GJF Construction, Inc. v. Sirius America Insurance , 934 N.Y.2d 697 ( 2011 )

Manzanet-Daniels and Román, JJ.,

concur in a separate memorandum by Román, J., as follows: In this declaratory judgment action we find that where the insurance policy requires that the insurer be given notice of any additional insureds which its policy is intended to cover, the failure to provide such notice precludes coverage as to any such additional insured.

The insurance policy contains an endorsement amending the policy to include, as insureds, persons or organizations “as on file with company.” While a written request was made to add 101 Park Avenue Associates to the policy, the record fails to indicate that such a request was made with regard to GJF Construction. Contrary to plaintiffs’ contention, the act of requesting that an additional insured be named under the policy was not a purely ministerial act whose failure should be excused, because while not the only act required by the policy to have the person or organization named as an additional insured under the policy, it was a critical and material act which would have given defendant the option to deny coverage. Accordingly, while it is true that “[w]hen a substantial performance is shown the party claiming the benefit of the contract should not be defeated for the want of a literal compliance as to some unimportant detail” (Porter v Traders’ Ins. Co. of Chicago, 164 NY 504, 509 [1900]; see also Jacob & Youngs, Inc. v Kent, 230 NY 239, 241 [1921]), here the failure to provide defendant with notice that GJF was an additional insured deprived defendant from exercising its right to deny coverage under the policy (Blumberg v Paul Revere Life Ins. Co., 177 Misc 2d 680, 682 [1998] [“The general rule is that an insurance application constitutes nothing more than an offer to the insurer, which it may accept or reject after determining whether an applicant is a desirable risk”]), such that the failure to fully comply with the policy cannot be deemed unimportant (cf. Anderson Clayton & Co. v Alanthus Corp., 91 AD2d 985 [1983] [plaintiff not excused from contractual obligations when defendant had substantially performed and its breach was trivial in nature]).

The trial court erroneously treated the letter sent by defense counsel to plaintiffs’ counsel, advising that GJF was an additional insured under the policy, as an informal, rather than a formal, judicial admission. A formal judicial admission takes the place of evidence and is conclusive of the facts admitted in an action (People v Brown, 98 NY2d 226, 232 n 2 [2002]). The hallmark of a formal judicial admission is that it “dispenses with the production of evidence by conceding, for the purposes of the litigation, the truth of a fact alleged by the adversary” (id. at 232 n 2 [internal quotation marks omitted]).

Here, on February 26, 2008, in response to plaintiffs’ letter dated January 14, 2008, wherein plaintiffs stated that they “need[ed] either a letter . . . confirming that . . . GJF Construction, Inc. . . . [was an] . . . additional ] insured[ ] . . . under the . . . policy ... or deposition dates for the Sirius underwriter,” defendant sent plaintiff a letter, wherein defendant, clearly in order to avoid producing a witness from its underwriting department, acknowledged that GJF was an additional insured. On June 3, 2008, months after its initial letter and after plaintiffs filed their note of issue and made a motion in reliance on defendant’s representation, defendant contended that its letter acknowledging that GJF was an additional insured was sent in error and retracted its statement by telephone and in writing. Certainly, defendant’s statement had all the trappings of a formal judicial admission, and it was thus bound by it (Brown at 226 n 2; Burdick v Horowitz, 56 AD2d 882, 883 [1977] [statement made by defendant’s counsel during a deposition, to preclude line of questioning, deemed a binding formal judicial admission]).

Contrary to the position taken by our concurring colleagues, while defendant ultimately produced its underwriter, a witness employed by its agent, it did so only after plaintiffs had already relied on defendant’s representation to their detriment and notably only after the close of discovery. Accordingly, on these facts, it is evident that defendant’s representation was designed to preclude the exchange of discovery and the production of defendant’s witness did not make its prior admission any less binding. Moreover, we decline to limit the ambit of what constitutes a formal judicial admission to where within a proceeding, a letter, affirmation or deposition, happens to manifest itself. Guided by Court of Appeals precedent we instead think it more prudent to adhere to the definition promulgated in Brown, aptly applicable here — where plaintiff forewent discovery and relied on defendant’s representation to support its motion for summary judgment — which defines a formal judicial admission as an admission made to avoid having to produce discovery on a fact at issue (Brown at 226 n 2). Notwithstanding the foregoing, defendant’s formal judicial admission acknowledging that GJF was an additional insured under the policy fails to confer coverage to GJF since, as noted above, there was no compliance with a critical contractual provision of the insurance policy and even by formal judicial admission, defendant, an insurer, cannot be compelled to provide coverage where none exists by waiver (Albert J. Schiff Assoc. v Flack, 51 NY2d 692, 698 [1980]; Drew Chem. Corp. v Fidelity & Cas. Co. of N.Y., 60 AD2d 552 [1977], affd 46 NY2d 851 [1979]).

101 Park Avenue Associates failed to demonstrate that it acted reasonably and with due diligence in notifying defendant of the claim. In fact, 101 Park Avenue Associates never directly notified defendant of the claim at all, simply tendering it to GJF, who then tendered the claim to defendant 51 days after 101 Park Avenue Associates was first notified of the incident underlying the claim. While a justifiable lack of knowledge of insurance coverage may excuse a delay in reporting an occurrence, 101 Park Avenue Associates adduced no evidence that it made any effort, let alone reasonably diligent efforts to ascertain whether coverage existed pursuant to the project contract in order to promptly notify defendant (see Winstead v Uniondale Union Free School Dist., 201 AD2d 721, 723 [1994]). As such, 101 Park Avenue Associates’s failure to directly notify defendant and the delay in notification stemming therefrom is inexcusable as a matter of law (id.). Nor can 101 Park Avenue Associates rely on the notice provided to defendant by GJF as a “similarly situated” insured, since, as noted above, GJF is not an insured under the policy (see American Home Assur. Co. v BFC Constr. Corp., 81 AD3d 545 [2011]).