When he was just about two years old, Braylon Jordan swallowed small magnets, “Buckyballs”, manufactured by Maxfield & Oberton. Once ingested, the magnets shredded his internal organs, necessitating surgery to remove most of his intestines, leaving Braylon severely disabled for the rest of his life, and consigning his parents to provide near constant care for their son for the rest of theirs. On April 23, 2012, WWL TV in New Orleans ran an article detailing Braylon’s surgeries and the dangers posed by high-powered magnets. Zucker saw this article and forwarded it, along with one about a teenager in Oregon, to M & O’s primary insurer the next day. Zucker told the insurer that the “news stories were reported online involving our products. All known information about the incident are included in the story. We have no additional information nor have we been contacted directly regarding the incident.” A day later M & O forwarded the WWL article to its excess insurers, including Evanston. M&O’s primary insurer acknowledged receipt of Zucker’s message, responding that it “reserved all rights, including the right to deny coverage for this claim.” For its part, Evanston opened an internal “Claim/Occurrence” file. It included an initial file notation: “Claim setup and forward to agent to assignment.” On April 30, 2012, Evanston added a comment that it had “received notice of the filing of a consumer complaint regarding the insured product, Buckyballs.” That same day Evanston noted that it had “received e-mail from underlying advised they have also received notice of this new loss.” In June 2012, Evanston added a note to the file that stated “no claim or lawsuit filed.” In October 2012 Evanston again noted “no claim or lawsuit filed.”
Summary judgment was filed by Evanston and M&O regarding the lack of timely notice under the policies. In their opposing motion for summary judgment, the Jordans did not squarely address whether they had made a timely claim against M&O but instead focused on the news articles about Braylon. They argued that M&O treated these articles as if a claim had been made against it and had then forwarded at least some of them to its insurers, notifying them of a claim. The Jordans also asserted that based on the insurers’ internal references to the articles as a “claim”, the insurers had treated M&O’s correspondence as notice of a claim. The Jordans argued that coupling the articles with the fact that the insurers “received, recorded, and treated the Braylon Jordan matter as a ‘claim’ during the Policy Period” was enough to demonstrate that M&O’s insurers had received notice of a claim sufficient to trigger coverage.
Shortly after the motions for summary judgment were filed, the Jordans reached an agreement with Zucker and M&O’s underlying insurer to settle their claims against both. The underlying insurer tendered its policy limits, and Zucker agreed to pay an additional $20 million to the Jordans, contingent on that amount being funded by M&O’s excess insurers. Evanston refused to fund this settlement. The district court denied the parties’ summary judgment motions. The court stated that “a trial will need to be held on whether the newspaper article was a claim or an occurrence, and perhaps more importantly, whether the 2011–12 insurers should be estopped from denying coverage because they treated the newspaper article as a timely claim.” After the parties later stipulated that a trial was not necessary, the district court revisited the motions based on the briefing.
The U.S. Fifth Circuit Court of Appeals reversed:
Perhaps the leading treatise on insurance law states that: “‘claim’, as used in a provision of an insurance policy requiring the insured to give timely notice of a claim, connotes the following: authoritative or challenging request; demand of right or supposed right; calling on another for something due or supposed to be due; and demand for compensation, benefits, or payment. In other words, a ‘claim’ is an assertion by a third party that, in the opinion of that party, the insured may be liable to it for damages within the risk covered by a policy.” 13A Couch on Insurance §191:10.
“The entirety of the district court’s analysis on this issue, much like the Jordans’ argument on appeal, focused on the fact that M&O forwarded news articles it happened to see to its insurers, including Evanston. The district court reasoned that because the insurers had notice of the articles describing Braylon Jordan’s injuries, including Meaghin Jordan’s statements quoted above, and because the insurers on occasion internally referred to the media reports as evidencing a ‘claim’, the initial requirements for coverage were met. But this reasoning neglects the fact that the insured’s awareness of an alleged injury is not enough to constitute a claim. The fact that M&O became aware of media reports about Braylon’s injuries and sent those reports to Evanston, which in turn opened an internal Claim/Occurrence file and monitored further developments, does not substitute for the Jordans actually making a timely claim against M & O. Their failure to do so is fatal to their assertion of coverage.”
Jordan v. Evanston Ins. Co., 23 F.4th 555 (5th Cir. 2022).