A federal court in Arkansas has held that coverage was precluded due to a three-year delay in providing notice of suit, despite the insureds’ erroneous belief that their liability policy lapsed.Columbia Insurance Group, Inc. v. Park Plus Management Co., 2015 WL 2341273 (W.D. Ark. May 14, 2015).

The owners of a housing complex were sued by residents for various claims arising out of a rise in crime in the neighborhood. The insureds believed that their liability policy had lapsed and did not provide notice of the suit for over three years. When the insurer received notice of the claim, it defended under a reservation of rights and instituted a separate declaratory judgment action against the insureds. The insurer moved for summary judgment on its late notice defense.

The court granted the motion. It held that satisfaction of the notice provision was a condition precedent to the insured’s recovery under the policy. The court found that no reasonable juror could find that a three-year-delay satisfied the insureds’ obligation to provide notice “as soon as practicable,” and concluded that the mistake by the insureds as to the policy’s existence was irrelevant.