The United States Court of Appeals for the Second Circuit, applying New York law, has held that a pre-suit letter sent to an insured constituted a “Claim” under a liability policy. Match Group, LLC v. Beazley Underwriting Ltd., 2024 WL 3770709 (2d Cir. Aug. 13, 2024). The court remanded the case to determine whether the claim was tendered in time considering a New York statute that extends contract deadlines falling on a weekend.
The insured, an online dating service company, was sued by a product development consultant. Prior to the lawsuit, the consultant had sent a letter to the company alleging that the company had used his product and marketing ideas without compensation. The letter stated that the insured’s “malicious and bad faith refusal to compensate [him was] unlawful, wrong, and entitle[d] [him] to substantial recovery.” According to the insured, it viewed the letter as frivolous and thus did not report it to the insurer. After the consultant sued the insured, the insured reported the lawsuit to the insurer on the Monday after the policy’s Saturday expiration date.
The policy defined “Claim” to include “a written demand received by any Insured for money or services” or “a threat or initiation of a suit seeking injunctive relief.” The notice provision provided that claims must be reported no later than “the end of the Policy Period” or within “sixty (60) days after the expiration date of the Policy Period” for claims first made during the last sixty days of the policy period. The pre-suit letter was sent more than 60 days before the end of the policy period, but the lawsuit was filed within the 60-day window. The insurer denied coverage on the grounds that the pre-suit letter was a “Claim” that was not timely reported during the policy period. In the ensuing coverage litigation, the trial court granted summary judgment in the insured’s favor, holding that the pre-suit letter did not constitute a “Claim” and therefore the lawsuit was timely reported.
On appeal, the Second Circuit held that the pre-suit letter was a “Claim” under the policy’s terms and conditions. The court concluded that the consultant had not “outright demand[ed] a certain sum” in the letter, but “his letter stated that he had legal claims against [the insured], that he believed he was entitled to compensation and damages, and that he would sue if [the insured] did not contact him to resolve his claims.” Therefore, the pre-suit letter constituted a “Claim” that had to be reported within the policy period.
On appeal, the insured argued that, even if the pre-suit letter was a Claim, its notice was timely based on New York General Construction Law § 25, which extends the time for contractual performance when performance would otherwise be required on a weekend. The Second Circuit remanded to the district court to address the issue.
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