Argued: December 12, 2018
from the United States District Court for the Eastern
District of Virginia, at Alexandria. Liam O'Grady,
District Judge. (1:17-cv-00629-LO-JFA)
Thomas Brown, SILVER & BROWN, Fairfax, Virginia, for
Douglas Aaron Winegardner, SANDS ANDERSON, PC, Richmond,
Virginia, for Appellee.
B. Lawson, SILVER & BROWN, Fairfax, Virginia, for
AGEE, DIAZ, and HARRIS, Circuit Judges.
been awarded more than $900, 000 for a contractor's
faulty workmanship, Gateway Residences at Exchange, LLC, sued
to collect the judgment from the contractor's liability
insurer, Illinois Union Insurance Company. The relevant
policy, however, covered only claims reported to the insurer
during the policy period, and that policy expired 19 months
before Illinois Union learned about Gateway's claim.
should end this case. But Gateway claims it may nonetheless
recover on the policy because, by Virginia statute, Illinois
Union waived certain defenses by failing to promptly inform
Gateway of its coverage denial. See Va. Code Ann.
§ 38.2-2226. The district court was unpersuaded and, for
reasons that follow, we affirm.
insurance dispute started with two broken generators in an
Alexandria, Virginia, apartment complex. Gateway, the
building's owner, had hired a local contractor,
Mechanical Design Group (MDG), to provide various engineering
and design services. Among MDG's jobs was to install two
"life and safety power generators" in the garage.
J.A. 208. MDG apparently didn't install the generators
very well, though, for when they started up in August 2014,
they caught fire, wrecking the generators and delaying the
217-unit building's opening.
MDG for the damage, Gateway demanded that its contractor
"cure the negligent design and installation" of the
generators. J.A. 209. But it didn't sue MDG, at least
initially. And in September 2014, MDG went out of business.
starting work on the Gateway project, MDG had bought
liability insurance from Illinois Union. Under the policy,
Illinois Union had agreed to indemnify MDG for legal claims
that might arise from the Gateway job. The front page of the
policy advised that it provided liability coverage
"ON A CLAIMS-MADE AND REPORTED
BASIS," meaning that it covered
"ONLY CLAIMS FIRST MADE AGAINST THE INSURED AND
REPORTED TO THE INSURER, IN WRITING, DURING THE POLICY
PERIOD." J.A. 256 (typeface in original). To
further stress the point, the policy made it a
"condition precedent to coverage" that any claim be
reported to the insurer during the policy period. J.A. 259.
The policy period began on February 1, 2014, and ended one
year later on February 1, 2015.
apparently never told Illinois Union about Gateway's
potential claim before its insurance policy expired in 2015.
Instead, Illinois Union first heard about the generator
incident on September 6, 2016, after Gateway notified
MDG's insurers that it intended to sue. Ten days later,