May 6 (Westlaw Journals) - A Long Island, N.Y., restaurant’s failure to alert its insurer about a possible lawsuit as soon as it discovered that a patron died from alleged food poisoning proved fatal to its coverage claim, a state appeals court has ruled.

The Supreme Court Appellate Division’s 1st Department said Babylon Fish & Clam’s coverage claim was untimely because the restaurant waited 11 months to notify Tower Insurance Co. about a potential suit.

Babylon now must defend itself in a wrongful-death action filed by the patron’s wife.

According to the opinion, Michael J. Menken allegedly ate bad clams at Babylon around July 15, 2007, and died four days later.  Shortly after her husband’s death, Sandra Menken called Babylon about the alleged food-poisoning incident.

“This statement, whether or not true, should have reasonably alerted the insured that a claim was possible,” the appellate court said.

A few days after Sandra Menken’s call, the Suffolk County Department of Health Services inspected the restaurant’s premises, acting on a report that a patron suffered food poisoning after eating bad clams, the opinion says.

The inspector returned with the results of his inspection around Aug. 15, 2007, finding “some deficiencies.”  At that time, Babylon also discovered that the subject of the report was Michael Menken, according to the opinion.

Babylon failed to notify Tower about a potential claim until summer 2008 even though its policy required the restaurant to report claims “as soon as practicable.”

Tower denied coverage and filed suit in the New York County Supreme Court, seeking a declaratory judgment that it had no obligation to defend or indemnify Babylon in the wrongful-death action.

The court denied Tower’s motion, but the appeals court reversed.

Tower Insurance Co. v. Babylon Fish & Clam Inc., No. 3844 110967/08, 2011 WL 14976407 (N.Y. App. Div., 1st Dep’t Apr. 21, 2011).

(Reporting by Melissa Sachs, Westlaw Journal Insurance Coverage)