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Hallion v. Liberty Mutual Insurance Company3/1/2001
Argued January 10, 2001
Defendant Liberty Mutual Insurance Company (Liberty Mutual) appeals from the entry of a judgment compelling it to arbitrate plaintiff's underinsurance motorist claim (UIM). The judgment also provided that CNA Insurance Company (CNA) was not required to participate in the arbitration. On appeal Liberty Mutual contends that its insurance policy affords excess coverage to CNA's primary coverage policy, that it was not obligated to provide Longworth notice to CNA, and that, in any event CNA was not prejudiced by the failure to receive Longworth notice. Further, Liberty Mutual raises for the first time on appeal plaintiffs failure to provide it with Longworth notice and therefore plaintiffs' claim should be denied. We affirm.
We are hampered somewhat by the sparse record on appeal. We glean the following facts from the record submitted. Plaintiff Dale Hallion was involved in an automobile accident on November 7, 1995, while operating a vehicle owned by her daughter. There were two other vehicles involved in a chain collision accident, both insured by Allstate Insurance Company. The vehicle that struck plaintiff's vehicle was operated by Paula R. Scott who was struck from behind by a vehicle owned by Kessart Morrison. The liability coverage on the Scott vehicle was $15,000. Plaintiff was insured by Liberty Mutual and the vehicle she was driving was insured by CNA. The Scott and Henry vehicles were each insured by Allstate Insurance Company.
The Liberty Mutual policy provided UIM coverage in the amount of $500,000, while the CNA policy provided UIM coverage in the amount of $300,000.
Plaintiffs filed a complaint against Scott in 1996. We are informed by plaintiffs' counsel that Scott failed to answer, and a default was entered. Although the case was not settled, plaintiffs executed a release on September 25, 1997. A proof hearing on the default was scheduled for November 20, 1997. Settlement discussions led to Scott's insurer offering to pay the full policy limit of $15,000 in settlement of the case. Plaintiffs' counsel accepted the offer. The next day, November 21, 1997, plaintiffs' attorney forwarded a Longworth letter to Liberty Mutual seeking consent to accept the settlement offer. However, unbeknown to plaintiffs' attorney, the motion judge prepared and entered an order on November 20, 1997, dismissing plaintiffs' complaint.
After receipt of the Longworth notice, Liberty Mutual retained Commercial Litigation to conduct an asset search of Scott. On December 22, 1999, Commercial Litigation reported that Scott did not appear to have any assets. Neither plaintiffs' attorney nor Liberty Mutual informed CNA of the settlement offer.
On December 2, 1997, plaintiffs forwarded to Liberty Mutual documentation containing all pertinent medicals and authorizations and requested that Liberty Mutual evaluate the records for a possible settlement of their UIM claim. Liberty Mutual set up a claim file.
On June 10, 1998, plaintiffs wrote to Liberty Mutual demanding arbitration within thirty days and giving notice to their arbitrator. Liberty Mutual failed to respond to this notice within the allotted time, but eventually appointed an arbitrator.
On April 1999, plaintiffs' attorney sent a letter to CNA advising it of plaintiffs' UIM claim and demanding arbitration. CNA set up a claim file. However, on July 19, 1999, CNA wrote to plaintiffs rejecting their UIM claim because neither plaintiffs nor Liberty Mutual informed it of the offer from the tortfeasor, and therefore, CNA was unable to protect its subrogation rights.
On September 9, 1999, plaintiffs filed a complaint and an order to show
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