402 F.Supp.3d 548
E.D. Ark.2019Background
- ACE issued claims-made-and-reported EPL policies to Pine Bluff School District (PBSD) for 4/2/2015–2/1/2016 (2015 Policy) and 2/1/2016–2/1/2017 (2016 Policy).
- Definition of “Claim” in both policies includes an EEOC charge and a civil complaint; policies state that interrelated wrongful acts and claims arising from same wrongful act are "deemed to be one Claim" and are deemed first made on the earliest date.
- Teacher Celeste Alexander filed an EEOC charge on 12/1/2015 and later sued PBSD on 9/22/2016 alleging sexual harassment and retaliation arising from events in 2014–2015.
- PBSD did not notify ACE of the lawsuit until 10/3/2016; ACE requested EEOC materials and later (2/14/2018) denied coverage for both policies, asserting the claim was first made during the 2015 Policy and was untimely reported, and thus not covered by either policy.
- PBSD sued ACE seeking declaratory relief and coverage; PBSD alternatively argued ACE waived or was estopped from denying coverage. The district court granted ACE summary judgment and dismissed PBSD’s claims with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Alexander’s EEOC charge and later federal suit constitute a single "claim" under the policies | PBSD: “single claim” language is in Limits of Liability and governs only allocation/limits, not coverage timing; thus the suit is a separate claim for the 2016 policy | ACE: EEOC charge and suit are interrelated and, per policy, deemed one claim, first made on 12/1/2015 | Court: They are a single claim first made 12/1/2015 (policy language unambiguous) |
| Whether PBSD timely reported the claim under the 2015 Policy (including 60-day grace) | PBSD: ACE had or could have discovered EEOC materials earlier; ACE delayed and led PBSD to believe coverage existed | ACE: PBSD failed to report during policy period or 60-day extension (deadline 4/1/2016); PBSD’s 10/3/2016 notice was untimely | Court: Untimely — coverage under 2015 Policy precluded because notice was after grace period |
| Whether the 2016 Policy provides coverage | PBSD: claim arose (or was first made) during 2016 policy period or policies ambiguous | ACE: claim was first made on 12/1/2015, before 2/1/2016 inception of 2016 Policy, so no coverage | Court: No coverage under 2016 Policy because claim was first made before the policy period |
| Whether ACE waived or is estopped from denying coverage | PBSD: ACE’s conduct (delay, litigation involvement, hiring separate counsel for the principal) induced belief of coverage and prejudiced PBSD | ACE: Sent reservation-of-rights letter; requested documents; no waiver or estoppel — doctrines cannot expand coverage under Arkansas law | Court: No waiver/estoppel — ACE reserved rights and did not unreasonably delay; estoppel cannot create coverage |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standards)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment and resolving factual inferences)
- Norris v. State Farm Fire & Cas. Co., 16 S.W.3d 242 (Ark. 2000) (insurance policy language construed in plain meaning)
- Castaneda v. Progressive Classic Ins. Co., 166 S.W.3d 556 (Ark. 2004) (exclusionary endorsements must be clear and unambiguous)
- Campbell & Co. v. Utica Mut. Ins. Co., 820 S.W.2d 284 (Ark.) (claims-made-and-reported policy triggers require claim made in writing and given to insurer during policy period)
- J-McDaniel Constr. Co. v. Mid-Continent Cas. Co., 761 F.3d 916 (8th Cir. 2014) (Arkansas law does not permit waiver/estoppel to broaden coverage)
- Worthington Fed. Bank v. Everest Nat. Ins. Co., 110 F.3d 1211 (N.D. Ala.) (similar single-claim language construes scope and timing of coverage)