Tenth Circuit Holds That Two-and-One-Half Years and Two-and-One-Half Million Dollars Do Not Constitute Prejudice

In BSC Holding, Inc. et al. v. Lexington Ins. Co., — Fed.Appx. –, 2014 WL 929194 (10th Cir., March 11, 2014), the Tenth Circuit recently underscored  how difficult it can be for an insurer to demonstrate prejudice as a result of late notice.  The District of Kansas had granted summary judgment to Lexington, but the Court of Appeals reversed and sent the matter back to the lower court, holding that “substantial prejudice” had not been shown despite the fact that the policyholder had waited two-and-one-half years to notify the carrier and had spent $2.5 million dollars before doing so. Lyons Salt Company owned a salt mine in Kansas.  In January 2008, mine workers detected an inflow of water into the…