Insurance Law Hawaii

Insurer's Refusal to Consider Supplemental Claim Found Improper

    The Eleventy Circuit reversed the district court's finding that the insurer had properly rejected the insured's supplemental claim. Great Lakes Ins. SE v. Concourse Plaza A Condomiium Association, Inc., 2024 U.S. App. LEXIS 8958 (11th Cir. April 15, 2024). 

    On September 10, 2017, Hurrican Irma struck Concourse Plaza's building, causing wind and water damage. Great Lakes sent a adjuster to inspect the property. The adjuster found damages to the building were $31,035.21, well below the policy's deductible. Accordingly, Great Lakes advised that the net amount of the claim was zero. 

    Concourse Plaza responded on September 4, 2020, just shy of three years after the cliam accured. Concourse Plaza disputed the damages estimate, but did not include a competing estimate. The letter said an estimate was being prepared and Great Lakes should consider the letter as notice of the intent to pursue additional benefits for the loss pursuant to the policy's notice provisions and Florida law. 

    On April 8, 2021, Concourse Plaza formally submitted a proof of loss statement, providng a damages estimate of $6,403,728.62. Concurse Plaza also invoked the appraisal remedy. Concourse Plaza leter lowered its estimate to $3,276,080.50 while maintaining its appraisal demand.

    Great Lakes filed suit seeking a declaratory judgment that Concourse Plaza's September 2020 letter did not constitue a valid notice of a supplmental insurance claim under the Florida statute requiring notice within three years of the hurricane making landfall.

    The district court held that the Florida statute required an insured's notice of a supplemental claim to inlcude an estimate of claimed damages. Therefore, Concourse Plaza had failed to provide a qualifying notice within three years. Summary judgment was awarded to Great Lakes. Concourse Plaza appealed.

    On appeal, the court noted that Concourse Plaza sought additional recovery for lossess from the same hurricane as the original claim. Further, Great Lakes conceded that the policy by itself did not impose a requirement to provide an estimate of damages. Concourse Plaza's September 2020 letter therefore qualifed as a notice of a supplemental claim under the statute. Because it was sent within three years of the date Hurrican Irma made landfall, the statute was satisfied.

    The district court's grant of summary judgment to Great Lakes was reversed and the matter was remanded.

 

Harvard's Claim Rejected for Untimely Notice

    Harvard College's claim for excess coverage was properly denied for failure to provide timely notice on a claims-made policy. President and Fellows of Harvard College v. Zurich Am. Ins. Co., 2023 U.S. App. LEXIS 20715 (1st Cir. Aug. 9, 2023). 

    Harvard had a one year liability policy with National Union Fire Insurance Company of Pittsburgh, Pennsylvania. The claims-made policy had lmits up to $25,000,000. The policy required prompt notice of any claim filed against Harvard. In addition, Harvard also purchased an excess policy from Zurich to insure against an additional $15,000,000 should a claim exhaust the National Union coverage. The Zurich policy required notice "in the same matter required by the terms fo the [National Union] policy." Under both policies, therefore, a claim had to be reported within ninety days of the end of the policy period. Both policies had policy periods ending on November 1, 2015. Therefore, any claim had to be reported no later than January 30, 2016. 

    On November 17, 2014, Harvard was sued by students for violating Title VI of the Civil Rights Act of 1964. Harvard gave notice to National Union and thereby secured coverage under hte policy. Harvard neglected, however, to notify Zurich until May 23, 2017 - well beyond the excess policy's ninety day notificaiton window. Consequently, Zurich denied coverage for failure to provide timely notice. Harvard sued. The district corut granted summary judgment to Zurich.

    On appeal, the First Circuit noted that under Massachusetts law, notice provisions of claims-made policies were enforced even if the insurer was not prejudiced by the late notice. Therefore, Zurich had every right to deny coverage.

    Harvard argued for the first time on appeal that the notice requirement was ambiguous and further discovery might show Zurich had notice through a newspaper or other mediat outlet. The argument was rejected, however, because it was not raised below. 

Arbitration Compelled for Parties to Policy, But Not for Non-Party to Policy

    The court denied the non-insureds motion to compel arbitration, but compelled arbitration for the insurer and insured. Ill. Cas. Co. v. Kladek, Inc., 2023 U.S. Dist. LEXIS 131677 (D. Minn. July 31 2023).

    In the underlying case, several models sued Kladek, Inc., alleging that Kladek used photos of them in advertisements for its strip club without their consent or authorization. Kladek was insured by Illinois Casualty Company (ICC) under a Businessowners policy. ICC sought a declaratory judgment that it owed no duty to defend or indemnify Kladek in the underlying case. The Models were named as interested parties in UCC's lawsuit

    A Cyber Protection Endorsement to the policy included an arbitration agreement, unlike the Businessowners Liablity Coverage portion of the policy. The Models moved to compel arbitration and stay proceedings. Both Kladek and ICC opposed the Models requests based upon lack of standing. Separately Kladek moved to compel arbitration of only the Cyber Endorsement dispute.

    The court first concluded that the Models could not use equitable estoppel to compel Kladek and ICC to arbitrate their dispute. Under Minnesota law, a non-signatory to an arbitration agreement could compel arbitration by equitable estoppel when the non-signatory party's claims arose directly from violations of the terms of a contract containing an arbitration clause. Here, however, ICC's declaratory judgment claim did not arise out violations of the terms of a contract. Nor did ICC assert any claims against the Models. Rather, ICC sought clarification of its legal oblgations under the policy and named the Models as an interested party. The arbitration agreement only applied to "us", ICC and an "insured." Because the Models did not have standing to compel arbitration, their motion was dismissed. 

    ICC also opposed Kladek's motion to compel arbitration because Kladek failed to provide timely notice of the underlying case. The court decided this procedural issue should be left for the arbitrator to decide. Further, the arbitrator was the proper one decide the scope of the arbitration and whether the arbitration agreement only covered the Cyber Endorsement.

    Finally, the court agreed to stay instead of dismiss the declaratory judgment action becasue the arbitration would not resovle the entire controversy.

Ninth Circuit Affirms Denial of Claim Based on Late Notice

    The Ninth Circuit agreed the insurer suffered prejudice by the late notice from the insured and affirmed the denial of the claim. Stockton Mariposa, LLC v. West Am. Ins. Co., 2023 U.S. App. LEXIS 14787 (9th Cir. June 14, 2023).

    Stockton submitted a claim for theft and vandalism of covered property. West American denied the claim. Stockton sued and the district court granted summary judgment to West American. 

    The Ninth Circuit found that the policy's vacancy provision unambiguously stated that a consecutive vacancy for the prior 60 days prevented coverage for certain losses. When a triggering event occurred = a vacancy counting backwards more than 60 days before the loss - the exclusion applied without regard to who owned the property or who acted to cause the vacancy. 

   Further, Stockton provided late notice. Under California's notice prejudice rule, an insurer could not deny an insured's claim based on lack of timely notice or proof of claim unless it could show actual prejudice from the delay. The burden of establishing prejudice was on the insurer. Although the issue of prejudice with respect to delay was one of fact, under some circumstances, prejudice could exist as a matter of law 

    Here, West American had shown that it suffered actual prejudice because of Stockton's delay. West American's ability to investigate was not only impaired but rendered impossible. Given the delay, an investigation would not be able to determine whether an appreciable loss was covered under the policy. The late notice made it virtually impossible to learn what facts, favorable to the insurer, could have been ascertained through prompt injury. Stockton's late notice of its claim actually prejudiced West American as a matter of law. 

Claim Denied for Insufficient Notice

    The court found that an incomplete notice of the claim was insufficient to trigger coverage. Gray v. Fla. Peninsula Ins. Co., 2023 Flag. App. LEXIS 3406 (Fla. Ct. App. May 19, 2023).

    Hurricane Irma damaged the insureds' roof when it struck on September 10, 2017. A Florida statute required that notice of a claim be given to the insurer within three years after a hurricane first made landfall or a windstorm caused the covered damage.

    On September 10, 2020, the insureds submitted the first page of a letter of representation between themselves and their public adjuster to their insurer, Peninsula Insurance Company. The letter of representation made no reference to a claim for roof damage in any way. There was no feasible construction of the statute or policy language that could include what the insureds provided to their insurer.

    The trial court entered final judgment for Peninsula. The Court of Appeals affirmed.

Late Notice Bars Insured's Claim for Loss Caused by Hurricane

    The court found that the failure to provide prompt notice of damage caused by Hurricane Irma barred plaintiff's claim for coverage. Garcia v. Scottsdale Ins. Co., 2022 U.S. Dist. LEXIS 149312 (S.D. Fla. Aug. 18, 2022).

    On September 10, 2017, plaintiff's property allegedly suffered damage due to Hurricane Irma. Shortly thereafter, plaintiff observed a water stain on the ceiling of the bedroom which was painted over. She did not take any pictures of the water stain before repainting. Plaintiff reported to her experts that she observed other water stains in various areas in 2017, 2018 and 2019, and that she painted over them each time. She again observed water stains in several rooms in 2020, at which time she became aware of the magnitude of the problem and went to an attorney. Plaintiff did not report her claim until May 27, 2020. 

    Scottsdale inspected the property twice before denying coverage because no damage from a covered cause of loss was observed during the inspections. Scottsdale also reserved rights based on plaintiff's failure to give prompt notice of the loss as required by the policy. Both plaintiff's experts and Scottsdale's experts found evidence of repairs to the roof before and after Hurricane Irma based on aerial satellite photographs of the property. Scottsdale received no documentation regarding the condition of the property immediately after Hurricane Irma and no documentation of wind damage to the property after the alleged date of loss, but before any repairs. 

    Plaintiff filed suit and Scottsdale moved for summary judgment. The observation of roof repairs following Hurricane Irma indicated plaintiff was aware of damage for years before she reported the claim. Therefore, the notice was not prompt as a matter of law. 

    There was a presumption that Scottsdale suffered prejudice. Plaintiff was unable to rebut the presumption. Therefore, Scottsdale was entitled to summary judgment.

    

Insurer Fails to Establish Prejudice Due to Late Notice

    Summary judgment awarded to the insurer was reversed because the insurer presented no evidence of prejudice caused by untimely notice. Perez v. Citizens Prop. Ins. Corp., 2022 Fla. App. LEXIS 5435 (Fla. Ct. App. Aug. 10, 2022).

    The insureds' home suffered water damage due to Hurricane Irma around September 10, 2017. A claim was submitted to Citizens on November 27, 2018. Citizens had an independent adjuster inspect, but then denied the claim due to untimely notice. 

    The insureds sued and Citizens moved for summary judgment. Citizens argued it was prejudiced because it could not confirm the cause of the loss or the property damage attributed to it.

    The court agreed that the insureds' notice was untimely. The insureds were notified by tenants renting the property that leaks appeared around the time of Hurriane Irma. The policy language, however, placed the burden to rebut the presumption of prejudice caused by late notice on Citizens. Whether the insurer was prejudiced was a question of fact. Citizens failed to demonstrate any prejudice due to the untimely notice.

    Therefore, the summary judgment decision was reversed. 

    

Prejudice to Insurer After Late Notice of Hurricane Damage Raises Issue of Fact

    The court denied the insurer's motion for summary judgment on admittedly late notice because prejudice to the insured remained an issue of fact. Guzman v. Scottsdale Ins. Co., 2021 U.S. Dist. LEXIS 219625 (S.D. Fla. Nov. 15, 2021).

    The insured first noticed water leaking into his kitchen from the roof during Hurricane Irma on September 10, 2017. Various attempts were made by the insured to fix the leak, but none were successful. After the hurricane, the roof continued to leak whenever it rained. Notice was finally given to Scottsdale, the insurer, on April 19, 2020. 

    Scottsdale retained structural engineer Nazario Ramirez, who inspected the property twice. He also had photographs of the rapids. Ramirez denied being prejudiced during his inspections. Based on the pictures aerial photography and weather research, he determined that the damage was caused by underlayment failing, which could have resulted from age and deterioration or poor construction. When Scottsdale's corporate representative was deposed, he testified that Ramirez was able to determine the cause of the damage to the roof. 

    The insured claimed roof damage amounted to $244,141.09. Scottsdale determined the hurricane only caused damage to some roof tiles. The insured sued and Scottsdale moved for summary judgment, arguing the late notice had caused prejudice and barred the claim.

    Under Florida law, when notice was untimely, prejudice to the insurer was presumed, but the presumption was rebuttable. The insured argued that a genuine issue of material fact remained as to prejudice. The court agreed. Ramirez denied being prejudiced during his two inspections. He was retained to opine on the cause of damage as well as the scope of damage. He was able to reach a final conclusion based on pictures, aerial photography, and weather research. He determined that Hurricane Irma did not damage the roof except for three missing rake cap tiles and any water intrusion resulted from a failed underlayment, which resulted from age or poor construction. Summary judgment was inappropriate.  

 

Late Notice Kills Insured's Claim for Damage Due to Hurricane

    The insurer's motion for summary judgment was granted based upon the insured's late notice nearly two years after a hurricane caused property damage. Ramirez v. Scottsdale Ins. Co., 2021 U.S. Dist. LEXIS 209716 (S.D. Fla. Oct. 29, 2021).

    Plaintiff alleged he suffered property loss due to wind and water damage from Hurricane Irma on September 10, 2017. The roof, exterior, and interior of the home were damaged. 

    On May 20, 2019, twenty months after the hurricane, plaintiff first notified Scottsdale of his claim for damages. An adjuster inspected and observed wind, wear and tear, and deterioration damage to the roof tile, as well as interior water damage to portions of the home. The claim was denied based upon wind, wear and tear, and deterioration exclusions in the policy.

    Plaintiff filed suit. Scottsdale moved for summary judgment because plaintiff failed to provide "prompt notice" as required by the policy. Plaintiff conceded the notice was untimely, but argued Scottsdale suffered no prejudice because it was able to inspect the property. 

    The court disagreed with plaintiff's argument. Under Florida law, where the policy required notice "as soon as practicable," the clause is breached by a failure to notify the insurer for a period of more than one year. When the undisputed factual record establishes notice is so late that no reasonable juror could find it timely, Florida courts will deem the notice untimely as a matter of law. 

    Plaintiff argued Scottsdale was not prejudiced because it had the opportunity to inspect the property. This at least created an issued of fact for the factfinder. But plaintiff failed to point to anything in the record to support this argument. 

    Therefore, Scottsdale's motion was granted.

   

Insurer's Late Notice Defense Fails on Summary Judgment

    The insurer's motion for summary judgment to dismiss the claim because the insurer did not provide notice "as soon as practicable" was denied. Vintage Hospitality Group LLC v. Nat'l Trust Ins. Co., 2021 U.S. Dist. LEXIS 192651 (M.D. Ga. Oct. 6, 2021). 

        Vintage owned hotels, one of which was struck by a severe hailstorm on July 21, 2018. Vintage was not aware of roof damage until two months after the storm, and did not make the connection between the hailstorm and roof damage until February 2020, when it reported the damage to National. The claim was denied because it was not reported "as soon as practicable" as required by the policy.

    Vintage sued and National moved for summary judgment. 

    Vintage did not notice the leaks until September 2018. The focus was on fixing the leaks, and connection to the hailstorm did not register. The leaks persisted over the next year and a half. A construction company was called in to evaluate the leaking roof. The construction company advised that the roof had experienced previous hail damage which was causing the leaks. At this point, Vintage connected the damage to the hailstorm. A claim was promptly submitted to National, which denied the claim.

    The National policy did not place a hard deadline for reporting a claim. Georgia law interpreted the phrase "as soon as practicable" as within a reasonable time considering all the circumstances. Vintage reported the claim within a few days of being informed by the roofing contractor that the leaky roof was caused by previous hail damage.

    The court found there was a genuine factual dispute as to whether Vintage gave notice as soon as practicable. The court denied National's motion.