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Tri-State Insurance v. Smith
Citations: 248 Ark. 71; 449 S.W.2d 698; 1970 Ark. LEXIS 1175Docket: 5-5136
Court: Supreme Court of Arkansas; February 9, 1970; Arkansas; State Supreme Court
Frank Holt, Justice. The appellee, insured by the appellant under a comprehensive liability insurance policy, faced a lawsuit defended by his attorney, who billed the appellant directly. The appellant only agreed to pay two-thirds of the bill, prompting the appellee to seek full payment in court. The trial court ruled in favor of the appellee, awarding $2,940 for legal services, $257.70 for expenses, a 12% statutory penalty, and attorney's fees. The appellant appealed, arguing that the trial court erred in its judgment due to insufficient notice regarding the incident and the lawsuit, claiming that the notice was not given to an official representative of the company. The court found no merit in this argument, noting that the appellee promptly notified the local agent, Harold Hodge, about the incident and was informed that the policy did not cover such occurrences. After the complaint was filed, the appellee hand-delivered it to Hodge, who again stated there was no coverage. Subsequently, the appellee hired Mr. Boyd Tackett for defense, and a jury initially ruled in favor of the appellee. When the lawsuit was refiled, Tackett contacted the appellant’s home office, which acknowledged coverage for the incident and instructed him to proceed with the case. The policy required written notice of an accident to be given as soon as practicable and for any claims to be forwarded immediately. The appellant contended that compliance with these notice provisions was a condition precedent to its liability. However, the court found that Hodge, as the local agent who had twice denied liability, acted as the appellant’s authorized representative, which supported the appellee's position. Hodge's role extended beyond solicitation, as indicated by his countersigning of the policy as the appellant's "Authorized Representative." Appellant was notified by the appellee about an incident and later received the original complaint and summons after being sued. Appellant’s representative informed the insured that the policy did not provide coverage. Case law establishes that an insurer cannot defend against liability on grounds of an insured's failure to comply with policy provisions regarding notice and forwarding suit papers if the insurer has already denied liability for other reasons. A denial of all liability by the insurer is treated as a refusal to pay, making compliance with notice requirements unnecessary. Furthermore, there was a clear waiver of notice provisions when the appellant's claim manager acknowledged coverage for assault and battery shortly before the second trial and instructed appellee’s attorney to proceed. The principle is that notice requirements exist for the insurer's benefit, and the insurer can waive these requirements. The appellant failed to show any prejudice to its rights from the alleged insufficient notice. Additionally, the court found no error in granting statutory penalties and attorney's fees under Ark. Stat. Ann. 66-3258, despite the appellant's argument that it did not issue a relevant policy. The court previously allowed penalties and fees in a different context, indicating that the definitions in the Insurance Code apply here as well. The trial court correctly required the appellant to pay the statutory penalty and attorney’s fees, and an additional $500 fee was granted for the appellee's attorney for appeal services. The decision was affirmed.