business, which prompted his tendered claim to CCC. (Id. ¶ 17.)
Because service in a lawsuit “would have prompted any person of ordinary

11

McPartlon’s son “contacted” his corporate attorney, (Dkt. No. 28, Attach. 24 ¶ 16), but, given
the overall lack of diligence—including the failure to contact any of the various attorneys who
had been retained closer in time to 1996—any consultation with counsel was perfunctory,
(Def.’s SMF ¶¶ 15-18). Moreover, although McPartlon’s son telephoned three out of five
former insurance brokers, he did not write any of them and seemingly failed to communicate
with them in any meaningful way. (Id. ¶¶ 15, 18.)

12

prudence to consult either an attorney or an insurance broker,” McPartlon
failed to raise a question of fact that he made reasonably diligent efforts to
ascertain whether coverage existed. Winstead v. Uniondale Union Free
Sch. Dist., 201 A.D.2d 721, 723 (2d Dep’t 1994).
For these reasons, McPartlon’s proffered excuses for his delayed
notice fail as a matter of law.12
2.

Rashiek Haynes’ Underlying State Court Lawsuit

As with Nakira Haynes’ lawsuit, CCC contends that it does not have
a duty to defend or indemnify McPartlon in the underlying state court
lawsuit brought by Rashiek Haynes because McPartlon failed to provide
timely notice of the 1994 DOH report, which is an “occurrence” under the
policy. (Dkt. No. 10 at 10-13, 16-17, 1:15-cv-1520.) The same reasoning
articulated above applies to Rashiek Haynes’ lawsuit, and accordingly CCC
has no duty to defend or indemnify McPartlon as to that action.
B.

Bad Faith
McPartlon claims that CCC acted in bad faith in denying coverage as

to the underlying state court lawsuit brought by Nakira Haynes. (Am.
Compl., ¶ 36.) CCC argues that McPartlon’s bad faith claim fails as a
12

Even if the court were to hold that McPartlon raises a question of fact as to whether his
delayed notice of the suit was justified, it would be of no moment because McPartlon has failed
to do so regarding his delayed notice of the “occurrence.”

13

matter of law because there is no cognizable claim for the denial of
insurance in New York where an insurer has an arguable basis to disclaim
coverage. (Dkt. No. 23, Attach. 1 at 15-16 (citing Nouveau Elevator Indus.,
Inc. v. Cont’l Cas. Ins. Co., No. 05-CV-0813, 2006 WL 1720429, at *8
(E.D.N.Y. June 21, 2006)).) In response, McPartlon cites no evidence that
CCC lacked an arguable basis to disclaim coverage or otherwise acted in
bad faith. (Dkt. No. 28, Attach. 23 at 15-16.)
As evidenced above, the court concurs that CCC had a basis to deny
coverage regarding Nakira Haynes’ underlying lawsuit because McPartlon
failed to provide timely notice of the suit. CCC also had a basis to deny
coverage based on McPartlon’s failure to provide timely notice of an
“occurrence.” Thus, CCC is entitled to summary judgment on McPartlon’s
bad faith claim.
V. Conclusion
WHEREFORE, for the foregoing reasons, it is hereby
ORDERED that CCC’s motion for summary judgment (Dkt. No. 23,
1:15-cv-299) is GRANTED; and it is further
ORDERED that McPartlon’s cross motion for summary judgment
(Dkt. No. 28, 1:15-cv-299) is DENIED; and it is further
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ORDERED that McPartlon’s amended complaint (Dkt. No. 5, 1:15-cv299) is DISMISSED; and it is further
ORDERED that CCC’s cross motion for summary judgment (Dkt. No.
10, 1:15-cv-1520) is GRANTED and therefore CCC owes no defense or
indemnity coverage to McPartlon in the underlying state court lawsuit filed
by Rashiek Haynes; and it is further
ORDERED that McPartlon’s motion to dismiss (Dkt. No. 8, 1:15-cv1520) is DENIED AS MOOT; and it is further
ORDERED that the Clerk close both cases; and it is further
ORDERED that the Clerk provide a copy of this MemorandumDecision and Order to the parties.
IT IS SO ORDERED.
September 26, 2017
Albany, New York

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