Premature Denial for Failure to Appear at EUO FailsIt is not Reasonable to Deny a Claim for Failure to Appear for EUO Before the Date the EUO was Scheduled to OccurIn March 2021, an arsonist destroyed a building on the Brockton Fair fairgrounds known as the "State Building," owned by BAS Holding Corporation ("BAS") and, according to BAS, insured against loss by Philadelphia Indemnity Insurance Company ("Philadelphia"). Philadelphia undertook an investigation to determine coverage. The insurer sought an examination under oath ("EUO") of George Carney, the president and owner of BAS.In Philadelphia Indemnity Insurance Company v. BAS Holding Corporation, Brockton Agricultural Society, No. 22-1296, United States Court of Appeals, First Circuit (August 17, 2023) the First Circuit recognized that a requirement for EUO must be reasonable and the claimed premature denial was probably not reasonable.FACTUAL BACKGROUNDPhiladelphia sued seeking a declaration that BAS breached the insurance policy's EUO condition. In its answer, BAS denied that it had refused to submit to an EUO. On cross-motions for summary judgment, the district court granted judgment for Philadelphia on the ground that BAS failed to cooperate by not providing Carney for an EUO. BAS appealed.BAS is the record owner of the State Building, a landmark building located on the Brockton Fair fairgrounds in Brockton, Massachusetts. The interior of the building was mostly open space used for exhibits or storage at the annual agricultural fair. The fire set by the arsonist on March 17, 2021, caused a total loss of the structure. The remains of the building were razed that same day.At the time of the fire, BAS held a policy (the "Policy") issued by Philadelphia that BAS claimed covered the State Building.On June 16, 2021, Philadelphia also sought an EUO of BAS in accordance with the Policy's EUO condition.BAS presented Susan Rodrigues as its designee to attend the EUO. She did "everything" to help put on the fair and also oversaw maintenance work on the fairgrounds and buildings throughout the year, including the State Building.During her examination, Rodrigues identified six people – five maintenance workers and Carney – who might be able to provide additional information in response to BAS's questions.ANALYSISUnder Massachusetts law, attendance at reasonably requested EUOs is a condition precedent for insurance coverage. Thus, the question before the First Circuit was a narrow one: did the district court rule correctly -- as a matter of law -- that BAS willfully and without excuse refused Philadelphia's request for an EUO of Carney, thereby breaching the insurance contract?The timeline of Philadelphia's denial weighs heavily against any conclusion that BAS refused to produce Carney for an EUO. The entire discussion between the parties about whether there should be additional EUOs of Carney and the five maintenance workers spanned only nine days. The First Circuit vacated the district court's grant of summary judgment for Philadelphia and remanded for further proceedings not inconsistent with the opinion.ZALMA OPINIONI have personally taken hundreds of EUOs. I, like the First Circuit, cannot understand how an insurer can deny a claim for failure to appear on a date prior to the date scheduled for the EUO to take place. Such a denial makes no sense. I have sat with a court reporter at the time and place scheduled for an EUO and no one appeared and, thereafter denied the claim only to withdraw the denial when the witness produced an excuse like the birth of a child or the hospitalization of the witness. The failure to wait a week or two to deny the claim gained Philadelphia nothing more than the ire of the First Circuit.(c) 2023 Barry Zalma & ClaimSchool, Inc.FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257 Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

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