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Owatonna Clinic -- Mayo Health System v. the Medical Protective Company of Fort Wayne, Indiana

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Submitted: December 14, 2010

Before LOKEN, ARNOLD, and BYE, Circuit Judges.

This is a contracts case. Owatonna Clinic — Mayo Health System sued its insurer, Medical Protective Company, claiming that the company had breached its obligation to defend and indemnify the Clinic in a medical malpractice suit that had resulted in a judgment against it. Medical Protective denied that it had any such duty because the Clinic had failed to give proper notice of a potential claim against it. After cross-motions for summary judgment, the district court*fn1 held that the notice the Clinic provided was sufficient as a matter of law. The court also noted, though, that the policy required that, when giving notice, the Clinic “reasonably believe allegations of liability may result” from an incident, and the court decided that this requirement involved two questions: one was whether the Clinic’s belief, if any, was objectively reasonable, the other was whether the Clinic actually believed that it was at risk. The court ultimately held that there was a triable issue on the latter question only, held a trial on that question, and put the matter specially to a jury. After the jury returned a verdict for the Clinic on the question, the district court entered judgment for it in the amount of the policy limits and awarded the Clinic pre-judgment interest on that amount.

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