783 F. Supp. 2d 1209
M.D. Fla.2011Background
- Jennings entered into a Consent Agreement with non-parties to settle a 2005 contract/professional negligence dispute.
- ACE issued an Errors and Omissions policy covering Insureds for March 1, 2005–March 1, 2006, but ACE was not a party to the Consent Agreement.
- Insureds did not report Jennings's claim to ACE until December 21, 2006, after the policy expired.
- The policy is a claims-made-and-reported policy with a written notice condition precedent to coverage.
- Notice and reporting provisions include automatic and optional extended reporting periods; Jennings argues ambiguity between defense duty and reporting requirement.
- The court granted ACE’s motion to dismiss the complaint without prejudice, allowing Jennings to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether failure to report within the policy period bars coverage. | Jennings argues prejudice must be shown in a claims-made policy. | Non-report within period precludes coverage regardless of prejudice. | Coverage denied; failure to report within period bars coverage. |
| Whether the claims-made notice requirement conflicts with the duty to defend. | Duty to defend may be triggered automatically regardless of notice. | Notice is a condition precedent; no conflict or ambiguity. | No conflict; notice within period is prerequisite to coverage and defense duties. |
| Whether the policy ambiguity defeats enforcement of the Consent Agreement. | Cooperation/notice provisions could be treated as ambiguous with defense duties. | Policy is clear; notice is essential to coverage. | Not ambiguous; enforcement fails due to lack of coverage. |
| Whether Jennings can amend to plead a state of facts that could establish coverage. | Possibility of Extended Reporting Period could salvage coverage. | Speculative facts; no pleaded basis for coverage. | Dismissal without prejudice; leave to amend allowed. |
Key Cases Cited
- Gulf Ins. Co. v. Dolan, Fertig & Curtis, 433 So. 2d 512 (Fla. 1983) (distinguishes occurrence vs. claims-made reporting policy)
- Prodigy Commc'ns Corp. v. Agric. Excess & Surplus Ins. Co., 288 S.W.3d 374 (Tex. 2009) (notice essential to coverage under claims-made-and-reported policy)
- Sinni v. Scottsdale Ins. Co., 676 F. Supp. 2d 1319 (M.D. Fla. 2009) (consent agreements require coverage before recovery against insurer)
- Coblentz v. Am. Sur. of New York, 416 F.2d 1059 (5th Cir.1969) (conceptual basis for enforcing consent agreements; coverage prerequisite)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standards; context for dismissal standards)