Receipt of notice of a claim to the excess carrier after the jury awarded damages was insufficient to enforce coverage. See Berkley Reg'l Ins. Co. v. Philadelphia Indem. Ins. Co., 2012 U.S. App. LEXIS 15998 (5th Cir. Aug. 2, 2012).
The underlying case involved a slip-and-fall by a dentist on the premises of Towers of Town Lake Condominiums. Towers had a primary policy with Nautilus with a policy limit of $1 million per occurrence. It also had excess coverage through Philadelphia Indemnity Insurance Company with a policy limit of $20 million in excess of the primary coverage.
Injuries to the dentist were substantial. She could no longer continue practicing as a dentist. She sued Towers, and Nautilus defended. Expert reports put her damages at $800,000 to $1.25 million. Negotiation attempts failed and the case went to trial. The jury awarded $1.6 million. The day of the verdict, Towers demanded that Philadelphia pay the amount in excess of the primary coverage. Philadelphia contended this was the first time it had notice of the claim.
Nautilus unsuccessfully appealed on behalf of Towers. When the appeal was exhausted, suit was filed against Philadelphia. The district court held Philadelphia was not prejudiced by the lack of notice prior to the adverse jury verdict.
The Fifth Circuit reversed. Notice requirements afforded valuable rights. The lack of notice, however, had to prejudice the insurer. Here, Philadelphia was not just notified late, it was noticed after all material aspects of the trial process had concluded and an adverse jury verdict was entered. It lost the ability to do any investigation or conduct its own analysis, as well as the ability to "join in" Nautilus's evaluation of the case. Finally, Philadelphia lost a right to sit at the mediation table.
