First Circuit Holds No Coverage Where Insured Failed to Provide Timely Notice of Claim

The United States Court of Appeals for the First Circuit, applying Massachusetts law, held that no coverage was available for a lawsuit because the insured failed to provide timely notice to the insurer. Nahant Preservation Trust, Inc. v. Mount Vernon Fire Ins. Co., 2023 WL 5266290 (1st Cir. Aug. 16, 2023).

The insured maintained successive claims-made policies with the same insurer. Each policy required that the insured provide written notice of any claim to the insurer “as soon as practicable,” but in no event later than ninety days “after the expiration date” of the policy. The insured was sued during the 2019-2020 policy period, but it did not provide notice of the lawsuit to the insurer until the 2020-2021 policy period, over ninety days after the expiration date of the 2019-2020 policy. The insurer denied coverage on the grounds that the insured failed to provide notice during the notification period of the 2019-2020 policy. The insured sued the insurer for coverage, and the district court granted the insurer’s motion to dismiss.

The First Circuit affirmed the district court’s decision that no coverage was available because the insured failed to provide timely notice of the lawsuit. In so holding, the court rejected the insured’s argument that an amended prior or pending litigation exclusion in the relevant policy “should be read to change the meaning of ‘effective date’” in the policies and “alter the definition of ‘policy period’ such that the policy period of all four policies would be deemed to run from the inception date of the first policy . . . to the expiration date of the last policy[.]” The court explained that policy exclusions are interpreted narrowly, and the insured “has turned this principle upside-down, disregarded that narrow purpose, and interpreted the [amended exclusion] broadly to work a massive reformation of the entire series of policies,” contrary to the plain language of the amended exclusion which also “instructs that ‘all other terms and conditions of this Policy remain unchanged.’” Finally, the court concluded that “it is well-established in Massachusetts that late notice under a claims-made policy forfeits coverage, regardless of prejudice.”