Policyholder’s Notice of Claim Does Not Satisfy Notice Requirement for Other Insureds

The United States District Court for the Central District of California, applying California law, has held that coverage was barred for insureds who did not give timely notice, despite timely notice by the policyholder. Evanston Ins. Co. v. Frederick, 2025 WL 2019379 (C.D. Cal., June 12, 2025). The court also held that whether the insured breached the cooperation requirement in the policy was a question of fact.

An insured fertility clinic provided notice of a claim for wrongful termination under a policy providing directors and officers liability coverage and employment practices liability coverage. The notice only identified the insured fertility clinic and did not disclose any other entities or individuals named in the claim. More than a year later, a wrongful termination lawsuit was filed against the insured fertility clinic and several other defendants, including individual physicians.

The insurer denied coverage for the individual defendants and other entity defendants because only the fertility clinic gave timely notice. The insurer then filed a declaratory judgment action. In its motion for summary judgment, the insurer argued that the individual defendants failed to comply with the policy’s reporting requirement, which required written notice “as soon as practicable,” or within ninety (90) days after expiration of the policy; that the insured individuals were not being sued in an insured capacity and the other entity defendants did not qualify as insureds; and that all of the insureds breached the policy’s cooperation provision.

The court granted the insurer’s motion in part and denied it in part. The court determined that while the underlying lawsuit alleged misconduct by the insured individuals in an insured capacity, the insured individuals did not comply with the reporting requirement in the policy and thus were not entitled to coverage for the lawsuit. The court rejected the insureds’ argument that constructive notice at the time the insured fertility clinic provided notice of the claim against it was sufficient notice to trigger coverage, concluding that each insured was required to give notice of the claim as a condition precedent to coverage. The court denied the insurer’s motion with respect to cooperation, finding that whether the insureds breached the duty to cooperate was a question of fact.