Post-Settlement Notice Bars Coverage Under Pennsylvania Businessowner's Policy.

   In Download Nationwide Mut. Fire Insurance Co. v. Nova Real Estate LLC (E.D. Pa. Case No. 09.0303, Memorandum [Opinion] Filed March 1, 2011) PUBLIC ACCESS, also published as 2011 WL 721475 (E.D. Pa. March 1, 2011)(authorized password required to access Westlaw), a Federal Court held that Pennsylvania Insurance Law precluded all Coverage in a case of post-settlement first notice to a Businessowner's Insurance Company in a fire loss.  The Federal Court granted the Insurance Company's Motion for Summary Judgment for that reason.

   In that case, it is reported that the Policyholder's Attorneys negotiated a $3Million settlement of an underlying liability case filed by a third party against the Policyholder.  The Policyholder's Attorneys then sent the Insurance Company a demand to pay indemnity under the Businessowner's Policy:

On October 29, 2008, more than three and one-half years after the fire, counsel for Kay and Ranalli notified Nationwide by letter of the fire, the lawsuit, the settlement and the assignment of rights....  Defendants [Policyholders in this case] admit that this letter was the first notice that Nationwide received of the fire, the lawsuit or the settlement.

Id. at *2.

     Under these circumstances, the Federal Court agreed with Nationwide's reasons for denying Coverage:

       Nationwide argues that under Pennsylvania law there is no coverage under the policy issued to Nova Realty for the settlement of the Kay Lawsuit because Nova Realty failed to provide timely notice of the Kay Lawsuit and the subsequent settlement agreement and Nationwide suffered prejudice as a result of the late notice. Nationwide also argues that it is not obligated to provide indemnification for claims arising from the Kay Lawsuit because Nova Realty and Lawrence Eburouh voluntarily made payments and incurred expenses without Nationwide's consent in violation of the Nationwide Policy.

Id. at *4.

   Under Pennsylvania law in short, said the Federal Court, violations of Notice and Settlement Conditions precluded Coverage on the facts of this case:

After a thorough review of the record, we are satisfied that the Defendants failed to comply with the clear terms of the Nationwide Insurance Policy by providing late notice of claims, that Nationwide was prejudiced by the untimely notice, and that therefore Plaintiff is not liable to Defendant for coverage on the claims arising from the Kay Lawsuit. We also conclude that Nationwide is not obligated to indemnify for claims in the Kay Lawsuit due to Nova Realty's breach of the voluntary payments clause of the Nationwide Policy.

 Id.

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