Insurer’s Late Notice Defense in Virginia: Dabney v. Augusta Mutual Ins. Co.
November 30th, 2011
In Dabney v. Augusta Mutual Insurance Co., 282 Va. 78, 710 S.E.2d 726 (2011), the Virginia Supreme Court held that the question whether the insured gave the insurer notice of the claim "as soon as is practicable" was a question for the jury, notwithstanding the insured's 254-day delay in providing notice. The Court reversed the trial court's award of summary judgment to the insurer, because the trial court only focused on the length of the delay, and failed to consider the facts and circumstances surrounding the delay.
The Virginia Supreme Court reasoned that the timeliness of the notice of the claim must be considered in light of all the facts and circumstances presented in the case. There were extenuating circumstances here: The insured was unaware of the claim before her death; and the address for notice in the insurance policy had been changed, unbeknownst to the executor of the insured's estate, resulting in the initial written of notice letter being sent to the wrong address, and yet the letter was never returned to sender or acknowledged.
Given the extenuating circumstances, whether the notice was timely under the policy was a question of fact upon which reasonable minds could disagree, and the trial court erred in ruling that the notice was untimely as a matter of law.
Elsewhere in the decision, the Virginia Supreme Court held that the trial court correctly held that the plaintiff was limited to the alleged date of notice plead in the amended complaint. The Court emphasized that the law in Virginia is well established that a court cannot enter judgment based on facts that are not alleged in the parties' pleadings. The issues in a case are made by the pleadings, and not by the testimony of witnesses or other evidence.
However, the Court noted that the plaintiff's counsel did not argue to the circuit court that, pursuant to Code sec. 8.01-377, its pleading could have been amended to conform to the evidence presented at trial. Because the Virginia Supreme Court remanded the case for trial, this raised the possibility that plaintiff's counsel still could amend the pleading to allege alternative dates of notice.
The alternative dates of notice were a key underlying issue at trial, because of the operation of Virginia Code sec. 38.2-2226, which states in pertinent part that:
Id.
Thus, if the plaintiff could show that the insurer had received notice of the claim earlier than 45 days from the time that the insurer gave the claimant notice of the late notice defense, the defense would be waived as a matter of law under this statute. Virginia courts have been strict in applying such waiver. See, e.g., Aetna Casualty & Surety Co. v. Compass & Anchor Club, Inc., 33 Va. Cir. 235 (Feb. 24, 1994). See also Morrell v. Nationwide Mut. Fire Inc. Co., 188 F.3d 218 (4th Cir. 1999).
For those reasons, whether or not the trial court would, on remand, allow an amendment of the pleadings to conform to the evidence presented at trial, could mean the difference between victory or defeat for the parties.
All insurers doing business in Virginia and their counsel should keep the notification requirements of Va. Code sec. 38.2-2226 in mind in any claim involving a late notice defense or any other claim involving alleged breach of the conditions of the insurance policy as a defense.
The Virginia Supreme Court reasoned that the timeliness of the notice of the claim must be considered in light of all the facts and circumstances presented in the case. There were extenuating circumstances here: The insured was unaware of the claim before her death; and the address for notice in the insurance policy had been changed, unbeknownst to the executor of the insured's estate, resulting in the initial written of notice letter being sent to the wrong address, and yet the letter was never returned to sender or acknowledged.
Given the extenuating circumstances, whether the notice was timely under the policy was a question of fact upon which reasonable minds could disagree, and the trial court erred in ruling that the notice was untimely as a matter of law.
Elsewhere in the decision, the Virginia Supreme Court held that the trial court correctly held that the plaintiff was limited to the alleged date of notice plead in the amended complaint. The Court emphasized that the law in Virginia is well established that a court cannot enter judgment based on facts that are not alleged in the parties' pleadings. The issues in a case are made by the pleadings, and not by the testimony of witnesses or other evidence.
However, the Court noted that the plaintiff's counsel did not argue to the circuit court that, pursuant to Code sec. 8.01-377, its pleading could have been amended to conform to the evidence presented at trial. Because the Virginia Supreme Court remanded the case for trial, this raised the possibility that plaintiff's counsel still could amend the pleading to allege alternative dates of notice.
The alternative dates of notice were a key underlying issue at trial, because of the operation of Virginia Code sec. 38.2-2226, which states in pertinent part that:
Whenever any insurer on a policy of liability insurance discovers a breach of the terms or conditions of the insurance contract by the insured, the insurer shall notify the claimant or the claimant's counsel of the breach. Notification shall be given within forty-five days after discovery by the insurer of the breach or of the claim, whichever is later. . . . Failure to give the notice within forty-five days will result in a waiver of the defense based on such breach to the extent of the claim by operation of law.
Id.
Thus, if the plaintiff could show that the insurer had received notice of the claim earlier than 45 days from the time that the insurer gave the claimant notice of the late notice defense, the defense would be waived as a matter of law under this statute. Virginia courts have been strict in applying such waiver. See, e.g., Aetna Casualty & Surety Co. v. Compass & Anchor Club, Inc., 33 Va. Cir. 235 (Feb. 24, 1994). See also Morrell v. Nationwide Mut. Fire Inc. Co., 188 F.3d 218 (4th Cir. 1999).
For those reasons, whether or not the trial court would, on remand, allow an amendment of the pleadings to conform to the evidence presented at trial, could mean the difference between victory or defeat for the parties.
All insurers doing business in Virginia and their counsel should keep the notification requirements of Va. Code sec. 38.2-2226 in mind in any claim involving a late notice defense or any other claim involving alleged breach of the conditions of the insurance policy as a defense.
