                                                         [DO NOT PUBLISH]


           IN THE UNITED STATES COURT OF APPEALS

                     FOR THE ELEVENTH CIRCUIT           FILED
                      ________________________ U.S. COURT OF APPEALS
                                                         ELEVENTH CIRCUIT
                                                           MARCH 1, 2011
                             No. 09-15541                    JOHN LEY
                       ________________________               CLERK

                    D. C. Docket No. 06-00667-CV-SLB

PENNSYLVANIA NATIONAL MUTUAL
CASUALTY INSURANCE COMPANY,

                                                           Plaintiff-Appellant-
                                                           Counter-Defendant-
                                                              Cross-Appellee,

                                   versus

SOUTHEASTERN ENVIRONMENTAL INFRASTRUCTURE, LLC,

                                                          Defendant-Appellee-
                                                           Counter-Claimant-
                                                             Cross-Appellant,

LARRY RIVERS,

                                                          Defendant-Appellee-
                                                             Cross-Appellant.

                       ________________________

                Appeals from the United States District Court
                   for the Northern District of Alabama
                      _________________________
                              (March 1, 2011)
Before TJOFLAT, ANDERSON and ALARCÓN,* Circuit Judges.

PER CURIAM:

       In this declaratory judgment action regarding insurance coverage,

Pennsylvania National Mutual Casualty Insurance Company (“Penn National”),

Southeastern Environmental Infrastructure (“SEI”), and Larry Rivers all appeal

portions of several of the district court’s orders. We address the arguments in turn

and affirm.

                                       I. DISCUSSION

       A. Bad Faith

       In the district court, SEI raised several claims alleging bad faith on the part

of Penn National. On cross-appeal, SEI narrowed its argument to a bad faith claim

based on the enhanced obligation of good faith as set forth in L & S Roofing

Supply Co. v. St. Paul Fire & Marine Ins. Co., 521 So. 2d 1298 (Ala. 1987). That

enhanced duty requires the insurance company to properly investigate the claim,

retain competent counsel, keep the insured informed of the case’s progress, and not

act in any way that would be to the detriment of the insured. Id. at 1303. SEI’s



       *
                Honorable Arthur L. Alarcón, United States Circuit Judge for the Ninth Circuit,
sitting by designation


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argument that Penn National’s investigation was insufficient is conclusory, and

thus without merit. SEI appears to argue on appeal that Penn National should have

settled with Rivers. However, under Alabama law, it is the insured’s obligation to

fund a settlement when an insurance company is defending under a reservation of

rights, as was the case here. Id. at 1303; see also Mitchum v. Hudgens, 533 So. 2d

194, 201-02 (Ala. 1988) (contrasting differences in settlement negotiations when

insurer defends under a reservation of rights and when insured has relinquished

control of defense). SEI had a representative at the mediation and SEI’s own

separate counsel was involved in all of the relevant negotiations. SEI could have

settled but Penn National was not obligated to provide the funds. Therefore, Penn

National’s failure to settle with its own funds did not amount to bad faith.



      B. Post-Judgment Interest

      With respect to the post-judgment interest awarded by the district court, both

Penn National (on direct appeal) and Rivers (on cross-appeal) assert challenges.

The particular arguments asserted in brief by each party have been carefully

considered, but found unpersuasive. Any other arguments are deemed abandoned.

We cannot conclude that either party has pointed to error in the district court’s

judgment in this regard.

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      C. The Underlying Insurance

      Rivers argues on cross-appeal that the district court erred when it held that

Penn National was liable only for the amount of the judgment in excess of the

million dollar underlying insurance limit. Rivers argues that because the umbrella

policy, when belatedly delivered, did not include a schedule of underlying

insurance, Penn National could not enforce the underlying insurance limit. We

readily reject Rivers’ argument. When the umbrella policy was delivered, it was

obvious to everyone that it was excess insurance over and above the limits of

liability in the CGL policy.

      Rivers also argues that the district court erred in applying the “underlying

insurance limit,” asserting that the correct underlying insurance limit should have

been the $10,000 retained limit. We readily reject Rivers’ argument in this regard.

The policy language is clear. The policy expressly provides “The limits of

insurance in any policy of underlying insurance will apply even if . . . (a) the

‘underlying insurer’ claims the insured failed to comply with any condition of the

policy.” The policy language also provides “If the policies of ‘underlying

insurance’ do not apply to the occurrence’ or ‘offense’, the amount stated in the

Declarations as the ‘retained limit’” is the “applicable underlying limit.” Under the

first quoted policy language, it is clear that the limits of underlying insurance apply

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notwithstanding the fact that there was no coverage under the CGL policy because

of the lack of notice. Similarly, the second quote from the policy language means

only that the retained limit applies when the underlying insurance does not apply at

all to the occurrence. The underlying insurance here (the CGL policy) clearly

applied to the occurrence, but simply provided no coverage because of the lack of

notice.

      We also reject Rivers “drop down argument.”       This argument is precluded

by the express language of the policy, to-wit: “The limits of insurance in any policy

of underlying insurance will apply even if . . . (a) the ‘underlying insurer’ claims

the insured failed to comply with any condition of the policy.”

      Other arguments challenging the district court’s application of the

underlying insurance limit are wholly without merit. They are rejected without

need for discussion.



      D. Independent Contractor

      We reject as wholly without merit Penn’s argument on direct appeal that the

district court erred in concluding that Rivers was an independent contractor.



      E. Notice

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      Penn National argues that SEI’s late notification of the accident voided

coverage under the umbrella policy. We reject Penn National’s attempt to hold SEI

to conditions of a policy that it had not received at the time of the accident.

      SEI and Rivers on cross-appeal challenge the district court’s holding that the

underlying CGL policy provided no coverage because of the belated notice. They

argue that the district court erred when it held that Penn National did not waive the

policy condition of giving prompt notice by not including it in the first two

reservation of rights letters. We disagree. The district court properly interpreted

Penn National’s reservation of rights letters to preserve the notice issue. See

Shelby Steel Fabricators v. U.S. F. & G., 569 So. 2d 309 (Ala. 1990) (interpreting

similarly broad language in reservation of rights letter to not waive later discovered

issues). SEI and Rivers also argue that the district court erred when it held that

SEI’s notice to Penn National under the CGL was late. Alabama courts look at

both the length of the delay and the reason for the delay. Southern Guar. Ins. Co. v.

Thomas, 334 So. 2d 879 (Ala. 1976). SEI’s reason for the delay – that it did not

think it would be sued – has been specifically rejected. Id. at 884. The same court

in Thomas held that a six month delay in notifying the insurance company of the

accident was unreasonable. Id. Therefore, the district court did not err.




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      F. Discovery

      On cross-appeal, SEI argues that the district court erred when it denied SEI’s

request for discovery before the court decided on Penn National's motion for

summary judgment. The district court denied SEI’s request because it thought that

the sought-after manuals had no bearing on its decision. Because SEI’s one-page

argument that the court abused its discretion does not explain how the district court

erred when it made that determination, we reject it.



                                II. CONCLUSION

      We have carefully considered, and have heard oral argument with respect to,

the numerous issues raised by the several parties on direct appeal and cross-appeal.

We conclude that none of the challenges to the district court’s rulings have merit.

Accordingly, the judgment of the district court is

AFFIRMED




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