4th Street Investments, LLC v. Dowdell

Opinions of the United
2009 Decisions States Court of Appeals
for the Third Circuit

7-2-2009

4th Street Inv LLC v. James Dowdell
Precedential or Non-Precedential: Non-Precedential

Docket No. 08-1512

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"4th Street Inv LLC v. James Dowdell" (2009). 2009 Decisions. Paper 1080.
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 NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 08-1512

4TH STREET INVESTMENTS, LLC; LEWIS A. SCHULL, Jr.;
GREGORY T. HERBRANK; SUSAN M. HEBRANK;
PETER R. CAMERON; STUART H. KESSLER; SUSAN L. KESSLER;
RALPH ARTUSO; ROBERT FIDEL; RICHARD L. WAGNER;
ROBERT S. HILLMAN; SANDRA S. HILLMAN; MYLES D. SAMPSON;
GREGG L. GOLDSTON; KIM A. GOLDSTRON;
LAUREL HIGHLANDS RADIOLOGY ONCOLOGY PENSION;
ARNOLD N. WAGNER; JACKLYN WAGNER; MARC A. GOLDBERG;
JOANNE GOLDBERG; EDWIN A. THANER; DORIS THANER; JOY T. EDWARDS;
TERRY L. EVANS; SALLY A. EVANS; RONALD MCGLADE;
RONALD L. CLAWSON; GAIL TITUS; JAMES R. TITUS; DANIEL W. AMIDON;
WILLIAM SITTING; CHRISTOPHER C. SHEEDY;
FAMILY PARTNERSHIP LP; TNG L.P. LLC, trading and doing business as BP
INVESTMENT PARTNERS II, LP; BERKOWITZ PIERCHALSKI INC;
JACK H. MILLSTEIN; ANDREA B. MILLSTEIN; M & S PARTNERS LLP,

Appellants.

v.

JAMES DOWDELL; FEDERAL INSURANCE COMPANY

On Appeal from the United States District Court
for the Western District of Pennsylvania
(D. C. No. 06-cv-00536)
District Judge: Honorable Joy Flowers Conti

Submitted under Third Circuit LAR 34.1 (a)
on February 5, 2009
 Before: RENDELL and ROTH, Circuit Judges
and PADOVA*, Senior District Judge

(Opinion filed: July 2, 2009)

OPINION

ROTH, Circuit Judge:

4th Street Investments LLC appeals from the final order of the United States

District Court for the Western District of Pennsylvania, granting summary judgment for

Federal Insurance Company. We exercise plenary review over a summary judgment

grant. E.g., Dee v. Borough of Dunmore, 549 F.3d 225, 229 (3d Cir. 2008). We

moreover view the facts in a light most favorable to the nonmovant and apply the same

standard that guided the District Court. E.g., id. For the reasons discussed below, we will

affirm. Because the parties are familiar with the facts, we will describe them only as

necessary to explain our decision.

4th Street secured a judgment against James Dowdell and his company, SafeDrive

Technologies, Inc. 4th Street then filed suit to garnish the proceeds of a Directors and

Officers’ Insurance Policy that Federal had issued to Dowdell and SafeDrive. The

*Honorable John R. Padova, Senior United States District Judge for the Eastern
District of Pennsylvania, sitting by designation.

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District Court granted summary judgment for Federal because Dowdell had not satisfied

the policy’s reporting requirement, a condition precedent to coverage. The District Court

had jurisdiction under 28 U.S.C. § 1332. We have jurisdiction under 28 U.S.C. § 1291.

4th Street claims that the District Court erred for two reasons. 4th Street first

contends that the District Court erred in holding that the policy required that Dowdell

provide notice. We reject this argument because the policy’s “Declarations” section

plainly provides that “[a]ny Insured shall, as a condition precedent to exercising [his]

rights under any Liability Coverage Section, give to [Federal] written notice as soon as

practicable of any Claim.” (emphasis omitted). Under Pennsylvania law, which the

parties agree applies here, if a policy’s language is clear and unambiguous, a court is

required to give effect to that language. Progressive N. Ins. Co. v. Schneck, 813 A.2d

828, 831 (Pa. 2002). The language confirms that this policy is a “claims-made” policy,

which under Pennsylvania law, makes notice a condition precedent to coverage. See ACE

Am. Ins. Co. v. Underwriters at Lloyds and Cos., 939 A.2d 935, 940 (Pa. Super. 2007),

aff’d, No. 45 EAP 2008, 2009 WL 1176268 (Pa. Apr. 14, 2009).

4th Street argues, however, that because the Directors and Officers’ section of the

policy is silent on the notice issue, the notice requirement does not apply to claims made

under that section. The first page of the Director and Officers’ section states, however,

that it is “subject to the Declarations,” which contain the claims-made requirement. The

policy further provides, in the Declarations section, that the claims-made requirement

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applies to “any Liability Coverage Section.” (emphasis omitted). Therefore, the policy’s

clear and unambiguous language required Dowdell’s written notice as a condition

precedent to coverage.

4th Street next asserts that even if the policy required Dowdell to provide notice,

the District Court erred in requiring strict compliance with that requirement instead of

requiring that Federal show prejudice. We reject this argument because reporting

requirements in claims-made policies are strictly construed and enforced; if an insured

does not give notice within the required time, “there is simply no coverage under the

policy.” City of Harrisburg v. Int’l Surplus Lines Ins. Co., 596 F. Supp. 954, 961 (M.D.

Pa. 1984); see Pizzini v. Am. Int’l Specialty Lines Ins. Co., 210 F. Supp. 2d 658, 668 (E.D.

Pa. 2002) (“Failure to comply with the reporting provision of a claims made policy

precludes coverage.”) (internal quotation marks omitted).1

We conclude that the District Court did not err in granting summary judgment for

Federal. We will thus affirm the judgment of the District Court.

1
Moreover, the Pennsylvania Supreme Court has recently confirmed that an insurance
company need not prove prejudice when denying coverage for lack of notice in
connection with a claims-made policy. See ACE Am. Ins. Co. v. Underwriters at Lloyds
and Cos., No. 45 EAP 2008, 2008 WL 1176268 (Pa. Apr. 14, 2009) (summarily affirming
Superior Court order after granting allocatur specifically to address whether Superior
Court erred in concluding that insurer could deny coverage under claims-made policy for
lack of notice without establishing prejudice).

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