04/24/2020- MAK Services is exclusively in the business of snow and ice removal. MAK Services obtained liability insurance (“the Policy”) for its operations from Selective Way. The Policy excluded various types of coverage. Among these exclusions was one titled “Exclusion – Snow and Ice Removal.” After an individual slipped and fell at a location that MAK serviced, he sued MAK. For the next eighteen months, Selective Way represented MAK Services in all aspects as to its defense against the claims. Selective Way filed then a complaint seeking a declaratory judgment against, inter alia, MAK Services. In pertinent part, Selective Way averred that MAK Services’ “potential negligence is based solely upon ice and snow removal activity, and the [Policy] specifically excludes a defense and indemnity for any damages arising from snow and ice removal activity . . . .” MAK Services filed a motion for summary judgment, arguing that the language contained in Selective Way’s reservation of rights letter was “insufficient to properly preserve the potential coverage defense of the Snow and Ice Removal exclusion,” and that Selective Way should be estopped from raising the policy exclusion. The trial court granted Selective Way’s motion. The Superior Court reversed and remanded.
The Court held that, under the particular facts and circumstances of the case, Selective Way failed to conduct an adequate investigation following the submission of a claim by MAK Services. As a consequence of this deficient investigation, Selective Way’s reservation of rights letter failed to “clearly communicate” the extent of the rights being reserved, which resulted in presumptive prejudice to MAK Services. As a result of this prejudice, Selective Way should have been estopped from asserting this policy exclusion for the first time eighteen months later without sufficient notice to MAK Services regarding Selective Way’s coverage position.