Federal judge Anna Brown recently confirmed that under Oregon law, a carrier must demonstrate that it was prejudiced by allegedly late notice of a claim before the court will inquire into whether the delay in providing notice was reasonable. This case arose from a collision between a commercial vehicle and a train in Texas allegedly caused by the policyholder, whose auto-insurance policy was governed by Oregon law. The policyholder waited for eight months before notifying her carrier that she had been sued in connection with the accident. The carrier claimed that because the delay was unreasonable, there was a presumption of prejudice. But as Judge Browns recognized, that is not Oregon law. Because the carrier did not put forward any evidence that it had been prejudiced by the delay, the court rejected the carrier’s motion for summary judgment on whether it had a duty to defend, due to late notice. This case is another reminder that Oregon law is, in some respects, much more policyholder-friendly than other states’ law, and that “technical” defenses such as late notice rarely get much traction.
It is worth noting that Judge Brown also rejected the carrier’s more substantive argument against there being a defense obligation, finding that although the allegations of wrongdoing in the underlying case did not directly implicate the use of the vehicle, they indirectly referred to it. Therefore, under Oregon’s generous duty-to-defend standard, most recently explained in Bresee Homes v. Farmers, the carrier is on the hook for the defense.