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Waiting 21 months after the incident to report claims to the insurer loses liability insurance



While Paris Evans checked to make sure a ground door outside the parking deck was closed, she was sexually assaulted by an unidentified man who threatened her by stabbing her in the neck. The man raped her and then dropped her twice before leaving the area.

I Nationwide Property & Casualty Insurance Company, Nationwide Mutual Fire Insurance Company, Plaintiffs – Appellees, v. Renaissance Bliss, LLC, Renaissance Residential, LLC, City Walk Apartments, LLC, Renaissance Retail, LLC, Cohen & Associates , LLC, Paris Evans No. 19-11733, United States Court of Appeals for The Eleventh Circuit (August 14, 2020), the Eleventh Circuit faced a claim from ("Nationwide") which insured several companies with ownership interests in the Renaissance Walk and claimed that the insurance covered 22 months.

FACTS

In September 201

3, Paris Evans was attacked near the facility's parking lot and a business manager for five companies that are somehow connected to the complex quickly traveled to Atlanta to investigate. The officer did not notify Nationwide of the incident. Almost two years later, in 2015, Evans brought an action before the State Court, claiming damages for his injuries. In an amended complaint, she named each of the Renaissance units. Nationwide provided a defense but eventually discovered that it had not been notified when the Renaissance units first received the incident.

The police report shows that the apartment staff told the responding officials that a security camera in the parking area was not in operation. Renaissance Bliss, Renaissance Residential, Renaissance Retail and Cohen & Associates did not own or manage these common areas, which were the responsibility of a housing association at Renaissance Walk.

In summary, the district court ruled that under Georgia law, Renaissance units had been unreasonably late in notifying Nationwide of the attack on Evans. As a result, the court granted a summary judgment to Nationwide and allowed it to recover $ 275,000 it had paid for the settlement.

The primary policy, under the heading "Obligations in the event of occurrence, crime, claim or suit," provides the following: "You must ensure that we are notified as soon as practicable of any" event "or crime that may result in a claim, ”and it defines an“ event ”as“ an accident. ”Primary policy also states that“ [n] o person or organization is entitled under this coverage …

Twenty months after the incident, in a letter dated June 12, 2015, Evans' lawyer requested disclosure of liability insurance covering Renaissance Residential and City Walk Apartments, among others. Counsel for the Renaissance Residential and City Walk Apartments forwarded these letters to Nationwide on July 16, 2015.

On August 20, 2015, Evans filed a state court case (" Evans Disputes") against City Walk Apartments and Renaissance Residential, among other defendants who are not parties to this case. Nationwide originally appointed a lawyer to defend Renaissance Residential and later wrote to the Renaissance General's General Council after learning that Renaissance Residential was aware of the incident on the same day as it occurred, although it had not informed Nationwide for nearly two years. As a result, the letter Renaissance Residential recommended that Nationwide reserve its rights for disclaimer.

Evans claimed that the defendants knew or should have known of previous criminal activity at the scene. The complaint included three degrees of negligence – negligence in not keeping the property in proper repair, negligence in not keeping the property safe and a general theory of negligence.

The nationwide and Renaissance units signed a confidential "Financing and Status Quo Agreement" under which Nationwide would finance the $ 375,000 settlement. The agreement specified that this payment "would not be considered a voluntary payment and [would] would not waive Nationwide's right to try "this already ongoing trial. Nationwide agreed to waive the recovery of defense costs and $ 100,000 of the $ 375,000 they paid for settlement, "so that the total amount in question with the coverage dispute is limited to $ 275,000." The agreement also provided that the parties did not "waive [] any rights, obligations [,] or defense except as specifically stated" in the agreement.

The District Court granted Nationwide's proposal for a summary judgment and denied the Renaissance units' cross-motion. The district court also held that the Renaissance units by law had not shown sufficient reason to delay notifying Nationwide of the attack on Evans. As a result, Nationwide had no obligation to defend and replace the Renaissance units, even without showing prejudice.

ANALYSIS

Application of Diversity Jurisdiction Federal courts apply the choice of law in the forum state. In the case of an agreement, the courts of Georgia generally apply the law of the State in which the parties entered into the agreement. But if the contract specifies that performance is to take place in another country, then the laws of the state will apply.

The Renaissance units, which assert a right to the "rule of notice for prejudice" followed in California and not in Georgia, did not identify a charter in California. which creates California's rule of notice prejudice. According to Georgian law, a specific decision rule comes from the statutes or from the common law of another jurisdiction. And in that respect, the rule of notice for prejudice is merely a product of California's common law, which means that it is subject to Georgia's choice of law that does not apply to common law in other jurisdictions.

Although Renaissance units first notified Nationwide of the attack on Evans over twenty-two months after their occurrence, they claim that this delay was not unreasonable by law. Under Georgia law, clauses requiring timely termination to an insurance company apply as conditions that precede coverage. The policy behind this rule is to give insurers an early opportunity to investigate potential claims, prepare for disputes and evaluate settlements. Georgian courts have ruled that long periods of unjustified delay are unreasonable by law. Renaissance units "lost confidence" in not paying anything do not excuse the insurer under Georgia law.

Under the circumstances of this case, the Renaissance units' twenty-two-month delay in notifying Nationwide was unreasonable. as a matter of law. To reach this conclusion, the eleventh circuit considered the nature of the event, the extent to which it appears reasonable in the circumstances of the Renaissance that damages or property damage were due to the event and the apparent severity of such damage to Evans.

The insured considered Evans to be a "team member", although the Renaissance units did not employ her. The investigation shows that the Renaissance units fully understood the seriousness of the attack on her. The insured communicated with the broker for their employees' compensation insurance because he was worried about liability. Based on the information available to Renaissance units immediately after the incident, their actions were unreasonable by law.

It should be axiomatic that when an insured finds out about a potential claim, it should be reported immediately to all liability insurers. In Georgia, a 22-month delay is not excusable. In states such as California, where the rule of notice is followed by legal fiat, the conditions for notification are avoided if it does not affect the insurer. In Georgia, the rule of notice for prejudice does not apply. In this case, a delay of 22 months obviously affected the insurer's right to investigate. The Eleventh Circle, because it correctly applied Georgia law, had no reason to determine whether Nationwide was prejudiced. The insured had no one to blame for the $ 275,000 sentence except themselves.


© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to employment as an insurance consultant specializing in insurance. coverage, handling of insurance claims, cheating and insurance fraud almost equally for insurers and policyholders. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance industry. He can be found at http://www.zalma.com and zalma@zalma.com.

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