AutoOne Ins. Co. v. Hutchinson ----N.Y.S.2d ----, 2010 WL 1078467 N.Y.A.D. 2 Dept., decided by the Appellate Division, Second Department on March 23 2010 in the context of an SUM dispute stands for the often quoted proposition that a hearing is required to determine the propriety of a disclaimer of coverage where the disclaimer is based on lack of cooperation. Here the insured sought SUM benefits from AutoOne Insurance Company after Nationwide disclaimed coverage to the injured party based on lack of cooperation from its insured in investigating the accident. The petitioner, AutoOne Insurance Company, made a prima facie showing that the offending vehicle was insured by Nationwide Mutual Fire Insurance Company through the submission of a police accident report containing the vehicle's insurance code (Matter of Continental Ins. Co. v. Biondo, 50 A.D.3d 1034, 857 N.Y.S.2d 588; Matter of State Farm Mut. Auto. Ins. Co. v. Mazyck, 48 A.D.3d 580, 581, 849 N.Y.S.2d 906;).

In opposition to the petition, Nationwide submitted evidence that it had disclaimed coverage for the offending vehicle based upon its insured's failure to cooperate in the investigation of the subject accident. The Appellate Division remanded this case back to lower Court, indicating, " since a disclaimer based upon lack of cooperation penalizes the injured party for the actions of the insured and "frustrates the policy of this State that innocent victims of motor vehicle accidents be recompensed for the injuries inflicted upon them," an insurer seeking to disclaim for noncooperation has a heavy burden of proof (Thrasher v. United States Liab. Ins. Co., 19 N.Y.2d 159, 168, 278 N.Y.S.2d 793, 225 N.E.2d 503; see Continental Cas. Co. v. Stradford, 11 N.Y.3d 443, 450, 871 N.Y.S.2d 607, 900 N.E.2d 144). 

To sustain its burden of establishing lack of cooperation, the insurer must demonstrate that "it acted diligently in seeking to bring about the insured's cooperation ... that the efforts employed by the insurer were reasonably calculated to obtain the insure[d]'s cooperation ... and that the attitude of the insured, after his cooperation was sought, was one of 'willful and avowed obstruction' " (Thrasher v. United States Liab. Ins. Co., 19 N.Y.2d at 168, 278 N.Y.S.2d 793, 225 N.E.2d 503, quoting Coleman v. New Amsterdam Cas. Co., 247 N.Y. 271, 276, 160 N.E. 367; see Matter of State Farm Indem. Co. v. Moore, 58 A.D.3d 429, 430, 872 N.Y.S.2d 82; Matter of State Farm Mut. Auto. Ins. Co. v. Campbell, 44 A.D.3d 1059, 845 N.Y.S.2d 88; Matter of Eveready Ins. Co. v. Mack, 15 A.D.3d 400, 400, 790 N.Y.S.2d 48). 

Here, while Nationwide's disclaimer letter and evidential proof that its insured failed to attend an examination under oath were sufficient to raise an issue of fact warranting a hearing, these submissions were insufficient to establish the validity of the disclaimer as a matter of law (see Matter of Mercury Ins. Group. v. Ocana, 46 AD3d 562, 563; Matter of Allstate Ins. Co. v. Anderson, 303 A.D.2d 496, 497, 755 N.Y.S.2d 724; Matter of New York Cent. Mut. Ins. Co. v. Davalos, 39 A.D.3d 654, 656, 835 N.Y.S.2d 247; Matter of Lumbermens Mut. Cas. Co. v. Beliard, 256 A.D.2d 579, 580, 682 N.Y.S.2d 430). 

A further problem for Nationwide here was highlighted by the Appellate Court, Nationwide's letters demanding that its insured appear at an examination under oath made reference to his purported status as a claimant for no-fault benefits, and warned him that the failure to appear could result in the denial of such benefits, despite the fact that there is no indication that the insured was injured in the accident and sought no-fault benefits