# U ni te d S ta te s Co ur t of A pp ea ls For the Eig hth Circu it

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No. 1 3- 33 81

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Ph il ad el ph ia Co ns ol id at ed Hol di ng Co rp or at io n, d oi ng bu si ne ss as P hi la de lp hi a In su ran ce Co m

pa ni es

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el le e

v.

LSI-Lo wery

Sy st em s, In c.

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t

Hod el l-Na tc o In du st rie s, In c.

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t - Ap pe ll an t

The Int eg rat ed Bu si ne ss So lu ti on s Gro up , Inc

.

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t

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No. 1 3- 33 97

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Ph il ad el ph ia Co ns ol id at ed Hol di ng Co rp or at io n, d oi ng bu si ne ss as P hi la de lp hi a In su ran ce Co m

pa ni es

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff - App el le e

v.LSI-Lo wery Sy st em s, In c.

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t - Ap pe ll an t

Hod el l-Na tc o In du st rie s, In c.; Th e In te gr at ed Bu si ne ss So lu ti on s Gro up , Inc

.

ll ll ll ll ll ll ll ll ll ll l Defe nd

an ts

__ __ __ __ __ __ App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Eas te rn Dis tri ct of M is so ur i - St . Lou is

__ __ __ __ __ __
Su bm it te d: Sep te m

be r 8, 2 01 4 Fil ed : J an ua ry

9, 2 01 5

__ __ __ __ __ __ Befo re RI LEY, Chi ef J ud ge , SMITH an d KELLY, Circ ui t J ud ge s.

__ __ __ __ __ __
KELLY, Cir cu it Ju dg e.

LS i-Lo wery Sy st em s, In c. (LSi ), an d Hod el l-Na tc o In du st rie s, In c. (Ho de ll ),

ap pe al th e di st ric t co ur t’s gr an t of su m m ary jud gm en t in a de cl arat or y act io n fil ed 1 by Ph il ad e l p h i a Co ns ol id at ed Hol di ng Co rp or at io n, d/ b/ a Ph il ad el ph ia In su ran ce Co m pa ni es ( P IC). PIC fil ed th e act io n in th e East ern Dis tri ct of Mi ss ou ri to de te rm in e whe th er PIC was req ui red to de fen d a nd in de m ni fy it s in su red
, LSi, with

res pe ct to a la wsu it fil ed by Hod el l in th e Nor th ern Dis tri ct of Ohi o. Th e d i st ric t

co ur t fo un d LSi di d no t ha ve co ve rag e un de r ei th er of it s po li ci es wit h PIC be cau se 2
it di d no t pr ov id e no ti ce of Hod el l’s cl ai m s or po te nt ia l cl ai ms t o PIC as req ui red

The Hon or ab le Cat he rin e D. Perr y , Ch ie f Ju dg e, Uni te d St at es Dis tri ct Co ur t 1 fo r th e Eas te rn Dis tri ct of M is so ur i.

LSi h ad two co ns ecu ti ve po li ci es wit h P IC. 2

-2

-un de r th e po li cy

. Hod el l an d LSi ap pe al

. Ha v i n g ju ris di ct io n un de r 28 U.S.C. 3 § 1 29 1, we af

fir m

.

I. Ba ck gr ou nd

LSi is a fir m th at pr ov id es co m pu te r a nd te ch no lo gy co ns ul ti ng se rv ic es

. In
Decem be r 20 04 , LSi s ol d b us in es s s of twar e to Hod el l. LSi al so ag reed to de ve lo p 4

an ad d- on pr og ram fo r th e so f t w a r e

. As pa rt of it s im pl em en ta ti on se rv ic es , LSi

ev al ua te d Hod el l’s ha rd ware an d so ftwa re req ui rem en ts an d pe rfo rm ed te st in g. The

so ftwa re wen t li ve on Mar ch 1, 20 07
, an d H od el l im m ed ia te ly be ga n ex pe rie nc in g
pe rfo rm an ce p ro bl em s.

Mo st of th e un di sp ut ed fact s are do cu m en te d in em ai l s b e t w een Hod el l an d LSi. On Mar ch 13
, 20 07
, Kev in Rei dl of Hod el l em ai le d Dan Lower y of LSi,

co m pl ai ni ng th e syste m was un st ab le an d sl ow, affe ct in g Hod el l’s “ bo tt om li ne each da y at ve ry real le ve ls .” He de m an de d “ an aro un d- th e-cl oc k effo rt by A LL pa rti es in vo lv ed to ge t ou r co m

pa ny ba ck of

f of it s kn ees .” In a Mar ch 14
, 20 07
, em ai l, LSi ack no wled ge d th at , “ if we do no t ge t Hod el l ha pp y , we can ex pe ct a le ga l is su e.” On
M a r c h 2 0
, 20 07
, Hod el l em ai le d LSi, “ If we do n’t se e im m ed ia te res ul ts on th e syste m pe rfo rm an ce

. . . I wil l reco m m en d

. . . th at we st art th e pr oc es s of ta ki ng le ga l

act io n.”

Hod el l fil ed i t s n o ti ce of ap pe al on Octo be r 29
, 20 13
, an d th e cas e was 3 do ck et ed un de r cas e nu m be r 13 -3 38 1. LSi fil ed it s no ti ce of app eal on Octo be r 30
, 20 13
, an d it was do ck et ed un de r cas e nu m be r 13 -3 39 7. The In te gr at e d B u s i n e ss So lu ti on s Gro up , Inc ., is a who ll y own ed su bs id ia ry of LSi and di d n ot fil e a n ot ic e of ap pe al . The Ho de ll an d LSi cas es were co ns ol id at ed on Nov em be r 1, 2 01 3.

The bu si ne ss so ftwa re was de ve lo pe d by an ot he r co m pa ny th at was no t a pa rty 4
to th e d ecl arat or y

act io n.

-3

-On Apr il 11
, 20 07
, LSi em ai le d th e bu si ne ss -s of twar e de ve lo pe r st at in g Hod el l

was “ cl os e to th ro win g th e syste m ou t” an d warn in g th at “ [i]f th ey th ro w th e syste m

ou t, th ey wil l fo r su re ge t le ga l wit h us al l.” On Apr il 25
, 20 07
, Hod el l em ai le d LSi

as ki ng “wh o wil l pa y fo r da m ag es .” Tha t sa m e da y , Hod el l em ai le d LSi th at “ ou r
at to rn ey s h av e n ow b een bro ug ht in to th e lo op .”

On Ju ne 5, 20 07
, Hod el l em ai le d LSi a li st of ta sk s an d st at ed if th ey were no t

co m pl et ed
, “ we wil l be tu rn in g co m m un ic at io ns ov er to ou r le ga l ad vi so rs .” Lower y of LSi res po nd ed th e sa m e da y th at Hod el l’s th reat s of “ go in g to co ur t” ha d le ft hi m

“ sh ak en ” an d th at th e pr ob l e ms h a d “h i t [h im ] fin an ci al ly ve ry ha rd as well .” In a Ju ne 25
, 20 07
, em ai l, Hod el l de m an de d LSi co rrec t ev erythi ng “ or rei m bu rs e Hod el l-Na tc o fo r th e ex pe ns e.” On Ju ne 29
, 20 07
, Hod el l in fo rm ed LSi it wou ld “ be

re c e i v i n g co rres po nd en ce fro m ou r le ga l ad vi so rs .” On Ju ly 6, 20 07
, an in te rn al

em ai l at LSi ack no wled ge d th at , wit ho ut “ bi g pe rfo rm an ce im pr ov em en t s ” o n th e Hod el l p r o

je c t , LS i wou ld “ rece iv e a le tt er fro m [Ho de ll ’s] la wy ers

. . . [p ]rob ab ly

st at in g t he ir d em an ds for m on ey .”

On Ju ly 24
, 20 07
, Hod el l’s at to rn ey s se nt a le tt er to LSi, th at read as fo ll ows :

Pl eas e be ad vi se d th at we ha ve be en ret ai ne d by Hod e l l

- N a t co In du st rie s, In c. . . . .

Hod el l-Na tc o ha s be en m or e th an pa ti en t in ex te nd in g th e op po rtu ni ty to [LSi ] to pr ov id e i n t e gr at ed so ftwa re wit h th e ag reed fu nc ti on al it y

. H o w e v e r, as of th e da te of th is le tt er, th e in te gr at ed so ftwa re fal ls far sh or t of th e pr om is ed p e r f o r mance an d we are co m pe ll ed to de cl are [LSi ] in m at eri al de fau lt of th ei r ag reem en ts wit h Hod el l-Na tc o, in cl ud in g t he Deve lo pm en t Ag reem en t.

. . . .
Thro ug ho ut th e de ve lo pm en t pr oc es s, it ha s be en ou r cl ie nt ’s ob jecti ve to ob ta in in te gr at ed so ftwa re wit h th e ag reed fu nc ti on al it y op erat in g at

-4

-ac c e p t a b le pe rfo rm an ce le ve ls

. W it h th e li m it ed res ou rces y ou ha ve

de vo te d to th is pr ojec t, th at res ul t si m pl y ha s no t oc cu rred

. If po ss ib le
, o ur cl ie nt wou ld li ke to av oi d li ti ga ti on , bu t gi ve n th e se ve re i mp a c t up on it s bu s i n e s s, Hod el l-Na tc o wil l pu rs ue al l le ga l an d eq ui ta bl e
rem ed ie s av ai l a b l e to it

. You are req ue st ed to ha ve y ou r at to rn ey s
co nt act th e un de rs ig ne d w i th in fiv e (5 ) bu si ne ss da y s of th e rece ip t of th is let te r to di sc us s an am ic ab le res ol ut io n t o t hi s m at te r.

On Ju ly 26
, 20 07
, LSi ack no wled ge d rece ip t of th e le tt er, as ki ng Hod el l, “ [Y]ou are

as ki ng fo r rem ed ie s (ie m on ey ? ) Co rrec t? ” An em ai l f r o m LS i th e ne xt da y ag ai n ad dr es se d t he “ le ga l l et te r” an d Ho de ll ’s di ss at is fact io n wi th LSi’s p erfo rm an ce.

On J an ua ry

23 , 20 08 , Ho de ll se nt LSi an em ai l s ta ti ng , “ W e are off eri ng y ou th e ch an ce to res ol ve th is si tu at io n by refu nd in g th e TOTAL fu nd s we’ve pa id to LSI [s ic ] th at are rel at ed to so ftwa re li cen se s an d m ai nt en an ce fees .” LSi res po nd ed
,

“ [W] e m us t rem ai n pa rtn ers th ro ug h ou t [s ic ] y ou r mi g r a t i o n

. I can no t do th at effe ct iv el y un de r a th re a t o f b e i n g su ed ev ery d ay

. So al l I am sa y in g is if y ou are, th en do it .” Hod el l em ai le d, “ [D]on’t y ou carr y pr of es si on al li ab il i t y i n s u r an ce fo r th is type of is su e?

. . . In an effo rt to av oi d a dr ag ge d- ou t la wsu it
, we m ad e a pr op os al

to res ol ve th is in a m an ne r th at ga ve us a sm al l am ou nt of rel ie f, far sh or t of ou r to ta l

co st

. . . If we d o n ot see rel ie f, I can ’t ass ur e y ou of n o [s ic ] su it .”

On Nov em

be r 21
, 20 08
, Hod el l fil ed su it ag ai ns t LSi an d ot he rs in th e Nor th ern Dis tri ct of Ohi o, as se rti ng cl ai m s fo r frau d, br each of co nt ract , ne gl ig en ce,

an d ne gl i g e n t misr ep res en ta ti on ari si ng fro m th e pe rfo rm an ce is su es wit h th e

so ftwa re. On Decem

be r 8, 20 08
, LSi fir st no ti fie d PIC of Hod el l’s cl ai m s ag ai ns t it

. The is su e be fo re us is whe th er LSi ga ve PIC ti m el y no ti ce of Hod el l ’s cl ai m fo r
pu rp os es of c ov erag e u nd er ei th er p ol ic y

.

-5

-II . Disc us si on

P I C is su ed two su cces si ve “ cl ai m s m ad e” pr of es si on al li ab il it y in su ra n c e
po li ci es to LSi in 2 0 0 7 an d 20 08

. In or de r fo r LSi to ha ve co ve rag e un de r ei th er 5

po li cy , LSi was req ui red to pr ov id e no ti ce to PIC d u r i n g th e po li cy pe rio d of an y

“ cl ai m m ad e ag ai ns t [it ]” or “ an y ci rcu m st an ce whi ch co ul d reas on ab ly be ex pe ct ed

to gi ve ris e to a cl ai m .” In th e 20 07 po li cy , a “ cl ai m ” was de fin ed a s “ a de m an d

rece iv e [s ic ] by th e In su red fo r m on ey , in cl ud in g th e se rv ic e of su it or in st it ut io n of arb it rat io n pr oc eed in gs in vo lv in g th e In su red .” In th e 20 08 po li cy , th e de fin it io n of

a “ cl ai m ” ch an ge d to “ a de m an d rece iv ed by y ou fo r m on ey or se rv ic es , in cl ud in g th e

se rv ic e of su it or in st it ut io n of arb it rat io n pr oc eed in gs in vo lv in g y ou ari si ng fro m an y al le ge d wro ng fu l act .” (Em ph as is ad de d)

. Bo th po li ci es de fin ed a “ wro ng fu l act ” as

a “n e g l i ge nt act , erro r, or om is si on co m m it te d or al le ge d to ha ve be en

co m m it te d

. . . in th e ren de rin g of pr of es si on al se rv ic es ”an d “ pr of es si on al se rv ic es ”

as “ se rv ic es ren de red to ot he rs for a fee . . . in th e co nd uc t o f y ou r pr of es si on .”

In it s co ve rag e se ct io n, th e 20 07 po li cy pr ov id ed co ve rag e fo r “ an y Cl ai m fir st

m ad e ag ai ns t t he Ins ur ed an d re po rte d t o t he Co m pa ny by writ te n n ot ic e d ur in g t he
Po li cy Peri od ”; pr ov id ed “ su ch Cl ai m is by r e as on of a W ro ng fu l Act co m m it te d[ ]
Dur in g th e Po li cy Peri od ” or co m m it te d “ Pri or to t h e P o l i cy Peri od

. . . an d [t]he
In su red ha d no ba si s to be li ev e th at su ch W ro ng fu l Act m ig ht reas on ab ly be ex pe ct ed

to gi ve ris e to a Cl ai m un de r th is Po li cy .” In co nt ras t, th e 20 0 8 p o l i c y pr ov id ed

co ve rag e fo r “ an y cl ai m fir st m ad e ag ai ns t y ou du rin g th e p o l i c y p eri od

. . . a ris in g

ou t of a wro ng fu l act co m m it te d

. . . pr io r to th e en d of th e po li cy pe rio d.” Und er th e

ex cl us io n se ct io n, th e 20 08 po li c y s t a t e d “[t]his po li cy do es no t ap pl y to an y cl ai m

. . . ari si ng ou t of

, res ul ti ng fro m , ba se d up on or in co ns eq ue nc e of
, di rect ly or in di rect ly, an y wro ng fu l act co m m it te d pr io r to th e po li cy pe rio d .

. . whi ch y ou ha d

The 20 07 po li cy was effe ct iv e fro m Apr il 23
, 20 07
, to Ap r i l 2 3
, 20 08 ; th e 5 20 08 po li cy

was e ffec ti ve fro m

Apri l 2 3, 2 00 8, t o Ap ril 23 , 20 09

. -6

-an y ba si s t o b el ie ve m ig ht reas on ab ly b e ex pe ct ed to gi ve ris e to a cl ai m un de r th is

Po li cy .”

PIC m ai nt ai ns LSi ha s no co ve rag e un de r th e 20 07 po li cy be cau se LSi di d no t

no ti fy PIC of an y cl ai m or po te nt ia l cl ai m du rin g th e 20 07 po li cy pe rio d. PIC fu rth er

co nt en ds LSi ha s no co ve rag e un de r th e 20 08 po li cy be cau se th e 20 08 po li cy co ve red cl ai m s “ fir st m ad e” du rin g th e po li cy pe rio d an d Hod el l “ fir st m ad e” a cl ai m ag ai ns t LSi be fo re th e 20 08 po li cy wen t i n to effe ct

. Hod el l an d LSi as se rt su m m ary jud gm en t was in ap pr op ria te be cau se th ere is a ge nu in e is su e of m at eri al fact whe th er LSi re cei ve d n ot ic e o f an act ua l o r po te nt ia l cl ai m be fo re Ho de ll fil ed it s l aws ui t i n Nov em be r 20 08

.

W e rev ie w a gr an t of su m mar y ju dg m en t de no vo , “ vi ewin g th e reco rd m os t fav or ab ly to th e no nm ov in g pa rty an d dr awin g al l reas on ab l e i nf eren ces fo r th at
pa rty.” Mu nr o e v

. C on t’l W . I ns . C o., 73 5 F.3 d 78 3, 78 6 (8 th Ci r. 20 13 ). W e al so

rev ie w th e di st ric t co ur t’s co ns tru ct io n of an in s u r an ce po li cy an d in te rp ret at io n of

st at e la w de n ov o. Id. 6

Und er Mis so ur i law, th e te rm s of an ins ur an ce po li cy are gi ve n “ th e m ean in g whi ch wou ld be at ta ch ed by an or d i n a ry pe rs on of av erag e un de rs ta nd in g if

pu rch as in g in su ran ce.” Seec k v. Geic o Gen

. In s. C o ., 21 2 S.W .3d 12 9, 13 2 (Mo

. ba nc 20 07 ) (q uo ta ti on om it te d)

. Bec au se in su ran ce po li ci es are co nt ract s, th e ge ne ral

ru le s of co nt ract co ns tru ct io n are us ed in in te rp ret in g an in su ran ce po li cy

. Tod d v. Mo

. Uni te d Sch

. In s. Co un ci l, 22 3 S.W .3d 15 6, 16 0 (Mo

. ba nc 20 07 ). The po li cy is read as a who le to de te rm in e th e pa rti es ’ in te nt , an d th e la ng ua ge us ed in th e po li cy is gi ve n it s pl ai n an d or di na ry m ean in g. Thi em an n v. Co lu m bi a Pu b. Sch

. Dis t., 33 8
S.W .3d 83 5, 83 9– 40 (Mo

. Ct

. App

. 20 11 ). If, gi vi ng th e la ng ua ge us ed it s pl ai n an d

The pa rti es ag ree M is so ur i l aw ap pl ie s. 6

-7

-or di na ry m ean in g, th e in te nt of th e pa rti es is cl ear an d un am bi gu o u s , th e po li cy is

en fo rced acco rd in g t o i ts ter m s. See ck , 21 2 S .W .3d at 1 32

.

A cl ai m s m ad e po li cy “ pr ov id es co ve rag e whe n th e act or om is si on is di sc ov ered an d b ro ug ht to th e at te nt io n of the in su rer, rega rd le ss of whe n th e act or

om is si on oc cu rred .” W it tn er, Po ge r, Ro se nb lu m & Sp ewak
, P. C

. v

. Bar Pl an Mu t. In s. Co
., 96 9 S.W .2d 74 9, 75 4 (Mo

. ba nc 19 98 ). Und er a cl ai m s m ad e po li cy , no ti ce is es pe ci al ly im

po rta nt

. Gris so m v. Fi rs t Nat’ l

. I n s

. Age nc y , 37 1 S.W .3d 86 9, 87 4 (Mo . Ct. Ap p. 2 01 2)

.

Not ic e m us t be gi ve n to th e in su rer du rin g th e po li cy p e r i o d. If th e in su red do es no t gi ve no ti ce wit hi n th e co nt ract ua ll y req ui red po li cy pe rio d, th ere is si m

pl y no co ve rag e un de r a cl ai m s m ad e po li cy , whe th er
or no t th e in su rer was pr ejud ic ed

. Thi s is be c a u s e t h e ev en t whi ch in vo ke s co ve rag e in a cl ai m s m ad e po li cy is tra ns m it ta l of no ti ce of th e cl ai m to th e in su rer. The ve ry es se nc e of a cl ai m s m ad e po li cy is no ti ce to th e car rie r wit hi n t he po li cy pe rio d.

Id

. at 87 4 (q uo ta ti on om it te d)

. Und er a cl ai m s m ad e po li cy , no ti ce “ de fin es th e li m it s of th e in su rer’s ob li ga ti on —i f th ere is no ti m e l y n o t i ce, th ere is no co ve rag e.”
Lex in gt on Ins . Co. v . St. Lo ui s Un iv ., 88 F.3d 63 2, 6 34 (8t h C ir. 1 99 6)

. 7

The di st ric t co ur t co nc lu de d th ere was no co ve ra g e un de r th e 20 07 po li cy be cau se LSi di d no t gi ve no ti ce of a cl ai m or po te nt ia l cl ai m to PIC wit hi n th e 20 07

po li cy pe rio d. Ho d e l l a n d LSi do no t di sp ut e th is fact

. W e ag ree wit h th e di st ric t

co ur t t ha t, “ [b ]y

th e p la in lan gu ag e o f th e [2 00 7] po li cy , th ere i s n o c ov erag e.”

Tim el y no ti ce un de r a cl ai m s m ad e po li cy “ al lo ws th e in su r e r t o more 7

accu rat el y fix it s res erv es fo r fu tu re li ab il it ie s an d co m pu te pr emi u ms w it h gr eat er cert ai nt y .” Lexi ng to n, 8 8 F .3d at 6 34 (qu ot at io n o m it te d)

. -8

-The di st ric t co ur t al so fo un d th ere was no co ve rag e un de r th e 20 08 po l i cy

be cau se it co nc lu de d th e co m m un ic at io ns be twee n Hod el l an d LSi fro m Mar ch 20 07
, whe n Hod el l fir st ex pe rie nc ed pr ob le m s wit h th e so ftwa re, an d Apr il 23
, 20 08
, th e

s t a r ti ng da te of th e 20 08 po li cy , co ns ti tu te d a cl ai m

. In it s em ai l co m m un ic at i o n s wit h LSi, Hod el l co m

pl ai ne d ab ou t th e pr ob le m s wit h th e so ftwa re an d de m an de d LSi fix th e pr ob le m s an d co ve r th e as so ci at ed co st s. The em ai ls di sc us se d Hod el l’s in te nt
to br in g in it s “ le ga l ad vi so rs ” an d LSi’s ex pe ct at io n of be in g su ed i f t h e so ftwa re
pr ob le m s were no t co rrec te d. In ad di ti on to th e e m ai ls
, th e Ju ly 20 07 le tt er fro m Hod el l’s at to rn ey s ad vi se d LSi th at th e fir m ha d be en ret ai ne d by Hod el l, th at Hod el l

w a s un ha pp y wit h th e pe rfo rm an ce of th e so ftwa re, an d th at “ Hod el l-Na tc o wil l

pu rs ue al l le ga l an d eq ui ta bl e rem ed ie s av ai la bl e to it .” The le tt er req ue st ed th at LSi “h a v e [ th ei r] at to rn ey s co nt act th e un de rs ig ne d wit hi n fiv e (5 ) bu si ne ss da y s of th e

rece ip t of th is le tt er to di sc us s an am ic ab le res ol ut io n of th is m at te r.” Cf. Berr y v. St

. Pau l Fi re & Mar in e In s. Co
, 70 F.3 d 98 1, 98 3 (8 th Ci r. 19 95 ) (le tt er se nt by at to rn ey

“ su ffi ci en tl y de m an di ng in to ne an d su bs ta nc e to qu al ify as a ‘clai m ’ wit hi n th e

m ean in g of th e po li cy” )

. W e ag ree wit h th e di st ric t co ur t th at th e co m m un ic at io ns

“ sh ow th at Hod el l b l a med LSi fo r th e fu nc ti on al it y pr ob le m s of th e [] so ftwa re,
req ue st ed th at LSi fi x t he is su es , and ex pe ct ed LSi t o p ay th e as so ci at ed co st s.”

H o d el l an d LSi as se rt th e di st ric t co ur t erre d in fin di ng th e co m m un ic at io n s

co ns ti tu te d a cl ai m be cau se it re l i e d o n th e 20 08 de fin it io n of a cl ai m —wh ic h i n c l u de d “ a de m an d fo r m on ey or se rv ic es ”—b ut sh ou ld ha ve an al y zed th e

co m m un ic at io ns un de r th e 20 07 de fin it io n of a cl ai m —wh ic h de fin ed a cl ai m so le ly

as “ a de m an d fo r m on ey .” Hod e ll an d LSi arg ue th at Hod el l di d no t m ak e a cl ai m
ag ai ns t LSi pri or to th e st art da te of t he 20 08 po li cy be cau se Hod el l d id no t m ak e a
sp eci fic de m an d fo r mon ey

. As an in it ia l m at te r, we qu es ti on whe th er th e de fin it io n of a cl ai m in th e 20 07 po li cy wou ld ap pl y whe n de te rm in in g co ve rag e un de r th e 20 08

po li cy . Yet, we n ot e th at th e de fin it io n o f a cl ai m in th e two po li ci es is th e sa m e in

on e ke y res pe ct : Bo th in cl ud e a “ de m an d fo r m on ey .” The Ja nu ary 23
, 20 08
, em ai l fro m Hod el l to LSi pr op os ed “ a ch an ce to res ol ve th is si tu at io n” wit h a refu nd of th e

-9

-m on ey Hod el l pa id “ rel at ed to so ftwa re li cen se s an d m ai nt en an ce fees .” Hod el l’s

em ai l to LSi la te r th at da y as ke d LSi ab ou t it s pr of e s s i o n a l l ia bi li ty in su ran ce an d

no te d th at , “ [i]n an effo rt to a v o i d a d r a g g ed -o ut la wsu it
, we m ad e a pr op os al to

res ol ve th is in a m an ne r th at ga ve us a sm al l am ou nt of rel ie f, far sh or t of ou r to ta l

co st

. . . . If we do no t se e rel ie f, I can ’t as su re y ou of no [s ic ] su it .” W hi le Hod el l di d

no t m ak e a de m an d fo r a sp eci fic do ll ar am ou nt , it pr op os ed a “ se tt le m en t” in

e xc ha ng e fo r a refu nd of th e m on ey Hod el l pa id fo r pr od uc ts an d se rv ic es

. Reg ard le ss of wh ic h d efi ni ti on ap pl ie s, t he res ul t i s t he same: The co m m un ic at io ns be twee n Hod el l an d LSi pr io r to th e da te co ve rag e be ga n un de r t h e 2 0 0 8 po li cy

co ns ti tu te d a “ de m an d fo r m on ey ” an d t he refo re am ou nt ed to a “ cl ai m .”

Hod el l an d LSi al te rn at iv el y arg ue LSi was no t req ui red to gi ve no ti ce to PIC be ca use the co m

m uni catio ns be twee n Hod el l an d LSi rep res en te d di ss at is fact io n wit h LSi’s pe rfo rm an ce of it s co nt ract

— w hi ch wou ld no t be co ve red un de r th e
po li cy —ra th er th an a cl ai m of ne gl ig en ce. The un di sp ut ed ev id en ce sh o w s Hod el l

co m pl ai ne d to LSi ab ou t th e sa m e act s an d om is si on s Hod el l ev en tu al ly al le ge d in th e

un de rlyin g li t i g a t i o n

. Fu rth er, Hod el l ne ve r li m it ed it se lf to a br each -o f-co nt ract cl ai m

. W hi le th e ev id en ce m ay su pp or t th e as se rti on Hod el l be li ev ed LSi ha d br each ed it s co nt ract , Hod el l m ad e it cle ar t o LSi it in te nd ed to pu rs ue al l le ga l and

eq ui ta bl e rem ed ie s— no t ju st a su it pre m is ed on bre ach of c on tra ct

.

Hod el l an d LSi fu r t he r as se rt PIC sh ou ld ha ve be en req ui red to sh ow it was
pr ejud ic ed by LSi’s fai lu re to gi ve ti m el y no ti ce. Thi s Co ur t an d ot he rs in te rp ret in g Mi ss ou ri la w ha ve lo ng he ld th at Mi ss ou ri la w do es no t req ui re an in su rer to sh ow
pr ejud ic e un de r a cl ai m s m ad e po li cy

. See Lex in gt on , 88 F.3 d at 63 5 (“ [The in su rer]

ne ed no t pr ov e pr ejud ic e to de ny co ve rag e if th e [in su red ] fai le d to rep or t th e [] cl ai m du rin g th e po li cy te rm ”); W it tn er, 96 9 S.W .2d at 75 4 (“ The pr ejud ic e req ui rem en t is

ge ne ral ly not he ld to ap pl y to cla im s m ad e p ol ic ie s.”)

.

-1 0-Hod el l an d LSi arg ue Lex in gt on an d W it tn er are in ap po si te to th e fact s of th is

cas e b ecau se PIC d en ie d LSi ’s cla im ba se d o n a n e xc lu si on in th e 2 00 8 p ol ic y , and Mi sso ur i la

w co ns tru es ex cl us io ns st ric tl y ag ai ns t th e in su rer. Thi s arg um en t ig no res 8
th e fact th at th e di st ric t co ur t fo un d— an d we ag ree— th at th e un di sp ut ed fact s sh ow Hod el l m ad e a cl ai m ag ai ns t LSi pr io r to th e 20 08 p o l i c y p e r i o d

. The 20 08 po li cy

on ly pr ov id ed co ve rag e fo r cl ai m s “ fir st m ad e ag ai ns t [LSi ] du rin g th e po li cy pe rio d.”
Acco rd in gl y , th ere was no co ve rag e u nd er t he 20 08 po li cy in th e fir st in st an ce, an d

we ne ed no t d e t e r mi n e whe th er Mi ss ou ri la w wo ul d req ui re PIC to sh ow pr ejud ic e be fo re d en y in g c ov erag e b as ed on an ex cl us io n.

II I. Co ncl us io n

Acco rd in gl y , we affi rm

th e jud gm en t o f th e d is tri ct co ur t.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __

Hod el l an d LSi rel y up on Mi ss ou ri reg ul at io n 10 0- 1.2 0 whi ch pr ov id es : “ No 8 in su rer sh al l de ny an y cl ai m ba se d up on th e in su red ’s fai lu re to su b mi t a writ te n
no ti ce of lo ss wit hi n a sp eci fie d ti m e fo ll owi ng an y lo ss , un le ss th is fai lu re op erat es to pre jud ic e th e ri gh ts of t he in su rer.”

-1 1-