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Argued: June 4, 2001

Appeal from a judgment of the United States District Court for the Northern District of New York (Thomas J. McAvoy, Judge), granting defendants liability insurers’ motion for summary judgment, and denying plaintiff’s cross-motion for summary judgment. The basis of the judgment was that defendants properly disclaimed coverage of their insured’s liability for an injury suffered by plaintiff because defendants received defective notice of plaintiff’s injury.

We hold, inter alia, that (1) Texas law controls the interpretation of the insurance contract at issue here; (2) under Texas law, a liability insurer may generally disclaim coverage on the basis of defective notice only if it has been prejudiced by the defect; and (3) further development of the record as to prejudice is appropriate.

 
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