Peter Smythe, P.C.

Jen­kins v. State & County Mutual Fire Insu­rance Com­pany, No. 2 – 08-​279-​CV, 2009 Tex. App. LEXIS 4217 (2nd Dist., June 11, 2009) (Gard­ner, Wal­ker, Meier)

In a case that is sure to rever­be­rate through plain­tiffs’ firms, the Fort Worth Court of Appeals recently held that insu­rance com­pa­nies are not on the hook for cove­rage if their insu­reds do not notify them of a pen­ding lawsuit.

Garry Jenkins’s foot was crushed when a tank skid fell off of a truck dri­ven by Mark Lem­mon. Jen­kins filed suit, but couldn’t effec­tuate per­so­nal ser­vice on Lem­mon so his law­yer got an order autho­ri­zing ser­vice by publi­ca­tion. Jenkins’s law­yer advi­sed Lemmon’s insu­rance com­pany, State & County Mutual (“SFM”), of the order, but the carrier didn’t care. It denied Lem­mon cove­rage on the basis of its notice-​of-​suit pro­vi­sion, i.e. it didn’t hear of the law­suit from Lemmon.

Jen­kins obtai­ned a default judg­ment against Lem­mon for $650,000 and sought to enforce that judg­ment against SFM. SFM moved for sum­mary judg­ment on the same basis of its ini­tial denial of the claim, i.e. Lemmon’s fai­lure to notify it of the law­suit, and it won. Jen­kins appealed.

On appeal, Jen­kins argued that SFM was on the hook for cove­rage because it had actual notice of the law­suit from Jenkins’s law­yer. The Fort Worth Court of Appeals held that, des­pite actual know­ledge of the law­suit, SFM could right­fully disc­laim cove­rage because Lem­mon did not comply with the notice-​of-​suit pro­vi­sions of the insu­rance policy. The court rea­so­ned that Texas insu­reds are char­ged with the duty of rea­ding their poli­cies and compl­ying with all of their terms. Cove­rage under the policy doesn’t arise unless the insu­red, and not someone else, pro­vi­des notice of a pen­ding law­suit and requests a defense. The court’s hol­ding, in a nutshell, is:

an insu­rer has no duty to defend and no lia­bi­lity under a policy unless and until the insu­red in ques­tion com­plies with the notice-​of-​suit pro­vi­sions and demands a defense.

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