F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
APR 21 2003
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
CLARENDON AMERICA
INSURANCE COMPANY,
Plaintiff-Appellee,
No. 00-6319
v. (D.C. No. 98-CV-1761-M)
(W.D. Okla.)
CONTINENTAL MASONRY
CORPORATION,
Defendant-Appellant.
ORDER AND JUDGMENT *
Before EBEL , HENRY , and MURPHY , Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
Plaintiff-appellee Clarendon America Insurance Company (Clarendon) filed
this declaratory judgment action pursuant to 28 U.S.C. § 2201 against
defendant-appellant Continental Masonry Corporation (Continental), seeking a
declaration that it was not obligated to provide coverage for an indemnity claim
made against Continental because it did not receive timely notice of the claim.
Jurisdiction in the district court was based on diversity of citizenship pursuant to
28 U.S.C. § 1332. Because this is a diversity case, the district court applied the
substantive law of the forum state, Oklahoma. See Farmers Alliance Mut. Ins. Co.
v. Salazar , 77 F.3d 1291, 1294 (10th Cir. 1996). The district court entered
summary judgment in favor of Clarendon, concluding it could properly deny
coverage under the insurance policy at issue. We affirm.
The parties to this case are familiar with its facts and procedural history,
which are accurately and thoroughly set forth in the district court’s order; thus, we
only very briefly summarize them here. During the relevant period, Continental
was covered by a commercial liability insurance policy issued by Mid-Continent
Casualty Company (Mid-Continent) and a commercial umbrella policy issued by
Clarendon. It purchased both policies through Insurance Agency of Mid-America
(IAM). Clarendon’s policy required Continental to notify it or Continental’s
broker of any accident or injury which could result in a liability claim as soon as
possible, even if no claim had been made. The policy also required Continental to
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send Clarendon copies of all demands or legal documents if someone made a claim
or started a lawsuit.
The loss in question occurred in November 1988. It is undisputed that
Continental did not notify any of its insurers of the loss incident. The injured
parties filed a lawsuit against Continental in 1990, but later voluntarily dismissed
it. Continental did notify IAM of this first lawsuit, but Mid-Continent is the only
insurer listed in its loss notice. There is no evidence Clarendon was notified of
this first, dismissed lawsuit.
The injured parties filed a second lawsuit in 1991, naming different
defendants, one of whom filed a third-party complaint against Continental in 1992,
seeking indemnification. Continental did not notify Clarendon about either the
injured parties’ second lawsuit or the indemnification action filed against it, nor
did it send Clarendon copies of any of the relevant legal documents. In November
1997, the injured parties obtained a $2,150,000 judgment. In March 1998,
Continental notified Clarendon of this judgment and the indemnification claim
against it, seeking coverage. Clarendon then filed this declaratory action,
claiming, among other things, that Continental had breached the terms of the
policy by failing to give it timely notice.
Both parties filed motions for summary judgment. Clarendon presented
undisputed evidence that it received no notice of any accident or injury, no notice
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of any claim or lawsuit, and no copies of any demands or legal documents until
March 1998, almost ten years after the loss occurred. Continental contended the
loss notice it provided to IAM in 1990 about the first dismissed lawsuit satisfied
its notice obligations under the policy, regardless of whether Clarendon ever
actually received notice.
The district court rejected Continental’s argument, holding that IAM was
not Clarendon’s agent as a matter of law under Okla. Stat. tit. 36, § 1423(B)
(1990), 1 and therefore, notice to IAM did not constitute notice to Clarendon.
Further, it ruled that any notice to IAM of the first lawsuit in 1990 was
insufficient, because that action was dismissed and Continental never provided
notice to Clarendon of the second lawsuit or the indemnity claim. The district
court also ruled that Clarendon was prejudiced by Continental’s failure to provide
timely notice. Because Continental failed to give Clarendon timely notice of
either the incidents giving rise to the claims or the claims themselves, as required
by the policy, the district court ruled Clarendon could properly deny coverage.
1
Clarendon is licensed in Oklahoma only to sell excess and surplus lines
policies, and may only do so through an excess and surplus lines broker.
Although Continental utilized IAM to acquire its umbrella policy from Clarendon,
IAM actually utilized an excess and surplus lines broker, Westphalen, Bradley &
James, Inc., to acquire the policy on behalf of Continental. Section § 1423(B),
since renumbered as Okla. Stat. tit. 1435.3 (B) (2003), provides that a surplus
lines insurance broker “shall . . . be regarded as representing the insured or the
insured’s beneficiary and not the insurer.”
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“We review a grant of summary judgment de novo, applying the same
standard as the district court.” Ferroni v. Teamsters, Chauffeurs & Warehousemen
Local No. 222 , 297 F.3d 1146, 1149 (10th Cir. 2002). Summary judgment is
proper if the moving party shows “that there is no genuine issue as to any material
fact and that the moving party is entitled to a judgment as a matter of law.”
Fed. R. Civ. P. 56(c). “When reviewing cross-motions for summary judgment,
‘our review of the record requires that we construe all inferences in favor of the
party against whom the motion under consideration is made.’” Pirkheim v. First
Unum Life Ins. , 229 F.3d 1008, 1010 (10th Cir. 2000) (quoting Andersen v.
Chrysler Corp ., 99 F.3d 846, 856 (7th Cir. 1996)).
On appeal, Continental first contends the district court erred in ruling that
IAM was not its agent and, therefore, that its 1990 notice to IAM failed to satisfy
its notice obligations. Continental contends that, notwithstanding § 1423(B), the
terms of the Clarendon policy permitted it to provide notice to its broker, which it
identifies as IAM. We need not resolve IAM’s agency status under § 1423,
however, because, even if IAM was the authorized broker through whom
Continental could give notice to Clarendon, its 1990 notice was insufficient to
satisfy the notice requirements under the Clarendon policy. See Griffin v. Davies ,
929 F.2d 550, 554 (10th Cir. 1991) (holding that this court will not “undertake to
decide issues that do not affect the outcome of a dispute”).
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The loss notice that Continental gave to IAM in 1990 listed only
Mid-Continent as its insurer and referenced only the Mid-Continent general
liability policy. Aplt. App. at 96. Continental’s 1990 loss notice made no
reference whatsoever to Clarendon or the Clarendon umbrella policy. Quite
simply, Continental’s loss notice neither requested nor authorized IAM to notify
Clarendon of any potential or actual loss or claim.
Moreover, we agree with the district court that the 1990 loss notice was
insufficient because it only provided notice of the 1990 lawsuit, which was
voluntarily dismissed shortly thereafter. It is undisputed that Continental gave
Clarendon no notice of the injured parties’ second lawsuit, which actually
proceeded to trial and judgment, or the indemnification action filed against
Continental. Continental does not suggest a reason why the 1990 notice would be
adequate to notify Clarendon of these two later-filed actions, other than to
summarily assert it is immaterial, nor does it dispute the district court’s ruling that
the 1990 loss notice was insufficient in this regard. See Snell v. Tunnell , 920 F.2d
673, 676 (10th Cir. 1990) (holding this court will not reach out and decide issues
where the adverse ruling has not been appealed). Further, Continental does not
challenge the district court’s factual finding, based on the undisputed evidence,
that Continental failed to send Clarendon copies of any legal documents relating to
any claim or action until March 1998, or its legal conclusion, based on the plain
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meaning of the policy, that this failure violated the policy terms, requiring
Continental to send copies of all legal demands or legal documents directly to
Clarendon. See id.; see also VBF, Inc. v. Chubb Group of Ins. Cos. , 263 F.3d
1226, 1230 (10th Cir. 2001) (holding, under Oklahoma law, that insurance
contracts are to be interpreted “according to the plain meaning of the language in
the policy”).
Because we agree with the district court’s conclusion that Continental did
not notify Clarendon of the claim until March 1998, we need not address its
second argument on appeal that the 1990 notice was timely, despite its failure to
give notice of the 1988 incidents giving rise to the ultimate claims.
For the reasons more fully stated by the district court, we also reject
Continental’s third contention: that Clarendon was not prejudiced by its failure to
give timely notice. Although the indemnification action was still pending when
Continental gave notice in March 1998, the underlying action had proceeded to
judgment. It is undisputed that, because of the nearly ten-year delay, Clarendon
was unable to find any record of the policy, to undertake its own investigation or
analysis of the claim, to participate with the primary insurer in the underlying
litigation in an effort to resolve the claim within the collective policy limits, or to
obtain reinsurance protection from its reinsurers. See Montgomery v. Prof’l Mut.
Ins. Co. , 611 F.2d 818, 819-20 (10th Cir. 1980) (holding that nearly four-year
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delay between claim and notice to insurer “to be beyond all periods of reason,” and
sufficient to demonstrate prejudice as a matter of law).
Finally, Continental claims there are genuine issues of material fact in
dispute, precluding summary judgment. It does not specifically identify any such
disputed facts, nor do we find there to be any genuine issue of material fact in
dispute. See Anderson v. Liberty Lobby, Inc ., 477 U.S. 242, 248 (1986) (holding
that, “[o]nly disputes over facts that might affect the outcome of the suit under the
governing law will properly preclude the entry of summary judgment”).
The judgment of the United States District Court for the Western District of
Oklahoma is AFFIRMED. Continental’s counsel’s motion to withdraw is
GRANTED.
Entered for the Court
David M. Ebel
Circuit Judge
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