In Frankenmuth Mutual Insurance Co. v. Brown’s Clearing Inc., the Eleventh Circuit Court of Appeals affirmed an Alabama district court’s ruling that the insured was not required to give notice of an underlying lawsuit until the insured had actual knowledge of the suit.

Brown’s Clearing, a tree clearing company, hired a subcontractor to clear trees along I-75 in Bartow, Georgia. In July 2018, Courtney Ford allegedly sustained injuries when a tree limb pierced the windshield of her vehicle while she was driving on I-75.

Courtney Ford and her husband filed a negligence suit in Alabama state court against Gunnison Tree Specialists and Georgia Power, two other companies also working along I-75 at the time of the accident. On February 18, 2019, attorneys for Gunnison and Georgia Power emailed Brown’s Clearing and requested documents. Brown’s Clearing responded with information that confirmed where its equipment was on the date of Ford’s accident.

On May 10, 2019, the Fords amended their complaint to add Brown’s Clearing as a defendant. Brown’s Clearing’s authorized agent for service of process, Registered Agents Inc., was served with the suit but was unable to deliver the documents to Brown’s Clearing, despite several attempts.

After Brown’s Clearing failed to respond to the amended complaint, the Fords moved for entry of default judgment. On July 19, 2019, the Fords’ attorney notified Brown’s Clearing of the default motion via email and advised her to notify her insurance company. Brown’s Clearing maintained that this email was its first notice of the negligence lawsuit.

Seven days after receiving notice, Brown’s Clearing filed an online claim with Frankenmuth, its commercial general liability and umbrella carrier. Frankenmuth then filed a complaint for declaratory judgment against Brown’s Clearing, seeking a determination as to whether it had a duty to defend and indemnify Brown’s Clearing in the underlying litigation.

The notice provision in Brown’s Clearing’s general liability policy required Brown’s Clearing to “[s]ee to it that [Frankenmuth] is notified as soon as practicable of an ‘occurrence’ … which may result in a claim.” Similarly, the policy required Brown’s Clearing to “[n]otify [Frankenmuth] as soon as practicable” if a “claim or ‘suit’ is brought against any insured.” However, those conditions were breached only if Brown’s Clearing failed to provide such notice when “an ‘occurrence’ is known to … [a]n executive officer,” or when a “claim or ‘suit’ is known to … [a]n executive officer.”

The dispute between the parties primarily revolved around the meaning of the word “known.” The Alabama district court granted summary judgment for Brown’s Clearing, ruling that no reasonable jury could determine that Brown’s Clearing had “known” of the accident in February 2019.

The Eleventh Circuit affirmed. According to the appellate court, “Frankenmuth and Brown’s Clearing were free to contract with the phrases ‘should have known,’ ‘had reason to know,’ or ‘would be likely to have known,’ but they did not — rather, they chose the term, ‘known.’” The court noted that “known” is defined by the Oxford English Dictionary as “to recognize, acknowledge, perceive [or to] become an object of knowledge.” Based on this definition, the court found that “known” required that an executive officer must have actual knowledge of the occurrence, claim, or suit to trigger the policy’s notice requirement.

Applying this plain meaning to the facts, the court held that Brown’s Clearing did not have knowledge of the suit when its registered agent was served with the amended complaint. Because “registered agent” was not listed along with “[a]n executive officer or insurance manager,” the court refused to impute the registered agent’s knowledge to Brown’s Clearing.

Instead, the court determined that Brown’s Clearing did not have actual knowledge until July 19, 2019, and this date triggered Brown’s Clearing’s duty to provide notice to Frankenmuth. Because Brown’s Clearing provided notice to Frankenmuth on July 26, 2019, the Eleventh Circuit affirmed the district court’s determination that Brown’s Clearing gave notice as soon as practicable.