Opinion ID: 454582
Heading Depth: 2
Heading Rank: 2

Heading: The Insurance Coverage

Text: 4 Prior to the accident, Meldeans and Elevating had procured a marine insurance policy from defendant appellee American Bankers Insurance Company of Florida (American Bankers). The American Bankers policy afforded coverage for claims up to $1,000,000 with a $100,000 deductible, and provided that American Bankers would defend Meldeans and Elevating for suits under the policy. The notice of claim provision of the policy provided, however, that Meldeans and Elevating would use due diligence to give American Bankers prompt notice of any accident for which Meldeans or Elevating were or might become liable and would forward to American Bankers as soon as practicable all communications and legal documents it received. 2 The district court found as a fact, however, that despite the seriousness of Rivers' injuries and the ongoing court action neither Meldeans nor Elevating had given any notice of claim to either American Bankers or American Bankers' insurance agents at any time prior to April 16, 1979. Rather, consistent with their usual practice of independently retaining counsel and defending suits such as Rivers', Meldeans and Elevating hired their own attorney to represent them in Rivers' suit in state court. 3 5 On or about April 16, 1979, two weeks before Rivers' state court trial commenced and well over two years after the accident, Lynn Dean, the president of Meldeans, sent a handwritten, undated note to the marine insurance broker that had handled the American Bankers' policy advising it of the scheduled trial date and enclosing a copy of Rivers' complaint. The insurance broker forwarded this letter and the supporting information to Jersey International, Inc., the company that acted as the underwriting and servicing arm for American Bankers' marine insurance business. On April 26, 1979, Jersey wrote to Dean and Elevating on behalf of American Bankers informing them that coverage for the claim and representation in the suit would be denied since neither Meldeans nor Elevating had ever filed the required notice of claim. 6 Meldeans instituted this suit in federal court under its admiralty jurisdiction, 28 U.S.C. Sec. 1333(1) (1982), claiming that the defendants breached the marine insurance contract by failing either to represent Meldeans and Elevating or to afford coverage for the loss. After conducting a bench trial and making written findings of fact, the district court rejected these challenges. The court found that the notice to American Bankers only two weeks before trial did not meet the requirements of the notice of claim provision in the policy and that such failure had caused substantial prejudice to American Bankers. On the prejudice issue, the court concluded that the late notice deprived American Bankers of the opportunity to (1) make a prompt investigation of the claim, (2) appoint its own counsel to represent its interests, and (3) settle the case for less than the judgment actually awarded. The sole challenge Meldeans and Elevating raise in this appeal is whether the district court correctly concluded that American Bankers actually was prejudiced by their failure to notify American Bankers of the accident and suit until the eve of trial. 4