The Colorado Court of Appeals issued its opinion in MarkWest Energy Partners, L.P. v. Zurich American Insurance Co. on Thursday, July 14, 2016.
Insurance—Notice-Prejudice Rule—Occurrence Liability Policy.
MarkWest Energy Partners, L.P. (MarkWest), a natural gas company, procured from Zurich American Insurance Company (Zurich) a commercial general liability policy (the policy) with a limited pollution liability endorsement (the endorsement), covering “incidents” occurring between November 1, 2012, and November 1, 2013. On November 4, 2012, MarkWest was constructing a pipeline when a chemical used in the drilling process escaped the drilling area, thereby contaminating the surrounding area. MarkWest immediately reported the incident to local environmental officials, who approved a chemical cleanup protocol and confirmed that cleanup had been successfully completed in February 2013. On March 28, 2013, MarkWest notified Zurich of the contamination and filed an associated claim. Zurich denied the claim because MarkWest had failed to provide notice within 60 days of the incident, as required by the endorsement. MarkWest filed an action for damages, and the district court granted Zurich’s motion for summary judgment.
On appeal, MarkWest contended that the notice-prejudice rule applied and the district court erred in granting Zurich’s motion for summary judgment. Colorado’s notice-prejudice rule applies even where, as here, the notice requirement is a condition precedent to coverage under an occurrence liability policy. Therefore, unless Zurich can show that its ability to investigate the occurrence or defend against a claim was prejudiced by MarkWest’s late notice, the court cannot deny a claim based solely on a failure to strictly comply with the notice provision. Because the district court concluded otherwise, its decision was reversed and the case was remanded for further proceedings.
Summary provided courtesy of The Colorado Lawyer.