Late Notice

5th Circ. Finds No Asbestos Coverage Due To Untimely Notice And Rejects Need For Proof Of Prejudice

The Fifth Circuit, applying Louisiana law, affirmed a lower court’s ruling that Anco Insulations, Incorporated (“Anco”) had failed to timely tender claims to National Union Fire Company of Pittsburgh, Pennsylvania (“National Union”) and, therefore, National Union was not obligated to reimburse Anco for any legal costs that it incurred in defending the lawsuits, even for costs incurred after the date of notice. The court also held that National Union was not required to demonstrate prejudice due to late notice.

Anco distributed insulation materials that contained asbestos. It was named as a defendant in approximately 2,700 asbestos-related lawsuits between 1987 and 2008. National Union issued Anco a primary general liability insurance policy for the policy period January 1, 1987 to January 1, 1988. The 1987 policy did not contain an asbestos exclusion. Anco only became aware of the existence of the 1987 National Union policy during the course of discovery in a 2007 coverage case.  On April 23, 2009, Anco tendered all of its suits to the 1987 National Union policy.

The Fifth Circuit upheld the district court’s ruling that there was no issue of material fact as to the date of notice and held that Anco first tendered the underlying lawsuits to National Union on April 23, 2009. Anco presented evidence which it asserted created an issue of fact about the date of first notice, but the court disagreed. Anco’s evidence included testimony that it was Anco’s practice to forward all lawsuits to National Union; references to prior asbestos “claims” and various policies in letters from a claims adjuster for National Union; and a letter from Anco’s counsel’s dated September 2000, apprising the AIG Toxic Tort Claims Unit of the asbestos cases pending against Anco, as well as two follow-up letters from January 2001. The court found that none of the evidence was sufficient to create a dispute as to material fact particularly because none of the evidence referred to the specific National Union policy.

On appeal, Anco asserted that National Union must demonstrate prejudice due to the untimely notice before it can disclaim coverage. The Fifth Circuit noted that the general rule in Louisiana is that an insurer must demonstrate that it was sufficiently prejudiced by the late notice prior to disclaiming coverage due to late notice. This general rule, however, is subject to an exception when timely notice is an express condition precedent to coverage. The policy before the court required Anco to “immediately” forward any claims and stated that “[n]o action shall lie against the company unless, as a condition precedent thereto, there shall have been full compliance with all of the terms of this policy.” The Fifth Circuit held that the notice provision was a condition precedent to coverage and therefore Anco’s failure to comply with the notice provision of the policy precluded coverage. Anco Insulations Inc. v. Nat’l Union Fire Ins. Co. of Pittsburg, Pa., No. 12-31313 (5th Cir. Feb. 25, 2015).

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