Insurance Law Report focuses on developments in Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia.
Below are the articles for the November issue. To view, click on the appropriate title and you will be brought to the full version of the article below.
VIRGINIA SUPREME COURT HOLDS COVERAGE FOR CHINESE DRYWALL CLAIMS EXCLUDED BY POLLUTION EXCLUSION
LOUISIANA SUPREME COURT HOLDS INSURANCE SETTLEMENTS ARE NOT “PROOF OF LOSS” UNDER BAD FAITH STATUTE
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FEDERAL COURT IN GEORGIA RULES THAT INSURED’S DELAY OF OVER TWO AND A HALF YEARS BEFORE PROVIDING NOTICE WAS UNJUSTIFIED AND PRECLUDES COVERAGE
A federal court in Georgia recently held that an insured’s unjustified delay of over two and a half years did not constitute notice “as soon as practicable” and there was no coverage under the CGL policy. Westfield Ins. Co. v. Dabbs-Williams Gen. Contractors, LLC, 2012 WL 4468539 (S.D. Ga. Sept. 27, 2012).
After the construction of a condominium complex, the insured sued the developer for breach of contract. The developer counterclaimed for negligent and defective construction and for breach of the implied duty to perform in a fit and workmanlike manner. The insured chose not to notify its CGL insurer because it concluded that there was no coverage for the counterclaims. More than two and a half years later, the developer expanded its counterclaim by including allegations of negligence and faulty construction to other parts of the building. The insured then notified its insurer of the suit. The insurer provided a defense under a reservation of rights, but filed a declaratory judgment action to determine coverage.
Applying Georgia law, the district court granted summary judgment in the insurer’s favor, finding the insured’s justification for the delay in notifying the insurer that the amendment did not change the nature of the counterclaim but merely enlarged its scope was unreasonable as a matter of law. The court further explained that the insured’s subjective, optimistic belief that the initial counterclaim was very limited was also objectively unreasonable under the circumstances. Recognizing that other courts have repeatedly held that much shorter delays have precluded coverage, the court held the insured’s delay of over two and a half years was not “as soon as practicable,” and the insurer was not obliged to respond.