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E Dillon & Co. v. Travelers Casualty & Surety Co.

United States District Court, W.D. Virginia, Abingdon Division

June 12, 2015

E DILLON & COMPANY, Plaintiff,

Robert V. Ward and Beth Osborne Skinner, Ward & Rasnic, P.C., Bristol, Virginia, for Plaintiff.

Charles M. Sims and Joseph M. Rainsbury, LeClairRyan, A Professional Corporation, Richmond and Roanoke, Virginia, for Defendant.


JAMES P. JONES, District Judge.

In this dispute over an employer's liability insurance coverage, the defendant, Travelers Casualty and Surety Company of America ("Travelers"), has filed a Motion for Summary Judgment. In its Complaint, the plaintiff, E Dillon & Company ("E Dillon"), claims that Travelers wrongfully denied it coverage in relation to an employment discrimination lawsuit brought by one of its former employees. Travelers asserts it was not timely notified of the claim as required by the insurance policy, and was thus not obligated to cover the claim. Jurisdiction of this court exists pursuant to diversity of citizenship and amount in controversy. 28 U.S.C. § 1332.

I will grant summary judgment to Travelers, on the ground that the undisputed facts show that the insured's notice of the claim was untimely, and it was therefore not entitled to coverage under the insurance policy.[1]


The pertinent facts are undisputed.[2] E Dillon, a company headquartered in Swords Creek, Virginia, produces and sells construction and mining materials. On August 1, 2010, its then President and Chief Financial Officer, Otey Dudley, took out a liability policy (the "Policy") for the company with Travelers, with a policy period ending August 1, 2011. According to Dudley, the Policy has since been continuously renewed on an annual basis.

Under the Policy's Insuring Agreement for Employment Practices Liability, Travelers agreed to provide coverage for any "Employment Claim" first made during the policy period for a "Wrongful Employment Practice." (Certified Policy 26, ECF No. 15-2.) The Policy's definition of "Employment Claim" includes "a formal administrative or regulatory proceeding commenced by the filing of a notice of charges... including... a proceeding before the Equal Employment Opportunity Commission, " among other types of claims. ( Id. at 27.) The definition of "Wrongful Employment Practice" includes claims of "Discrimination" and "Retaliation." ( Id. at 30.)

In a section entitled "Insured's Duties in the Event of a Claim, " the Policy provides that if an "Executive Officer" becomes aware of a claim, he must give written notice of the particulars of the claim - including the alleged facts, specific dates, and identities of the persons involved - "as soon as practicable." ( Id. at 15.) The Policy states that such notice is "a condition precedent to any rights under this Liability Policy." ( Id. ) Further, the Policy requires that the insured give "such information, assistance and cooperation as... may reasonably [be] require[d]." ( Id. ) The Policy's definition of "Executive Officer" includes an "officer" of the company. ( Id. at 35.) Dudley does not dispute that he is an "Executive Officer" for purposes of liability coverage. (Dudley Dep. 12, ECF No. 15-1.)

On April 4, 2011, Dudley received notice that a former employee of E Dillon, Vincent Sizemore, had filed a charge with the Equal Employment Opportunity Commission for alleged employment discrimination in violation of Title VII of the Civil Rights Act, 42 U.S.C. §§ 2000e, et seq., and the Americans with Disabilities Act, 42 U.S.C. §§ 12101, et seq. (Notice of Charge, ECF No. 15-3.) E Dillon hired counsel to defend the charge, and denied the allegations of discrimination in a letter to the EEOC dated May 5, 2011. (Miller Letter, ECF No. 15-4.) By letter dated June 7, 2011, Sizemore's counsel informed Dudley that Sizemore had been declared permanently disabled by his treating physician, that he would not be returning to work at E Dillon, and that he would be pursuing remedies against the company for its alleged unlawful discrimination. (Figueiras Letter 30, ECF No. 15-11.)

On April 27, 2012, the EEOC gave notice to E Dillon and Sizemore that it was dismissing Sizemore's EEOC charge, and providing issuance of the right to sue. (Dismissal & Notice of Rights, ECF No. 15-6.) The EEOC later reversed its position, however, and issued a finding on September 27, 2012, that "there is reasonable cause to believe that a violation of the Americans with Disabilities Act of 1990, as amended, has occurred." (EEOC Determination 3, ECF No. 15-8.)

At the EEOC's invitation, Sizemore and E Dillon agreed to attend a conciliation meeting scheduled March 14, 2013. Prior to the conciliation meeting, E Dillon provided notice of Sizemore's claim to Travelers for the first time through correspondence dated February 28, 2013. (Dudley Letter 2-3, ECF No. 15-11.) Thereafter, on March 11, 2013, Travelers denied coverage for E Dillon's claim, stating that "[t]he almost two (2) years delay in reporting this matter does not satisfy the Policy provision requiring that a Claim be reported as soon as practicable." (Travelers Letter 5, ECF No. 15-13.)

Following the conciliation meeting, the EEOC presented E Dillon with a draft Conciliation Agreement, proposing that the company pay $178, 000 in back wages and damages. (Conciliation Agreement 5, ECF No. 15-16.) E Dillon rejected this proposed settlement. Subsequently, Sizemore filed suit in this court, alleging he had been discriminated against due to his disability based on the same facts as his EEOC claim. (Compl., Case No. 1:13CV00048, ECF No. 15-14.) The Summons and Complaint were served on E Dillon's registered agent in September of 2013. (Dudley Letter 2, ECF No. 15-14.) The court set a mediation date for February 11, 2014, and a trial date of September 29, 2014. ( Id. ) E Dillon did not inform Travelers of the pending suit until February 3, 2014, when it requested by letter that Travelers defend against Sizemore's claims in the mediation and trial. On February 10, 2014, Travelers responded by again denying coverage, based on E Dillon's ...

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