November 4, 2009
Previously published on October 27, 2009
McCabe v. St. Paul Fire and Marine Ins. Co., 884 N.Y.S.2d 634 (2009)
Brief Summary
Attorney failed to notify insurer of malpractice claim and failed to respond to plaintiff’s repeated attempts to obtain insurer information until after the policy notification period had lapsed. The insurer tried to deny coverage based on late notice, but plaintiff had a statutory right to give notice after policy period had lapsed because she diligently sought insurer information and expeditiously gave notice upon receiving such information.
Complete Summary
Plaintiff Amy McCabe retained lawyer David E. Fretz to handle a fire loss claim. After Fretz, who was suffering from mental incapacity, neglected the matter, McCabe brought a legal malpractice claim against Fretz. Fretz failed to timely notify his insurer, St. Paul Fire and Marine Insurance Company (“St. Paul”) of the claim. After many repeated attempts, McCabe obtained Fretz’s insurance information and notified St. Paul of the malpractice claim. St. Paul then denied coverage because it had not been notified within the period set forth in the policy. Although it was clear that the policy’s notification period had lapsed, McCabe argued that, under New York Insurance Law § 3420(a), she was not bound by the policy’s notification period.
The court held for McCabe, requiring St. Paul to indemnify Fretz for his malpractice. The court noted that under § 3420(a), there are circumstances in which injured parties can notify insurers of claims after the policy notification period has lapsed. Section 3420(a) applies to policies covering “injury to a person” and allows notification after the policy period has lapsed if it was not “reasonably possible to give such notice within the prescribed time[.]” Section 3420(a) also calls for notice to be given as soon as reasonably possible once the insurer’s identity is discovered.
St. Paul argued that Fretz’s policy did not cover “injury to a person” because it specifically excluded coverage for “bodily injury.” The court found this argument unconvincing given that the policy expressly did cover “personal injury” and defined that term to not include “bodily injury.” The court held there was no basis, in statutory law or in the policy itself, for differentiating between “personal injury” and “injury to a person.”
The court then addressed the reasonableness of McCabe’s notice by assessing whether she acted diligently in attempting to ascertain the identity of Fretz’s insurer and expeditiously in notifying the insurer after discovering its identity. The court held that as a matter of law, McCabe acted diligently in notifying St. Paul because she sought insurer information from Fretz with multiple phone calls, four letters over a three month period, and a court order; and she notified St. Paul immediately upon finally obtaining this information.
Significance of Opinion
This opinion gives injured parties in New York legal malpractice actions some potential freedom from the strictures of policy notification periods. It is, however, a trial court opinion and not an appellate court decision.
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