Nautilus Insurance Company v. Darwin Vargas d/b/a
711 F. App'x 214
| 5th Cir. | 2017Background
- Miranda-Mondragon was shot while working as a waitress at a nightclub and sued the nightclub operators; she later amended to add Houston Star Security Patrol, alleging Houston Star failed to provide adequate security.
- Houston Star was served but did not appear; the Texas state court entered a default judgment against Houston Star.
- Miranda-Mondragon’s counsel sent a copy of the default judgment to Houston Star’s insurer, Nautilus, 41 days after the default was entered and demanded payment.
- Nautilus filed a declaratory-judgment action in federal court seeking a ruling that it owed no duty to defend or indemnify Houston Star.
- The district court granted summary judgment for Nautilus, finding (1) Houston Star failed to provide timely notice as required by the policy and (2) late notice prejudiced Nautilus as a matter of law; the court alternatively found the claim would be excluded under the policy but affirmed on the untimely-notice ground.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether insurer had duty to defend/indemnify given notice timing | Miranda-Mondragon argued facts raise genuine issue; insurer should be liable despite timing | Nautilus argued Houston Star failed to give required timely notice and insurer received notice only after default judgment, relieving duty | Court held late notice (first notice 41 days after default) prejudiced insurer as a matter of law and relieved Nautilus of duty to defend/indemnify |
| Whether policy exclusions barred coverage (alternative ground) | Miranda-Mondragon contended coverage applied | Nautilus argued claim fell within policy exclusions | Court noted exclusion argument but did not decide because it affirmed on notice/prejudice ground |
Key Cases Cited
- Aldous v. Darwin Nat’l Assurance Co., 851 F.3d 473 (5th Cir. 2017) (standard of review for summary judgment)
- Morgan v. Plano Indep. Sch. Dist., 589 F.3d 740 (5th Cir. 2009) (treatment of competing summary-judgment motions)
- Cal-Dive Int’l, Inc. v. Seabright Ins. Co., 627 F.3d 110 (5th Cir. 2010) (affirmance standard where no genuine fact issues)
- Harwell v. State Farm Mut. Auto. Ins. Co., 896 S.W.2d 170 (Tex. 1995) (notice provision is condition precedent to insurer liability)
- Weaver v. Hartford Accident & Indem. Co., 570 S.W.2d 367 (Tex. 1978) (same)
- Berkley Reg’l Ins. Co. v. Philadelphia Indem. Ins. Co., 690 F.3d 342 (5th Cir. 2012) (notice after default judgment establishes prejudice as a matter of law)
- Liberty Mut. Ins. Co. v. Cruz, 883 S.W.2d 164 (Tex. 1993) (late notice that follows default relieves insurer of liability)