Lewis Brisbois Obtains Declaratory Judgment in Failure to Cooperate Case

Lewis Brisbois recently won a declaratory judgment action for an insurer client in a coverage action the insurer brought against its insured. The matter arose out of the failure by the insured to cooperate in the defense of the insured in an underlying lawsuit brought against the insured arising out of an automobile accident. The declaratory judgment action was brought in Kings County Supreme Court.

The underlying action against the insured alleged that the insured caused severe bodily injury to the underlying plaintiff in the course of an automobile accident. The insurer retained defense counsel to defend its insured in the lawsuit. However, the insured would not cooperate with the defense of the matter and refused to appear for a deposition ordered by the court. The insurer made numerous attempts to obtain the cooperation of the insured, including retaining an investigator to serve the insured with a court order requiring the insured to appear for a deposition at the risk of preclusion. After the insured failed to attend the deposition, the insurer denied coverage and filed a declaratory judgment action against the insured for an order stating that the insurer did not have a duty to defend or indemnify the insured due to the insured’s lack of cooperation.

Our client’s motion in support of the declaratory judgment action was opposed by the underlying plaintiff, who filed a cross-motion for summary judgment against the insurer. The underlying plaintiff argued that, although the insurer met its heavy burden of proving that the insurer did not have the duty to defend or indemnify its insured due to the failure to cooperate, the disclaimer was untimely under New York State’s strict late disclaimer statute, Insurance Law 3420(d)(2). However, the court granted the insurer’s declaratory judgement and denied the underlying plaintiff’s motion for summary judgment, agreeing with our position that the disclaimer was timely based upon the insured’s sporadic indications that he would cooperate. Our client’s motion for a declaratory judgment that it did not have a duty to defend or indemnify the insured was granted by the court and the underlying plaintiff’s cross-motion for summary judgment against our client was denied.