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January 14, 1987


The opinion of the court was delivered by: WEBER

 This matter has taken us rushing headlong into the past, to events which occurred over twenty years ago and which have now spawned 10 reported decisions in three separate lawsuits. *fn1" For the reader's sake we will condense that history as best we can.

 Prior to 1965, life was relatively simple in Liberty Mutual's claims departments. Sometime in 1965, the company altered the structure of those offices to create two parallel positions: Claims Representative and Claims Adjuster. The company's hiring for these positions was gender-based, approaching 100% women in claims representative positions, and achieving 100% males in the claims adjuster position, over a 6 year period.

 A class action suit was filed with this court in 1972, after percolating through the required administrative levels. Plaintiffs alleged that Liberty Mutual's practices in hiring, compensation, promotions, discharge and other conditions and incidents of employment violated Title VII. This court certified the class and ultimately concluded that the company's employment policies were discriminatory on the basis of sex. In 1978, the parties reached a settlement for an amount in excess of $5.5 million.

 Following the settlement, Liberty Mutual began to look in earnest for coverage from its various insurers over the relevant span of time. One insurer won the race to the courthouse and filed a declaratory judgment action to determine liability on its policy of insurance. Appalachian Insurance Co. v. Liberty Mutual Insurance Co., Civil Action No. 78-1151 (W.D. Pa.)

 In Appalachian, the insurer contended that it had issued an "occurrence" policy, that the "occurrence" giving rise to liability was Liberty Mutual's adoption of a discriminatory employment policy in 1965, and therefore Appalachian's policy covering a period from 1971-1974 was not applicable to the loss. We agreed and, on slightly different reasoning, the Circuit affirmed. 507 F. Supp. 59 (W.D. Pa. 1981), aff'd 676 F.2d 56 (3d Cir. 1982).

 The present action represents Liberty Mutual's effort to pin down the applicable insurer. Defendants are underwriters on three policies of insurance issued to Liberty Mutual and covering the period 7/1/65-6/30/68. *fn2" Defendants interposed a number of defenses and after much wrangling over discovery the parties have raised several issues on cross motions for summary judgment. We have concluded that there are no disputed issues of material fact and we are therefore able to resolve these questions as described below.

 I. Condition "J"

 The Underwriters argue that Liberty Mutual failed to comply with the requirements of Condition J of the policies, a condition precedent to the Underwriters' liability, and therefore defendants have no obligation under these policies. This is the subject of cross motions for summary judgment, and there is no dispute as to the material facts.

 Condition J provides, in its entirety:

Liability under this policy with respect to any occurrence shall not attach unless and until the Assured, or the Assured's underlying insurer, shall have paid the amount of the underlying limits on account of such occurrence. The assured shall make a definite claim for any loss for which the Underwriters may be liable under the policy within twelve (12) months after the Assured shall have paid an amount of ultimate net loss in excess of the amount borne by the Assured or after the Assured's liability shall have been fixed and rendered certain either by final judgment against the Assured after actual trial or by written agreement of the Assured, the claimant, and Underwriters. If any subsequent payments shall be made by the Assured on account of the same occurrence, additional claims shall be made similarly from time to time. Such losses shall be due and payable within thirty (30) days after they are respectively claimed and proven in conformity with this policy.

 Defendants caution, and we agree, that this provision is to be distinguished from the notice requirements of Condition G:

Whenever the Assured has information from which the Assured may reasonably conclude that an occurrence covered hereunder involves injuries or damages which, in the event that the Assured should be held liable, is likely to involve this Policy, notice shall be sent as stated in Item 3 of the Declarations as soon as practicable, provided, however, that failure to give notice of any occurrence which at the time of its happening did not appear to involve this policy but which, at a later date, would appear to give rise to claims hereunder, shall not prejudice such claims.

 The Underwriters freely admit that plaintiff provided prompt notice of the claim, satisfying Condition G, and this is not an issue in the litigation. The issue is the purport of Condition J, and the meaning of "definite claim."

 Defendants liken Condition J to "proof of loss" provisions traditionally contained in fire and property insurance policies and in many excess insurance policies. In such policies, proof of loss is a condition precedent to liability and the failure to satisfy that condition within the time specified by the policy will excuse the insurer from its obligations. See, Romanos v. Home Insurance Co., 355 Mass. 499, 246 N.E.2d 173 (1969); Smith Beverages Inc. v. Metropolitan Casualty Insurance Co., 337 Mass. 270, 149 N.E.2d 146 (1958); Nichols v. Continental Insurance Co., 265 Mass. 509, 164 N.E. 442 (1929). *fn3"

 In the defendants' view, Liberty Mutual's loss was fixed at the time of its settlement of the Wetzel suit, in September of 1978, and it paid out that sum in disbursements to individual class members in May, 1979. And yet, plaintiff made no demand for a specific sum until May 7, 1982, a delay of 3 1/2 years, well outside the 12 month period provided by Condition J.

 Defendants' argument fails on several counts. First of all, defendants interpret "definite claim" to mean a demand for a dollar figure, a sum certain. There is nothing in the policy to support this restrictive interpretation, but, in any event, the Underwriters were well aware of the amount of the Wetzel settlement, and therefore their exposure on the policies, at the time the settlement was achieved in 1978.

 However, defendants contend that plaintiff represented that it intended to allocate the loss among all excess insurance policies for the years 1965-1974, and plaintiff's failure to allocate this loss in a timely fashion violated Condition J. What defendants conveniently omit from the equation is the birth, life and death of Appalachian Insurance Co. v. Liberty Mutual Insurance Co., Civil Action No. 78-1151 (W.D. Pa.). Appalachian insured Liberty Mutual for the period 8/1/71-7/31/74. It filed a declaratory judgment action to challenge Liberty Mutual's plan to allocate the Wetzel settlement among the various insurers from 1965 to 1974, and ultimately was successful. Appalachian, 507 F. Supp. 59 (W.D. Pa. 1981); aff'd, 676 F.2d 56 (3d Cir. 1982. During the pendency of this litigation, allocation was a question mark, and in the end, a nullity. The insured's failure to allocate a loss in a sum certain when the very process of allocation was under attack will not excuse the defendants from their obligations on the policies.

 In light of the uncertainty cast by the Appalachian litigation on the insurance claims to be made by plaintiff, Liberty Mutual knew with certainty the amount of its claim against these underwriters only upon the conclusion of Appalachian. A demand for payment of the full amount of the Wetzel settlement was then promptly made on defendants, satisfying condition J.

 As an alternative response, Liberty Mutual has argued that defendants waived, or are estopped from asserting, Condition J as a bar. Under Massachusetts law, employing the Underwriter's analogy to proof of loss provisions, where an insurer denies coverage on other grounds before expiration of the time allowed for proof of loss, the requirement of proof of loss becomes a useless gesture and is therefore deemed to be waived. E.g., Smith Beverages Inc. v. Metropolitan Casualty Insurance Co., 337 Mass. 270, 149 N.E.2d 146 (1958); Star Fastener v. American Employers' Insurance Co., 326 Mass. 728, 96 N.E.2d 713 (1951); Milton Ice Co. v. Travelers Indemnity Co., 320 Mass. 719, 71 N.E.2d 232 (1947); Jackson & Co. v. Great American Indemnity Co., 282 Mass. 337, 185 N.E. 359 (1933). The rationale is equally applicable to Condition J. The Underwriters had denied coverage for various reason ever since receiving the initial notice of claim in 1972. No purpose would be served by making a formal claim in light of the insurers' consistent denials of coverage.

 Finally, we note with equal parts amusement and distaste the energy and expanse of paper employed by the Underwriters to argue that they were severely prejudiced by Liberty Mutual's failure to make a definite claim following the Wetzel settlement. Defendants in their brief assert:

"Quite literally, the Underwriters at risk on the policies in suit were in the dark for over three and one half years with respect to what Liberty Mutual was seeking from them by way of damages." (Defendants' Brief in Support of Motion for Summary Judgment at p. 23.)

 We are not dealing here with babes in the woods. It is a certainty that defendants were aware of the Appalachian litigation and its import to the allocation of loss. Furthermore, defendants had been keeping watchful eye on the Wetzel suit since its inception, aided by periodic reports from Liberty Mutual, and by its own high priced watchdog, Mendes & Mount, ...

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