The U.S. Fifth Circuit Court of Appeals recently affirmed a
ruling in favor of an insurer that it did not owe defense or
indemnity because the insurer did not receive notice of the lawsuit
until over 40 days after the entry of a default judgment against
its insured. Nautilus Insurance Co. v. Darwin Vargas d/b/a Houston
Star Security Patrol, et al., Case No. 17-20261 (5th Cir. (Tex.)
Oct. 20, 2017).
A waitress was shot while working at a nightclub where the
insured contracted to provide security services. The waitress sued
the security company and took a default judgment against it. Six
weeks later, the claimant’s counsel sent a letter to the
security company’s insurer seeking “a resolution, and
payment of the judgment amount.” This was the insurer’s
first notice. The insurer sought declaratory judgment. The district
court concluded that, under Texas law, the delay by the insured in
providing notice of the suit to the insurer before the default
judgment was taken
