Claim Was Made Against Insured Before Policy’s Effective Date, Eighth Circuit Decides

The U.S. Court of Appeals for the Eighth Circuit has ruled that a claim had been made against the insured under a commercial general liability (“CGL”) insurance policy before the policy’s effective date.

The Case

No later than early 2008, Burlington Graphics Systems reported to Ritrama, Inc., that recreational vehicle (“RV”) owners were experiencing issues with graphics that Burlington had purchased from Ritrama. In one of its early emails, Burlington informed Ritrama that it was “not going to let [quality issues] just pass by” and that if Ritrama failed to take corrective action, it would seek an alternate supplier.

On July 8, 2008, a manager for Ritrama met with Burlington’s president to discuss the alleged product failures.

On September 9, 2008, Burlington sent Ritrama a spreadsheet detailing three claims for monetary damages based on the alleged product failures. Ritrama responded by asking, “[w]hen we settle on what the split will be, will this be it?”

In October, Ritrama again communicated with Burlington regarding the amount necessary to reach a settlement, and it forwarded a settlement proposal to Burlington.

In early 2009, Ritrama purchased a commercial general liability (“CGL”) insurance policy from HDI-Gerling America Insurance Co.  The policy provided coverage only for claims made between March 31, 2009 and March 31, 2010.

On July 17, 2009, Ritrama advised its insurance agent of its issues with Burlington and on the same day, the agent sent a “notice of occurrence” to Gerling.

On January 6, 2011, Burlington sent a letter through its litigation counsel to Ritrama formally demanding payment and threatening litigation. Ritrama failed to meet Burlington’s demands and, on April 21, 2011, Burlington sued Ritrama in federal court.

On June 14, 2011, Gerling denied coverage and refused to defend Ritrama in its liability suit. Ritrama then filed an action against Gerling, claiming that the insurer had breached its duty to defend under the policy.

Gerling moved for summary judgment, arguing that Burlington had made a “claim” within the meaning of the policy prior to March 31, 2009. The district court agreed and granted summary judgment in favor of Gerling, and Ritrama appealed to the Eighth Circuit.

The Circuit Court’s Decision

The Eighth Circuit affirmed.

In its decision, the circuit court found that the term “claim,” although undefined, was unambiguous. It also upheld the district court’s definition of “claim” as “an assertion by a third party that the insured may be liable to it for damages within the risks covered by the [p]olicy.” The circuit court noted that the definition was consistent with dictionary definitions, adding that it also was consistent with the policy as a whole.

Finally, the Eighth Circuit agreed with the district court that the spreadsheet sent from Burlington to Ritrama in September 2008 could be considered a “claim.” The circuit court reasoned that, in the context of the surrounding communications and already developed discussions on the issue between the parties, there was “no reasonable way to interpret the spreadsheet as anything other than a demand for relief.” The circuit court concluded that, in fact, this was “precisely how Ritrama itself understood the communication.”

The case Ritrama, Inc. v. HDI-Gerling America Ins. Co., No. 14-3392 (8th Cir. Aug. 11, 2015).