Johnny and Elizabeth Forshee own and operate a Chevron service station and convenience store. In November of 2007, a woman fell at the store and two years later she filed a lawsuit against the Forshees for injuries that she sustained as a result of the fall. The Forshees tendered the lawsuit to Employers Mutual which defended under a reservation of rights. The Forshees gave Employers Mutual no notice of the fall until after they were sued in November of 2009. Employers Mutual, while the personal injury lawsuit was pending, filed a declaratory judgment action against the Forshees, alleging that they failed to timely notify Employers Mutual of the fall and, for that reason, Employers Mutual owed them no defense or coverage in connection with the personal injury lawsuit. The trial court hearing the declaratory judgment action agreed and found that Employers Mutual had no duty to defend or indemnify the Forshees.
The Forshees were aware of the fall which occurred outside of the store. Mr. Forshee saw the woman on the ground and went outside and asked if she was hurt or needed medical assistance. He went back into the store to get the woman a drink and when he returned the woman was seated in a car and refused his offer to call for medical assistance, telling him instead that she intended to go home. She did mention that she was hurt. Mr. Forshee never ascertained the identity of the woman who fell and the Forshees did not see, speak with, or hear anything about the woman or her companion for nearly two years after the fall.
Suit was filed by the injured claimant only days before the statute of limitations expired. Attached to the Complaint were copies of medical records showing that on the day she fell at the Forshees’ store, she was treated for a broken arm at a hospital in Alabama. The trial court believed that the Forshees had a duty, pursuant to their Employers Mutual’s policy, to notify Employers Mutual of the fall even though they did not know the identity of the person harmed and that the Forshees had failed to comply with that duty, thereby voiding coverage under the Employers Mutual’s policy.
Under Georgia law, when an insurance policy includes a notice requirement as a condition precedent to coverage and when the insured fails to timely comply with the notice requirement, the insurer is not obligated to provide a defense. However, an insured is not required to foresee every possible claim, no matter how remote, that might arise from an event and give notice of it to its insurer. Instead, the law only requires an insured “to act reasonably under the circumstances.” If a reasonable and ordinarily prudent person would conclude that an event forms no basis for a possible claim, the failure to give notice of the event is justified and is no bar to coverage. In most cases, according to Georgia appellate courts, the reasonableness of a failure to give notice is a question of fact.
In examining whether an accident or incident would require an insured to provide notice to its insurer, the Court wrote that relevant circumstances include the nature of the event, the extent to which it would appear to a reasonable person in the circumstances of the insured that injuries or property damage resulted from the event, and the apparent severity of any such injuries or damages. Courts should also consider whether anyone gave an indication that he or she intended to hold the insured responsible for the event and resulting injuries, and the extent to which the insured acknowledged the likelihood that a claim could arise from the event.
The trial court in this case focused only on the severity of the injury. The Court of Appeals found that the trial court failed to “eliminate the distorting effects of hindsight” when it based its determination of reasonableness on how severe the injury turned out to be rather than how severe it would have appeared to Mr. Forshee on the day of the incident. Therefore, the case was sent back down to the trial court for a trial on the issue of the reasonableness of Mr. and Mrs. Forshee’s conduct based upon what they knew at the time of the fall.
This opinion reinforces that questions of late notice will more than likely be factual questions to be decided by a trier of fact, meaning either a jury or a judge in a bench trial. In these types of cases it will be difficult for an insurer to obtain summary judgment on the basis of late notice.
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