United States Court of Appeals

Fifth Circuit

FILED

December 7, 2004

Charles R. Fulbruge III

Clerk

REVISED DECEMBER 29, 2004

In the

United States Court of Appeals

for the Fifth Circuit

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m 04-50110

Summary Calendar

_____________________

SINGLEENTRY.COM, INC.,

Plaintiff-Appellant,

VERSUS

ST. PAUL FIRE & MARINE INSURANCE COMPANY,

Defendant-Appellee.

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Appeal from the United States District Court

for the Western District of Texas

m A-03-CV-94-SS

____________________
2

Before DAVIS, SMITH, and DENNIS,

Circuit Judges.

JERRY E. SMITH, Circuit Judge:*

SingleEntry.com, Inc. (“SingleEntry”), appeals a summary summary judgment in favor

of St. Paul Fire and Marine Insurance Company (“St. Paul”). SingleEntry, as assignee of

ThinkSpark Corporation’s rights, contends

that ThinkSpark provided notice of a claim

within its policy period under a claims-made

technology errors and omissions policy. In addition, SingleEntry avers that St. Paul is required to show prejudice for failure to provide

notice and was required to provide a defense

to ThinkSpark under article 21.55 ofthe Texas

Insurance Code. We affirm.

I.

St. Paul issued ThinkSpark a claims-made

technology errors and omissions policy covering the period from November 9, 2000, to

November 9, 2001. SingleEntry hired ThinkSpark to design and build a website. In the

spring of 2000, a dispute arose between SingleEntry and ThinkSpark. SingleEntry sued

ThinkSpark on December 5, 2000, alleging

fraud, breach of contract, violations of the

Texas Deceptive Trade Practices Act, and an

alternative claim for negligent misrepresentation. 

ThinkSpark knew of the litigation no later

than December 7, 2000, but did not inform St.

Paul until September 18, 2001, when ThinkSpark’s insurance broker sent St. Paul a copy

of the petition. SingleEntry and ThinkSpark

submitted their dispute to arbitration, and on

August 7, 2002, SingleEntry obtained an arbitration award against ThinkSpark. 

St. Paul denied coverage to ThinkSpark for

the claims assert ed by SingleEntry in the underlying litigation. On February 11, 2003, the

state court ordered a turnover that assigned

ThinkSpark’s claims against St. Paul to SingleEntry, which then sued St. Paul, alleging

status as an assignee and judgment creditor or

third-party beneficiary of the policy and seeking indemnification under the policy. St. Paul

removed to federal court on the basis of diversity jurisdiction.

SingleEntry and St. Paul filed cross-motionsfor summary judgment on the legal question whether the provision in the policy that

required ThinkSpark to notify St. Paul of a

loss “as soon as possible” is a mandatory notice requirement and therefore a condition precedent to coverage. The district court denied

Single-Entry’s motion for partial summary

judgment and granted St. Paul’s cross-motion

for summary judgment, determining that

ThinkSpark had failed to comply with the

notice requirements.

II.

An assignee steps into the shoes of the assignor and takes the assigned rights subject to

all defenses that an opposing party might be

able to assert against the assignor. Burns v.

Bishop, 48 S.W.3d 459, 466 (Tex.

App.SSHouston [14th Dist.] 2001). A thirdparty beneficiary judgment creditor of the insured stepsinto the shoes ofthe insured. State

Farm Lloyds Ins. Co. v. Maldonado, 963

S.W.2d 38, 40 (Tex. 1998). The judgment

creditor must show that the insured complied

with the conditions precedent and terms of the

policy. Id. 

*

 Pursuant to 5TH CIR. R. 47.5, the court has

determined that this opinion should not be published and is not precedent except under the limited

circumstances set fort in 5TH CIR. R. 47.5.4.
3

When interpreting an insurance policy under Texas law, a court must construe ambiguities against the insurer and in favor of the insured. Nat’l Union Fire Ins. Co. v. Willis, 296

F.3d 336, 339 (5th Cir. 2002). The primary

goal is to give effect to the written expression

of the parties’ intent. Id. This is necessary to

ensure that the interpretation of the policy will

give effect to each term in the contract so that

none will be rendered meaningless. Id. An

insurance policy will be considered ambiguous

if, when considered as a whole, it isreasonably

susceptible to more than one meaning. Matador Petroleum Corp. v. St. Paul Surplus Lines

Ins. Co., 174 F.3d 653, 657 (5th Cir. 1999)

(quoting Forbau v. Aetna Life Ins. Co., 876

S.W.2d 132, 134 (Tex. 1994)). A court

should not strain to find ambiguities that may

defeat the parties’ probable intention. Id. Furthermore, an insurance contract will be given

its certain legal meaning or interpretation if

possible. Id.

The terms in an insurance contract are

given their ordinary and generally accepted

meaning, unless the policy shows that the

words were meant in a technical or different

sense. New Era of Networks, Inc. v. Great N.

Ins. Co., 2003 WL23573645, at *8 (S.D. Tex.

2003) (citing Am. States Ins. Co. v. Hanson

Indus., 873 F. Supp. 17, 22 (S.D. Tex. 1995)).

The purpose of a notice requirement is to

enable the insurer to investigate the circumstances of an accident while the matter is fresh

in the minds of the witnesses so that it may

adequately prepare to adjust or defend any

claims that may be then or thereafter be asserted against persons covered by its policy.

Id. (citing Employers Casualty Co. v. Glens

Falls Ins. Co., 484 S.W.2d 570, 575 (Tex.

1972); Bay Elec. Supply, Inc. v. Travelers

LloydsIns. Co., 61 F. Supp. 2d 611, 619 (S.D.

Tex. 1999)).

Compliance with the provision that notice

be given as soon as practicable is a condition

precedent, the breach of which voids policy

coverage. Id. (citing Broussard v. Lumbermens Mut. Cas. Co., 582 S.W.2d 261, 2662

(Tex. App.SSBeaumont 1979); Duzich v.

Marine Office of Am. Corp., 980 S.W.2d 857,

866 (Tex. App.SSCorpus Christi 1998). Accordingly, “failure to give timely notice is a

breach of the insurance contract and relieves

the insurer of its obligation to defend or

indemnify. Id. (citing Assicurazioni Generali

SpA v. Pipe Line Valve Specialties Co., 935 F.

Supp 879, 887 (S.D. Tex. 1996)). Where an

insurance policy requires notification of an occurrence or a lawsuit as soon as practicable or

immediately, courts must consider the reasonableness of a delay in notification if the facts

are undisputed. Id. Notice requirements are

strictly interpreted, because the partiesspecifically negotiate them. Matador, 174 F.3d at

657.

A claims-made policy is distinguishable

from an occurrence policy, where an occurrence during the policy triggers coverage. Id.

Alternatively, under a claims-made policy,

providing notice triggers the insured’s coverage. Id. An insurer is not required to show

prejudice from late notice where a claimsmade policy is involved. Id. at 659. Courts

will not rewrite policies to permit notice-prejudice to be applied to claims-made policies,

because to do so would interfere with the

right to contract. Id. A party rightly should

be held to know the conditions of the policy

and the conscious choice that it made in selecting a claims-made policy instead of an occurrence policy. Hirsch v. Tex. Lawyers Ins.

Exch., 808 S.W.2d 561, 565 (Tex. App.SSEl

Paso 1991, wrtidenied). Therefore, the failure

to provide proper notice under a claims-made

policynegates coverage,regardless ofwhether
4

the insurer has been prejudiced. Id. A showing of prejudice is required only in narrowly

defined cases involving bodily injury and

propertydamage. DairylandCounty Mut. Ins.

Co. v. Roman, 498 S.W.2d 154, 157 n.2 (Tex.

1973). 

The instant policy sets forth definite requirements withwhichThinkSpark must comply to secure coverage. Under the policy

section titled “When this Policy Provides

Liability Protection,” the policy states: “If an

accident, error, event, offense, or wrongful act

happens that may involve liability protection

provided in this policy, you or any other protected person involved must tell us or our

agent what happened as soon as possible.”

ThinkSpark, however, did not notify St. Paul

until nine months after SingleEntry had filed

suit. 

In addition, ThinkSpark did not give notice

to St. Paulwhen SingleEntry failed to payover

$219,952 worth of invoices on May 9, 2000.

Also, in June 2000, ThinkSpark referred the

controversy with SingleEntry to an attorney,

and its chieffinancial officer predicted that the

dispute would result in litigation. St. Paul’s

policy states that “it is reasonable that a protected person could foresee a claim or suit

being made or brought if one of your customers refused to pay all or part of your charges

forthose products orservices.” Consequently,

the actual period of time during which ThinkSpark failed to notify St. Paul is actually much

longer than nine months. 

Analogously, there is ample Texas authority

that taking eleven months to notify an insurer

is not “as soon as practicable.” Chicago Ins.

Co. v. W. World Ins. Co., 1998 WL 51363, at

*3 (N.D. Tex. 1998). Therefore, the district

court correctlyfound that ThinkSpark failed to

fulfill the notice requirement of the policy.

The terms and conditions ofthe policy demonstrate that this notice requirement was meant

to be a condition precedent. Accordingly, because SingleEntry took the assigned rights

fromThinkSpark subject to all the defenses St.

Paul is able to assert, the district court properly granted St. Paul’s cross-motion for summary judgment. 

III.

SingleEntry’s assertion that noticewas provided before the expiration of the policy is

unavailing. The policy specifically mandated

that notice be provided “as soon as possible.”

Therefore, under Texas law, ThinkSpark’s

delay of notification from May 2000 until

December 2001 fails to fulfill the condition

precedent of providing notice. Moreover,

althoughSingleEntryrepeatedlycitesthe language of the policy stating that “failure to comply could affect coverage,” thislanguage must

be read along with the requirement that notice

must be given “as soon as possible.” Accordingly, St. Paul was properly granted summary

judgment on SingleEntry’ssuit asthe assignee

of ThinkSpark’s claim.

St. Paul also defends SingleEntry’s claims

by noting that the policy did not cover the

dispute that arose between ThinkSpark and

SingleEntry. Specifically, the policy states that

“[w]e won’t cover loss that results from any

delay in delivery of, or failure to deliver your

computer or electronic products or services.”

The dispute between SingleEntry and

ThinkSpark arose because ThinkSpark failed

to complete the requested website for SingleEntry by the deadline of May 1, 2000. 

We affirm based on ThinkSpark’sfailure to

fulfill the condition precedent of providing notice to St. Paul “as soon as possible.” This decision, moreover, is bolstered by the conclu-
5

sion that the claim was not covered by the policy. Therefore, summary judgment was properlyawarded becauseSingleEntry, as assignee,

is subject to all defenses St. Paul may raise

against ThinkSpark.

IV.

SingleEntry argue that in Texas, for there

to be a condition precedent, terms such as “if”

or “provided that” or “on condition that” normally must be used. Criswell v. European

Crossroads Shopping Ctr. Ltd., 792 S.W.2d

945, 948 (Tex. 1990). Furthermore, SingleEntry tries to distinguish Fed. Ins. Co. v.

CompUSA, 319 F.3d 746, 748 (5thCir. 2003),

because the contract in that case stated that

“the insured shall, as a condition precedent to

exercising their rights” give written notice.

Therefore, SingleEntry contendsthat the language “condition precedent” must be used for a

notice requirement to act as a condition precedent.

InGemmy Indus.Corp. v.Alliance General

Ins. Co., 190 F. Supp. 2d 915, 921 (N.D. Tex.

1998), however, the insurance policy in controversy did not explicitly have the words

“condition precedent” for the notice requirement, but rather stated that notice must be

given as soon as practicable. Id. The court

found that a delay of more than one year before notifying the insurer was insufficient, regardless ofthe fact that the notice requirement

was not specifically labeled as a “condition

precedent.” Id. 

Similarly, in Assicurazioni, 935 F. Supp. at

887, the policy at issue required notice assoon

as practicable, yet the insured notified its insurer almost seventeenmonths afterthe occurrence and two months after receipt of the original petition. The policy listed the notice requirements under the condition section of the

policy, yet the terms did not explicitly state

that the notice requirement was a “condition

precedent” to coverage. Again, although the

notice requirement was not specificallylabeled

as a “condition precedent,” the court found

that the delays violated the requirements set

out in the policy. Id.

SingleEntry further urges that ThinkSpark

had discretion to determine when the need for

coverage may exist. SingleEntry cites Employers Ins. v. Bodi-Wachs Aviation Ins.

Agency, Inc., 39 F.3d 138 (7th Cir. 1994), to

illustrate that the insured has discretion in determining when an insurer must be given notice. In Bodi-Wachs, the insured gave notice to

its insurer directly after an amended pleading

was filed against it for fraud and negligence.

Id. Notably, the decision of the district court

granting coverage to the insured did not demonstrate that the insured has discretion of

when to provide notice, but that the insured

fulfilled the requirements of the policy. 

Alternatively,ThinkSpark had reasonto believe that coverage would be needed when it

failed to reach its deadline for SingleEntry’s

website on May 1, 2000. Furthermore, in June

2000, the chief executive officer of ThinkSpark noted that litigation would likely result.

Consequently, ThinkSpark had the obligation

to notify St. Paul of possible litigation no later

than June 2000, and its failure provide notice

until September 2001 constituted a failure to

provide the proper notice. 

V.

SingleEntry argues that St. Paul had a duty

to provide defense and pay the final judgment

on behalf ofThinkSpark under article 21.55 of

the Texas Insurance Code. SingleEntry is incorrect, because it is not making a first-party

claim in this dispute. Under Article 21.55
6

§ 1(3), claims are defined as a first-party claim

made by an insured or policyholder under an

insurance policy or contract or by a beneficiary

named in the policy or contract that must be

paid by the insurer directly to the insured or

beneficiary. An illustration of a first-party

claim can be found in Hartman v. St. Paul Fire

& Marine Ins. Co., 55 F. Supp. 2d 600, 603

(N.D. Tex. 1998), showing that a first-party

claim is an immediate direct diminution of the

insured’s assets, in contrast to a third-party

claim, which goes through the first-party as a

conduit. 

SingleEntry’s claimis not a first-partyclaim

for damage suffered directly by the insured.

Therefore, because ThinkSpark’s policy was

not a first-party insurance policy, Single Entry’sthird-party claim is not covered by article

21.55. In addition, SingleEntry is not the

holder of the policy or a named beneficiary.

Accordingly, SingleEntry does not meet the

requirements of article 21.55, so summary

judgment was properly awarded to St. Paul.

AFFIRMED.