Late notice is a coverage defense that ordinarily involves prejudice to the insurance company. In some jurisdictions, the liability carrier must prove prejudice. In other jurisdictions, late notice raises a rebuttable presumption of prejudice. In cases involving a reubuttable presumption, legally there is a presumption of prejudice which the policyholder is free to rebut with evidence (and of course the insurance company is free to support with evidence). Florida follows a presumption of prejudice following late notice, but that did not help the Commercial General Liability (CGL) carrier in Donovan Construction, Inc. v. Vacker, Essex Insurance Co., & Ocampo & Assoc's, Inc., 31 Florida Law Weekly D2440 (Fla. 4th DCA Case No. 4D05-4105 Opinion Filed September 27, 2006)(subscription required), free access available through the Fourth District Court of Appeal public web site (click on opinions released September 27, 2006 and then follow the above case number).
Donovan Construction and its president, Mr. Thomas Donovan, obtained a CGL policy from Essex. Allegedly, a construction project on which Donovan was working incurred a modern problem: Mold.
The standard liability insurance policy generally requires two types of notice to the insurance company, although the opinion in the Donovan case does not discuss them. First comes notice of occurrence likely to result in a claim that will involve the liability policy, in basic terms. Without discussing whether the Essex policy required this type of notice in the Donovan case, the Fourth District wrote: "On May 3, 2004, Thomas Donovan, directed his insurance agent, Associated Underwriters of Florida, to notify Essex of Vacker's 'possible' claims. At no time did Essex contact Donovan regarding the potential claim nor, to DCI's [Donovan Construction, Inc.'s] knowledge, take any actions as a result thereof."
The other type of notice required under the standard liability insurance policy involves notice of a claim in suit. In other words, the other type of notice involves notice that an insured has been brought into a lawsuit. On January 7, 2005 DCI was served with a complaint in a lawsuit filed as a result of the alleged mold. Notice was again given, apparently: "On January 25, 2005, AXA Corporate Solutions, DCI's other insurer [this is the only time AXA is mentioned in the appellate opinion], wrote to Essex advising them .... Also on this date, Essex notified DCA of its denial of said claims. DCI tendered the defense of this matter to Essex and requested that they be indemnified. Essex refused to defend and indemnify" for many reasons including alleged late notice.
The trial judge entered a summary judgment for Essex on the ground of no coverage due to late notice. The Fourth District Court of Appeal reversed, holding that on the above and similar facts, "there is a genuine issue of material fact concerning when DCI knew of the mold problems and whether it failed to timely notify Essex."
Late notice is just not a particularly good ground to support Total Denial of All Coverage, as this new case reflects.
REMINDER: THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP. ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.
Comments