Response brought this DJ action seeking a declaration that it did not owe defendants a defense or indemnity in an underlying bodily injury lawsuit.

In the underlying action, the defendant, Lita Vita brought a lawsuit against her husband, the defendant, David Vita, in Supreme Court, Queens County entitled Lita Vita v. David Vita. In that lawsuit, Lita Vita claimed to have sustained personal injuries as the result of a motor vehicle accident which occurred in Johnston, North Carolina on April 13, 2004. She alleged that her injuries were caused by the negligence of David Vita in the operation of the motor vehicle in which she was a passenger. At the time of the accident in North Carolina, David Vita was a named insured under a personal automobile policy issued by Response Insurance Company.

Response argued that because of the auto policy exclusion which negates liability coverage for any person for bodily injury to the spouse of that person, it had no obligation to defend or indemnify David Vita in the underlying action.

Response asserted that its policy contained the following exclusion:

II Part A " Liability Coverage

Part A is amended as follows:

F. The following exclusion is added:

We do not provide Liability Coverage for any person:

For bodily injury to the spouse of that person. However, we will provide Liability Coverage for a spouse if named as a third party defendant in a legal action commenced by his or her spouse against another party.

Response also argued also that, pursuant to New York Insurance Law 3420(g), it had no obligation to defend and or indemnify defendant David Vita in the underlying action. Section 3420(g) provides in relevant part:

No policy or contract shall be deemed to insure against any liability of an insured because of death of or injuries to his or her spouse or because of injury to, or destruction of property of his or her spouse unless express provision relating specifically thereto is included in the policy as provided in paragraphs one and two of this subsection. This exclusion shall apply only where the injured spouse, to be entitled to recover must prove the culpable conduct of the injured spouse.

Response asserted that it advised the defendant David Vita that it would provide a courtesy defense for him for claims made in the underlying action, but made it clear that the defense would be provided subject to a reservation of Responses right to disclaim coverage under the exclusions and conditions of the policy provisions.

Lita Vitas attorneys alleged that a default judgment was entered against David Vita in the underlying action due to Responses negligence in defending that suit. Response countered that the default was the result of David Vitas late notice of the summons to Response.

In its decision, the court began, The court finds that Response Insurance Company is not obligated to defend or indemnify defendant David Vita in the Vita action because of the exclusion clause contained in the Response policy which negates liability coverage for any person for bodily injury to the spouse of that person. Under the Amendment of Policy Provisions " New York section, it clearly states that liability coverage is not provided for bodily injury to the spouse of that person. As Lita Vita was the spouse of David Vita at the time of the accident, this exclusion exempts Response from having to indemnify or defend Defendant David Vita in the Vita action.

Furthermore, pursuant to New York Insurance Law 3420(g), plaintiff has no obligation to defend and or indemnify defendant David Vita in the Vita action. The underlying action, wherein it is claimed that defendant David Vita was negligent on the date of the accident, is subject to Insurance Law 3420(g).

...As such, Response is insulated from having to provide coverage for David Vita in the Vita action based on Section 3420(g).

Moreover, the court finds that because of defendant David Vitas breach of the notice provision contained in the Response policy, it has no obligation to defend and or indemnify defendant David Vita in the Vita action. The notice provision of the Response policy reserved the right to disclaim coverage if there is a failure to provide, inter alia, copies of legal papers pertaining to the accident as soon as is reasonably possible, and such failure is prejudicial to Response. Defendant Vita does not deny that Response did not receive notice of the underlying lawsuit until several months after he acknowledged service of the summons and complaint in the underlying action. The court agrees with Responses contention that the entry of a default judgment against David Vita in the Vita action materially prejudices Response in its ability to investigate and defend against this claim. Therefore, Response has no duty to defend or indemnify David Vita in the Vita action based on the breach of notice condition.

Comment: This is a good decision to keep handy because it emphasises the right of an insurance carrier to provide legal defense to its insured under a reservation of rights while it brings a DJ action.

Response Insurance Company v. Vita, 2007 NY Slip Op 34068(U) (Supreme Court, Queens County) (Judge: Howard G. Lane)