Clifford Construction Co. v. Liberty Mutual Insurance

Tiffany, J. This is an action in contract where the plaintiff seeks to recover the sum of $1,603.35, the amount expended in defense of a suit initiated against it by a third party. The plaintiff says it was entitled to a defense by the insurance company defendant in accordance with the provisions of an insurance policy issued by the defendant. • There was a finding for the plaintiff in the trial court in the amount of $ 1,603.35 and the defendant is aggrieved by the denial of its Requests for Rulings of Law, eighteen in all. The sole issue before this Division is the interpretation of a provision of the policy which states: Written notice shall be given by or for the insured to the company, or any of its authorized agents as soon as practicable.... A second provision requires the insured to: Immediately forward to the company any demand, notice, answers or other process received.... It is an axiom of law that what is a reasonable time is a question of fact, but where the basic facts are undisputed, it becomes a question of law. Parker v. Middlesex Assurance Company, 179 Mass., 528; Depot Cafe, Inc. v. Century Indemnity Company, 321 Mass., 220. The evidence as reported has a bearing on the case at bar. In July of 1969, plaintiff removed rubbish and debris from the premises of an Anna Ditson. On August 10, 1969, plaintiff was notified of a claim by Ditson that plaintiff had removed some valuables and claimed damages and instituted a suit in equity in the Superior Court. On the return day, Octob.er6, 1969, the plaintiff, through its house counsel, filed an answer on behalf of the plaintiff and mailed a report of the Ditson claim, a copy of the service of the equity complaint, and a copy of plaintiffs answer to the defendant. No further action was taken by anyone until August 30, 1976— seven years later. At that time, communications were reviewed between the plaintiff and defendant, culminating in defendant’s declining to defend plaintiff in the equity suit based on failure of plaintiff to comply with the notice provisions of the insurance contract. The period of time that elapsed between the date of injury and notice to the insurer is important in cases of this nature. The underlying theory from contract law is that courts should exercise judicial restraint in interferring with the freedom of private contracts where the intent of the parties is clear. In McCarthy v. Rendle, 230 Mass., 35, it was held that the passage of twenty days from injury to notice to the insurer could be used to [53] deprive the insurer of his contractual right to notice. In Spooner v. General Accident Fire & Life Assurance Corporation, Ltd., Mass., (1979)1 a case involving a period of twelve months and five days, the court held that even with substantially less delay notice of an accident given by an insured to his insurer did not constitute notice “as soon as practicable. ” The requirement of notice has been regarded as a condition of the contract of insurance and a breach of that condition, in the absence of estoppel or waiver, relieved the insurer of liability. This Division is aware of the recent changes in the statutory law, notably in G. L. c. 175, §112 which relates to motor vehicle coverage and sets forth the legal proposition that prohibits an insurance carrier from denying coverage because of failure to give seasonable notice unless the insurer has been prejudiced thereby. A careful review of all the cases, Depot Cafe, Inc. v. Century Indemnity, 321 Mass. 220 (forty days late); Morse v. Employers’ Liability Assurance Corporation, Ltd., 323 N.E. 2d, 769 (three and one half months); Segal v. Aetna Casualty & Surety Co., 337 Mass. 185 (four months); Brachman v. American Employers' Insurance Co., 349 Mass. 767 (forty days); Romanos v. Home Insurance Co., 355 Mass. 449 (2 months), fully recites that the notice requirement was an aspect of contractual law between the parties. The plaintiff urges us to recognize the recent trend to abolish the technical and procedural aspects of the denial of coverage in areas other than motor vehicle insurance and follow the principle of shifting the burden to the insurer to prove it has been materially prejudiced by virture of the late notification. In this, they have been clairvoyant, albeit premature. The Supreme Judicial Court in Johnson Controls, Inc. v. Bowes, 409 N.E. 2d 185, has adopted this radical incursion upon existing law and requires insurers, in futuro, to prove that breach of the notice provision resulted in prejudice to its position. In so doing, they have recognized the true nature of an insurance contract, i.e., that the conditions are dictated by the insurer to the insured and that any breach of the non-negotiable conditions by the insured would deny him coverage for a loss. However, in the instant case, the holding in Johnson Controls, Inc. v. Bowes is of very little solace to the plaintiff as that decision is confined to claims arising after August 5, 1980. In our opinion, it was prejudicial error to deny defendant’s request for rulings 1,4,5,6,13,15,22 and 23. The finding for the plaintiff should be reversed and judgment entered for the defendant. So ordered. Footnotes [1] Mass. Adv. Sh. (1979) 2657.