Our last post [here] summarized a case in which the Ninth Circuit found the anti-concurrent provision to be ambiguous. See Alexander Mfg., Inc. v. Illinois Union Ins. Co., No. 07-35812 (9th Cir. March 25, 2009) [here]. Today we review a case in which the anti-assignment provision was strictly construed by the Tenth Circuit. See Manchester v. Certain Underwriters at Lloyds, London, No. 08-6119, 2009 U.S. App. LEXIS 6033 (10th Cir. March 23, 2009).
The insureds, the Rutzes, owned a water park, operated as Sun 'N Fun Family Recreation, Inc. ("Inc."). In mid-June 2005, they decided to sell the water park to the Behars. Inc. held a liability policy with Underwriters that was set to expire on June 25, 2005. On June 25, 2005, Inc. mailed a premium check to Underwriters. On July 27, 2005, Underwriters issued and mailed to Inc. a renewal policy. The policy listed Inc. as the insured. The policy included a non-assignment provision which provided the policy could not "be assigned without the prior written consent of the Insurer." During the negotiations for the sale of the water park, the parties had discussed having Inc.'s policy transferred to the Behars. This never took place, however, nor did Underwriters ever approve transfer of the policy to the Behars.
The Behars took over operation of the water park on June 29, 2005. On July 14, 2005, an employee fell from one of the water slides and died. On July 25, 2005, a payment was due on the policy. The Behars sent a premium payment to Underwriters, using the checking account that had previously been used by Inc. and the Rutzes. In October 2005, Underwriters returned the payment to the Behars.
When the victim's family sued, the Behars tendered to Underwriters. Coverage was denied and suit was filed. The district court found there was no coverage under the policy.
On appeal, the Tenth Circuit affirmed. The Court determined Underwriters had neither waived nor was estopped from asserting the non-assignment provision. Underwriters could not waive the requirement because they were never provided with notice that Inc. wanted to transfer the policy to the Behars. Nor was there evidence of any statement or admissions by Underwriters that could reasonably be considered inconsistent with its reliance on the non-assignment provision.
