Key Takeaway
Court applies prejudice rule when default judgment was vacated before insurer raised timely notice defense under Insurance Law § 3420(c)(2)(B).
This article is part of our ongoing timely notice of claim coverage, with 15 published articles analyzing timely notice of claim issues across New York State. Attorney Jason Tenenbaum brings 24+ years of hands-on experience to this analysis, drawing from his work on more than 1,000 appeals, over 100,000 no-fault cases, and recovery of over $100 million for clients throughout Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, and the Bronx. For personalized legal advice about how these principles apply to your specific situation, contact our Long Island office at (516) 750-0595 for a free consultation.
Castillo v Prince Plaza, LLC, 2016 NY Slip Op 06191 (2d Dept. 2016)
Nothing in the world of coverage is more exciting than the application of the prejudice rule regarding the failure to give timely notice of an event or occurrence. So little has been written about it.
(1): The default judgment and irrebutable presumption of prejudice
In this case, a default judgment was obtained prior to notice being given. As such: ” Insurance Law § 3420(c)(2)(B) provides, in pertinent part, that “an irrebuttable presumption of prejudice shall apply if, prior to notice, the insured’s liability has been determined by a court of competent jurisdiction or by binding arbitration; or if the insured has resolved the claim or suit by settlement or other compromise.”
Having found coverage after entry of the default, Plaintiff vacated the default and allowed an answer to be interposed. Defendant still argued that the irrebutable presumotion of prejudice should apply. The Court said no (which is interesting) and held as follows:
“Here, contrary to Century’s contention, based on the plain language of Insurance Law § 3420(c)(2)(B), an irrebuttable presumption of prejudice did not apply in this case. Although a default judgment was previously entered in the main action against Prince Plaza, the default judgment was vacated more than a year before Century raised Insurance Law § 3420(c)(2)(B) as a ground upon which it was not obligated to defend and indemnify Prince Plaza. Thus, the Supreme Court correctly determined that Prince Plaza’s liability had not actually been “determined” by a “court of competent jurisdiction or by binding arbitration” (Insurance Law § 3420; cf. Matter of Sportsfield Specialities, Inc. v Twin City Fire Ins. Co., 45 Misc 3d 1201, 2012 NY Slip Op 52509 ). The plain intent and purpose of Insurance Law § 3420(c)(2)(B), which is to prevent insurers which have continuously collected premiums to disclaim coverage based upon an inconsequential technicality, would be defeated if Century were allowed to disclaim coverage under the circumstances herein (see Insurance Law § 3420, New York Bill Jacket, 2008 SB 8610, ch 388).”
(2) Timely Notice
However, Prince Plaza was unaware of the accident because it was not present at the site and it was not informed of the accident by its general contractor or the injured plaintiff. The summons and complaint in the main action were served on Prince Plaza through the Secretary of State on or about August 26, 2011, but because Prince Plaza had failed to notify the Secretary of State of its new address, it did not receive a copy of the summons and complaint and did not initially appear in the main action. Thus, in the January order, the Supreme Court granted the plaintiffs’ motion for leave to enter a default judgment against Prince Plaza, which later received a copy of the January order on February 24, 2012. Upon receipt of the January order, Prince Plaza promptly notified Century of the accident and lawsuit, and this notice was received by Century on March 2, 2012.
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Legal Context
Why This Matters for Your Case
New York law is among the most complex and nuanced in the country, with distinct procedural rules, substantive doctrines, and court systems that differ significantly from other jurisdictions. The Civil Practice Law and Rules (CPLR) governs every stage of civil litigation, from service of process through trial and appeal. The Appellate Division, Appellate Term, and Court of Appeals create a rich and ever-evolving body of case law that practitioners must follow.
Attorney Jason Tenenbaum has practiced across these areas for over 24 years, writing more than 1,000 appellate briefs and publishing over 2,353 legal articles that attorneys and clients rely on for guidance. The analysis in this article reflects real courtroom experience — from motion practice in Civil Court and Supreme Court to oral arguments before the Appellate Division — and a deep understanding of how New York courts actually apply the law in practice.
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Jan 6, 2014Common Questions
Frequently Asked Questions
What are the notice of claim requirements in New York?
For claims against municipalities, General Municipal Law §50-e requires a notice of claim within 90 days of the incident. For insurance claims, timely notice to the insurer is a condition precedent to coverage. Late notice can result in denial of benefits or dismissal of the claim, though courts may grant extensions in limited circumstances.
Can a late notice of claim be excused?
Under GML §50-e(5), courts have discretion to grant leave to serve a late notice of claim. Factors include whether the claimant was an infant or incapacitated, whether the municipality had actual knowledge of the claim, and whether the delay caused prejudice. For insurance claims, late notice is harder to excuse and typically requires demonstrating reasonable justification.
What happens if I fail to give timely notice to my insurer?
Failure to provide timely notice to your insurer can result in denial of your claim. In no-fault cases, the 30-day deadline for the NF-2 application is strictly enforced. For other insurance claims, the policy typically requires notice "as soon as practicable." Late notice gives the insurer a strong defense unless you can demonstrate a valid excuse.
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About the Author
Jason Tenenbaum, Esq.
Jason Tenenbaum is the founding attorney of the Law Office of Jason Tenenbaum, P.C., headquartered at 326 Walt Whitman Road, Suite C, Huntington Station, New York 11746. With over 24 years of experience since founding the firm in 2002, Jason has written more than 1,000 appeals, handled over 100,000 no-fault insurance cases, and recovered over $100 million for clients across Long Island, Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, the Bronx, and Staten Island. He is one of the few attorneys in the state who both writes his own appellate briefs and tries his own cases.
Jason is admitted to practice in New York, New Jersey, Florida, Texas, Georgia, and Michigan state courts, as well as multiple federal courts. His 2,353+ published legal articles analyzing New York case law, procedural developments, and litigation strategy make him one of the most prolific legal commentators in the state. He earned his Juris Doctor from Syracuse University College of Law.
Disclaimer: This article is published by the Law Office of Jason Tenenbaum, P.C. for informational and educational purposes only. It does not constitute legal advice, and no attorney-client relationship is formed by reading this content. The legal principles discussed may not apply to your specific situation, and the law may have changed since this article was last updated.
New York law varies by jurisdiction — court decisions in one Appellate Division department may not be followed in another, and local court rules in Nassau County Supreme Court differ from those in Suffolk County Supreme Court, Kings County Civil Court, or Queens County Supreme Court. The Appellate Division, Second Department (which covers Long Island, Brooklyn, Queens, and Staten Island) and the Appellate Term (which hears appeals from lower courts) each have distinct procedural requirements and precedents that affect litigation strategy.
If you need legal help with a timely notice of claim matter, contact our office at (516) 750-0595 for a free consultation. We serve clients throughout Long Island (Huntington, Babylon, Islip, Brookhaven, Smithtown, Riverhead, Southampton, East Hampton), Nassau County (Hempstead, Garden City, Mineola, Great Neck, Manhasset, Freeport, Long Beach, Rockville Centre, Valley Stream, Westbury, Hicksville, Massapequa), Suffolk County (Hauppauge, Deer Park, Bay Shore, Central Islip, Patchogue, Brentwood), Queens, Brooklyn, Manhattan, the Bronx, Staten Island, and Westchester County. Prior results do not guarantee a similar outcome.
