Southern Cleaning Service, Inc. v. Essex Insurance Company, et al.: Whether an entity has apparent authority to accept notice of an insured’s claim on behalf of companies is an issue of fact that precludes summary judgment.

In February 2016, the Supreme Court of Alabama decided the matter of Southern Cleaning Service, Inc. v. Essex Insurance Company, et al. [Ms. 1140870], — So.3d —, 2016 WL 687048 (Ala. 2016), holding that an issue of fact remained as to whether agency had apparent authority to accept notice of insured’s claims on behalf of companies.

 Southern Cleaning Service (“SCSI”) had a CGL policy with Essex Insurance Company that SCSI had purchased with an independent agent, Alabama Auto. Essex refused to provide defense and indemnity to SCSI, arising out of a personal injury claim related to work performed by Phase II, who had been subcontracted by SCSI. Essex’s grounds for refusing to provide coverage was that SCSI had failed to timely notify Essex of the claim, by failing to notify it until 15 months after the incident.

SCSI argues that it properly notified Essex via notification of the claims to Alabama Auto, who (according to SCSI) had apparent authority to accept notice for Essex. SCSI propounded the following evidence to support its claim: all communication from Essex was routed through Alabama Auto; the Essex policy identified Alabama Auto as “agent” and listed Alabama Auto’s address while providing no other contact information or directions regarding how to provide notice of a claim; and Essex accepted and responded to other notices of claims forwarded them by Alabama Auto.

In reviewing this evidence to determine whether summary judgment was properly entered for Essex and against SCSI, the Supreme Court of Alabama found that the above-identified does not conclusively establish that Alabama Auto had apparent authority to accept notice of claims on behalf of Essex, but there is substantial evidence indicating that a genuine issue of material fact exists on that point.