In a ruling earlier this month, an Eleventh Circuit Court of Appeals judge ruled in Scott, Blane, and Darren Recovery L.L.C., Anova Foods Inc. v. Auto-Owners Insurance Co., No. 17-12945-E, 2018 WL 1611256 (11th Cir. 2018), that an insurer did not have a duty to defend and indemnify its insured in a false marketing suit. Anova Food Inc. was sued by its competitor, King Tuna, for allegedly falsely asserting in its advertising that it treated tuna meat with a smoking process using filtered wood chips. King Tuna claimed that, in reality, Anova treated its tuna with synthetic carbon monoxide. In finding that King Tuna’s lawsuit did not trigger Auto-Owner’s duty to defend, the court held (1) that the lawsuit did allege a covered “advertising injury”; (2) that coverage was excluded under the policy’s “failure to conform” exclusion; and (3) coverage was barred by Anova’s untimely notice of the lawsuit.
This decision serves as a reminder for insureds that, when in doubt, notify your insurer. Here, Anova provided timely notice of an initial lawsuit filed by King Tuna in Oregon state court. When King Tuna dismissed that lawsuit and refiled in a California federal court, Anova assumed that it did not need to provide notice of this second lawsuit. Specifically, Anova contended that the Oregon lawsuit and the California lawsuit were the same claim, and thus Anova had no duty to tender notice of the California lawsuit.
Siding with Auto-Owners, the Eleventh Circuit held that Anova still owed Auto-Owners a duty to provide notice and that it failed to do so. The court noted that under Georgia law, after an insurer denies coverage for the first claim, the insured is released from a notice obligation as to that claim and that insurer cannot assert lack of notice as a defense to coverage. Anova’s policy was interpreted under Florida law, however, and under Florida law, notice requirements are not waived in such circumstances. Further, the court noted the addition of a new claim in King Tuna’s California lawsuit, and thus concluded that the California lawsuit was a “new claim filed in a new jurisdiction.”
Accordingly, this decision highlights the importance of providing timely notice to insurers, even where an action appears similar to a prior action for which notice was provided. While insureds may understandably fear higher premiums when reporting potential claims, the failure to provide timely notice can lead to a far worse consequence. Thus, when in doubt, an insured should always provide notice to its insurer.