Appellate Court Affirms Breach of
Notice of Suit Condition Bars Coverage for Arbitration Award Under Umbrella Liability Policy
In
Tudor Insurance Co. v. Altman Management Co.
,
et al
.
,
Nos. 335841 and 335890 (Mich. App. Ct. August 21, 2018) (unpublished), the Michigan Court of Appeals affirmed summary judgment to our client, National Union Fire Insurance Company of Pittsburgh, Pa., agreeing with the Circuit Court of Wayne County that the insured’s breach of the National Union excess policy’s notice of suit condition relieved National Union of any coverage obligation.
The insured received summons and a copy of the underlying complaint which alleged permanent neurological impairment due to carbon monoxide exposure at the insured’s apartment complex. The insured failed to notify its primary insurer, Tudor Insurance Company, and excess insurer, National Union, of the underlying lawsuit and failed to appear and defend against the suit. The court entered a default judgment against the insured as to liability and causation. The sole unresolved issue was the underlying plaintiff’s damages. The insured provided notice of the suit to National Union almost two years after service of the underlying complaint and more than nine months after the insured’s liability defenses were barred by the court’s refusal to set aside the default. The underlying plaintiff subsequently obtained a $3.5 million binding arbitration award against the insured.
At the trial court level, National Union moved for summary judgment, seeking a declaration that it owed no duty to indemnify the insured for the award based on the insured’s failure to provide timely notice of the suit. The trial court agreed, finding the insured’s untimely notice breached the policy’s notice of suit condition, and that National Union was prejudiced by the insured’s late notice as a matter of law, because National Union lost the opportunity to investigate and defend against the lawsuit. The Court of Appeals agreed and affirmed that National Union is relieved of any indemnity obligation for arbitration award.
