Sharp Realty & Management, LLC v. Capitol Specialty Insurance Corp.
503 F. App'x 704
11th Cir.2013Background
- SRM sued Allied and Capitol for six forms of relief arising from E&O coverage denial and related claims.
- District court granted summary judgment for Allied and Capitol; SRM appeals.
- SRM's coverage-based claims included specific performance, breach, bad faith (negligent investigation), and costs of defense; fraud-based claims centered on affiliated-entities coverage and endorsements.
- Allied policy required prompt written notice; SRM delayed notifying Allied after July 10, 2009 surgery and March 16, 2010 notice—deemed unreasonable.
- Capitol policy covered claims first made during 2009–2010 period but related acts were treated as a single act dated July 10, 2009, outside the Capitol period.
- Court affirmed summary judgment for Allied and Capitol, holding no reasonable coverage, bad-faith, or fraud claims against either insurer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SRM forfeited coverage for late notice | SRM contends notice timing not a condition precedent. | Notice provision is a condition precedent; delay bars coverage. | SRM forfeited coverage; summary judgment affirmed for Allied. |
| Whether affiliated-entities exclusion/endorsement created coverage for affiliated entities | Endorsement 8 binds coverage to affiliated entities. | No evidence Allied intended to cover affiliated entities; exclusion applies. | Evidence insufficient; Allied not liable for coverage or related fraud claims. |
| Whether Capitol coverage applied to underlying claims | Second Pearce audit claims fall within Capitol period. | Related Erroneous Acts treated as one; first claim July 10, 2009 outside Capitol period. | Capitol summary judgment proper; no coverage for SRM's claims. |
| Whether SRM's fraud claims against Capitol survive | Capitol promised coverage for affiliated entities; misrepresentation and intent to deceive. | No false representation or proof of intent; broker/insured agency limits liability. | Promissory-fraud elements not met; fraud claims fail. |
Key Cases Cited
- Reeves v. State Farm Fire & Cas. Co., 539 So. 2d 252 (Ala. 1989) (forfeiture when insured fails to give timely notice as a condition precedent)
- Miller v. Travelers Indem. Co., 86 So. 3d 338 (Ala. 2011) (reasonableness of delay in notice; factors limited to length and reasons)
- Nationwide Mut. Fire Ins. Co. v. Estate of Files, 10 So. 3d 533 (Ala. 2008) (five-month delay may require reasonable excuse evidence)
- Exxon Mobil Corp. v. Ala. Dept. of Conservation & Nat. Resources, 986 So. 2d 1093 (Ala. 2007) (elements of fraud; promissory fraud framework)
- Ex Parte Michelin North America, Inc., 795 So.2d 674 (Ala. 2001) (promissory fraud: intent not to perform and intent to deceive)
- HR Acquisition I Corp. v. Twin City Fire Ins. Co., 547 F.3d 1309 (11th Cir. 2008) (related claims/acts doctrine under insurance policies)
- Capitol Specialty Ins. Corp. v. Sharp Realty & Mgmt., LLC, 869 So.2d 1169 (Ala. Civ. App. 2003) (insurance broker as insured's agent; not ordinarily liable for representations)