Below you'll find some excerpts from the article. I've moved some of the paragraphs around because it makes more sense to me this way. If you want to read the article in its entirety and in the right order, please click on the link above or pick up the Law Journal on Monday.
This amendment, in part, overturns the standing impediment to such
declaratory relief established by the Court of Appeals in 2004 in Lang v. Hanover Insurance Co.The change is significant because disclaimers for lack of notice are
common under liability insurance policies. Sometimes they result from
the insured mistakenly assuming no claim will be forthcoming, or
perhaps because the insured is reluctant to communicate information
that could result in increased premiums. In either event, the insured
is courting disaster, because a failure to give the insurer notice "as
soon as practicable" of an "occurrence" that might result in liability,
is a common "condition" of coverage. The consequences of noncompliance
are severe, for both the personal injury plaintiff and the defendant.To some extent the Lang holding is paradoxical, because the
standing requirement has been recognized to prevent courts from
transgressing upon the legislative or executive realms, or rendering
advisory opinions. Such defects in the "case and
controversy," requirement of CPLR 3001 destroy subject matter
jurisdiction. But if the insurer has disclaimed, and the defendant is
not sufficiently wealthy to pay the entire anticipated judgment, the
highly motivated tort plaintiff may be the only party in the position
to challenge the validity of the disclaimer. The Lang case
had established that the tort plaintiff has no standing to do so, but
the legislative granting of limited relief from the standing stricture
gives us pause to wonder: Why was CPLR 3001 so limited in the first
place?At its core, the "case and controversy" requirement is constitutional
in nature, because it confines the proper exercise of judicial powers.
Perhaps then it may reasonably be argued that cases aggressively
limiting access to the court on grounds of standing may have overshot
the mark, while the amendment to fix the Lang problem
undershoots it. Why not let all tort plaintiffs interested enough in a
contract fight with an institutional adversary have a go at it? What is
to be gained by shutting the courthouse door? There seems to be little
risk of generalized pronouncements that affect nonparties to the
declaratory judgment litigation, as would be the case with true
advisory opinions.The Court of Appeals in Lang noted that the carrier should
weigh the risk of the disclaimer carefully, because of a much higher
possible default liability if the disclaimer is tossed out after the
case proceeds to judgment. This should induce the insurer not to
disclaim unless they are very sure of the right to do so, but will not
address the problem of a fairly debatable disclaimer. If
there is a good reason to restrict a broader right to declaratory
relief, it does not seem to depend on the particular ground for the
disclaimer, or the assumptions by the insurer alone as to how sound
their disclaimer is.
Mr. Gleason briefly takes the reader through the legislative history of the the amendment:
As with most things legislative, this expansion of declaratory relief
under CPLR 3001 is a compromise, and the compromise bears directly on
that formerly harsh rule. In return for the partial removal of the
standing limitation recognized in Lang, the Legislature has tempered the previously clear right for a liability insurer to refuse coverage for lack of timely notice. Starting in January, the insurance company must support the disclaimer by proof that the delay was prejudicial.8
8.
L 2008, ch 388 §4. The insurer will have the burden to prove prejudice
if the notice was provided within two years of when required under the
policy. After two years, the burden shifts to the insured, and
prejudice is conclusively presumed after a liability determination or
settlement.
I took most of the footnotes out.
bruteforcelawyer.com 