Insurer Might Not Have Waived Late Notice Defense Even Though Not Mentioned in Disclaimer Letter

Estee Lauder Inc. v OneBeacon Ins. Group, LLC
Edited by Lawrence N. Rogak

In a brief decision with a minimum of details, the Court of Appeals holds that an insurance company’s disclaimer which did not cite late notice as a defense, did not automatically waive that defense, because late notice had been cited by the insurer in earlier communications with the insured. As a result, the insurer was permitted to amend its Answer to assert the late notice defense. The significance of this decision is that a defense to coverage might be preserved even if not mentioned in the disclaimer.—LNR

The order of the Appellate Division should be reversed, with costs, the order of Supreme Court reinstated, and the certified question answered in the negative.

Analyzing the circumstances under the common-law waiver standard, which requires an examination of all factors, defendants cannot be said to have waived their right to assert the late-notice defense as a matter of law by failing to specifically identify late notice in their disclaimer letters. Defendants identified the late-notice defense in early communications with plaintiff before relying on a reservation of rights in two disclaimer letters. “Under common-law principles, triable issues of fact exist whether defendants clearly manifested an intent to abandon their late-notice defense” (Keyspan Gas E. Corp. v Munich Reins. Am., Inc., 23 NY3d 583, 591 [2014]). Accordingly, Supreme Court properly granted defendants’ motion for leave to amend their answer to reassert the affirmative defense of late notice.

2016 NY Slip Op 06012
Decided on September 15, 2016
Court of Appeals