The CT Supreme Court just decided the case of Arrowood Indemnity Company v. Pendleton King, et al, which resulted from a minor operating his parents' ATV whereby he seriously injured another child he was towing behind the motorized vehicle. This appeal involved issues of the construction of an insurance contract, claims of negligent entrustment and an insured's responsibility to provide notice of a claim.
In this case, the Kings' 14 year-old son was towing another boy, McEntee, behind the ATV when the boy being towed fell, sustaining a serious head injury that resulted in hospitalization and a temporary coma. Following the accident, the McEntee and King families would socialize together and the McEntee family never indicated that they intended to bring an action related to their son's injury.
More than one year after the accident, the Kings received a letter from the McEntees' lawyer indicating that they were filing a claim. The Kings, for the first time, notified their insurance agent of the claim. The notice provision in the Kings' policy stated "in the case of an accident or occurrence," the insured has the duty to "give written notice to us or our agent as soon as practical..."
The Kings' insurance company, after a lawsuit was started, filed a special defense alleging that it was not provided with timely notice of the claim and due to such violation on the part of the Kings, the insurance carrier had no duty to afford coverage. The Kings argued that no notice was required prior to their receiving a letter from the McEntees' lawyer because subsequent to the accident, they had socialized with the child and his family and their interactions did not create the impression that a lawsuit would be instituted.
In deciding this issue, the CT Supreme Court did something very unusual in that it overruled itself. One of the legal doctrines by which court decisions are rendered is that of stare decisis. In Latin, this means 'to stand by decided matters'. In other words, under common law, courts in the same jurisdiction would adhere to the precedents of earlier cases. For stare decisis to be effective, each state's highest court must decide the law of a precedent-setting case that then becomes the law of that state.
The U.S. Supreme Court and each states' highest court (i.e. the Supreme Court in CT and the Court of Appeals in NY) act as the precedent setting courts deciding cases that become the law of each particular state.
Prior to March 27, 2012, the law in the State of Connecticut as it related to late notice of a claim under an insurance policy was set forth in Aetna Casualty & Surety Co. v. Murphy, 206 Conn 417, which held that if notice was untimely, as it was determined to be in Arrowood, a decision had to be made to determine if the insurer was prejudiced by the late notice, which burden was on the insured to disprove prejudice in order for the insurer to be obligated to provide coverage.
In Arrowood, the CT Supreme Court held that an insurer must prove prejudice to disclaim its obligation to provide coverage based upon untimely notice and, in so holding, overruled Aetna v. Murphy to the extent it allocated the burden to the insured to disprove prejudice. We now conclude, stated the Court, that this reasoning, while legally tenable, is not as consistent with the principles we articulated herein.
The interesting thing about this case is that our Supreme Court overruled a decision made by our Supreme Court that was decided less than 24 years ago and now appears to be in conformity with a majority of other jurisdictions.