79 F. Supp. 3d 1245
N.D. Ala.2015Background
- Penn National issued a CGL policy to Anniston Concrete; IPS acted as Penn National's agent and issued certificates.
- J.F. Morgan was named as an additional insured under Anniston Concrete's Penn National policy via an automatic endorsement.
- Ricky Smith's death at a job site triggered notice obligations under the policy; Penn National was not notified.
- McFry filed a lawsuit against J.F. Morgan about Smith's death; J.F. Morgan and Anniston Concrete did not timely forward suit papers to Penn National.
- Anniston Concrete informed IPS (agent) about the accident and the McFry suit; Penn National received notice via IPS, not directly from J.F. Morgan.
- J.F. Morgan did not forward McFry's suit papers to Penn National for 13 months, triggering the insurer's defense/coverage defenses.
- The court granted Penn National summary judgment on coverage for the McFry settlement, holding 13-month delay unreasonable; Nationwide’s related motions denied/abated.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether IPS was Penn National's agent for notice | Penn National's agency agreement makes IPS a limited agent for notice | IPS not an agent, or not authorized to receive notice | IPS is Penn National's limited agent for notice |
| Whether J.F. Morgan had to notify Penn National | Named insured's status not relevant; additional insured must notify | Only Anniston Concrete (named insured) bears notice duties | J.F. Morgan had no independent notice duty; obligation through IPS existed |
| Whether J.F. Morgan was required to forward suit papers | Policy requires all insureds to forward copies of suit papers | Only Anniston Concrete needed to forward; J.F. Morgan not required | J.F. Morgan failed to forward suit papers in violation of policy |
| Whether 13-month delay in forwarding papers was reasonable | Delay could be excused; no evidence of prejudice needed | Delay unreasonable without legitimate excuse | Delay unreasonable as a matter of law |
| Which insurer must indemnify for McFry settlement | Penn National should indemnify if no timely notice; Nationwide liable otherwise | Penn National liable for delay; coverage denied; Nationwide indemnifies Penn National | Penn National not liable for the settlement; Nationwide must indemnify Penn National |
Key Cases Cited
- Colonial Life & Accident Ins. Co. v. Collins, 280 So.2d 532 (Ala. 1967) (statutory notice interpretation guidance in Alabama)
- N. River Ins. Co. v. Overton, 59 So.3d 1 (Ala. 2010) (agency notice authority considerations)
- Burkes Mch., Inc. v. Ft. James-Pennington, Inc., 908 So.2d 905 (Ala. 2004) (notice duties apply to named and additional insureds)
- Royal Indem. Co. v. Pearson, 246 So.2d 652 (Ala. 1971) (agency knowledge imputed to insurer)
- Alfa Ins. Co. v. Templeton, 919 So.2d 300 (Ala.Civ.App. 2005) (third-party notice papers forwarded; insurer duties)
- Thomas, 334 So.2d 882 (Ala. 1975) (reasonableness of notice delay standard)