The U.S. District Court for the Eastern District of Washington has held that a statutory notice of intent to sue letter received by an insured prior to a claims-made policy period did not constitute a “claim,” because it was not a “written demand for monetary, non-monetary or injunctive relief.” Tree Top, Inc. v. Starr Indem. & Liab. Co., 2017 WL 5664718 (E.D. Wash. Nov. 21, 2017).
Prior to the policy period, the insured, an agricultural cooperative, received a notice of intent to sue letter from a claimant seeking to enforce certain portions of California Proposition 65, which aims to reduce chemicals in consumer products. The notice stated the claimant “intend[ed] to bring suit in the public interest against [the insured] . . . to correct the violation occasioned by the failure to warn all customers of the exposure to lead.”
The claimant later sued the insured within the policy period. The insured tendered defense expenses to a liability insurer. The insurer denied coverage on the basis that the notice of intent to sue letter constituted a “claim” made prior to the policy period.
In the resulting coverage litigation, the district court held that the notice did not constitute a “claim” under the policy. The court held that the notice lacked any “explicit” demand for relief, stating that “[t]he notice does not request a settlement or direct [the insured] to take any affirmative action. It merely provides notice of [the claimant’s] allegations and its intent to sue.”
The insurer argued alternatively that the notice contained an “implicit” demand, characterizing the notice as a “call to action” that required the insured to either correct its product labeling or “face an imminent lawsuit.” The court disagreed, determining that “[t]he past-tense language and threatened claim for monetary relief suggests [the claimant] intended to bring suit for [the insured’s] past violations. Accordingly, it is not at all apparent from this language that [the insured] could have avoided suit by conforming its labels to [the claimant’s] demands.”