In the Superior Court case of Jarrett v. Government Employees Insurance Company, No. 136036638, 2014 WL 3397944 (Conn. Super. June 4, 2014), the plaintiffs-insureds brought a claim against the defendant, GEICO, seeking to recover uninsured motorist benefits as a result of injuries sustained when their vehicle was struck by a vehicle operated by an unknown driver. GEICO moved to dismiss the plaintiffs’ complaint on the ground that the court lacked subject matter jurisdiction based upon the plaintiffs’ failure to comply with the terms of the policy regarding notice1 and cooperation.2 The subject policy expressly stated “we (carrier) cannot be sued unless the insured or his legal representative have fully complied with all of the policy terms.” GEICO likened such non-compliance to failure to comply with a condition precedent to suit such that the court was without jurisdiction. The plaintiffs-insureds countered with an argument that appellate case law permits an insured party to recover on a claim irrespective of whether that party has failed to give timely notice and/or comply with the cooperation provision of the policy.

The Jarrett court first addressed the issue of late notice. Citing Aetna Cas. & Sur. Co. v. Murphy, 206 Conn. 409 (1988), overruled by Arrowhead Indem. Co. v. King, 304 Conn. 179 (2012), the court recognized “that strict compliance with conditions of contracts is not always necessary.” The court also noted, citing Murphy, “that a balancing test must be implemented that weighs loss of coverage under disproportionately strict compliance conditions against ‘an insurer’s legitimate interest and protection from stale claims.’” Therefore, a “factual inquiry into whether in the circumstances of a particular case, an insurer has been prejudiced by its insured’s delay in giving notice of an event triggering insurance coverage” is warranted. The Jarrett court held, however, that such factual inquiries are inappropriate on a motion to dismiss.

Next, the court addressed the issue of the failure to cooperate. The plaintiffs-insureds argued that the Murphy holding should apply to cases involving the failure to cooperate and that their noncompliance would be excusable if the defendant carrier was not prejudiced by the breach. The Jarrett court quoted Taricani v. Nationwide Mut. Ins. Co., 77 Conn. App. 139 (2003) in that “it is difficult to see why the principle analysis in Murphy (late notice) should not be extended to this case (cooperation).” The Jarrett court further noted that the Murphy and Taricani courts left the burden on the insured to prove that there was no prejudice.

The Jarrett court then discussed the Supreme Court’s holding in Arrowhead Indemnity Co. v. King, 304 Conn. 179 (2012), a case which ultimately overruled Murphy, by holding that “the insurer bears the burden of proving by a preponderance of evidence that it has been prejudiced by the insured’s failure to comply with a notice provision.” The Jarrett court noted that it was “undisputed that plaintiffs were late in filing their claim and that they failed to comply with the relevant cooperation clause and that such lapses may affect their ability to prevail on the merits of their claim.” The Jarrett court held that the plaintiffs-insureds’ failure to give notice and failure to cooperate did not deprive the court of its jurisdiction and that a factual determination on prejudice was not appropriately made at the motion to dismiss stage.

Although the principal issue in Jarrett was whether a motion to dismiss was the proper vehicle to address a factual determination involving prejudice, the Jarrett court stated unequivocally, based on King, that the burden is on the defendant insurer to prove material prejudice as a result of late notice and lack of cooperation. The undersigned authors note, however, that while King overturned Murphy with respect to the burden of proving prejudice for purposes of a late notice defense, the court in King did not address the prejudice issue in the context of a failure to cooperate defense. Indeed, King did not overrule Taricani, Brown v. Employer’s Reinsurance Corp. , 206 Conn. 668, March 29, 1988 (holding that the insured has the burden of proof of establishing lack of prejudice from a breach of the cooperation clause) or Double G Leasing v. Underwriter’s at Lloyds, 116 Conn. App. 417, 434 (2009) (agreeing with the trial court that “the plaintiff did not demonstrate that the insurer was not prejudiced by the breach” and that the insured still has the burden of proof in establishing that the carrier was not prejudiced as a result of their material breach of the cooperation provision), all of which place the burden of proving lack of prejudice in failure to cooperate cases squarely on the insured. Thus, notwithstanding the decision of the court in Jarrett, because the Supreme Court in King did not address the issue concerning burden of proof regarding prejudice in lack of cooperation cases, carriers should continue to maintain that the burden is on the insured to establish lack of prejudice where the insured has breached the policy’s cooperation provision.

1The subject policy required that all hit-and-run claims must be filed within thirty days of the accident. The plaintiffs-insureds filed a claim approximately eleven months after the accident.

2The plaintiffs-insureds declined to submit to multiple requests for statements under oath.