Defended Insureds, Lonergan Law Firm, PLLC, et al. ("Lonergan"), recently appealed to the Fifth District Court of Appeal of a Northern District of Texas, which ruled against it, finding that it failed to meet a material condition of the policy by failing to send its Notice of Claim ("Notice") to Responsibility Department. Landmark American Insurance Co. ("Landmark") filed a lawsuit against its insured and tried to avoid liability for coverage by claiming that although it received a notice via an additional claim during the insurance period, the insured failed to send the notice of the place established by policy. 1
The Fifth Circuit found that it was undisputed that Lonergan "reported" or "provided information on" the claim to Landmark in accordance with the requirement in the policy. Landmark claimed that "Notice of claim" in the policy forced Lonergan to "Send all claim information to: Attention: Claims dept. [address]." In support of its argument, Landmark cited a number of cases which argued that the insured's notice of claims "should" be sent to a specific address. The Fifth Circuit, however, examined the language of Landmark policy and quickly distinguished from the cases cited:
However, Landmark's policy can be distinguished from these cases, as the "where" clause is defined in legal certainty ("please"), not mandatory ("shall") ) conditions. With its express terms, Landmark's notice of termination to the claims department cannot be regarded as a significant condition, which automatically overrides the insurer's insurance denial. We are guided by the Texas Supreme Court, which ruled that requiring notice of an application to the insurer "as soon as possible" is not a material coverage condition when the notice was provided within the time specified in the insurance coverage. Prodigy Commc’ns Corp. v. Agric. Surplus and surplus ins. Co. 288 S.W.3d 374, 382 (Tex. 2009). While an insurance's breach of a material reporting obligation relieves the insurer of its obligation to defend and defend the insurer, it is not necessarily the same when an insured violates an intangible notice condition. See id. In view of the irrelevance of the special communication permit expressed here, Landmark can thus be released from its obligation to defend and make amends only when it shows that it was harmed by the infringement. See id .; E. Tex Med. Ctr. Reg’l Healthcare Sys. v. Lexington Ins. Co. 575 F.3d 520, 529–30 (5th Cir. 2009) (& # 39; [N] fit is an obligation that is subject to the need to show prejudice. & # 39;) (Discusses Prodigy 288 SW3d at 381). Here, the district court never reached the question of whether Landmark was affected by Lonergan's alleged failure to comply with the policy's notification provisions, as the court considered that Lonergan did not fulfill its reporting obligation.
When he found the policy '' was to report 'a "request" that is not essential to the mandatory "reporting requirement", the Fifth District withdrew the district court's grant of a summary judgment to Landmark and re-assigned the case for proceedings consistent with its opinion.
1 Landmark American ins. Co. v. Lonergan Law Firm, P.L.L.C. No. 19-10385 (5th Cir. June 4, 2020).