The Complex Commercial Litigation Division of the Superior Court routinely presides over actions involving insurance coverage and contractual indemnification clauses. In Avaya, Inc. v. Charter Communications Holding Co., Inc., et al., the Court was asked to interpret the notice provision within an indemnification clause. The relevant language in the contract is as follows:
Avaya will defend or settle, at its own expense, any claim or suit against you alleging that any Avaya Products purchased under this Agreement infringe any United States patent or copyright or trade secret. Avaya will also pay all damages and costs that may be assessed against you due to such infringement as such damages and costs are incurred. Avaya’s obligation is expressly conditioned upon the following: (1) you shall promptly notify Avaya in writing of such claim or suit ….
At the outset of the case, Avaya filed a summary judgment motion seeking a declaration that it was not required to defend or indemnify the defendants because they failed to give ‘prompt notice’ of suit as a matter of law–specifically, Avaya claimed that defendants waited 10 months to provide notice and demand coverage of an infringement suit. Defendants did not dispute the 10 month lapse in notice, however they contend that the term ‘prompt’ is subject to some interpretation, and sought the opportunity to take discovery on attendant facts and circumstances. The Court agreed with defendants:
I am not persuaded that the fact alone of a ten month period between the commencement of the Katz Lawsuit and the giving of the July 2, 2007 notice constitutes lack of prompt notice as a matter of law. I agree with Charter that the phrase [Prompt Notice] is subject to some interpretation, and that the interpretation may be influenced by attendant facts and circumstances.
Seth Niederman is a partner with the law firm Fox Rothschild LLP. Seth practices in Fox Rothschild’s Wilmington, Delaware office. You can reach Seth at 302-622-4238, or email@example.com.