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11th Circuit: Atlanta Condo Managers Failed to Promptly Inform Insurer of Emlpoyee’s Sexual Assault

If you are involved in a car accident, you should always promptly notify your auto insurance carrier. Failure to do so may lead the insurer to deny coverage. This is a basic rule of Georgia insurance law that applies equally to large companies. At the end of the day, an insurance policy is a contract, and you are expected to strictly adhere to its terms, including any notice requirements.

Nationwide Property & Casualty Insurance Company v. Renaissance Bliss, LLC

Indeed, a failure to notify can affect the rights of third-party victims who may end up suing an insured entity. A recent decision from the U.S. 11th Circuit Court of Appeals in Atlanta, Nationwide Property & Casualty Insurance Company v. Renaissance Bliss, LLC, provides an illustration of this principle. This particular case began with the rape of a property manager at a Georgia condominium complex. The sexual assault occurred in the property’s parking lot. When police later arrived at the scene, they learned that the parking lot’s security cameras, which might have captured footage of the assault, were not operational.

That same night, the regional manager for the condominium’s management company called the complex’s chief operating officer to inform him of what had happened. As the management company was based in California, the COO decided to travel to Georgia personally to investigate. The COO also reported the incident to the management company’s owner.

After arriving in Atlanta, the COO forwarded a copy of the police report regarding the sexual assault to the management company’s insurance broker, which managed its workers’ compensation policy. However, he did not send that report to Nationwide, which was the insurance company that provided the primary commercial general liability (CGL) policy for the various entities that owned and managed the condominium complex.

It was not until 21 months later that Nationwide learned of the assault when the victim’s attorney requested information regarding the ownership entities’ insurance policies. Shortly thereafter, the victim sued the entities. Nationwide agreed to defend the entities against the lawsuit in state court but reserved the right to challenge coverage in federal court.

Which brings us to the 11th Circuit. Affirming a district judge’s earlier ruling, the appellate court said Nationwide did not have to defend or indemnify the ownership entities against the victim’s state lawsuit, which was later settled.

There were two basic legal issues here. The first was whether California or Georgia law applied to the CGL policy. This mattered because under California law, an insurance company “must demonstrate that a policyholder’s delay in giving notice significantly hindered its ability to investigate and resolve a claim under the policy.” Under Georgia law, however, there is no need to show prejudice–if the policyholder fails to provide notice, as required by the policy, then the insurer does not have to provide coverage, period.

The 11th Circuit said Georgia law applied. This meant the notice requirement was a condition “precedent to coverage.” The 21-month delay between the victim’s assault and the ownership notifying Nationwide was “unreasonable as a matter of law,” according to the Court. Even if the ownership believed it was not legally liable for the victim’s attack, such “misplaced confidence” cannot excuse a failure to promptly notify an insurer.

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