Plaintiffs argue that the conflict between an absolute duty to defend suits brought and a limited duty to defend claims made creates an ambiguity. As discussed above, we do not find an independent duty to defend against all suits brought, and so find that there is no ambiguity on this point.
Plaintiffs argue further that the policy states that in the event a policy holder becomes aware that a party intends to hold the holder responsible for an injury, or if the holder becomes aware of an incident that could subsequently give rise to a claim, the holder must notify the Company. However, the policy does not define the terms "claim" or "notice" and therefore, Plaintiffs argue, the parties' rights and responsibilities are in conflict and ambiguous. Although the terms "claim" and "notice" are not defined in the policy, we do not find that that fact creates inherent ambiguity in their meaning or makes the policy ambiguous. Courts give undefined contract terms their common meaning. 692 F.2d at 291. The terms "claim" and "notice" are standard terms, and Plaintiffs have not demonstrated any confusion concerning their meaning. Accordingly, the contract is not ambiguous.
Plaintiffs' third major argument is that their failure to timely notify the Company of the claim made is excusable. They argue that they had no knowledge of the claim by the end of the policy, and therefore, could not possibly have timely notified the Company of the claim.
We find that even if we excused Bala from the notification requirements, it is still not covered by the policy. The policy expressly is limited to claims "first made during the policy period" or within the sixty-day extension period. Policy at § 1 & § 8, P 13. Accordingly, because Thornton's claim was not made within the life of the policy, her claim is not covered by it.
Plaintiffs' last argument is that in Pennsylvania, a court must find that an insurance company has been prejudiced before it can deny coverage based on failure to notify. This doctrine stems from Brakeman v. Potomac Ins. Co., 472 Pa. 66, 371 A.2d 193 (1977). That case held that with an automobile liability occurrence policy, failure to timely notify the insurance company of the occurrence giving rise to coverage was not fatal if the insurance company was not prejudiced by the delayed notification. Id. at 76-77, 371 A.2d at 198.
To date, no Pennsylvania appellate court has addressed the issue of whether Brakeman applies to a claims-made policy.
The federal courts have, however. In 1984, the Middle District of Pennsylvania held that an occurrence policy and a claims-made policy were materially different,
and held that the considerations that influenced the Pennsylvania Supreme Court in Brakeman did not exist in a claims-made policy. City of Harrisburg v. International Surplus Lines Ins. Co., 596 F. Supp. 954 (M.D. Pa. 1984), aff'd 770 F.2d 1067 (3d Cir. 1985). Accordingly, it held that an insurance company need not show prejudice when there has been a failure to comply with notice provisions in a claims-made policy. Id. at 962. Since then, that reasoning has been adopted in this District. Clemente v. Home Ins. Co., 791 F. Supp. 118, 120 (E.D. Pa. 1992); Employers Reins. Corp. v. Sarris, 746 F. Supp. 560, 564 (E.D. Pa. 1990), aff'd, 981 F.2d 1246 (3d Cir. 1992).
Plaintiff argues that because a Pennsylvania appellate court has not ruled on this question, that we should extend Brakeman to apply to claims-made policies. Plaintiff also attempts to distinguish the federal cases from this case on the ground that in those cases the policy holders all knew of the claims during the policy period, but did not timely report them. This factual distinction does not persuade this Court to depart from the reasoning of its brethren. Whether the policy holders in the other federal cases had notice of a claim does not lessen the fact that claims-made policies are very different from occurrence policies, which warrants different treatment by the courts. City of Harrisburg, 596 F. Supp. at 961. Accordingly, we do not apply Brakeman to this claims-made policy.
In conclusion, we find that Thornton's claim was not brought during the life of the policy, nor was the Company timely notified of her claim. Accordingly, we hold that the claims-made policy here does not cover the claims asserted by Thornton against Bala. An appropriate Order follows.
AND NOW, this 18th day of November, 1994, upon consideration of Defendant's Motion to Dismiss Plaintiffs' Complaint and responses thereto, the Motion is hereby GRANTED.
BY THE COURT:
J. CURTIS JOYNER, J.