Nationwide Mutual Insurance Company v. Sandbridge Properties, Inc.
Filing
16
OPINION AND ORDER: For the reasons set forth in this Order, plaintiff's motion for summary judgment is GRANTED and the clerk is DIRECTED to enter judgment in favor of the plaintiff. (See Order for Specifics) Entered 1/16/13 and filed 1/17/13. (Signed by District Judge Robert G. Doumar on 1/16/13). (ecav, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
FILED
Norfolk Division
JAN 1 7 2013
NATIONWIDE MUTUAL INSURANCE
CLERK, US DISTRICT COURT
COMPANY,
NORFOLK. VA
Plaintiff,
Civil No. 2:12cv263
V.
/
SANDBRIDGE PROPERTIES, INC.,
d/b/a SIEBERT REALTY,
Defendant.
OPINION AND ORDER
This is adeclaratory judgment action. The Court has jurisdiction over the parties and the
subject matter pursuant to 28 U.S.C. §1332 based upon complete diversity of citizenship
between the parties and an amount in controversy in excess of $75,000. In this action, plaintiff
Nationwide Mutual Insurance Company ("Nationwide") seeks a declaration by the Court that,
under commercial general and umbrella liability policies it issued to the defendant, Sandbridge
Properties, Inc. d/b/a Siebert Realty ("Siebert"), it has no duty to defend or indemnify Siebert
with respect to acertain state tort action due to Siebert's failure to provide timely notice of the
accident out of which that tort claim arises.
This matter is now before the Court on the plaintiffs motion for summary judgment
pursuant to Rule 56 ofthe Federal Rules of Civil Procedure. For the reasons set forth below, the
plaintiffs motion is GRANTED and judgment will be entered in its favor.
I. FACTUAL AND PROCEDURAL BACKGROUND
Siebert is in the real estate business, including, in particular, the management of more
than 400 vacation rental properties at Sandbridge Beach in Virginia Beach, Virginia.
Nationwide is aproperty and casualty insurer that issued commercial general and umbrella
liability policies to Siebert, providing coverage for the policy period April 15,2008, to April 15,
2009.
On July 2, 2008, Siebert was notified by aguest at one of the vacation properties it
managed that her nine-year-old daughter had fallen out of abunk bed at the property the night
before and had been taken to the hospital. That same day, Seibert reported the accident to the
property owners, and they in turn reported the accident to their homeowner's liability insurer,
Lloyd's of London. Pursuant to the management agreement between Siebert and the property
owners, the property owners were obligated to maintain casualty and liability insurance coverage
naming Siebert as an additional insured. The policies issued to Siebert by Nationwide provided
that they were excess over the property owners' homeowner's policy. For at least the next
several days, Siebert continued to receive updates regarding the status of the injured girl, but it
did not provide notice ofthe accident toNationwide.
On April 29, 2011, Siebert was served with the complaint in the underlying state tort
action, which sought damages in excess of $10 million for the injuries allegedly suffered as a
result of the girl's fall, including permanent traumatic brain injury. On May 18, 2011, nineteen
days later, Siebert's attorney wrote to tender defense of the complaint to Nationwide. This was
Nationwide's first notice ofthe accident, nearly three years after Siebert itself received notice.
Nationwide issued a reservation-of-rights letter to Siebert on June 20,2011.
On May 9, 2012, Nationwide filed the complaint in this action, seeking adeclaration that
it had no obligation under the liability policies it had issued to defend or indemnify Siebert for
the claims raised in the underlying state tort action. Nationwide did so the ground that Siebert's
failure to give notice ofthe occurrence of the accident giving rise to the underlying state tort
action "as soon as practicable" or "as soon as possible," as expressly required by the policy
terms, constituted amaterial breach of contract, thus excusing Nationwide from performing.
Siebert filed its answer to the complaint on June 5,2012.
On December 20, 2012, Nationwide filed a motion for summary judgment pursuant to
Rule 56 ofthe Federal Rules of Civil Procedure. On December 31,2012, the Siebert filed abrief
in opposition to the motion. On the morning ofJanuary 7,2012, Nationwide filed its reply brief.
Ahearing on the motion was held later that same day. The matter is now ripe for decision.
II. SUMMARY JUDGMENT STANDARD
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment should be
granted only if "there is no genuine dispute as to any material fact and the movant is entitled to
judgment as amatter of law." Fed. R. Civ. P. 56(a). Afact is "material" only if it might affect
the outcome of the case. AnH^ v. Liberty Lobby. 477 U.S. 242, 248 (1986). Adispute of
material fact is "genuine" only ifthe evidence "is such that a reasonable jury could return a
verdict for the non-moving party." l± In deciding asummary judgment motion, the Court must
view the record as a whole and in the light most favorable to the nonmovant. Terry's Floor
Fashions. Inc. v Burlington Indus.. Inc., 763 F.2d 604,610 (4thCir. 1985).
The party seeking summary judgment "bears the initial responsibility of informing the
district court ofthe basis for its motion," and demonstrating the absence ofa genuine dispute of
material fact. Celotex Corn, v. Catrett. 477 U.S. 317, 323 (1986). Ifthe movant makes such a
showing, the nonmovant must set forth specific facts, supported by the record, demonstrating
that "the evidence presents a sufficient disagreement to require submission to the jury."
Anderson. 477 U.S. at 251-52.
III. ANALYSIS
There is no dispute as to the material facts ofthis case. Siebert had actual knowledge of
the accident on July 2, 2008. Siebert did not notify Nationwide of the accident until May 18,
2011-two years, ten months, and sixteen days later. In the interim, the rental property and its
furnishings had been sold.
The terms of the insurance policies at issue are also beyond dispute. As a condition
precedent to coverage, the general liability policy required that Siebert notify Nationwide "as
soon as practicable of an 'occurrence' or an offense which may result in aclaim." Compl. Ex. 1
at 17 (Condition No. 2(a)). Similarly, the umbrella policy required that Siebert notify
Nationwide "as soon as possible of any 'occurrence' which may result in aclaim if the claim
may involve this policy" or the underlying general liability policy. Compl. Ex. 2 at 18
(Condition No. 6(a)). Both policies defined "occurrence" to mean "an accident, including
continuous or repeated exposure to substantially the same general harmful conditions." Compl.
Ex. 1at 21 (Definition No. 13); Compl. Ex. 2at 16 (Definition No. 12(a)).
The parties agree that the policies were written and delivered in Virginia, and, thus,
Virginia law applies to the resolution of this dispute. See Nationwide Mut. Fire Ins. Co. v.
Overstreet. 568 F. Supp. 2d 638, 643 n.6 (E.D. Va. 2008). Under Virginia law, insurance policy
provisions requiring notice of an accident "as soon as practicable" or "as soon as possible" are
reasonable and enforceable, and an insured's substantial compliance with these notice provisions
is acondition precedent to recovery under the policy. Overstreet. 568 F. Supp. 2d at 643; Atlas
Ins. Co. v. Chapman. 888 F. Supp. 742, 745 (E.D. Va. 1995); Lord v. State Farm Fire & Cas.
Co., 295 S.E.2d 796,797 (Va. 1982); Mount Vernon Realty. Inc v St. Paul. Ins. Co.. 19 Va. Cir.
203, 203 (1990). Substantial compliance requires that the insured provide notice to the insurer
within a reasonable time, under the circumstances. Oveisjreet, 568 F. Supp. 2d at 643;
Chapman. 888 F. Supp. at 745; Lord, 295 S.E.2d at 800; Mount Vernon, 19 Va. Cir. at 204.
Whether notice was given within areasonable time is normally aquestion of fact for the
jury, but
when the facts are undisputed and certain, the question becomes one of
law for the court. In other words, the question ofdelayed notice may be
decided as amatter oflaw where reasonable men could not differ as to the
inferences to be drawn from the undisputed facts.
Chapman. 888 F. Supp. at 745 (citations omitted).
The only justification for delay given by Siebert is its subjective mistaken belief that
coverage under the Nationwide policies would not be implicated. Overstreet, 568 F. Supp. 2d at
644 ("Where there are extenuating circumstances for the delay, the jury may consider whether
these circumstances furnish ajustification or excuse for the delay."). But, as the Supreme Court
of Virginia has made clear,
[fjailure to give timely notice will not be excused when the insured only
subjectively concludes that coverage under the policy will not be
implicated. Such a policy provision requires the insurer to be notified
whenever, from an objective standpoint, itshould reasonably appear to the
insurer thatthe policy may be involved.
Dan River. Inc. v. Commercial Union Ins. Co.. 317 S.E.2d 485, 487 (Va. 1984) (emphasis
added); see also Overstreet. 568 F. Supp. 2d at 645 ("[A]n insured's subjective mistaken belief
that an occurrence is not covered cannot excuse or justify a delayed notice."); Chapman, 888 F.
Supp. at 745 ("[A]n insured's subjective opinion that an accident will not precipitate a claim
under the policy is irrelevant to the question ofwhether notice should be provided.").
Under Virginia law, "a long delay in notifying an insurer of an occurrence, with no
justification, can in certain circumstances constitute aviolation of anotice provision as amatter
oflaw." Overstreet. 568 F. Supp. 2d at 646. This and other courts applying Virginia law have
repeatedly held that adelay ofas little as four months, with no justification, is unreasonable as a
matter oflaw. 5~ ^.v Union In, Co.. No. 4:06cv26, 2007 WL 582931, a, -8 (E.D. Va.
Feb. 20, 2007) (three-year delay unreasonable as amatter of law due to "sheer lapse oftime");
Ctapman, 888 F. Supp. at 746 (delay of 126 days unreasonable as amatter of law); Vajiarm
—•.n.,,-^, Sutherland. No. 7:03cvl22,2004 WL 2360162, a, 1 (W.D. Va. Oct. 19,
2004) ("a delay of601 days is beyond the outer limit ofreasonableness"); Vermont Mut. Ins. Co,
v. Everette. 875 F. Supp. 1181 (E.D. Va. 1995) (18-month delay unreasonable as amatter of
law); Walton, 423 S.E.2d at 192 (two-year delay unreasonable as amatter oflaw); seealso Lord
.. c... ^
w» A. (k Co.. 295 S.E.2d 796, 799-800 (Va. 1982) (finding 173-day delay
unreasonable on stipulated facts).
In this case, Siebert did not provide notice to Nationwide until more than 1,000 days-
nearly three years-after it learned ofthe accident. In the absence ofany cognizablejustification
for the delay, the Court is compelled to conclude, as amatter of law, that Siebert failed to
substantially comply with the notice provisions of the Nationwide polices, and it is therefore
barred from recovery under the policy.
IV. CONCLUSION
For the foregoing reasons, the plaintiffs motion for summary judgment is GRANTED.
The Clerk is DIRECTED to enter judgment in favor of the plaintiff and against the
defendant in this case. Said judgment shall include the requested declaration that plaintiff
Nationwide Mutual Insurance Company has no obligation under Commercial General Liability
Policy ACP GLO 2403201474 and Commercial Umbrella Liability Policy ACP CAF
2403201474 to provide indemnification, a defense, costs of defense, or any other insurance
coverage or benefits to or for defendant Sandbridge Properties, Inc. d/b/a Siebert Realty for the
claims or causes of action arising out ofthe facts and allegations that are the subject ofthe civil
action styled n-w., vFlannagan. Case No. CL11-2221, filed in the Circuit Court for the
City ofVirginia Beach on April 6,2011.
IT IS SO ORDERED.
^T v
January |V,2013
Norfolk, Virginia
Robert G. DBy™*j ,
Senior Umtet^tfftes^istrictJudge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?