May 27, 2009 -
Summary Judgment Win for Insurer on Prejudice Issue
SRBC's Susan Hartnett and Shanel Lindsay scored a recent summary-judgment victory for an insurance-company client, in a case where the insured landlord failed to report a slip-and-fall lawsuit in housing court, and allowed a default judgment to enter against him.
By hurrying to appoint defense counsel once it got notice, the insurance company had been able to get the default partially removed: the housing court re-opened the case as to damages, but refused to do so as to liability, finding that the insured landlord had "no meritorious defense" on that part of the case.
In the insurance dispute, the landlord and the tort plaintiff argued that the insurance company was not prejudiced by the late reporting of the claim--the landlord could not have won on liability in any event, they argued, and the issue of damages was still open. Thus, the insurer could not avoid its obligation to defend him.
But a superior court judge agreed with SRBC's position that the insurer was undisputedly prejudiced because it could not conduct discovery to find evidence that might have supported a defense. The court allowed SRBC's motion for summary judgment, ruling that the claim was not covered as a matter of law.