- Federal Court in Arkansas Finds Insurer Entitled To Reformation
- March 22, 2013 | Author: George B. Hall
- Law Firm: Phelps Dunbar LLP - New Orleans Office
A federal district court in Arkansas has held an insurer entitled to reform a policy that was erroneously issued without a law enforcement exclusion. Harleysville Worchester Ins. Co. v. Diamondhead Property Owners Ass’n, Inc., 2013 WL 392478 (W.D. Ark. Jan. 31, 2013).
The insured property owners association sought to obtain a commercial liability policy. The insured’s agent advised the insurer that the policy need not cover law enforcement activities because the association had law enforcement coverage under a separate policy, and the insured’s application expressly excluded law enforcement coverage. The insurer submitted a quote that excluded law enforcement coverage. For unknown reasons, the policy was issued without the law enforcement exclusion. An incident involving law enforcement officers occurred resulting in claims against the association, and a claim was made against the policy. The insurer filed a declaratory judgment action and moved for partial summary judgment seeking reformation of the policy to include the law enforcement exclusion.
The court held that the policy issued did not reflect the parties’ intent at the time of contracting. Considering the evidence of the negotiations, including undisputed testimony from the association’s agent that it never sought law enforcement coverage, the court held that the parties’ intent at the time of contracting was clear. The only evidence submitted by the association was a comment posted on the internet by a community member after the policy was issued, expressing a belief that the policy included law enforcement coverage. The court held that this evidence did not reveal the parties’ intent at the time of contracting and was inadmissible hearsay. The court rejected the argument that the agent was not acting on behalf of the association when the policy was procured and also held that there was no issue of ambiguity to consider because the question of reformation did not turn on any policy language. The court granted the motion to reform the policy to incorporate the law enforcement exclusion.