628 F.3d 46
2d Cir.2010Background
- Accident in April 2003: RGIS employee Birardi struck Shore, causing serious injuries; Camrac vehicle owned by Camrac and driven by Birardi; Shore sues in 2005 for damages.
- RGIS, Birardi, and Camrac are protected by a $2 million primary policy (USF&G) and a $25 million excess policy (Lumbermens).
- Lumbermens argued Shore’s claim was not timely noticed under the Excess Policy’s notice requirement; RGIS and Birardi notified Lumbermens January 14, 2008, on the eve of trial.
- District court held Timbermens’ notice timely under Michigan law, ruling the claim would likely involve excess coverage only if the underlying limits were exhausted.
- Shore’s verdict exceeded the primary limit, triggering excess policy concerns; Lumbermens filed suit for declaratory relief seeking coverage denial.
- On appeal, the issue was whether the admissible, undisputed facts show timely notice under the Excess Policy’s language requiring notice when it appears likely a claim will involve excess coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of notice under excess policy | Lumbermens contends notice required when claim likely to involve excess coverage. | RGIS and Birardi argue notice was timely because it appeared unlikely primary limits would be exhausted. | Timely notice required appears likely to involve excess coverage; here, timely under Michigan law. |
| Meaning of 'appears likely' in policy | Prevents notice only upon near-certain exhaustion of underlying limits. | Insurance language grants discretion; notice when liability could involve excess coverage. | Plain language requires likelihood of excess policy involvement, not mere possibility. |
| Prejudice and reliance on defense counsel | Late notice prejudiced Lumbermens by excluding participation in settlement discussions. | No substantial prejudice shown given investigation did not indicate excess exposure. | Court did not reach prejudice analysis; dismissal affirmed on timeliness ground. |
Key Cases Cited
- Engle v. Zurich-American Ins. Grp., 230 Mich.App. 105 (Mich. Ct. App. 1998) (enforces contract as written, plain meaning of policy terms)
- Morley v. Auto. Club of Michigan, 581 N.W.2d 237 (Mich. 1998) (policy language interpreted to enforce insured’s duty consistent with contract terms)
- Kerr v. Illinois Central R.R. Co., 283 Ill.App.3d 574 (Ill. App. 1996) (notice not required solely by potential liability; focus on likelihood of excess involvement)