Cornhusker Casualty Insurance Company v. Samples
Filed January 31, 2008
Cite as 06-35106

Decision on Insured Coverage Rights Remanded

Washington landscaper Rockeries, Inc. had its automobiles insured under a liability policy issued by Cornhusker Casualty Insurance Company of Nebraska. Rockeries failed to pay its quarterly premium, which was due on September 2, 2004, and as a result, on September 29, the insurance company sent Rockeries a notice advising it that the policy would be cancelled.

The mailed notice, however, never reached Rockeries. It was returned to Cornhusker, undelivered, in early November. On October 19, Cornhusker cancelled the policy. But following that, on October 28, the insurance company received a check from Rockeries for the past-due premium installment.

However, on October 22, Leanne Samples, an employee of Washington landscaper Rockeries Inc., died in a fatal automobile accident with another employee. Rockeries notified its insurance broker of the accident on October 25.

Leanne’s husband brought a wrongful death action against Rockeries and its owners in Washington state court.

In response, Cornhusker then filed suit seeking a declaratory judgment that Rockeries was no longer insured at the time of the accident and thus it had no obligation to provide Rockeries with a defense or assume any liability in the wrongful death action.

The district court granted summary judgment in favor of Cornhusker. The decedent’s husband, Brooks Staples, appealed the decision.

In review, the Ninth Circuit court of appeals stayed proceedings pending certification to the Washington Supreme Court of the question of the effectiveness of the notice sent by Cornhusker to Rockeries.

At issue, the court explained, was whether Cornhusker’s act of mailing the cancellation notice by certified mail complied with the notice requirement of Revised Code Washington §48.18.290 even if the cancellation letter was never received by Rockeries. The determinative question was whether the cancellation notice was “mailed,” for purposes of §48.18.290, if it was never actually received by the insured.

In final ruling, the court of appeals stayed proceedings in an appeal from a district court judgment and certified a question of law to the Washington Supreme Court. Further, the court held that an insured’s right to coverage under an automobile liability policy could not be determined without first determining state law regarding the effectiveness of a termination of coverage notice which was sent to the insured by certified mail but never received by the insured.