Opinion ID: 1969101
Heading Depth: 1
Heading Rank: 3

Heading: The Insured's Failure to Comply with The Policy's Provisions.

Text: In this final portion of its appeal, the insurer directs our attention to the numerous notice and consent provisions that are liberally sprinkled throughout the policy. It maintains that the insured's failure to comply with these terms frees it of any obligation to indemnify the insured for her loss. We shall first discuss the consent provisions before considering the notice requirements. The defendant has included within its policy an exclusion which makes the uninsured motorists coverage inapplicable when, without its written consent, the insured makes any settlement with any person or organization who may be legally liable for the insured's injury. We have no doubt that this proviso is enforceable as it seeks to safeguard the insurer's right of subrogation. Such a clause, however, carries with it an implied promise by the insurer that its consent will not be arbitrarily or unreasonably withheld. Levy v. American Auto. Ins. Co., 31 Ill. App.2d 157, 175 N.E.2d 607. In seeking to determine how London's conduct should be classified, let us review the record of plaintiff's negligence suit and her insurer's reaction thereto. An examination of the pleadings on this file shows that plaintiff alleged that the only persons who were negligent were the cab's driver and its owner. While Alice was a party defendant to the suit against the taxi owner and its driver, plaintiff at no time ever contended that her friend was a negligent driver. It is quite clear that at all times plaintiff was pressing for a speedy trial. On April 11, 1967, she made a motion that her case be assigned to the jury trial calendar for September 21, 1967. Counsel for the cab's insurer had filed a motion asking that the case be assigned to January 8, 1969  almost two years later. The plaintiff objected to this motion and on April 21, 1967, an order was entered denying each of the litigants' motions and directing that the case be assigned to the February 15, 1968 jury trial calendar. The plaintiff's replies to the interrogatories asked of her by Liberty Mutual were filed with reasonable dispatch. They were lengthy and gave in complete detail a thoroughly itemized account of plaintiff's claim. The cab driver's answer to plaintiff's interrogatories was not filed until after she had filed a motion that the driver be compelled to furnish his answers. When the insured's attorney in December, 1967 sent defendant notice of her claim under the uninsured motorists endorsement of her policy, the negligence action had been in an assigned status on the jury trial calendar for over eight months. The insurer received this notice but did nothing. After the lapse of another month, a second notice was sent to London informing it of the trial date, and inviting the insurer to participate in the forthcoming trial, so that the best possible verdict could be obtained. Finally, on February 9, 1968, just six days before the jury trial day, the insurer, through its counsel, sent a letter to the insured's attorney wherein the receipt of his two earlier letters was acknowledged. While the insurer's communication was described as a reservation of rights, it went on to say that there had been manifest disregard of the terms and conditions of the policy; that the insured's attorney was in error as to the facts and the law; and that in any event, coverage neither exists nor applies in manner and form as you have alleged. The letter then concluded by specifically withholding the insurer's consent to either the acceptance of the settlement offer made by Liberty Mutual or to the prosecution of judgment of the negligence action. Even though it has been said that a rose is a rose, the so-called reservation-of-rights letter amounted to nothing more than an outright eleventh-hour denial of liability. It would have been ludicrous and a true exercise in futility for plaintiff to sit back and await the defendant's written consent after her counsel had been told that there was no coverage. The negligence action had been ready for trial and on the calendar for many months when the insurer finally decided to do something about plaintiff's claim. It ignored the December 1967 message and it cannot be said that it proceeded with any expeditious dispatch when it received the January 1968 notice. It made no effort to initiate any investigation of the claim. Rather, its sole response was a letter which in substance proclaimed no liability under its policy but, whatever you do, do not proceed any further with the pending suit. This attitude, in the circumstances of this case, can only be described as capricious and arbitrary. It would be unjust in this day of crowded and clogged court calendars to permit defendant insurer, who has been anything but diligent, to prevent the disposition of a case assigned as ready to go to trial on February 15, 1968, by employing on February 9, 1968, the simple device of refusing to permit its insured to do anything with her suit against the uninsured cab. We, therefore, hold that the insurer's conduct relieved plaintiff from complying with the provisions requiring London's consent before the claim could be settled. See Allstate Ins. Co. v. Pietrosh, 454 P.2d 106; Vanguard Ins. Co. v. Polchlopek, 18 N.Y.2d 376, 222 N.E.S.2d 515, 222 N.E.2d 383. The several notice provisions found in the policy concern such matters as the giving to the insurer notice of a loss, the furnishing the insurer with copies of legal process served in the uninsured motorist's suit and the filing of a sworn written proof of claim. The policy declares that the giving of notice of the loss and the filing of the proof of claim shall be done as soon as practicable while the copies of suit papers are to be forwarded immediately to the insurer. The insurer insists that the almost two and one-half years' lapse between the commencement of plaintiff's negligence action and her December 1967 notice does not amount to a notice which was offered as soon as practicable. It also points out that it was never supplied with a proof of loss or a copy of the summons and complaint filed in the taxicab suit. Although the insurer's subtraction is correct, it overlooks one factor. It is uncontradicted that the insured and her attorney had no inkling of the cab's uninsured status until sometime after July 31, 1967  the day the cab driver's replies to plaintiff's interrogatories were filed in the Superior Court. We have used the word sometime because it is impossible to tell from the negligence file the exact time when a copy of the driver's replies was sent to plaintiff's attorney. We shall, however, assume that plaintiff's attorney did receive a copy of the replies in early August 1967. [7] It is conceded that, a little over four months later, on December 22, 1967, London's agent was notified that plaintiff's negligence action was pending; that a settlement offer consisting of the full amount of the cab's policy had been tendered and that the amount of the insured's damages was estimated to be between $25,000 and $30,000. A requirement in an insurance policy that notice be given to the insurer as soon as practicable or immediately does not mean instantaneous notice. Rather, the condition is satisfied if the insured acts diligently and with all reasonable dispatch, having in mind all the circumstances and facts of a particular case. Cinq-Mars v. Travelers Ins. Co., 100 R.I. 603, 218 A.2d 467. In determining whether notice was given within a reasonable time, the following circumstances, among others, have been considered to be relevant: the length of delay in giving the notice, the reasons for the delay and the probable effect of the delay on the insurer. 8 Appleman, Insurance Law and Practice § 4734 at 29. Consideration of the effect of the delayed notice involves the extent, if any, of prejudice suffered by an insurer because it was not notified of a loss or claim within the reasonable time. Any evaluation of the effect of the four-month hiatus between August and December 1967 necessitates a reassessment of a holding made in 1917, when this court in Sherwood Ice Co. v. U.S. Cas. Co., 40 R.I. 268, 100 A. 572, ruled that it was wholly immaterial that an insurer was not prejudiced by its insured's neglect to give the requisite notice called for in the policy. There is, of course, a difference of opinion as to whether an insured's lack of prejudice is a material element to be considered when determining if proper notice was given by an insured. 8 Appleman, Insurance Law and Practice § 4732 at 15-19; 13 Couch, Insurance 2d § 49: 127 at 715; Anno. 18 A.L.R.2d 443, 479. The court in Sherwood Ice Co., supra, looked upon the insurance policy as a contract where the parties were free to include or exclude any legal conditions they thought necessary and proper. The parties having made their agreement, the court took the view that it would do nothing to modify the terms contained therein. Today, we no longer look at an insurance policy in that light. An insurance contract is not the end result of the give-and-take that goes on at a bargaining table. In Cooper v. Government Employees Ins. Co., 51 N.J. 86, 237 A.2d 870, it was recognized that an insurance policy is not a true consensual arrangement [8] but one that is available to the premium-paying customer on a take-it-or-leave-it basis. This being the case, the New Jersey Supreme Court observed that it is most appropriate that a carrier not be permitted to declare a forfeiture of the bargain-for protection unless there has been a breach of the notice provisions and the likelihood that the carrier has been prejudiced thereby. The carrier has the burden of showing such prejudice. Somewhat similar sentiments have been expressed in Sutton Mutual Ins. Co. v. Notre Dame Arena, Inc., N.H., 237, A.2d 676; Members Mutual Ins. Co. v. Cutaia, Tex.Civ.App., 460 S.W.2d 493. We find the reasoning in Cooper, supra, to be most persuasive. We do not believe that a technical breach of the notice provisions in a policy should bar an insured from recovering the benefits for which he has paid. We include within the term notice such items as the furnishing of a proof of claim and a copy of the summons and complaint. Since we have seen fit to overrule that part of Sherwood Ice Co., supra, which speaks about the lack of prejudice, we deem it proper to remand this case to the Superior Court where the insurer may, if it wishes, seek to show how and in what manner the four-month delay in the giving of notice and/or the lack of the proof of claim and the suit papers have worked to its prejudice. Any findings made by the trial justice as to prejudice are subject to appeal to this court. The defendant's appeal only insofar as it relates to the notice provisions of its policy and the $10,000 judgment is sustained and in all other respects it is denied. The judgment appealed from is vacated and the case is remanded to the Superior Court for further proceedings in accordance with this opinion.