Clarendon America Insurance v. Continental Masonry Corp. , 62 F. App'x 909 ( 2003 )


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  •                                                                            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    This order and judgment is not binding precedent, except under the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”).
    -5-
    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
    -6-
    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
    -7-
    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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