When the insured, Matkin, an architectural firm, was sued by GEWAC, Inc., shopping center owner, for improper drainage in a parking lot designed by Matkin, Everest, the insurer, refused to defend, contending Matkin had not given timely notice under the claims-made policy. Matkin-Hoover Engineering, Inc. v. Everest National Ins. Co., No. 08-CV-0451, 2009 U.S. Dist. LEXIS 44057 (W.D. Texas May 26, 2009).
Everest issued two policies to Matkin, one with a policy period from April 15, 2005 to April 15, 2006 (2005 policy) and the second from April 15, 2006 to April 15, 2007 (2006 policy). The policies required a claim first be made and reported within the same policy period. The policies defined "claim" as a "demand for money or professional services received by the Insured for damages . . . alleging a wrongful act arising out of the performance of professional services."
Matkin sued and Everest moved for summary judgment on its duty to defend. The issue focused on a letter Matkin received from GEWAC on March 19, 2006, but not reported to Everest until August 30, 2006. Matkin argued the letter was not a "claim" because it did not clearly indicate that GEWAC expected Matkin to pay to fix the defects. Everest argued GEWAC's March 19, 2006 letter was a claim that should have been reported in the 2005 policy period because it: (1) demanded Matkin to perform professional services to repair the drainage problems; and (2) it alleged Matkin committed a "wrongful act" that arose out of the performance of a professional service.
The court disagreed. Considering the circumstances known to the insured, the March 19, 2006 letter could be interpreted not as a demand but as a request for additional engineering services to help correct a construction defect for which Matkin was not responsible. Because a reasonable person may not have viewed the letter as a demand for professional services for damages, a question of fact existed, precluding summary judgment.
