Opinion
No. HHD X04 CV-04-4022252 S
August 4, 2009
MEMORANDUM OF DECISION
This insurance coverage dispute is before the court concerning the cross motions for summary judgment filed by plaintiff Gulf Insurance Company (Gulf) and by defendant CNA Insurance Co. (CNA or Continental). The court heard oral argument concerning the motions on June 25, 2009.
By order dated October 21, 2008, the court granted the defendant and counterclaim plaintiff's motion (#140) to substitute CNA for Murdock Claim Management Corporation (MCMC) as the defendant and counterclaim plaintiff. In its response to Gulf's motion for summary judgment and in its own motion for summary judgment, CNA refers to itself as Continental Insurance Company.
I BACKGROUND
Gulf issued to MCMC, of Windsor, Connecticut, two claims-made services professional's errors and omissions liability insurance policies, for the policy periods May 12, 2001 to May 12, 2002 and May 12, 2002 to May 12, 2003. See Gulf's Exhibits A and D. In seeking declaratory relief Gulf claims that, due to late notice, it owed no obligation to defend or indemnify MCMC thereunder for claims which arose out of MCMC's handling of two personal injuries claims, and that the anti-assignment provision in these policies precludes recovery under the policies by CNA, as MCMC'S assignee. Continental contends that MCMC timely reported a claim within the relevant policy period, and that any delay between when MCMC learned of a claim or a potential claim against it and the time when it reported that claim to Gulf was not prejudicial to Gulf. In addition, Continental asserts that MCMC's assignment of its claim against Gulf to CNA was valid. Based on MCMC's counterclaim, Continental seeks summary judgment, including declaratory relief, money damages, and attorneys fees, claiming that Gulf was obligated to indemnify MCMC and to pay for the defense of Continental's claim against MCMC.
The material facts are not in dispute. MCMC entered into a Claims Service Agreement with Continental Casualty Company and its subsidiary insurance companies, pursuant to which MCMC was to act as Continental's administrator for the servicing of insurance claims. See Gulf Exhibit B. On July 9, 2001, a Chevrolet tow truck owned by Continental's insured, North County Towing, Inc. (North County), was involved in a motor vehicle accident in Florida with a Toyota Corolla, which was operated by Ian Anderson, and in which Justin Shoup was a passenger. The accident resulted in fatal injury to Anderson and a serious head injury to Shoup.
North County reported the accident to MCMC on July 11, 2001 (See Gulf's Exhibit Y), and on August 6, 2001 MCMC learned of a wrongful death suit on Anderson's behalf against North County. See Gulf's Exhibit K. In October 2001, MCMC authorized North County's defense counsel, Nicholas J. Reising, Jr., Esq., to tender $500,000, the limits of the Continental policy, to counsel for Anderson's parents and estate. By letter dated November 27, 2001, that offer was rejected. Anderson's parents' and estate's counsel informed Reising that the offer was clearly untimely and that "[t]here is no question that, under the circumstances, your insurance company client is very much guilty of bad faith claims handling in the way they have poorly handled this horrible and tragic case involving the death of the Andersons' only son, Ian." See Gulf's Exhibit Q.
Similarly, counsel for Shoup stated, in a letter to Reising, dated November 28, 2001, that "[t]he claim handling of this case by Transportation Insurance Company amounts to egregious bad faith conduct on the part of Transportation Insurance Company." See Gulf's Exhibit S. Reising forwarded the November 27, 2001 and November 28, 2001 letters to MCMC on December 4, 2001. See Gulf's Exhibits R. and T., On December 12, 2001, by email message, Rick Pattavina of MCMC advised Russell Maida and Michael Murdock of MCMC that "[w]e need to advise CNA of bad faith allegations by way of a large loss report." See Gulf Exhibit U.
On the next day, December 13, 2001, Michael Brooks of MCMC sent a letter to Attorney Joseph Ligman, of the firm of Ligman, Martin in Miami, Florida, seeking legal assistance concerning the bad faith allegations. Brooks stated that MCMC was the claims manager for Transportation Insurance Company, and that MCMC was then handling the claims against North County. He also stated that, "[w]e have recently received correspondence from the attorneys representing the plaintiffs in this case alleging bad faith in the handling of this claim." Brooks enclosed pertinent parts of MCMC's file, and requested Ligman to "provide us with your opinion concerning these allegations . . ." See Gulf's Exhibit V. A response was requested by December 17, 2001, if possible.
Ligman responded to Brooks by letter on December 18, 2001. He advised that the question of whether "Transportation was guilty of bad faith in its delay in tendering the policy limit settlement is a question of fact for the jury." See Gulf's Exhibit W, page 9. Further, he stated that "there is no formula to apply to the instant case that will lead to a reliable prognosis about the result of the bad faith claim that is surely coming." See Gulf's Exhibit W, page 9.
Approximately three weeks later, by letter dated January 10, 2002, North County's personal attorney, Robert D. Critton, Jr., Esq., advised Russell Maida of MCMC that "by August 9th, 2001, you were aware that you had an accident which appeared to be your insured's fault with at least one death of a young male and a second young male who had a potential serious injury. You were aware that a top notch Florida plaintiff's attorney was representing the Andersons and should have realized that the case had a value, based on your own liability analysis of greater than $500,000.00." See Gulf's Exhibit X, page 2. Further, Critton stated, "[w]hen Murdock became aware on August 1, 2001 that Mr. Anderson had died as a result of the automobile accident, bells and whistles should have been flashing that Transportation and Murdock had a case which was worth in excess of $500,000.00. Yet they waited for over three months to offer the entire $500,000.00 to Mr. Anderson's attorneys to try and resolve the case and obtain full and complete releases. It was too late at that point." See Gulf's Exhibit X, page 3.
Critton also stated, "Murdock sat on its heels not offering to resolve either case with any of the Plaintiffs' lawyers, did not secure any releases and has now left my clients exposed to an excess judgment. There is no question in my mind that Murdock and/or Transportation are in bad faith for the manner in which they handled this case. Demand is hereby made on Murdock and Transportation that they resolve both of these claims as quickly as possible. It may be beneficial to do an early mediation to determine whether both claims can be resolved and if additional monies are necessary to resolve the cases, that Murdock and/or Transportation be prepared to come up with those additional funds to settle the cases. This case was grossly mishandled by Murdock and Transportation, and their mishandling of the case has exposed my client to a substantial excess verdict." See Gulfs Exhibit X, page 3.
Critton's letter was received at MCMC on January 14, 2002. See Interoffice Memo from Rick Pattavina of MCMC to Richard Hsia, General Counsel, dated May 10, 2002, Gulf's Exhibit Y, page 3.
CNA placed MCMC on notice, by letter dated May 7, 2002, that it "intend[ed] to seek indemnification from MCMC should Continental be found liable for damages arising from Murdock's actions or inactions in handling the Anderson/Shoup claim. If you have not already done so, you should place your Errors and Omissions insurer on notice of this potential liability." See Gulf's Exhibit Z.
On May 20, 2002, more than four months after receiving Critton's January 10, 2002 letter, MCMC sent a notice of claim letter to Gulf's claim managers, EO Professionals, advising of its receipt, on May 7, 2002, of the written notification of claim from CNA. See Gulf Exhibit A1. MCMC sought coverage under its insurance policy with Gulf, Policy No. IG0644105 and under the renewal policy. In response, Gulf disclaimed coverage. See Gulf Exhibit B1.
The insurance policy provisions are discussed below.
In September 2003, Continental sued MCMC in the Circuit Court in Palm Beach County, Florida. See Gulf's Exhibit C1 (Florida complaint). Continental settled the Anderson and Shoup claims for a total of $1.5 million dollars in excess of the $500,000 policy limits. See Florida complaint, pages 12-13, ¶¶ 55-56. In October 2006, MCMC settled with and assigned to CNA its rights to litigate against and recover the settlement amount from Gulf. See Covenant Not To Execute, Gulf Exhibit E1, page 2, ¶ 4. MCMC did not request Gulf to consent to the assignment, and no consent was provided.
Additional references to the facts are set forth below.
II STANDARD OF REVIEW
"Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." (Internal quotation marks omitted.) Bellemare v. Wachovia Mortgage Corp., 284 Conn. 193, 198, 931 A.2d 916 (2007). "When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue." (Internal quotation marks omitted.) Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 11, 938 A.2d 576 (2008).
"To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent." (Internal quotation marks omitted.) Bednarz v. Eye Physicians of Central Connecticut, P.C., 287 Conn. 158, 174-75, CT Page 13185 947 A.2d 291 (2008).
"[I]ssue-finding, rather than issue-determination, is the key to the procedure . . . [T]he trial court does not sit as the trier of fact when ruling on a motion for summary judgment . . . [Its] function is not to decide issues of material fact, but rather to determine whether any such issues exist." (Internal quotation marks omitted.) Precision Mechanical Services, Inc. v. T.J. Pfund Associates, Inc., 109 Conn.App. 560, 564, 952 A.2d 818, cert. denied, 289 Conn. 940, 959 A.2d 1007 (2008).
III DISCUSSION A Prompt Notice
Gulf contends that it has shown that summary judgment in its favor is warranted, since the insurance policy provisions provide that prompt notice of a claim or a potential claim is a condition precedent to coverage, and that the evidentiary record makes it clear that MCMC failed to provide such prompt notice. Continental also seeks summary judgment, arguing that notice was prompt and that any delay in reporting the claim did not prejudice Gulf. Both parties rely on Connecticut law as being applicable.
"[C]onstruction of a contract of insurance presents a question of law for the court . . . It is the function of the court to construe the provisions of the contract of insurance . . . The [i]nterpretation of an insurance policy . . . involves a determination of the intent of the parties as expressed by the language of the policy . . . [including] what coverage the . . . [insured] expected to receive and what the [insurer] was to provide, as disclosed by the provisions of the policy . . . [A] contract of insurance must be viewed in its entirety, and the intent of the parties for entering it derived from the four corners of the policy . . . [giving the] words . . . [of the policy] their natural and ordinary meaning . . . [and construing] any ambiguity in the terms . . . in favor of the insured . . ." (Internal quotation marks omitted.) Connecticut Insurance Guaranty Association v. Fontaine, 278 Conn. 779, 784-85, 900 A.2d 18 (2006). "This rule of construction may not be applied, however, unless the policy terms are indeed ambiguous." (Internal quotation marks omitted.) Enviro Express, Inc. v. AIU Ins. Co., 279 Conn. 194, 199, 901 A.2d 666 (2006).
"Although ordinarily the question of contract interpretation, being a question of the parties' intent, is a question of fact . . . [w]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law." (Internal quotation marks omitted.) Montoya v. Montoya, 280 Conn. 605, 613, 909 A.2d 947 (2006).
The insurance policy provisions are clear and unambiguous. Neither party claims otherwise. Gulf Policy No. IG0644105, which was effective from May 12, 2001 to May 12, 2002, states, on Declarations Page 1 of 2, that it is an Insurance Services Professionals Errors and Omissions Liability Insurance Policy. "Claims Made and Reported" appears directly thereunder. See Gulf Exhibit A (policy). MCMC is listed as the Named Insured. At the top of this page, in capital letters, the following appears: "NOTICE: THIS INSURANCE IS WRITTEN ON A CLAIMS MADE AND REPORTED BASIS AND PROVIDES COVERAGE FOR THOSE CLAIMS WHICH ARE FIRST MADE AND REPORTED TO THE COMPANY WHILE THIS INSURANCE IS IN FORCE AND WHICH ARE THE RESULT OF WRONGFUL ACTS COMMITTED ON OR SUBSEQUENT TO THE RETROACTIVE DATE SPECIFIED IN ITEM 4 OF THE DECLARATIONS. NO COVERAGE EXISTS FOR CLAIMS FIRST MADE AFTER THE END OF THE POLICY PERIOD UNLESS AND TO THE EXTENT AN EXTENDED REPORTING PERIOD APPLIES."
Continental does not contend that there was coverage under the renewal policy, No. 1G0645603, which was effective from May 11, 2002 to May 12, 2003. Rather, it claims that there was coverage under the first policy. See Continental's memorandum of law, pages 10-11.
At the top of page 1, in capital letters and bold print, the following appears: "THIS IS A CLAIMS MADE AND REPORTED INSURANCE POLICY." On the same page, Gulf agreed that, "[t]he Company will pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as Damages and Claim Expenses resulting from any Claim first made against the Insured and reported to the Company during the Policy Period for any Wrongful Acts the Insured, or someone for whose wrongful Acts the Insured is legally responsible, provided however, that such Wrongful Act was committed on or subsequent to the Retroactive Date specified in Item 4. of the Declarations." (Emphasis omitted.) See policy, page 1.
On Declarations Page 1 of 2 the Retroactive Date is listed as May 12, 1997.
For ease of reference, the court will not note every instance in which certain words of the policy appear in bold print.
The policy, at page 2, defines a "Claim" as "(a) any demand received by the Insured for Damages alleging a Wrongful Act including a civil action or suit or institution of arbitration proceedings; or (b) any notice received by the Company in accordance with IV. Special Provisions: 4. Claims, B. Notice of Potential Claims." Further, the policy provides that "Damages means any compensatory sum which an Insured is legally obligated to pay for any Claim to which this insurance applies, and shall include judgments and settlements, negotiated with the Company's written consent. Damages shall not include any Claim Expenses." See policy, page 3.
In pertinent part, the policy, page 4, defines Wrongful Act as follows: "Wrongful Act means any actual or alleged breach of duty, neglect, error, negligent misstatement, misleading statement or omission unintentionally committed solely in the conduct of the Insured's Professional Services . . ."
Concerning Notice Of Claims, the policy, page 7, provides, "If during the Policy Period, or any Extended Reporting Period, any Claim is first made against any Insured, then the Insured shall, as a condition precedent to their right to the protection afforded by this Policy, give to the Company prompt notice of such Claim."
As to Notice of Potential Claims, referred to above in the definition of a Claim, the policy, page 7, provides, "If, during the Policy Period, an Insured receives notice (written or verbal) or any threat of an intention to hold the Insured responsible for any Wrongful Act or first becomes aware of a Wrongful Act to which this Insurance may apply, either of which is reasonably expected to give rise to a Claim, and provides the Company, during the Policy period, with written notice which contains the names of potential claimants, a description of the Wrongful Act, the possible Damages arising from the Wrongful Act, then, if the Company determines that the information provided is sufficient, any Claim subsequently made against any Insured arising out of such circumstance(s) shall be deemed made during the Policy Period."
Under Reporting Requirements, page 8, the policy states, "In the event a Claim is made against the Insured, the Insured shall immediately forward to the Company or its authorized agent every demand, notice, summons or other process and pleadings received by the Insured or their representatives."
Gulf asserts that MCMC's May 20, 2002 notice of claim was untimely because, months before, MCMC was previously notified of its allegedly wrongful conduct in its handling of the Anderson and Shoup claims, in writing, (a) by the November 27 and 28, 2001 letters from counsel for the Andersons and Shoup; and (b) by Critton's January 10, 2002 letter. Continental contends that it provided prompt notice, since notice was provided soon after receiving CNA's May 7, 2002 letter and within the period covered by the policy.
While Continental also asserts that Gulf's defense is premised on MCMC's first reporting of the CNA claim after the expiration of the first policy, Gulf does not make that argument. Accordingly, in order to adjudicate the cross motions, the court need not address the issue of an extended reporting period. See General Statutes § 38a-327; Regs., Conn. State Agencies §§ 38a-327-3.
"The present policy is an example of a claims-made or, more accurately, a claims-made-and-reported policy. Such a policy provides coverage for a claim first asserted against the insured during the policy period, if the insured reports the claim during the policy period or within a specified time after learning of the claim . . . In contrast, an occurrence-based policy provides coverage based [on] whether the injury-causing event, or `occurrence,' takes place during the policy period, without regard to whether the resulting claim is brought against the insured during or after the policy period . . . Claims-made policies extinguish the `never-ending-tail liability' characteristic of occurrence policies." (Citations omitted; emphasis in original; footnotes omitted.) Asche v. Hartford Insurance Co. of Illinois, 2006 U.S. Dist. LEXIS 70192, *12 . . . *13, (D.Conn., September 28, 2006) (interpreting Connecticut law). "The purpose of claims-made policies, unlike occurrence policies, is to provide exact notice periods that limit liability to a fixed period of time after which an insurer knows it is no longer liable under the policy, and for this reason such reporting requirements are strictly construed . . . Allowing coverage beyond that period would be to grant the insured more coverage than that which was bargained for, and to require insurers to provide coverage for risks not assumed." (Internal quotation marks omitted.) Id., *24.
"`[N]otice provided pursuant to the claims reporting requirements permits the insurer to more accurately fix reserves for future liabilities and to compute premiums with greater certainty. The resulting reduction in the insurer's potential liability exposure reduces the cost of coverage under the policy.' Insurance Law Practice, Appleman, Vol. 8, Supplem., 1996-1997 Pocket Part § 4731." ITC Investments, Inc. v. Employers Re insurance Corporation, Superior Court, judicial district of New London at Norwich, Docket No. CV98-115128 (December 11, 2000, Corradino, J.).
Here, as set forth above, the policy stated that, "as a condition precedent," for the coverage to apply, the insured was required to provide "prompt notice" of a claim to Gulf. See policy, page 7. Thus, in the policy, the parties unequivocally agreed that the provision of prompt notice was a condition precedent to the provision of coverage. See Glazer v. Dress Barn, Inc., 274 Conn. 33, 56, 873 A.2d 929 (2005); Lach v. Cahill, 138 Conn. 418, 421, 85 A.2d 481 (1951) ("If the condition is not fulfilled, the right to enforce the contract does not come into existence.")
"There is no obligation to give notice until there are reasonable grounds to believe that a loss covered by the policy has been sustained." Danulevich v. Hartford Fire Insurance Co., 36 Conn.Sup. 570, 576, 421 A.2d 559 (App. Sess. 1980).
The quoted policy language is unambiguous. The policy does not define the term "prompt." In ascertaining the common meaning of terms utilized in an insurance contract where no definition is provided, the Supreme Court has looked to the dictionary definition, as found in Webster's Third New International Dictionary. See Metropolitan Life Insurance Co. v. Aetna Casualty Surety Co., 255 Conn. 295, 307, 765 A.2d 891 (2001); Moore v. Continental Casualty Co., 252 Conn. 405, 410-11, 746 A.2d 1252 (2000). Webster's, page 1816, in the closest relevant definition, defines "prompt" to mean "performed readily or immediately: given without delay or hesitation."
"[C]ircumstances may be such as to explain or excuse delay in giving notice and show it to be reasonable . . . When the facts are undisputed and one conclusion only is reasonably possible, the question of compliance with a provision for notice is one of law; otherwise it is a question of fact." (Internal quotation marks omitted.) West Haven v. U.S. Fidelity Guaranty Co., 174 Conn. 392, 397-98, 389 A.2d 741 (1978) (four-month delay in notice was neither excusable nor reasonable).
"Most of the policy provisions which have been involved in the cases concerning compliance [with notice requirements] have specified `immediate notice,' `prompt notice' or the like, and these terms have usually been construed as meaning and requiring that the notice be given within a reasonable time, under the circumstances of the case, after the assured learns of an accident resulting in injuries within the coverage of the policy." Baker v. Metropolitan Casualty Insurance Co., 118 Conn. 147, 149, 171 A.7 (1934).
The notice provision in the claims-made policy at issue in Southridge Capital Management, LLC v. Twin City Fire Insurance Co., Superior Court, judicial district of Middlesex, Complex Docket at Middletown, Docket No. X04 CV 02 0103527 (September 8, 2006, Beach, J.) ( 42 Conn. L. Rptr. 193), provides a useful illustration. There, the insurance agreement provided, "The Company shall pay on behalf of an INSURED all LOSS resulting from a CLAIM first made against an INSURED during the POLICY PERIOD and reported in writing to the Company as soon as practicable, but no later than sixty (60) days after said CLAIM is first made . . ." Id.
"[T]he gravamen of the case law is that the contract should be enforced as written where the language is clear." Southridge Capital Management, LLC v. Twin City Fire Insurance Co., supra, Superior Court, Docket No. X04 CV 02 0103527. Where the claim was reported late under the terms of the policy, the court found that there was no coverage. See id. "[T]here is no difference in the result if the claim is reported within the policy period, if it is also late under language in the coverage clause." Id.
Another claims-made policy notice case, cited by the court in Southridge, also provides useful guidance. In Janjer Enterprises, Inc. v. Executive Risk Indemnity, Inc. (Chubb Group), 97 Fed.Appx. 410, CT Page 13190 2004 WL 1011004 (4th Cir. 2004), the policy required the insured to provide the insurer "with written notice of any claim first made . . . during the policy period `as soon as practicable and in no event later than sixty . . . days after such Claim is first made.'" Id., 412. The court found that the insurer agreed to defend and indemnify the insured "only if" the insured complied with the reporting requirement. (Emphasis in original.) Id., 415. The insured was found to have failed to comply with the express notice provision, since, despite having received a notice of charge of discrimination on March 2, 2001, it did not notify the insurer of the claim until approximately seven months later. See id., 415-16.
In contrast, Mitchell v. Medical Inter-Insurance Exchange, 101 Conn.App. 721, 923 A.2d 790, cert. denied, 284 Conn. 903, 931 A.2d 265 (2007), cited by Continental, did not address a policy clause which required that notice be provided within a limited period of time, not just within the policy period.
Here, where the Gulf policy required "prompt notice," as "as a condition precedent to [the] right to the protection afforded by this Policy," notice to Gulf was required within a reasonable time after MCMC learned of a claim. See policy, page 7. The undisputed facts show that such prompt notice did not occur.
First, receipt of the November 27 and 28, 2001 letters from the Andersons' and Shoup's counsel provided MCMC with knowledge of facts which "would require a person of ordinary and reasonable prudence to believe that liability because of injury may arise . . .," triggering the duty to provide notice. (Internal quotation marks omitted.) Silver v. Indemnity Insurance Co., 137 Conn. 525, 528, 79 A.2d 355 (1951).
Although these letters referred to bad faith claims handling by the insurance company, MCMC knew that MCMC was responsible, under the Claims Service Agreement with Continental, for the claims handling. Indeed, in December 2001, when Michael Brooks of MCMC sought legal advice from Attorney Ligman in response to the November 2001 letters, he stated that MCMC was the claims manager for the insurance company, and that MCMC was then handling the claims against North County. See Gulf's Exhibit V. Further, the Claims Service Agreement provides, at Article V, page 3, that MCMC "agrees to indemnify, defend, and hold the other party and all of its affiliates and/or subsidiaries and their employees, officers and directors harmless with respect to any claim, demand, action, damages, cost and/or expense (collectively `Damages') to which one party may be subject to as a consequence of or as a result of any act, error, omission, tortious or otherwise, on the part of the other party." See Gulf's Exhibit B.
In addition, there was no doubt that damages would be sought based on the bad faith allegations. Ligman's December 18, 2001 response to Brooks, page 6, states that "[t]o present a third party bad faith claim, the claim must necessarily arise from an excess judgment . . . For the purposes of this opinion letter we will assume that an excess judgment is preordained." (Citation omitted.) See Gulf's Exhibit W. The November 27, and 28, 2001 letters provided facts which required a person of ordinary and reasonable prudence to believe that MCMC may have incurred liability as a result of its handling of the personal injury claims. Ligman's response to MCMC's request for legal advice confirmed this.
Second, Critton's (North County's/the insured's attorney's) letter of January 10, 2002 emphatically reiterated that MCMC was allegedly responsible for bad faith claims handling concerning the personal injury claims. Therein, he repeatedly asserted that MCMC had acted in bad faith in the alleged mishandling of the claims, and demanded that MCMC resolve both of the claims as quickly as possible. He specifically advised MCMC that, if additional monies were necessary to resolve the cases, that MCMC itself should be prepared to come up with those additional funds to settle the cases. See Gulf's Exhibit X.
There is no question that Critton's letter constituted a "Claim" under the Gulf policy, since it contained a demand for damages, alleging wrongful acts by MCMC. See policy, page 2. As discussed above, a notice of claim was not provided by MCMC to Gulf until May 20, 2002, more than five months after the November 27, and 28, 2001 letters were received by MCMC, and more than four months after Critton's January 10, 2002 letter was received. Likewise, there is no question that CNA's May 7, 2002 letter, which prompted MCMC to provide a notice of claim to Gulf on May 20, 2002, alluded to the same alleged mishandling of the Anderson and Shoup claims which was previously referred to in the November 27, and 28, 2001 and January 10, 2002 letters.
As a matter of law, the undisputed facts show that such notice by MCMC to Gulf was not prompt, as required by the policy as a condition precedent to coverage. It was not provided "as soon as can reasonably be expected under the circumstances." (Internal quotation marks omitted.) Silver v. Indemnity Insurance Co., supra, 137 Conn. 528. Instead, it was delayed. The delay lasted several months, which, under the circumstances, was unreasonable and not prompt.
Both parties cite this court's decision in Cabrera v. United Coastal Insurance Co., Superior Court, Docket No. CV 04 0833416 (July 18, 2005, Shapiro, J.) ( 39 Conn. L. Rptr. 822). The notice of claim provision at issue in Cabrera materially differed from that in the Gulf policy here. There, the policy stated, "This insurance applies only to `bodily injury' and `property damage' caused by an `occurrence' during the `policy period' and for which `claim' is first made against the `insured' and reported in writing to us during the `policy period' or within 30 days of the end of the `policy period.'" See Cabrera v. United Coastal Insurance Co., supra, Superior Court, Docket No. CV 04 0833416. Thus, in contrast to the Gulf policy, there was no provision requiring "prompt notice" in addition to requiring notice within the policy period; rather, a notice of claim was timely under that policy if reported in writing during the policy period or within thirty days of the end thereof.
Similarly, Hasbrouck v. St. Paul Fire Marine Insurance Co., 511 N.W.2d 364 (Iowa 1993), cited in Cabrera, and by Continental here, concerned a policy which only required that "The claim must . . . first be made while this agreement is in effect. When is a claim made? A claim is made on the date you first report an incident or injury to us or your agent." (Emphasis omitted.) Id., 367. Thus, in contrast to the Gulf policy here, the policy there did not contain a "prompt notice" provision, in addition to requiring that notice be provided while the policy was in effect.
"When interpreting [an insurance policy], we must look at the contract as a whole, consider all relevant portions together and, if possible, give operative effect to every provision in order to reach a reasonable overall result." (Internal quotation marks omitted.) National Grange Mutual Insurance Co. v. Santaniello, 290 Conn. 81, 89, 961 A.2d 387 (2009). As discussed above, the policy states, at page 7, that "[i]f during the Policy Period, or any Extended Reporting Period, any Claim is first made against any Insured, then the Insured shall, as a condition precedent to their right to the protection afforded by this Policy, give to the Company prompt notice of such Claim." Since the policy required "prompt notice," the court may not rewrite the parties' agreement to have it only require that notice be provided within the policy period, as extended. See Moore v. Continental Casualty Co., supra, 252 Conn. 414.
The Supreme Court has "recognized the canon of construction of insurance policies that a policy should not be interpreted so as to render any part of it superfluous . . . [W]e have consistently stated that [i]f it is reasonably possible to do so, every provision of an insurance policy must be given operative effect . . . because parties ordinarily do not insert meaningless provisions in their agreements . . . Since it must be assumed that each word contained in an insurance policy is intended to serve a purpose, every term will be given effect if that can be done by any reasonable construction . . . A construction of an insurance policy which entirely neutralizes one provision should not be adopted if the contract is susceptible of another construction which gives effect to all of its provisions and is consistent with the general intent." (Internal quotation marks omitted.) R.T. Vanderbilt Company, Inc. v. Continental Casualty Co., 273 Conn. 448, 468-69, 870 A.2d 1048 (2005). If the parties here had meant to say that notice of a claim would be timely if given during the policy period (including any extended policy period), they would have so provided. Interpreting the policy language in such a fashion would impermissibly render meaningless the inclusion of the word "prompt" in the policy language.
B Prejudice
Citing Aetna Casualty Surety Co. v. Murphy, 206 Conn. 409, 418, 538 A.2d 219 (1988), where the court stated that, "absent a showing of material prejudice, an insured's failure to give timely notice does not discharge the insurer's continuing duty to provide insurance coverage," Continental argues that coverage will be found to exist where the insured can show that the insurer suffered no material prejudice as a result of the delay in providing notice.
In Cabrera v. United Coastal Insurance Co., supra, Superior Court, Docket No. CV 04 0833416, this court stated that neither Aetna Casualty Surety Co. v. Murphy, supra, 206 Conn. 409, nor other Supreme Court precedent on the subject of prejudice due to late notice, "discusses the language of a claims made policy, such as is at issue here, where the provision of timely notice goes to the very essence of the coverage provided by the policy. Accordingly, . . . our Supreme Court's language in those cases concerning prejudice is not applicable here." More recently, in National Publishing Co. v. Hartford Fire Insurance Co., 287 Conn. 664, 949 A.2d 1203 (2008), the Supreme Court addressed notice and prejudice issues in the context of a requested jury instruction. It did not discuss the issues as applied to a claims-made policy.
While Continental agrees with the analysis in Cabrera, it contends that prejudice remains a factor to be considered here where notice was provided within the relevant claims-made policy period. See Continental's reply, page 3. However, this argument ignores the clear language in the Gulf policy, discussed above, which required prompt notice within the policy period, and which did not occur. Also, Continental cites language from the Supreme Court of Iowa's decision in Hasbrouck v. St. Paul Fire Marine Insurance Co., supra, 511 N.W.2d 364. There, in stating that "most courts will deem the notice provision waived" ( id., 368), where there is no showing of prejudice, the Iowa court explicitly was referring to the purpose of a notice provision in an occurrence policy, giving the insurer time to investigate the claim, not to notice in a claims-made policy.
In Cabrera, this court cited Judge Corradino's decision in ITC Investments, Inc. v. Employers Reinsurance Corporation, supra, Superior Court, Docket No. CV98-115128, decisional law from other jurisdictions, and language from insurance law treatises, the general consensus of which was that the issue of prejudice is not material to a claims-made policy. As this court concluded in Cabrera v. United Coastal Insurance Co., supra, Superior Court, Docket No. CV 040833416, the court "may not import a prejudice requirement into the unambiguous policy language here. To do so would constitute an impermissible, material re-writing of the claims made coverage provided by the policy. See Moore v. Continental Casualty Co., [ supra,] 252 Conn. [414]."
Subsequent to Cabrera, the court in Southridge Capital Management, LLC v. Twin City Fire Insurance Co., supra, Superior Court, Docket No. X04 CV 02 0103527, applying Delaware law, also found that "prejudice is immaterial in the consideration of late notice when applying a claims-made policy." After reviewing precedent from other jurisdictions, the court stated, "The consensus is that prejudice is not required because the insuring agreement is straightforward and provides certain underwriting and other advantages to the company by virtue of a speedy reporting requirement; courts ought not rewrite the contract, which is entered into by relatively sophisticated business people." Id.
More recently, in 4th Street Investments, LLC v. Dowdell, United States Court of Appeals, Docket No. 08-1512 (3d Cir. July 2, 2009), where the policy required "written notice as soon as practicable of any Claim," the plaintiff asserted that even if the policy required notice, the trial court erred in requiring strict compliance with that requirement instead of requiring a showing of prejudice. In affirming, the Court of Appeals stated, "[R]eporting requirements in claims-made policies are strictly construed and enforced; if an insured does not give notice within the required time, there is simply no coverage under the policy." (Internal quotation marks omitted). Id. The same is true here.
Since MCMC did not provide prompt notice of claim, it did not comply with the condition precedent for coverage under the Gulf policy. Since there was no coverage, Gulf had no obligation to defend or indemnify MCMC. This determination resolves the issues raised by Gulf's complaint and MCMC's counterclaim. Accordingly, the court need not address Gulf's argument that the assignment to CNA was invalid.
CONCLUSION
Based on the foregoing reasons, Gulf has shown that the material facts are not disputed and that it is entitled to judgment as a matter of law. Accordingly, Gulf's motion for summary judgment is granted. Gulf owed no obligation to defend or indemnify MCMC under the Gulf insurance policies concerning the claims at issue. In view of this determination, Continental's cross motion for summary judgment is denied. Judgment may enter for Gulf and against CNA on Gulf's complaint and on the counterclaim.
It is so ordered.