Lehrfield v. Liberty Mutual Fire Insurance Company

Summary of Case by Emily Walsh, Associate Attorney

FACTS OF THE CASE:

The insureds’ policy imposed a duty to promptly notify Liberty Mutual of a suspected covered loss. On April 5, 2017, the insureds discovered a water leak under their kitchen sink. A plumbing company repaired the leak the same day and Liberty Mutual was not given the opportunity to inspect the damage prior to the repairs. Eight months after the loss, the insureds hired a public adjuster, who contacted Liberty Mutual to file a claim under the policy for the damage resulting from the leak. Six days after the claim was reported, Liberty Mutual inspected the property and found rot, decay, mold, warping, and a large hole under the insureds’ sink. Liberty Mutual denied the claim on December 14, 2017, just six days after the claim was filed.

On July 11, 2018, the insureds filed this lawsuit for a breach of contract. The complaint alleges Liberty Mutual Breached the policy by denying the claim and refusing to pay the full amount of damages sustained to the insureds’ property. Liberty Mutual raised as an affirmative defense that the insureds failed to provide prompt notice as required under the policy.

ISSUE:

Liberty moves for summary judgment on this affirmative defense, because the insureds’ failure to provide prompt notice of the claim breached the policy and materially prejudiced Liberty Mutual’s investigation of the claim, which abrogated its obligation to pay under the policy. Liberty Mutual also argues it is entitled to summary judgment because the damages are not covered under the policy.

THE APPLICABLE LEGAL STANDARD:

The question of whether an insured’s untimely reporting is sufficient to result in the denial of recovery under the policy requires a two-step analysis. The first step is to determine whether the insured provided timely notice. If the notice was untimely, prejudice to the insurer is presumed, but that presumption can be rebutted.

HOLDING:

The court granted Liberty Mutual’s motion for summary judgement.

COURT’S REASONING FOR ITS HOLDING:

When a party fails to properly address another party’s assertion of fact, the court may treat that fact as undisputed in resolving a motion for summary judgement. The court found that the eight-month delay in reporting was unreasonable, and therefore, the insureds did not provide “prompt notice” as required as a matter of law. Because Liberty Mutual was not given prompt notice of the claim, there is a presumption of prejudice. The insureds failed to provide any admissible evidence to rebut this presumption so Liberty Mutual was entitled to summary judgement.