Zahoruiko v. Fed. Ins. Co.
17-965-cv
| 2d Cir. | Jan 5, 2018Background
- Plaintiff J. Graham Zahoruiko (pro se) sought coverage under a directors-and-officers liability policy issued by Federal Insurance Company for a 2010 lawsuit against him.
- Default was entered against Zahoruiko in the underlying 2010 action; he did not notify Federal until ~1.5 years after the suit began and about 15 months after the default.
- Federal denied coverage based on the policy’s notice provision and other policy language; Zahoruiko sued Federal for breach of contract and related claims in the District of Connecticut.
- District court granted summary judgment for Federal, finding Zahoruiko’s notice untimely and that Federal suffered prejudice from the delayed notice.
- Zahoruiko appealed, arguing (inter alia) that Federal failed to prove prejudice and that his late notice was excusable due to the plaintiff’s alleged misconduct in the underlying suit.
- The Second Circuit reviewed the grant of summary judgment de novo and affirmed for substantially the reasons stated by the district court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Zahoruiko gave timely notice under the policy | Notice was timely or excused by adverse conduct of the underlying plaintiff | Notice was unexcused and unreasonable because suit and default put Zahoruiko on notice | Held: Notice was untimely and not excused; duty to notify arose when liability became reasonably apparent and default made that clear |
| Whether Federal proved prejudice from late notice | Federal failed to show prejudice; declaration speculative | Late notice prevented investigation, witness interviews, defense participation, and settlement | Held: Federal carried its burden; denial of opportunity to investigate and entry of default constitute prejudice |
| Whether Zahoruiko preserved the prejudice argument for appeal | (Implicit) Challenged prejudice below and on appeal | Federal contended Zahoruiko did not raise prejudice challenge in district court | Held: Zahoruiko forfeited any new argument that Federal failed to show prejudice by not raising it below; in any event prejudice was shown |
| Whether summary judgment was appropriate | Disputed facts precluded summary judgment | No genuine dispute and Federal entitled to judgment as a matter of law | Held: Affirmed summary judgment for Federal; Zahoruiko failed to produce evidence creating a triable issue |
Key Cases Cited
- Jackson v. Fed. Express, 766 F.3d 189 (2d Cir. 2014) (standard of review for summary judgment at appellate level)
- Arrowood Indem. Co. v. King, 605 F.3d 62 (2d Cir. 2010) (under Connecticut law, insurer discharged if insured unreasonably delays notice and insurer shows material prejudice)
- Arrowood Indem. Co. v. King, 39 A.3d 712 (Conn. 2012) (insurer bears burden to prove prejudice by preponderance)
- Harrison v. Republic of Sudan, 838 F.3d 86 (2d Cir. 2016) (appellate courts generally will not consider issues raised first on appeal)
- Burt Rigid Box, Inc. v. Travelers Prop. Cas. Corp., 302 F.3d 83 (2d Cir. 2002) (plaintiff must adduce evidence sufficient to support a jury verdict to avoid summary judgment)