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Association of County Commissioners of Oklahoma v. National American Insurance Co.6/1/2005
gainst the insured, which is required to trigger coverage in a claims made policy is simply not the same notice, of loss, required to trigger Section 3629.
In its prior opinion in this case, the Court of Civil Appeals noted that Section 3629 is triggered by notice from an insured "claiming to have a covered loss." The court remanded the matter to the District Court to determine if ACCO-SIG had given notice to NAICO that it had suffered a covered loss. The policy provides that NAICO will "pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as compensatory money damages as a result of claims first made against the Insured and reported to the Company during the policy period." (Emphasis added). And, as noted earlier, the self-insured retention provided that NAICO had the option, but not the duty, to defend ACCO-SIG. Accordingly, until such time as ACCO-SIG had become legally obligated to pay money damages in excess of the self-insured amount, and had given notice of that loss to NAICO, NAICO was without obligation-either to submit formal proof of loss forms or to make a settlement offer to ACCO-SIG. Absent these triggers, Section 3629 could not apply.
While ACCO-SIG may have purported to comply with the notice provisions of the policy by forwarding to NAICO the complaints made against ACCO-SIG members, ACCO-SIG did not submit proof of covered loss (formal or otherwise) to NAICO before filing suit. In its brief in this appeal, ACCO-SIG asserts that coverage automatically attached upon notice, of claims made against ACCO-SIG, to Willis Corroon and that "no special demand was required." This statement confuses the notice which is a condition precedent of coverage pursuant to the policy language, with notice of loss to trigger application of Section 3629-that is, notice that ACCO-SIG had become legally obligated to pay amounts exceeding the self-insured retention.
Although notice of claims against ACCO-SIG was a policy-based condition precedent to coverage (in part because it gave NAICO the opportunity to exercise its option to defend), that notice alone gave NAICO no basis on which to make a settlement offer or reject the claimed loss. Only after ACCO-SIG became legally obligated to pay amounts in excess of the self-insured retention, and had notified NAICO of that loss, could NAICO be in position to offer to settle ACCO-SIG's claims. The plain language of Section 3629 shows the statute's purpose to encourage prompt settlement of claims, in part by offering prevailing party attorney fees. While a formal proof of loss form may not have been part of the course of dealing between ACCO-SIG and either Lloyd's or NAICO, nevertheless, a demand or notice of loss of an amount exceeding the self-insured retention was necessary for NAICO to be able to meet its Section 3629 obligation to made a settlement offer or reject the claimed loss (or risk an award of fees).
Deposition testimony of NAICO General Counsel Patrick Gilmore shows that NAICO acknowledged that the claims letters notified NAICO of claims made against ACCO-SIG. In reference to a letter from ACCO-SIG's claims manager to NAICO which detailed several claims, Gilmore stated "I think it probably has sufficient information to be report of a claim." But, Gilmore asserted NAICO's belief that a demand for payment of a specific amount is required to trigger application of Section 3629. Gilmore later indicated NAICO had "expressed (its) position that (it did not) believe there is coverage," but he asserted that the claims had not been denied officially because ACCO-SIG had not submitted formal demands. Indeed, deposition testimony from ACCO-SIG litigation manager Denny Butler shows that
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