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In GEICO v. Ryan, No. 4D13-2615 (Fla. 4th DCA, Mar. 11, 2015), the Court reversed the Trial Court’s award of attorney’s fees in favor of the insured because the “Proposal for Settlement contains a patent ambiguity–spelling out $100,000 in words but also referring to $50,000 in numerals.” Specifically, Bernadette Ryan (“Ryan”) brought an uninsured/underinsured motorist claim against her insurer, Government Employees Insurance Company (“GEICO”), for an auto accident involving Ryan. Ryan served GEICO with a proposal for settlement, pursuant to Fla. Stat. 768.79 and Fla. R. Civ. P. 1.442. As noted, the proposal for settlement contained a typo that included a difference between the spelled out amount and the numeric amount. It should be noted, however, that the applicable GEICO policy limits were $50,000, and the proposal for settlement included a statement that “the total amount of the settlement should not exceed $50,000.” Additionally, no testimony or other evidence was taken by the Trial Court, but “it was represented to the [Trial] court that the attorneys talked about a settlement and the defense attorney fully knew the settlement proposal.” As such, the Trial Court entered final judgment in favor of Ryan.
GEICO appealed the Trial Court’s award of attorney’s fees in favor of Ryan. In reversing the Trial Court, the Court of Appeals discussed the foregoing ambiguity and reasoned: “Because the offer of judgment statute and related rule must be strictly construed, virtually any proposal that is ambiguous is not enforceable.” (quoting Stasio v. McManaway, 936 So. 2d 676, 678 (Fla. 5th DCA 2006) (italics in original).) Thus, “[t]he trial judge had no basis in law or fact to conclude otherwise.”
For more information on this case, or any other litigation-related questions regarding proposals for settlement, please contact Edward Sylvester directly.
Edward Sylvester is a partner in Hinshaw’s Miami office and is licensed to practice in all state and federal courts in both Florida and Ohio.
In a significant decision the Wisconsin Supreme Court has held that claims-made-and-reported requirements in claims made policies should be enforced as written. An insured’s failure to report a claim during the time required by the policy will operate as a bar to coverage. See Anderson v. Aul, 2015 WI 19. The Court reversed the Court of Appeals decision holding that Wisconsin’s notice-prejudice statute superseded the claims-made-and-reported requirement of the professional liability policy. The Court also observed that even if the notice-prejudice statutes applied, requiring an insurer to provide coverage for a claim reported after the end of a claims-made-and-reported policy period was per se prejudicial to the insurance company. The decision places Wisconsin in the majority of jurisdictions that have enforced claims-made-and-reported policies as written.
The facts in the case were undisputed. On December 23, 2009 the Andersons notified Attorney Aul by letter that they were dissatisfied with the legal representation he had provided and demanded that Attorney Aul pay them $117,000.00. Aul received the letter while he was insured under a claims-made-and-reported professional liability policy. It was undisputed that the letter was a claim first made during the policy period and that the policy required Aul to report the claim during the same period. However, Aul did not report the claim until nearly a year after the policy expired.
A year later suit ensued and the professional liability insurer moved to intervene and sought a declaration that the insurance policy it had issued to Aul did not provide coverage because the claim was not reported as required during the policy period. The circuit court agreed with the insurer and granted its motion for summary judgment.
The Court of Appeals reversed the trial court’s decision, finding that Wisconsin’s notice-prejudice statutes, Wis. Stat. 631.81(1) and § 632.26, applied to the reporting requirement of the claims-made-and reported policy. These two statutes have been interpreted in tandem to hold that an insurer whose insured provides late notice within one year of the time required by the policy must show that it was prejudiced by the late notice in order to decline coverage. When notice is given more than one year after the time required by the policy, there is a rebuttable presumption of prejudice and the burden of proof shifts to the claimant to prove that the insurer was not prejudiced by the untimely notice. See Neff v. Pierzina, 2001 WI 95 ¶ 43, 245 Wis. 2d 285, 629 N.W.2d 177. The court stated that both the applicable statutes and Wisconsin’s case law made it clear that in order to decline coverage based on the late notice, the insurer must show it was prejudiced by the late notice. The court then applied the definition of “prejudice” adopted in prior cases and concluded that because Aul’s untimely reporting of the claim did not hinder the insurer’s ability to investigate, evaluate or settle the claim; determine coverage or present an effective defense, the insurer had not been prejudiced and therefore the policy provided coverage.
The Supreme Court reversed and enforced the claims-made-and-reported requirement of the policy as written, holding that the notice-prejudice statutes did not supersede the plain language of a claims-made-and reported policy. Wisconsin therefore joined the vast majority of jurisdictions which have strictly enforced the requirement that notice be provided during the described period without regard to whether or not the insurer was prejudiced by the delay.
A coverage dispute winding its way through New York appellate courts could provide useful guidance about the scope of “personal and advertising injury” coverage in standard commercial general liability policies.
According to a Law360 report, Sony Corp.’s lawyers recently asked a New York appeals court to overturn a trial court’s ruling that a data breach did not involve the “publication” of private information within the meaning of Sony’s commercial general liability policy.
The dispute, entitled Zurich American Insurance Co. v. Sony Corp. of America et al., stems from a 2011 cyberattack in which computer hackers broke into Sony networks and stole personal information of over 100 million users. A key legal issue is whether Sony’s negligent failure to prevent the data breach constituted a “publication.” The trial court ruled that coverage for a “publication, in any manner, of material that violates a person’s right of privacy” applied only to Sony’s own publications, not to those committed by third-party hackers.
During oral arguments before the appellate panel, Sony stressed that the right of privacy provision covers publications “in any manner” and that the policy language does not expressly limit coverage to liability from the insured’s own publications. In response, the insurers maintained that the “in any manner” language refers to the medium for the publication, not the entity that made it. The insurers contended that the “publication” requirement should be construed in the context of the policy’s other offense-based coverages – such as malicious prosecution, wrongful eviction, and false arrest – which contemplate purposeful conduct by the insured.
The insurers’ briefing relied on the New York Court of Appeals decision in Columbia v. Continental Ins. Co., 83 N.Y.2d 618, 634 N.E.2d 946 (1994). There, Columbia County sought coverage for environmental contamination under a personal injury endorsement. Personal injury was defined to include “wrongful entry or eviction or other invasion of the right of private occupancy.” The policy’s pollution exclusion barred coverage under an occurrence-based property damage theory. Upholding a dismissal in the insurer’s favor, the Court of Appeals interpreted personal injury coverage to reach only the insured’s “purposeful acts” not indirect, incremental harm from environmental pollution. Under this reasoning, the right of privacy prong would cover only an insured’s affirmative publications not its negligent failure to prevent a data breach.
The resolution of the Sony coverage litigation will have little impact on coverage for data breaches under most commercial general liability policies. Insurers have significantly expanded the exclusions in traditional liability policies to preclude coverage for almost all cyber-related risks. As a result, insureds will have to purchase specialty cyber policies to obtain protection for data breaches.
Nonetheless, the final decision in the Zurich v. Sony litigation should address significant issues bearing on the interpretation of “personal and advertising injury” coverage in standard liability policies – namely, the “publication” requirement and whether the “personal injury” offenses cover only the insured’s purposeful conduct.
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