State of N.Y. v. AMRO Realty Corp.

Issue Discussed: Waiver of Defenses

Submitted by Aluyah I. Imoisili, Claire-Lise Y. Kutlay*

Date Promulgated: June 25, 1991

State of N.Y. v. AMRO Realty Corp., 936 F.2d 1420 (2d Cir. 1991)

Court: United States Court of Appeals, Second Circuit

Issues Decided: Whether an insurer waives its right to assert a defense to coverage by failure to assert it in its disclaimer letter.

Key Holding

The State New York sued an alleged polluter’s corporate officers for violations of the Comprehensive Environmental Response, Compensation and Liability Act in connection with a discharge of hazardous waste at the alleged polluter’s site.  After the officers were denied coverage, in part based on an “untimely notice” defense, they filed third-party claims against the insurers.  The trial court granted summary judgment in favor of one insurer on the basis that the insurer had not waived its right to assert a late notice defense.

The Second Circuit reversed.  The Second Circuit held that, as a matter of law, the insurer waived the late notice defense because it disclaimed coverage on several enumerated grounds, without expressly asserting the late notice defense although it was apparent at the time of issuance of the disclaimer letter.

Key Takeaways

Under New York law, an insurer waives a defense to coverage by failure to assert it in its disclaimer letter when the circumstances giving rise to the defense are apparent at the time the letter is issued.

* Aluyah I. Imoisili is a Partner and Claire-Lise Y. Kutlay is an Associate at Greenberg Gross LLP, where they specialize in commercial litigation and arbitration.