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Insurance companies fail to show they were harmed by untimely notice

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The 7th Circuit Court of Appeals ruled a District Court judge from Evansville should not have excused two insurance companies from covering a $13.5 million award solely because the companies were notified of the award after the trial.

In National Union Fire Insurance Company of Pittsburgh, Pa. and Lexington Insurance Company v. Mead Johnson & Company LLC, et al., Nos. 12-3478 and 13-1526, the 7th Circuit Court of Appeals reversed a summary judgment in favor of the insurers and remanded for further proceedings.

The case originated from the U.S. District Court for the Southern District of Indiana, Evansville Division.

The 7th Circuit ruled that although Mead Johnson did not tell the insurance companies of the false advertisement lawsuit until after it lost at trial, the insurers have to show they were harmed in order to disclaim coverage.

National Union, the court held, did not explain how it could have garnered a better outcome if it has been notified earlier of the suit. The insurer would have employed the same law firm and attorneys that Mead chose.

Lexington could have presented evidence or argued that with earlier notification it could have convinced the jury to award the plaintiff, PBM Products LLC, less. However, the court noted, the insurers’ joint brief makes almost no mention of Lexington and, instead, assumes that, like National Union, it would have enlisted the same law firm and used the same litigation tactics that resulted in the $13.5 million judgment.  

The 7th Circuit asserted District Judge Richard Young, in finding the insurances companies were harmed, was misled by two decisions from the Indiana Court of Appeals. However, the Circuit Court noted the Indiana Supreme Court has held that if the insured has inflicted no cost on the insurance company by untimely notice, then the insurance company cannot reject the claim.

“To be consistent with Indiana law, the district judge should have said that the later the notice the harder it is for the insured to rebut the presumption that the insurer was harmed by being deprived of the opportunity to control the defense,” Judge Richard Posner wrote. “It’s because that’s a rough row for the insured to hoe that a trial is necessary to determine whether the lateness of the notice in this case was indeed harmless, as it appears to have been on the present, limited record.”

 

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  1. Good riddance to this dangerous activist judge

  2. What is the one thing the Hoosier legal status quo hates more than a whistleblower? A lawyer whistleblower taking on the system man to man. That must never be rewarded, must always, always, always be punished, lest the whole rotten tree be felled.

  3. I want to post this to keep this tread alive and hope more of David's former clients might come forward. In my case, this coward of a man represented me from June 2014 for a couple of months before I fired him. I knew something was wrong when he blatantly lied about what he had advised me in my contentious and unfortunate divorce trial. His impact on the proceedings cast a very long shadow and continues to impact me after a lengthy 19 month divorce. I would join a class action suit.

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  5. Dear Fan, let me help you correct the title to your post. "ACLU is [Left] most of the time" will render it accurate. Just google it if you doubt that I am, err, "right" about this: "By the mid-1930s, Roger Nash Baldwin had carved out a well-established reputation as America’s foremost civil libertarian. He was, at the same time, one of the nation’s leading figures in left-of-center circles. Founder and long time director of the American Civil Liberties Union, Baldwin was a firm Popular Fronter who believed that forces on the left side of the political spectrum should unite to ward off the threat posed by right-wing aggressors and to advance progressive causes. Baldwin’s expansive civil liberties perspective, coupled with his determined belief in the need for sweeping socioeconomic change, sometimes resulted in contradictory and controversial pronouncements. That made him something of a lightning rod for those who painted the ACLU with a red brush." http://www.harvardsquarelibrary.org/biographies/roger-baldwin-2/ "[George Soros underwrites the ACLU' which It supports open borders, has rushed to the defense of suspected terrorists and their abettors, and appointed former New Left terrorist Bernardine Dohrn to its Advisory Board." http://www.discoverthenetworks.org/viewSubCategory.asp?id=1237 "The creation of non-profit law firms ushered in an era of progressive public interest firms modeled after already established like the National Association for the Advancement of Colored People ("NAACP") and the American Civil Liberties Union ("ACLU") to advance progressive causes from the environmental protection to consumer advocacy." https://en.wikipedia.org/wiki/Cause_lawyering

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