The federal district court granted the insured’s motion for summary judgment and dismissed the insurer’s claims of misrepresentation against the insured. Colony Ins. Co. v. Oz Solutions, et al., 2026 U.S. Dist. LEXIS 138034 (S.D. N.Y. June 22, 2026).

Oz Solutions contracted with Danya Cebus Construction LLC to “supply skilled temporary workers to give temporary services” in connection with a construction project. The owner of the project filed suit against Danya Cebus alleging that corners had been cut during construction to save time and money, including by ordering the wrong parts for packaged terminal air conditioners and manually cutting the louvers.

Danya Cebus filed a third-party action against Oz, claiming it had supplied temporary workers who performed the work that the owner claimed to be defective. Colony Insurance Company, Oz’s insurer, retained counsel to defend Oz.

Colony filed suit against Oz on March 14, 2024, claiming that Oz made two material misrepresentations in its insurance application. First, it claimed Oz failed to disclose that it was “an employee leasing agency wherein its employees did whatever was asked of them.” Second, Colony claimed Oz failed to disclose that, “in addition to debris removal and janitorial cleanup, its employees did additional work, such as operated bobcats, cut concrete, drilled into concrete, and cut louvers on multiple job sites.” Colony sought a declaration that its policy with Oz was void and that Colony had no obligation to defend or indemnify Oz in the underlying action.

Oz moved for summary judgment on the ground that Colony’s claims were time barred under New York law. New York’s statute of limitations for a cause of action based on fraud was “the greater of six years from the date of the cause of action accrued or two years from the time the plaintiff discovered the fraud or could with reasonable diligence have discovered it.”

Because the alleged misrepresentation occurred in 2016 and 2017 – more than six years before commencement of this action on March 14, 2024 – Colony’s claim was time barred unless it could establish that it reasonably could not have discovered the fraud before the two-year period prior to that date. Based on the undisputed evidence, the court found, as a matter of law, that Colony, before March 2022, had knowledge of facts from which the alleged fraud could reasonably have been inferred.

For example, on March 26, 2021, Colony received the tender from Oz which included the Employment Agreement, under which Oz agreed to “supply skilled temporary workers to give temporary services” to Danya Cebus in connection with construction of the project. Further, numerous communications and internal notes reflected that Colony was on notice that Oz likely performed tasks beyond debris removal and janitorial cleanup.

Because the evidence showed that Colony was informed of facts suggestive of the purported fraud, Colony had a duty to inquire as early as April 2021, when it received information in the March 2021 tender letter related to both of Colony’s alleged misrepresentations. Because Colony discovered the alleged fraud more than two years before it brought this action on March 14, 2024, the claims were time barred.

Accordingly, the court granted the Oz defendants’ motion for summary judgment, finding Colony’s claims untimely.