Appel v. Allstate Ins. Co

In Appel v. Allstate Ins. Co. (20 AD3d 367 [1st Dept 2005]) plaintiff obtained a default judgment against by Allstate's insureds, who only notified Allstate after the default judgment was entered against them on April 24, 2001. Thereafter, Allstate disclaimed coverage to its insureds and "anyone else seeking coverage under" the policy based on the insureds' failure to give prompt notice. Just over a week later, on May 29, 2002, plaintiff's attorney served a copy of the default judgment on Allstate, and then commenced this action to collect on such judgment pursuant to Insurance Law 3420(b). Allstate sought summary judgment dismissing the complaint on the ground that since it had previously obtained a default judgment against its insureds declaring that it had no duty to defend or indemnify them due to their failure to give timely notice of plaintiff's claim, it likewise had no duty to indemnify plaintiff. The IAS court held that because Allstate is not liable to its insureds, it cannot be liable to plaintiff; that its disclaimer letter did not have to be addressed to plaintiff or explicitly name her, and was otherwise sufficient; and that it did not have to disclaim specifically based upon plaintiff's own failure to timely notify it since notice, albeit untimely, had already been given to it by its insureds. The First Department reversed. In Appel v. Allstate Ins. Co., the injured party commenced a lawsuit three months after the accident, obtained a default judgment after a judicial inquest and entered judgment ten months later; she did not learn the identity of the insurer that disclaimed based on the insured's failure to give prompt notice until nearly two years later (id. at 368). Counsel sent a copy of the default judgment to the insurer a week after learning of the disclaimer, and approximately two years after the accident. The Appellate Division held that the plaintiff had preserved her statutory right to proceed directly under Insurance Law Section 3420(b) as a matter of law. Where the insurer does not dispute receiving notice (albeit untimely) from its insured, "the only issue with respect to the injured party is whether the efforts of the injured party to facilitate the providing of proper notice were sufficient in light of the opportunities to do so afforded it under the circumstances" (Id. at 369 ).