The opinion
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
MIDDLE DIVISION
NATIONWIDE PROPERTY &
CASUALTY INSURANCE
COMPANY,
Plaintiff,
v. Case No. 4:21-cv-626-CLM
CHRISTOPHER ADAMS, et al.,
Defendants.
MEMORANDUM OPINION
Randell Alexander (“Alexander”) was injured while performing a job
for Apple Signs Company, LLC (“Apple Signs”). Seventeen months passed.
Alexander then sued Apple Signs and its owners Chris and Angela Adams
in state court to cover his medical expenses. See Randell Alexander v.
Apple Signs Co., LLC; Chris and Angela Adams, as owners, CV-2020-
900722. Apple Signs sought coverage from its insurance company,
Nationwide Property & Casualty Insurance Company (“Nationwide”).
Nationwide then filed this action in federal court, seeking a declaration
that it does not owe a duty to defend or indemnify Apple Signs or its
owners. As explained below, the court GRANTS Nationwide’s motion for
summary judgment because Apple Signs failed to timely notify
Nationwide about Alexander’s accident and resulting injuries.
BACKGROUND
1. The Facts: In July 2019, Alexander fell off a ladder while he was
welding for Apple Signs. (Doc. 2, p. 2). Alexander missed three weeks of
work due to the resulting injuries, and Chris Adams (Apple Sign’s owner)
paid Alexander’s medical expenses. (Doc. 20-1, p. 9-10). Adams did not tell
Nationwide about the accident or the resulting injuries and expenses.
Seventeen months later (December 22, 2020), Alexander sued Apple
Signs and the Adams in state court to cover his medical expenses. See
Randell Alexander v. Apple Signs Co., LLC; Chris and Angela Adams, as
owners, CV-2020-900722. Adams then contacted Nationwide for the first
time, seeking coverage for any resulting liability.1
2. The Policy: Nationwide had issued a commercial general liability
insurance policy to “Christopher Adams – DBA Apple Sign Supply” that
was effective when Alexander fell. (Doc. 2, p. 3, 20). The policy generally
provides that Nationwide will pay “sums that the insured becomes legally
obligated to pay as damages because of ‘bodily injury’ or ‘property
damage.’” (Doc. 2, p. 3). But the policy also contains specific exclusions.
For example, the policy does not cover injuries to employees of the
business, or any obligations under a worker’s compensation law. (Doc. 2,
p. 4).
The policy also requires that Nationwide be “notified as soon as
practicable of an ‘occurrence’ or an offense which may result in a claim.”
(Doc. 2, p. 6). And while the policy never defines “as soon as practicable,”
other parts of the agreement discuss the timing of notice. In a section
describing medical payment coverage for bodily injury, the policy states:
“We will pay medical expenses… for ‘bodily injury’ caused by an
accident… because of your operations; provided that… “[t]he expenses are
incurred and reported to us within one year of the date of the accident.”
(Doc. 2, p. 5) (emphasis added).
3. This lawsuit: Nationwide filed this declaratory judgment action
under 28 U.S.C. § 2201, seeking a declaration that it does not owe a duty
to defend or indemnify Apple Signs and the Adams. (Doc. 2). Nationwide
claims it need not pay because (1) the claims are specifically excluded from
coverage under the policy, and (2) Apple Signs failed to provide notice of
the occurrence within a reasonable time. (Doc. 2, p. 7).
1 The complaint alleges that Apple Signs notified Nationwide on January 4, 2021. (Doc. 2, p. 6).
Defendants do not argue that notice was given before December 22, 2020, but assert that the
timing of their notice was as soon as practicable. (See Doc. 23, p. 8).
STANDARD OF REVIEW
“The court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “The moving
party bears the initial burden of demonstrating the absence of a genuine
dispute of material fact.” FindWhat Inv’r Grp. v. FindWhat.com, 658 F.3d
1282, 1307 (11th Cir. 2011) (citing Celotex Corp. v. Catrett, 477 U.S. 317,
323 (1986)). A “material fact” is one that “might affect the outcome of the
suit.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Once the
moving party has met his burden, Rule 56 “requires the nonmoving party
to go beyond the pleadings” and with affidavits or other evidence,
designate “specific facts showing that there is a genuine issue for trial.”
Celotex, 477 U.S. at 324. At the summary judgment stage, the court must
view all evidence and make all reasonable inferences in favor of the non-
moving party. Allen v. Board of Pub. Educ. for Bibb Cnty., 495 F.3d 1306,
1315 (11th Cir. 2007).
DISCUSSION
Nationwide moves for summary judgment on two grounds. First,
Nationwide claims that the “employee exclusion” precludes coverage.
(Doc. 21, p. 10-14). Second, Nationwide asserts that Apple Signs’ late
notice precludes coverage. (Doc. 21, p. 14-17). “Compliance with the notice
requirements in an insurance policy is a condition precedent to recovery.”
Owners Ins. Co. v. Am. Timber Invs., Inc., 2014 WL 7365865, at *6 (N.D.
Ala. Dec. 24, 2014). So the court begins (and ends) with Nationwide’s
second argument.
The parties agree that Nationwide’s policy required Apple Signs to
notify Nationwide of an occurrence “as soon as practicable.” (See Doc. 21,
p. 14; Doc. 23, p. 8). The only question is whether Apple Signs met that
requirement when it waited 17 months to notify Nationwide about
Alexander’s fall and resulting injuries.
A. Alabama law
The policy does not define “as soon as practicable,” so the court turns
to Alabama law for guidance.2 The Alabama Supreme Court has
interpreted the phrase “as soon as practicable” to mean that the insured
must give notice “within a reasonable time under all the circumstances.”
See, e.g., Nationwide Mut. Fire Ins. Co. v. Estate of Files, 10 So. 3d 533,
535 (Ala. 2008); see also Pinson Truck Equip. Co., Inc. v. Gulf Am. Fire &
Cas. Co., 388 So. 2d 955, 956 (Ala. 1980).
Reasonableness, of course, is fact dependent. “Where facts are
disputed or where conflicting inferences may reasonably be drawn from
the evidence, the question of the reasonableness of a delay in giving notice
is a question of fact for the jury.” Southern Guar. Ins. Co. v. Thomas, 334
So. 2d 879, 882 (Ala. 1976); see also Pinson Truck Equip. Co., Inc. v. Gulf
Am. Fire & Cas. Co., 388 So. 2d 955, 957 (Ala. 1980). “Conflicting
inferences concerning the reasonableness of a delay may sometimes be
drawn where the insured offers evidence of mitigating circumstances.”
Thomas, 334 So. 2d at 882.
That said, “where an insured fails to show a reasonable excuse or
the existence of circumstances which would justify a protracted delay,”
the court should find “as a matter of law” that there has been a breach of
the policy’s notice provision. Id. at 882-83. “It is generally recognized that
the insured may be excused for a delay or failure to give the required
notice to the insurer where it appears that, acting as a reasonably prudent
person, he believed that he was not liable for the accident.” Thomas, 334
So. 3d at 884 (quoting Pan Am. Fire & Cas. Co. v. DeKalb-Cherokee
Counties Gas Dist., 266 So. 3d 763 (Ala. 1972).
2 Federal courts sitting in diversity apply the substantive law of the forum state. Grange Mut.
Cas. Co. v. Woodward, 826 F.3d 1289, 1295 (11th Cir. 2016). So this court applies the substantive
law of Alabama.
In sum, there may be circumstances where an insured can show a
reasonable excuse to justify delay. But Alabama law is clear that “it [is]
not the insured’s duty… to determine the probability of a suit being filed.”
Owners Ins. Co. v. Am. Timber Invs., Inc., 2014 WL 7365865, at *8 (N.D.
Ala. Dec. 24, 2014). Instead, “it is [the insured’s] duty to give the insurer
notice of any accident or occurrence.” Id.
So the court must look for two things: (a) did Adams have reason to
believe Apple Signs might be liable for Alexander’s injuries, see Thomas,
334 So. 3d at 884, and (b) did Adams fulfill his duty to timely notify
Nationwide of those injuries, so that Nationwide could determine whether
it might be liable under the policy.
B. Application
1. Timely Notice: The court finds that notice after 17 months is not
timely under the policy. Again, Nationwide’s policy never defines “as soon
as practicable” in specific terms. But other parts of the agreement are
instructive. In a section describing medical payment coverage for bodily
injury, the policy states: “We will pay medical expenses… for ‘bodily
injury’ caused by an accident… because of your operations; provided
that… “[t]he expenses are incurred and reported to us within one year of
the date of the accident.” (Doc. 2, p. 5) (emphasis added). This portion of
the policy strongly suggests that failing to notify Nationwide of an
accident within one year will terminate Nationwide’s duty to pay medical
expenses. Seventeen months exceeds one year, so the policy’s text
suggests Apple Signs’ notice was untimely.
Further, waiting 17 months to notify Nationwide about the accident
frustrated the purpose of the notice requirement—i.e., to give Nationwide
the opportunity to investigate its potential liability and prepare a defense
(if necessary). See generally Owners Ins. Co. v. Am. Timber Invs., Inc.,
2014 WL 7365865, at *8. It was practicable for Adams to notify
Nationwide that Alexander had suffered injuries (that Adams was paying
for) so that Nationwide could determine its duties under the policy. And
because notice was “practicable” once Adams knew that Alexander was
injured and sustaining medical bills, it was necessary under the policy.
2. Knowledge of potential liability: Alabama law permits untimely
notice if “acting as a reasonably prudent person, [Adams] believed that he
was not liable for the accident.” Thomas, 334 So. 3d at 884. Chris Adams
argues that his delay was justified because he “didn’t think there was a
need [to notify Nationwide] because [Alexander] was back to work.” (Doc.
20-1, pp. 9-10). But Adams had to know that Alexander suffered costly
injuries for two reasons: (1) Alexander’s injuries caused him to miss three
weeks of work (doc. 20-1, p. 9), and (2) Adams was paying Alexander’s
medical expenses (doc. 20-1, p. 10). And Adams had to know that Apple
Signs was potentially liable for the costs of Alexander’s injuries because
Adams knew that Alexander fell off an Apple Signs’ ladder while working
on a job for Apple Signs. (Doc. 20-1, p. 9). After all, Adams paid some of
the bills. So no reasonable juror could find that Adams reasonably
believed he and/or Apple Signs had no potential liability.
kK *
“Compliance with the notice requirements in an insurance policy is
a condition precedent to recovery.” Owners Ins. Co. v. Am. Timber Inus.,
Inc., 2014 WL 7365865, at *6 (N.D. Ala. Dec. 24, 2014). Apple Signs failed
to provide timely notice, so Nationwide does not owe a duty to defend or
indemnify its insured, Apple Signs and/or the Adams. The court will thus
enter a separate order that GRANTS Nationwide’s motion for summary
judgment (doc. 19) and closes this case.
DONE and ORDERED on November 21, 2022.
Leal Hag
COREY L. MAZE
UNITED STATES DISTRICT JUDGE