Aetna Cas. & Sur. Co. v. Murphy
Supreme Court of Connecticut, 1988
206 Conn. 409, 538 A.2d 219

Facts:

Murphy was a dentist that terminated his lease and dismantled his office in such a way that allowed a claim for damages. He received Aetna’s complaint in 1983, but didn’t notify his insurer, Chubbs, until around two years later. Shortly after that, he filed a third-party complaint against them.

History:

His insurer successfully moved for summary judgment.

  • Murphy ignored two provisions:

(1) Written notice had to be given as soon as practicable.

(2) He had to immediately forward every demand, summons, or other process he received.

Murphy argued that the insurer may not deny coverage because of late notice without showing that it has been prejudiced by the delay.

Issue:

Does the insurer have to be prejudiced by the delay in order for the conditions to be unexcused?

Holding:

Maybe (see below). Affirmed.

  • However, although the trial court was correct in granting the summary judgment, they did so for the wrong reason – the insurer was NOT automatically discharged because of the delay.

Reasoning:

  • If it can be shown that the insurer suffered no material prejudice from the delay, the nonoccurrence of the condition of timely notice may be excused because it is not, in Restatement terms, “a material part of the exchange.”
  • The burden is on the insured to prove this.
  • Here, Murphy didn’t include any factual basis that his insurer was not materially prejudiced.

Disproportionate forfeiture—If the non-occurrence of a condition would cause disproportionate forfeiture, a court may excuse the non-occurrence of the condition unless its occurrence was a material part of the agreed exchange.

Disproportionate forfeiture is where you go when you have nowhere else to go!

  • Prevention doctrine – nope.
  • Impracticability – nope.
  • Estoppel – nope.
  • Implied waiver – nope.
  • Express waiver – nope.