Eighth Circuit Hashes Out “As Soon As Practicable” Notice Requirement
Close
 

Eighth Circuit Hashes Out “As Soon As Practicable” Notice Requirement

In January 2014, a former employee sued his employer seeking unpaid commissions. In June, the employee obtained partial summary judgment and was awarded twice the unpaid commissions and attorney's fees but the award was not reduced to judgment (the parties settled 2 years later). It was not until August 2014, during the policy period, when the employer first notified its insurer and sought defense and indemnification under the “Employee Insuring” provision of the Employment Practices coverage. The insurer tentatively denied coverage and the insured sued claiming breach of contract, breach of the covenant of good faith and fair dealing, and declaratory judgment. The insurer then formally denied coverage stating notice was untimely and the claim was outside the policy's scope. The appellate court affirmed summary judgment for the insurer finding the insured’s notice was not “as soon as practicable” even though notice was within the policy period. Since notice was a condition precedent to coverage, the insurer’s duty to indemnify was never triggered. Under the subjective standard of the notice requirement the court found too much of a material nature had occurred before the insurer was notified.

Food Market Merchandising Inc v Scottsdale Indemnity Company