Hurricane Wilma litigation carries on in Florida courts, now almost 6 and a half years after the storm. One issue often raised in the litigation is timely notice of the claim. While policies differ, most require that the insured provide notice of a loss to the insurer with some degree of expediency. Late notice of a claim is generally ground for an insurer’s defense in not paying the claim. Whether notice was timely is generally a question of fact for the jury that precludes summary judgment. However, a South Florida federal court reminded us a few weeks ago that this is not always the case.
In Clena Investments, Inc. v. XL Specialty Ins. Co., 10-CV-62028, 2012 WL 1004851 (S.D. Fla. Mar. 26, 2012), a commercial property insurance policy required notice, “‘as soon as practicable,’ of any occurrence that could lead to an insurance claim.” The insured waited approximately four years to present its claim for Hurricane Wilma damage to the insurer. The insurer’s inspector concluded that although some of the damage he found was caused by wind and wind-blown debris, he could not identify when the damage occurred, nor could he pinpoint it to a particular hurricane, tropical storm, or other wind event. The insured’s inspector also could not identify a particular wind event as the cause, and the insured’s corporate representative apparently testified that all reasonable steps to protect the property after the storm were not taken, causing the damage to worsen over the four years between the damage and notice of the claim. The insured’s corporate representative also testified that the insured should have presented its claim in 2008 when it had constructive knowledge of the claim, but failed to do so because of an unqualified property manager. Applying these facts to Florida law, the court held that summary judgment in favor of the insurer was warranted.
First, the court explained that under Florida law, late notice was a legal basis for denial of an insurance claim. Second, the court described the two-step process for determining if late notice would bar an insurance claim:
Under this approach, consideration must first be given to whether the insured’s notice was untimely. If so, then prejudice to the insurer is presumed. At that point, the insured can only prevail by rebutting the presumption and demonstrating that no prejudice in fact occurred. “The insured’s burden is to show by competent evidence that the insurer has not been substantially prejudiced by the lack of notice or the untimely notice.” The insured may satisfy this burden by showing, for example, that “an investigation conducted immediately following the [occurrence] would not have disclosed anything materially different from that disclosed by the delayed investigation[.]” [Citations Omitted].
Importantly, the court rejected arguments that one Florida Court had set a per se limit on how much time could pass before notice would be determined late as a matter of law. See Kroener v. Fla. Ins. Gaur. Ass’n, 63 So.3d 914, 916 (Fla. 4th DCA 2011). The court also rejected arguments that granting summary judgment would set a new per se limit of four years on future cases:
In view of these facts, none of which are in dispute, the Court finds Clena should have known of its potential claim sooner than four years after the hurricane. The Court need not pinpoint exactly when Clena’s duty to notify arose; suffice it to say, notice after four years was simply too late. In this case, as in Kendall Lakes, no rational juror could find that Clena’s notice to the insurer, coming some four years after Hurricane Wilma, was timely under the circumstances. While, as Clena argues, there is no per se timeliness bar for filing a notice of claim under Florida law, it does not follow that the length of time from the occurrence to the claim is irrelevant or that it is never appropriate to find, as a matter of law, that the insured waited too long. At the hearing, counsel for Clena suggested a ruling in XL’s favor would effectively establish a per se defense for insurers in this State. Under Florida law, however, each case must be evaluated under the specific facts and circumstances at play. Here, the Court does not decide that whenever an insured waits more than four years, notice is automatically untimely; rather, the Court decides only that, under this set of undisputed facts, Clena’s notice was untimely as a matter of law.
In the end, the court held that an individual, case-by-case analysis was required of the facts and circumstances around each allegedly late notice case. However, the court reminded us that, “when the undisputed factual record establishes notice is so late that no reasonable juror could find it timely, Florida courts will deem the notice untimely as a matter of law.”