Travelers Insurance Companies v. Maplehurst Farms, Inc.

MAY, Judge,

dissenting.

I believe the trial court correctly addressed whether Maplehurst’s delay in notifying Travelers was reasonable, and nothing in Dreaded relieved the trial court of that obligation or otherwise made that analysis inappropriate. I must therefore respectfully dissent.

Our Indiana Supreme Court has explicitly addressed the significance of whether an insured’s delay in notifying the insurer is reasonable:

The requirement of prompt notice gives the insurer an opportunity to make a timely and adequate investigation of all the circumstances surrounding the accident or loss. This adequate investigation is often frustrated by a delayed notice. Prejudice to the insurance company’s ability to prepare an adequate defense can therefore be presumed by an unreasonable delay in notifying the company about the accident or about the filing of the lawsuit. This is not in conflict with the public policy theory that the court should seek to protect the innocent third parties from attempts by insurance companies to deny liability for some insignificant failure to notify. The injured party can establish some evidence that prejudice did not occur in the particular situation. Once such evidence is introduced, the question becomes one for the trier of fact to determine whether any prejudice actually existed. The insurance carrier in turn can present evidence in support of its claim of prejudice. Thus, both parties are able to put forth their respective positions in the legal arena.

Miller v. Dilts, 463 N.E.2d 257, 265-66 (Ind.1984) (emphasis added).

I would accordingly decline to adopt the majority’s apparent premise that after Dreaded, reasonableness is no longer a permissible consideration in our analysis of late-notice disputes. Such a premise is inconsistent with the explicit language of the Miller decision, and nothing in the decision relied on by the majority, Dreaded, suggests reasonableness must, should, or can be disregarded.

Rather, it appears no “reasonableness” argument was raised in Dreaded.⁶ The Dreaded Court’s detailed recitation of the facts indicates Dreaded and IDEM were in touch about a possible violation for three and one-half years before Dreaded finally told its insurer there was an IDEM claim. Nothing in that decision indicates Dreaded offered any justification, or even an explanation, for its delay in giving notice.⁷

It therefore seems apparent the Dreaded Court’s silence regarding application of the Miller reasonableness standard to Dreaded’s delay reflects only Dreaded’s failure to assert facts and argument relevant thereto; it does not indicate the Court was implicitly overruling its reasonableness discussion in Miller. Nothing else in Dreaded suggests the Court meant to overrule or change the Miller holding, nor has our Indiana Supreme Court taken the opportunity to do so in subsequent decisions that addressed Miller, e.g., TriEtch.

The trial court therefore could (and properly did, as reflected in the majority’s acknowledgement of the reasons for Ma-plehurst’s delay, see Op. at 1155-56, 1160-61, and 1161 n. 3) determine that as a matter of law,⁸ Maplehurst’s delay was not significant or unreasonable.

Enforcement of a notice provision operates as a forfeiture because the insured loses his insurance coverage without regard to his dutiful payment of insurance premiums, see, e.g., Roberts Oil Co., Inc. v. Transamerica Ins. Co., 113 N.M. 745, 833 P.2d 222, 230 (1992), and our Indiana Supreme Court has long recognized that forfeitures are disfavored by the law. Skendzel v. Marshall, 261 Ind. 226, 231, 301 N.E.2d 641, 644 (1973). In addition, summary judgment for Travelers in this case implicates the public policy our Supreme Court explicitly recognized in Miller — to protect innocent third parties from attempts by insurance companies to deny liability⁹ for an “insignificant” failure to notify. 463 N.E.2d at 265.

Nothing in the Dreaded opinion suggests Dreaded’s delay was “reasonable” or its failure to notify the insurer was “insignificant.” In the case before us, by contrast, there was ample undisputed designated evidence of the reasonableness of Maplehurst’s delay in notifying Travelers.

The Dreaded decision does not require summary judgment for Travelers, and Miller does not permit it. I must therefore respectfully dissent.

6 . After summarizing facts Maplehurst offered to support its argument that its delay was legally excused, the majority says, without citation, "it was also argued in Dreaded that the insured's delay was caused by the client's extended difficulties in identifying the relevant insurers and locating policy information. And none of these difficulties excused a three-year delay in Dreaded.'' (Op. at 1161.)

There is no such argument in Dreaded. To the contrary, the Dreaded Court was explicit that Dreaded offered no excuse for its late notice: “It is important to first recognize what this case is not about.... Dreaded does not here contend ... that its failure to give notice is legally excused.” 904 N.E.2d at 1272-73.

7 . Rather, Dreaded argued it was "entitled to recover its pre-notice defense costs unless [the insurer] can prove that it was prejudiced by Dreaded’s late notice,” 904 N.E.2d at 1270, and our Indiana Supreme Court held the insurer "did not need to present any separate proof of prejudice to justify its failure to defend during the pre-notice period.” Id. at 1273. This holding is consistent with Miller, which held "[prejudice to the insurance company's ability to prepare an adequate defense can therefore be presumed by an unreasonable delay in notifying the company about the accident or about the filing of the lawsuit.” Miller, 463 N.E.2d at 265 (emphasis added).

8 . "What is reasonable notice is a question of law for the court to determine when the facts are not in dispute.” Miller, 463 N.E.2d at 263.

9 . The majority acknowledges the Dreaded Court noted that "St. Paul was not seeking to avoid all its obligations under the policies.” Op. at 1159-60. Rather, on receiving notice, St. Paul did "assume the defense of Dreaded.” 904 N.E.2d at 1270. The majority then asserts, without citation, that "Travelers adduced both in its appellate brief and at oral argument that it was not seeking to avoid all its obligations under the policies.” Op. at 1160.

I do not challenge the majority's characterization of such statements Travelers might have made, but I must question Travelers' assertion that it was not attempting to avoid all obligation to Maplehurst. See, e.g., Appellant’s Reply Brief at 4 n. 6 ("All of Maple-hurst’s expenses, both pre-tender and post-tender, are expenses Maplehurst obligated itself to pay prior to tender."); Op. at 1157-58 ("Century and American Economy also moved for summary judgment on cross-claims that they had filed against Travelers, seeking contribution with regard to defense costs they had incurred after the insurers received notice.”). These facts indicate Travelers might, in fact, be "seeking to avoid all its obligations under the policies.”