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Click here for the full text of this decision FACTS:In 2001, a securities lawsuit was filed against Flashnet Communications Inc. in New York federal court. Process was served on Flashnet’s registered agent on June 20, 2002, but Flashnet did not give the issuer of its directors’ and officers’ liability policy, Agricultural Excess & Surplus Insurance Co., written notice of the suit until June 6, 2003. The policy included a notice provision, requiring Flashnet to give notice of any claim made against it “as soon as practicable,” but “in no event later than ninety (90) days after the expiration of the Policy Period or Discovery Period.” AESIC declined coverage for failure to timely notify it of the suit, so Flashnet’s successor, Prodigy Communications Corp., sued in Texas state court. AESIC and Prodigy both moved for summary judgment. The trial court denied Prodigy’s motion and granted AESIC’s, ruling that Prodigy did not comply with the condition precedent of timely notice. The trial court then granted AESIC’s additional summary judgment motion that refuted Prodigy’s contention that the policy violated Texas law governing surplus lines insurance. HOLDING:Affirmed. The court first addresses Prodigy’s argument that it gave timely notice because the “in no event later than ninety (90) days” language modifies the “as soon as practicable” language, creating a “safe harbor,” by allowing notice of a claim at any time before the end of the 90-day period, regardless of when the claim was made or when Prodigy itself received notice. The court agrees with AESIC’s interpretation, which is that notice was due “as soon as practicable,” and that the near year-long delay between service on Prodigy’s agent and when it gave notice was not “as soon as practicable.” The court explains that the plain language of the surplus line statute gives Prodigy 90 additional days to give notice after the end of the policy or discovery periods if the notice is given “as soon as practicable.” Contrary to Prodigy’s reading, the provision does not require every claim to be “made and reported” during the policy period or discovery period for there to be coverage. The court further rejects Prodigy’s excuse that AESIC had actual, oral notice of the suit within the required period, as well as its arguments that AESIC had to show that it was prejudiced by Prodigy’s untimely notice or that AESIC could not enforce the notice provision because the policy was sold in violation of the Texas surplus lines statute. Although not licensed in Texas, AESIC could, under an exception to the statute, enforce a policy procured by a licensed surplus lines agent from an eligible surplus lines insurer. The court rejects Prodigy’s additional argument that a fact issue still existed over whether the AESIC made any effort to market the policy to other carriers who were writing directors’ and officers’ insurance. The court finds Prodigy’s lacking in its attempt to prove whether there was a material and intentional violation of the surplus lines statute. Next, the court addresses Prodigy’s contention that the trial court limited its ability to take discovery. Here, the summary judgment evidence established Prodigy received notice of the lawsuit at the very latest in July 2002, and did not give notice under the policy until June 2003. “These are the dates relevant to the summary judgment motions. Prodigy does not contend additional discovery would establish a different, later date for its receipt of notice of the lawsuit, or a different, earlier date on which it gave written notice under the policy to AESIC. Therefore, additional discovery was not needed before the trial judge ruled on [AESIC's] motion for summary judgment on the notice issue.” Finally, the court rules the trial court acted properly when it did not require expert testimony on the marketing-of-the-policy argument. OPINION:Whittington, J.; Whittington, Wright and O’Neill, J.J.

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