Applying Mississippi Law, Fifth Circuit Reverses And Renders Summary Judgment To Excess Insurer Based On Insured’s Failure To Comply With Policy Claim And Notice Provisions

Reviewing a Mississippi district court’s ruling in favor of an insured, the U.S. Fifth Circuit Court of Appeals reversed and rendered in favor of an excess insurer due to the absence of an actual “claim” made under the excess insurer’s policy. See Jordan v. Evanston Ins. Co., 23 F.4th 555 (5th Cir. 2022). 

After a child ingested small magnets resulting in lifelong disability, the minor’s parents sued the magnet manufacturer. The manufacturer’s excess insurer declined to defend it against the Jordans’ suit, and the parents sought a declaratory judgment that the insurer owed a duty to defend and indemnify for a settlement reached among the parties. The insurer argued that no “claim” had been made during the policy period. The district court ruling hinged on the transmittal by the insured’s CEO of news accounts of the injury to the insurer during the policy period. The district court found that knowledge of the news articles about the incident satisfied the policy requirement that a timely claim be made and that coverage was triggered.

The Fifth Circuit reversed and rendered in favor of the insurer. The Fifth Circuit first determined that no “claim” was formally made against the insured during the policy period. It noted that the policy did not define what constituted a “claim” under its policy, and relied on the ordinary and plain meanings found in various dictionaries and insurance resources, as Mississippi law permits. The Fifth Circuit ultimately concluded that “[w]hatever the nuance between these definitions, a common thread is that a ‘claim’ involves a ‘demand’ or ‘assertion’ made by a claimant against a party who could satisfy it.” But here, there was no timely claim satisfying the “common thread.” The Fifth Circuit reversed the district court’s judgment finding that the insured’s awareness of an alleged injury via news articles did not constitute a proper “claim.”