Pitzer College v. Indian Harbor Insurance, 1/13/17, 9th Cir.
While constructing a student dorm, Pitzer College discovered darkened soils that required remediation. Three months after that, it performed the remediation. At some point, its risk management department discovered that the risk is insured, and, three months after remediation, the insurer was notified. Problem: The policy contains notice and consent provisions, as well as choice of law clause in favor of NY law. NY’s law on late notice — If you snooze you lose. But under California common law,
the notice-prejudice rule provides that an insurer must show that it was prejudiced by late notice in order for a notice clause in the policy to bar coverage. If California’s notice-prejudice rule is a “fundamental public policy” (no case apparently has said it is), the California rule will presumably trump NY law on that point.
After Indian Harbor denied coverage citing late notice, Pitzer sued. The trial court applied NY law in favor of Indian Harbor and dismissed Pitzer’s claims; on appeal, 9C has certified to the California Supreme Court the question of whether California’s notice-prejudice rule is a “fundamental public policy.” We’ll have to wait and see if Pitzer’s risk management department has a guardian angel looking after it.