Sheehan Construction Co. v. Continental Casualty Co.
2010 Ind. LEXIS 801
| Ind. | 2010Background
- Sheehan sought indemnification under Indiana Insurance's CGL policy for faultily constructed workmanship.
- The trial court granted summary judgment for carriers, finding no occurrence or property damage and thus no coverage.
- Court of Appeals affirmed, but Indiana Insurance sought rehearing to address timely notice (not reached on appeal).
- Indiana Insurance argued Sheehan’s late notice prejudiced its ability to investigate and prepare defenses; Sheehan argued no demonstrated prejudice.
- Indiana Supreme Court previously held CGL may cover faulty workmanship; on rehearing, it considered the notice issue and prejudice.
- Key policy provision required timely written notice; delay in notice led to presumption of prejudice under Indiana law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether notice delay creates prejudice to the insurer | Sheehan asserts no shown prejudice, so coverage should apply. | Delay presumptively prejudiced insurer, excusing denial of coverage. | Prejudice presumed; insurer lacks liability if delay is unreasonable. |
| Whether untimely notice forecloses coverage regardless of proof of prejudice | Delay should not automatically bar coverage without evidence of prejudice. | Duty to notify is a condition precedent; prejudice can be presumed from delay. | Notice delay bars coverage when prejudice is presumed (unreasonable delay) and no rebuttal shown. |
Key Cases Cited
- Miller v. Dilts, 463 N.E.2d 257 (Ind.1984) (prejudice from late notice may be presumed)
- P.R. Mallory & Co. v. Am. Cas. Co. of Reading, Pa., 920 N.E.2d 736 (Ind.Ct.App.2010) (presumption of prejudice from unreasonable delay in notifying insurer)
- Askren Hub States Pest Control Svcs., Inc. v. Zurich Ins. Co., 721 N.E.2d 270 (Ind.Ct.App.1999) (burden shifts to insured to rebut prejudice after presumption )
- Bushong v. Williamson, 790 N.E.2d 467 (Ind.2003) (summary judgment standard; burden-shifting framework)
- Stephenson v. Ledbetter, 596 N.E.2d 1369 (Ind.1992) (summary judgment burden and standard of review)