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Click here for the full text of this decision FACTS:A roof inspector hired by Ridglea Estate Condominium Association in July 2001 found that there was significant hail damage. Ridglea informed its insurer, Chubb Custom Insurance. Chubb determined that the damages must have been caused by a May 1995 hail storm, and that Ridglea would have to file a claim with the insurance company that was insuring the property at that time: Lexington Insurance Co. Ridglea thus submitted a claim to Lexington in November 2001. Lexington denied the claim a month later on the ground that the damage was less than the deductible. Lexington also stated that it found no proof that the damage was caused during the period when Lexington was insuring Ridglea. When further talks over coverage failed, Lexington filed for a declaratory judgment that it was not liable for the damage. The district court dismissed the suit, realigned the parties so that Ridglea was now the plaintiff and the suit was a direct suit for damages on the insurance policy. Both moved for summary judgment. The district court granted Lexington’s motion, which was based on defective notice under the insurance policy. The district court found that “no rational finder of fact” could conclude that the interval between May 1995 and November 2001 was notice within a reasonable time. On appeal, Ridglea argues the district court erred in not requiring Lexington to show that it was prejudiced by the faulty notice. HOLDING:Vacated and remanded. The court grants the petition for panel rehearing, and substitutes this opinion for its Jan. 21, 2005, opinion. The motion for rehearing en banc is denied. The court first considers Ridglea’s argument that Lexington waived any defense it might have had under the policy’s prompt notice provision because it originally denied the claim in December 2001 on the sole basis that the damage did not occur during the coverage period. The court acknowledges that there is a general exception to the general point raised by Ridglea where an insurer’s total denial of liability on any grounds � after the time for filing a proof of loss � had expired would not constitute a waiver of the defense of late filing of the proof of loss. Noting that Ridglea was able to point to other hail damage on the property � to cars, buildings, shutters, etc. � that was caused by the May 1995 hail storm, and that it would be difficult to see damage to the roof � the court finds that the prompt notice period ran from on or about the date of which Ridglea’s hail damage was incurred: May 5, 1995. Thus, “because Ridglea gave its notice of damage after the period for prompt notice had expired, Lexington’s subsequent general denial of liability likewise came”after the time limited for giving notice’ and thus did not constitute a waiver of the defense of late notice.” The court rejects Ridglea’s argument that the prompt notice provision is unenforceable as a matter of public policy, finding it irrelevant to this case because “prompt notice” mentioned in the Lexington policy is not synonymous with “immediate.” The court finds the notice provision is not ambiguous, as Ridglea also argues. No rational finder of fact could conclude that Ridglea’s notice, which was six years after the alleged date of the hail damage, was given within a reasonable time. Finding the provision to be ambiguous would not help Ridglea’s cause. Finally, however, the court does agree with Ridglea that Lexington was required to show that it was prejudiced by Ridglea’s breach of the policy’s prompt notice provision. Texas law requires a showing of prejudice in order to raise breach of a notice requirement as a defense against claims on certain types of insurance policies, the court points out, such as “occurrence” policies. The policy in this case carries an implied requirement of prejudice before the carrier can invoke the notice provision. The court rules that the district court erred as a matter of law by failing to require a showing of prejudice. OPINION:Jolly, J.; King, Jolly and Dennis, JJ.

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