Stuart D. Morse & Associates, L.L.C. Stuart D. Morse & Associates, L.L.C.
Colorado Insurance Defense And Business Litigation Attorneys
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Insurer prevails in dispute: no coverage duty in infringement case

A national online real estate listing firm was recently schooled in rather expensive fashion as to the merits of being duly proactive in taking care of business in an insurance claim.

Because it was anything but timely, in the view of a federal court, which recently ruled against it in a matter that will ding its corporate coffers to the tune of more than $8 million.

Following are the material facts in summary form concerning a recently concluded case that pitted Zillow, Inc. against National Union Fire Insurance Company.

The first blow came from VHT, Inc., a property photography firm, which sent a letter to Zillow several years ago citing the company's infringing use of listings photos and demanding that the images be taken offline.

Zillow refused to do so and, nearly a year later, VHT sued it in federal court. A jury awarded a money judgment of nearly $8.3 million to VHT.

Zillow sought insurance coverage from National Union, which came to its defense, but with a reservation of rights. The insurer only tardily learned of VHT's earlier-written demand letter and viewed it as a triggering point that formally commenced VHT's claim.

As such, the provider asserted, Zillow's demand was applicable to an already expired coverage period. The insurer sued Zillow for contract breach, noting its demand claim notwithstanding the company's failure to timely notify National Union. Given that VHT's claim was relevant to a prior policy term, the insurer argued in federal district court, National Union had no duty to defend or pay Zillow any amount of money at all.

The court agreed, with its ruling squarely holding that VHT's letter comprised a "claim" that Zillow didn't timely follow through on in contacts with National Union.

The ruling results in Zillow having sole responsibility for compensating VHT. Clearly, the company was taught an expensive lesson concerning the need to act with dispatch when responding to a claim from an adverse party.

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