United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 96-2456

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Kevin Graeme Smith, *

Individually and as the *

Representative of All *

Underwriters at Lloyd's, *

* 

Plaintiff - Appellee, * 

* 

v. * Appeal from the United States

* District Court for the

Shirley F. Henslin, dba * Western District of Arkansas.

CAR Transportation Company, *

* [UNPUBLISHED]

Defendant - Appellant, *

*

Golden Eagle Insurance Company, *

*

Defendant - Appellee. *

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 Submitted: January 16, 1997

 Filed: February 25, 1997

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Before LOKEN, JOHN R. GIBSON, and MORRIS SHEPPARD ARNOLD, Circuit

Judges.

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PER CURIAM.

From August 10, 1990, until September 10, 1992, insurance

broker Steven M. Kennedy obtained errors and omissions insurance

coverage from Golden Eagle Insurance Company ("Golden Eagle") on a

claims made basis. From September 10, 1992, until February 2,

1993, Kennedy obtained similar coverage from the Underwriters at

Lloyd's of London ("Lloyd's"). During these periods, Kennedy

received large premium payments from his customer, Shirley Henslin,

to pay for liability and cargo insurance for her interstate motor

carrier business, CAR Transportation Company. In April 1995, after
 The HONORABLE H. FRANKLIN WATERS, Chief Judge of the United

States District Court for the Western District of Arkansas.

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the insurers procured by Kennedy denied coverage for numerous

liability and cargo claims asserted against CAR, Henslin sued the

insurers, Kennedy, Golden Eagle, and Lloyd's, seeking to hold some

financially responsible party liable to provide the insurance

Henslin thought she had purchased. 

Henslin's lawsuit, ultimately dismissed by the district court

for lack of federal jurisdiction, caused Lloyd's (represented by

plaintiff Kevin Graeme Smith) to commence this lawsuit against

Kennedy, Henslin, and Golden Eagle, seeking a declaratory judgment

that Lloyd's need not indemnify nor defend Kennedy against

Henslin's claims of broker malpractice. Kennedy, who is now

incarcerated, defaulted. Henslin defended, opposing the relief

requested by Lloyd's. Golden Eagle defended and cross-claimed

against Henslin, asserting that it, too, has no obligation to

indemnify or defend Kennedy against Henslin's claims.

Henslin now appeals the entry of judgment in favor of Lloyd's

and Golden Eagle. As to Lloyd's, the district court concluded

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that there is no coverage under the policy it issued to Kennedy

because Henslin made no errors and omissions claims, and Kennedy

gave Lloyd's no notice of any unasserted claims, during the policy

period. As to Golden Eagle, the court first entered a default when

Henslin failed to plead in response to Golden Eagle's cross claim.

It then denied Henslin's motion to set aside the default because

"there has been absolutely no attempt to show any cause, much less

good cause, for the failure to timely respond." However, the court

delayed entering judgment of default until after it granted summary

judgment in favor of Lloyd's on the merits of its claim.

On appeal, Henslin first argues that the court erred in

granting summary judgment in favor of Lloyd's because an insurer
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"may not disclaim liability based upon inactions of the insured"

(Kennedy), and because the court in any event should not have

relied upon Lloyd's affidavit stating that it had received no

timely notice of claims. With a claims made policy, the insurer

need not show it was prejudiced by the lack of timely notice

because notice within the policy period "defines the limits of the

insurer's obligation." Lexington Ins. Co. v. St. Louis Univ., 88

F.3d 632, 634 (8th Cir. 1996). Therefore, after careful review of

the record, we affirm the grant of summary judgment for the reasons

stated in the district court's May 16, 1996, Memorandum Opinion.

See 8th Cir. Rule 47B.

Henslin next contends that the district court abused its

discretion in entering default judgment in favor of Golden Eagle.

Henslin argues that Golden Eagle was not prejudiced by Henslin's

inadvertent failure to reply to Golden Eagle's cross claim, and it

is therefore unjust to deprive Henslin of this substantial claim by

default. However, Henslin ignores the fact that the district court

delayed entering default judgment until it ruled on the merits of

Lloyd's claim. Like Lloyd's, Golden Eagle issued claims made

policies to Kennedy, and Henslin admitted to the district court --

albeit somewhat ambiguously -- that she could not recover from

Golden Eagle if Lloyd's prevailed on the merits of the claims-made

policy issue. In these circumstances, the district court did not

abuse its discretion in entering default judgment in favor of

Golden Eagle.

The judgment of the district court is affirmed.

A true copy.

Attest:

 CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.