In PDQ Coolidge Formad, LLC v. Landmark American Insurance Company, No. 13-12079, 2014 WL 2016553 (11th Cir. May 19, 2014), the US Court of Appeals for the Eleventh Circuit, applying Florida law, held that the timeliness of a policyholder’s notice and any prejudice resulting therefrom can be determined as matter of law.
The policyholder in PDQ owned an apartment complex in Orlando, Florida. Id. at *1. The apartment complex allegedly suffered property damage on or about August 20, 2008 as a result of Tropical Storm Fay. Id. Approximately six months after the storm, in February 2009, the policyholder first provided notice of the alleged damage to its property insurer and sought coverage. Id.
The insurer denied coverage in part because the policyholder had “failed to submit its claim for damages . . . in a timely manner as required by the terms of the [p]olicy.” Id. (internal quotations omitted). The policy required “prompt notice of the loss or damage,” including “a description of the property involved.” Id. (quoting policy). Further, the policy required that the insured provide “[a]s soon as possible” “a description of how, when and where the loss or damage occurred.”Id.
The policyholder sued the insurer, alleging the denial of coverage was a breach of the insurance contract. Id. In response, the insurer moved for summary judgment on the issue of late notice. Id. The district court granted summary judgment in favor of the insurer. It concluded that the policyholder failed to provide timely notice, that the insurer was prejudiced by the untimely notice, and that the insurer did not breach the contract by denying the claim. Id.
The policyholder appealed to the Eleventh Circuit, arguing that the district court erred because (1) the question of timely notice is an issue of fact for the jury; (2) the policyholder’s statements could create an issue of fact; (3) the policy language requiring prompt notice was ambiguous; and (4) the question of prejudice as a result of late notice is also a question of fact for the jury. Id. The Eleventh Circuit rejected each challenge.
First, the Eleventh Circuit found ample authority in Florida law to conclude that the issue of timely notice may be decided as a matter of law. Id. at *2. Delays of six months or fewer can constitute late notice in Florida. Id. at *3. The undisputed record in PDQ was that the policyholder waited six months to provide its insurer notice. Id. at *2. The district court, therefore, did not err in concluding the policyholder provided late notice. Id. at *3. The Eleventh Circuit seemed to be swayed, in part, by the fact that the policyholder clearly understood its notice obligations – the policyholder had promptly notified the insurer of damage to other nearby properties resulting from the same storm. Id.
Second, the Eleventh Circuit rejected the policyholder’s attempt to create a material issue of fact via an affidavit and deposition testimony of its representatives. Id. at *3. The court concluded that the affidavit and testimony contained only conclusory statements and did not offer actual dates when notice occurred. Id. Therefore, the statements could not defeat summary judgment. Id.
Third, the Eleventh Circuit readily dismissed the policyholder’s assertion that the term “prompt notice” had any ambiguity under Florida law. Id. at *2. Florida courts construe the phrase “to mean that notice must be given within a reasonable time in view of all the facts and circumstances of the particular case.” Id. (internal citations and quotations omitted).
Finally, the court rejected the policyholder’s claim that there was a dispute of fact about the prejudice the insurer suffered as a result of the late notice. Id. at *4. Under Florida law, the burden was on the policyholder to demonstrate a lack of prejudice. Id. at *4. The policyholder in PDQ failed to provide any evidence showing that an earlier inspection of the properly would not have impacted the insurer’s investigation and coverage determinations. Id. Summary judgment, therefore, was appropriate on the issue of prejudice too.
PDQ likely will provide helpful guidance to litigants in Florida and the Eleventh Circuit with respect to late notice coverage defenses. Further, the decision in PDQ may help shorten coverage litigation on late notice issues, as the courts appear willing to decide the issue as a matter of law.