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Court Denies Coverage where Architect’s Notice of Potential Claim not Detailed Enough – Recent Blog Posting by Nick Stewart

August 30, 2016

Recent Blog Posting by Nick Stewart.

The U.S. District Court for the Southern District of New York recently denied the University of Pittsburgh’s effort to obtain coverage on behalf of the architect who designed a troubled $40 million university campus construction project.  The Court held that the insured architect failed to properly notify Lexington Insurance of a potential claim because the notice sent by the architect lacked a proper description of the alleged damage and claim.

The Ballinger Company designed an 80,000-square-foot addition to the art deco Salk Hall on the University of Pittsburgh’s campus.  Under the terms of the Lexington policy, Ballinger was required to notify the insurer of any potential claim prior to the policy period ending and was required to set forth in its notice a description of the alleged breach of professional duty, when it occurred, what damage occurred and the circumstances of the alleged breach.  The day before the policy expired, Ballinger submitted an industry standard Acord General Liability Notice of Occurrence/Claim to Lexington.

The notice listed the location of the occurrence and set forth the following description: “senior management has been advised by the University of Pittsburgh that this project is experiencing problems and delays in its early stages.”  Lexington followed up with Ballinger requesting additional information, but Ballinger failed to provide any additional information.

Lexington denied coverage.  Subsequently, the University of Pittsburgh filed suit against Lexington and moved for a determination by the Court that Ballinger’s notice was sufficient to trigger coverage under the Lexington policy.

The Court denied the University of Pittsburgh’s motion for summary judgment seeking a determination that the notice was sufficient.  The Court held that the language used by Ballinger was “entirely nonspecific” and “could mean just about anything” and that the Lexington policy language required Ballinger to “provide more than a simple statement conveying that there is ‘trouble brewing at Pittsburgh.”

The court concluded that Ballinger’s notice was “plainly deficient on its face.”

This case demonstrates a court’s willingness to enforce the insured’s obligations under specific policy language, even when failure to meet those obligations has grave consequences to the insured.

The case is University of Pittsburgh v. Lexington Insurance Co., et al., case number 1:13-cv-00335, in the U.S. District Court for the Southern District of New York.  Please contact us if you would like a copy of the case or have any questions.

Please click here for more information on our Insurance Coverage Corner Blog.

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