           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                                            FILED
                                                                        December 15, 2008

                                       No. 06-10608                   Charles R. Fulbruge III
                                                                              Clerk

TRUMBLE STEEL ERECTORS, INC.

                                                  Plaintiff-Appellant
v.

JOHNNY MOSS, K & S Group, Inc. d/b/a K & S Insurance Agency;
WHITE HILL PLAZA INC. d/b/a K & S Insurance Agency

                                                  Defendants-Appellees



                   Appeal from the United States District Court
                        for the Northern District of Texas
                              USDC No. 5:04-CV-289


Before KING, HIGGINBOTHAM, and WIENER, Circuit Judges.
PER CURIAM:*
       Plaintiff-Appellant Trumble Steel Erectors, Inc. (“Trumble”) appeals the
district court’s grant of summary judgment. Trumble contends that the court
erred when it ruled that Trumble had failed to demonstrate the existence of a
genuine issue of material fact on the basis of which a reasonable jury could find
that Trumble’s insurer, Special Risk Services Group, L.L.C., as Managing
General Underwriter on Behalf of Certain Underwriters at Lloyd’s of London


       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
                                      No. 06-10608

(“SRS”), suffered material prejudice as a result of not receiving timely
notification from Trumble of a fatal crane accident. SRS, now standing in the
shoes of Trumble by virtue of subrogation, contends that untimely notice caused
it prejudice by preventing it from conducting a so-called “shock-loss
investigation.” Concluding that Trumble’s summary judgment evidence does not
establish a genuine issue of material fact regarding prejudice, we affirm the
district court’s judgment.1
                         I. FACTS AND PROCEEDINGS
       On September 26, 2003, a portion of a crane operated by Trumble on the
campus of Texas Tech University came in contact with an electric power line.
This resulted in the electrocution death of Richard Tankersley when he reached
out to steady a bucket suspended on the end of the crane’s cable. Trumble’s
crane operation was part of its work as a subcontractor for Deerwood
Construction, Inc. At the time of the accident, Trumble was insured by SRS.
The insurance policy required that SRS receive notice of “occurrences” like the
Tankersley accident “as soon as practicable.”
       On the day of this accident, three entities — Texas Tech University Police
Department, Lubbock Power and Light, and the Occupational Safety and Health
Administration (“OSHA”) — conducted independent investigations that included
photographing the scene and taking witness statements. OSHA eventually cited
Trumble for operating its crane too close to power lines, in violation of OSHA
crane-operation regulations.         During his deposition, Trumble’s president,
Charles Trumble, conceded that the crane was located too close to the power
lines. SRS did not conduct an immediate investigation of its own because it was
unaware of the accident.


       1
         The plaintiff-appellant in this case is nominally Trumble. Yet, SRS is pursuing this
action by standing in the shoes of Trumble. In the interest of clarity, we shall, when
appropriate, refer to appellant simply as “SRS.”

                                             2
                                        No. 06-10608

      As a regular practice, Trumble presents a daily work ticket to its
customers for signature before starting work. Trumble’s work tickets contain a
“hold harmless clause” specifying that the customer will indemnify Trumble
against a variety of possible claims (not including Trumble’s own negligence).
For some unknown reason, Trumble did not have Deerwood sign a work ticket
for the day and job in question.
      As soon as he learned of the accident, Charles Trumble called his
insurance       agent,    defendant-appellee        Johnny      Moss,    an    employee      of
defendant-appellee White Hill Plaza, Inc. d/b/a/ K&S Insurance Agency, who had
placed Trumble’s SRS policy.2 The K&S Defendants did not notify SRS of the
crane accident at that time.
      Less than three months after the crane accident, Tankersley’s estate and
survivors filed suit against Trumble and Deerwood for Tankersley’s death. It
was not until December 31, 2003, after the K&S Defendants received word of the
Tankersley suit, that they notified SRS of the accident. The district court set an
intended trial date of early August 2005, some eighteen months after SRS first
received notice of the occurrence.
      This suit originated as a declaratory judgment action in district court
brought by SRS against Trumble to determine whether SRS had a duty to
defend or indemnify Trumble in the Tankersley suit, given Trumble’s alleged
failure to provide timely notice to SRS.                Trumble then filed the instant
third-party claim against the K&S Defendants for their alleged negligence and
breach of contract in failing to forward timely notice to SRS.3
      Late in 2005, SRS and Trumble reached a settlement regarding their
liability vis-a-vis each other and agreed that the declaratory judgment action


      2
          Hereafter, we refer to the defendants-appellants collectively as the “K&S Defendants.”
      3
         Whether the K&S Defendants had an obligation to notify SRS of the accident timely
is not at issue for the purposes of this appeal.

                                                3
                                           No. 06-10608

was moot. They also agreed that SRS would assert its contractual subrogation
rights to step into the shoes of Trumble and continue the third-party claim that
Trumble had asserted against the K&S Defendants.
         Trumble and the K&S Defendants filed cross-motions for summary
judgment. The district court granted the K&S Defendants’ motion and denied
Trumble’s. This timely appeal followed.
                                          II. ANALYSIS
A.       Standard of Review
         We review de novo a district court’s grant of summary judgment.4
Summary judgment is appropriate only if there is no genuine issue of material
fact.5 In determining whether a genuine issue of material fact exists, courts view
all facts and draw all inferences therefrom in favor of the non-moving party.6
The court’s role at the summary judgment stage is not “to weigh the evidence
and determine the truth of the matter but to determine whether there is a
genuine issue for trial.”7 In a diversity case like this one, the substantive law of
the forum state, here Texas, controls.8
B.       Whether SRS Made a Sufficient Prejudice Showing
         1.        Applicable Law
         Under Texas law, when an insurance policy requires that the policyholder
notify its insurer of any claim or suit “as soon as practicable,” the policyholder’s
“failure to timely notify its insurer of a claim or suit does not defeat coverage if



         4
             Am. Int’l Specialty Lines Ins. Co. v. Canal Indem. Co., 352 F.3d 254, 259–60 (5th Cir.
2003).
         5
             Weeks Marine, Inc. v. Fireman’s Fund Ins. Co., 340 F.3d 233, 235 (5th Cir. 2003).
         6
             Id.
         7
             Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).
         8
             See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).

                                                  4
                                        No. 06-10608

the insurer was not prejudiced by the delay.”9 And, “[i]n many instances of
untimely notice of a claim, the insurer is not prejudiced at all.”10 The prejudice
requirement is consistent with the general principle “that an immaterial breach
does not deprive the insurer of the benefit of the bargain and thus cannot relieve
the insurer of the contractual coverage obligation.”11 The converse is also true:
“[W]hen one party to a contract commits a material breach of that contract, the
other party is discharged or excused from any obligation to perform.”12 “Whether
an insurer is prejudiced by delayed notice is generally a question of fact . . . .”13
Courts may determine the issue as a matter of law, however, when the material
facts are undisputed.14




       9
            PAJ, Inc. v. Hanover Ins. Co., 243 S.W.3d 630, 631, 636–37 (Tex. 2008) (emphasis
added).
       10
          Hanson Prod. Co. v. Ams. Ins. Co., 108 F.3d 627, 631 (5th Cir. 1997). In PAJ, the
Texas Supreme Court cited approvingly our Hanson opinion in which we made an Erie
determination that Texas law would require insurers to show prejudice in late-notice cases, i.e.,
that courts would not presume prejudice. PAJ, 243 S.W.3d at 634 (citing Hanson, 108 F.3d
at 630–31).
       11
         PAJ, 243 S.W.3d at 631 (citing Hernandez v. Gulf Group Lloyds, 875 S.W.2d 691, 692
(Tex. 1994)).
       12
        Hernandez, 875 S.W.2d at 692 (citing Jack v. State, 694 S.W.2d 391, 398–99 (Tex.
App. — San Antonio 1985, writ ref’d n.r.e.)).
       13
          St. Paul Guardian Ins. Co. v. Centrum G.S. Ltd., 383 F. Supp. 2d 891, 902 (N.D. Tex.
2003) (citing Duzich v. Marine Office of Am. Corp., 980 S.W.2d 857, 866 (Tex. App. — Corpus
Christi 1998, pet. denied)); see Coastal Ref. & Mktg., Inc. v. U.S. Fid. & Guar. Co., 218 S.W.3d
279, 287 (Tex. App. — Houston [14th Dist.] 2007, pet. denied).
       14
            St. Paul Guardian, 383 F. Supp. 2d at 902.

                                               5
                                         No. 06-10608

       “Prejudice” is the loss of a valuable right or benefit.15 Such a loss may be
described as suffering a material “adverse change in position due to the delay.”16
Because of the inherently uncertain nature of its burden — demonstrating how
events may have differed under a different set of facts — an insurer need not
“show precisely what the outcome would have been had timely notice been
given.”17 Additionally, “[t]his uncertainty . . . is the result of the failure of the
insured to comply with the policy, and it should not be permitted to use that
uncertainty as a weapon against the insurer.”18 Uncertainty does not, however,
relieve the insurer of the burden to “show the precise manner in which its
interests have suffered.”19 Further, the insurer must prove more than “prejudice
that is only theoretical or presumed merely from the length of the delay.”20


       15
           See Hernandez, 875 S.W.2d at 693 (distinguishing between when an insurer is
“deprived of the contract’s expected benefit” and when any “extinguished . . . right has no
value,” the latter constituting lack of prejudice); id. (citing RESTATEMENT (SECOND) OF
CONTRACTS § 241(a) (1981)) (“[C]ourts will consider, among other things, the extent to which
the nonbreaching party will be deprived of the benefit that it could have reasonably anticipated
from full performance.”).
       16
           Coastal Ref. & Mktg., 218 S.W.3d at 288, 296; 14 LEE R. RUSS & THOMAS F. SEGALLA,
COUCH ON INSURANCE § 199:139 (3d ed. 2008); see Fid. & Cas. Co. of N.Y. v. Tex. E.
Transmission Corp. (In re Tex. E. Transmission Corp. PCB Contamination Ins. Coverage
Litig.), 15 F.3d 1249, 1254 (3d Cir. 1994) (citing Members Ins. Co. v. Branscum, 803 S.W.2d
462, 466 (Tex. App. — Dallas 1991, no writ)) (determining that Texas courts would require a
material adverse change in position).
       17
            Am. Ins. Co. v. Fairchild Indus., Inc., 56 F.3d 435, 440 (2d Cir. 1995).
       18
            Id. at 440–41.
       19
          13 RUSS & SEGALLA, COUCH ON INSURANCE § 193:29 (“[A]n insurer must show the
precise manner in which its interests have suffered, meaning that an insurer must show not
merely the possibility of prejudice, but, rather, that there was a substantial likelihood of
avoiding or minimizing the covered loss . . . .”) (emphasis added); see Friedland v. Travelers
Indem. Co., 105 P.3d 639, 648–49 n.5 (Colo. 2005) (en banc) (quoting approvingly COUCH ON
INSURANCE); see also Clarendon Nat’l Ins. Co. v. FFE Transp. Servs., Inc., 176 F. App’x 559,
562 (5th Cir. 2006) (per curiam) (unpublished) (“[The insurer] is required to show the precise
manner in which its interests have suffered.”).
       20
            Coastal Ref. & Mktg., 218 S.W.3d at 288.

                                                6
                                          No. 06-10608

When inquiring into whether an insurer lost a valuable right or benefit, a court
should keep in mind the purpose of timely notice requirements: “to enable an
insurer to investigate the circumstances of an accident while the matter is fresh
in the minds of the witnesses so that it may adequately prepare to adjust or
defend any claims that may be then or thereafter asserted against persons
covered by its policy.”21
       Although we know that (1) to mount a successful untimely notice defense,
an insurer must establish prejudice and (2) prejudice is the loss of a valuable
right or benefit, Texas precedent provides limited practical assistance regarding
what constitutes a showing of prejudice sufficient to relieve an insurer of
liability.22 When given the opportunity, however, Texas courts have “definitively
and narrowly defined” sufficient prejudice.23 In our instant inquiry, we ask how
the Texas Supreme Court would rule on the issue of sufficient prejudice.24 In
seeking our answer, we may look to the rules of other jurisdictions and to the
decisions of Texas intermediate appellate courts.25



       21
            Employers Cas. Co. v. Glens Falls Ins. Co., 484 S.W.2d 570, 575 (Tex. 1972).
       22
           St. Paul Guardian Ins. Co. v. Centrum G.S. Ltd., 383 F. Supp. 2d 891, 902 (N.D. Tex.
2003) (citing Filley v. Ohio Cas. Ins. Co., 805 S.W.2d 844, 847 (Tex. App. — Corpus Christi
1991, writ denied)) (“[L]ittle authority exists to explain what constitutes sufficient prejudice . . .
.”); see Coastal Ref. & Mktg., 218 S.W.3d at 287 (“In determining whether an insurer has been
prejudiced, . . . the existing case law offers limited guidance.”).
       23
            St. Paul Guardian, 383 F. Supp. 2d at 902–03 (collecting Texas cases and
determining that courts “have been quite specific and definitive in holding that prejudice
occurs” under certain circumstances such as when the insurer does not receive notice until (1)
trial is fast approaching, (2) default judgment has been entered, or (3) after trial and
subsequent entry of judgment); see also Coastal Ref. & Mktg., 218 S.W.3d at 287 (“Some
authorities suggest that default judgment is the only circumstance constituting prejudice.”).
       24
            Hanson Prod. Co. v. Ams. Ins. Co., 108 F.3d 627, 629 (5th Cir. 1997).
       25
          See Lifemark Hosps., Inc. v. Liljeberg Enters., Inc. (In re Liljeberg Enters., Inc.), 304
F.3d 410, 424 (5th Cir. 2002) (looking to intermediate state court decisions); Hanson, 108 F.3d
at 631 (looking to other jurisdictions).

                                                  7
                                         No. 06-10608

       2.      SRS’s “Shock-Loss Investigation”
       As the district court explained, “a summary of [SRS’s] arguments is that
SRS would have liked to have had the opportunity on the day of the accident at
the accident site to have interviewed witnesses on its own and attempt to get
admissions of liability or indemnity from entities or individuals who were not its
insureds” and that “SRS did not have the opportunity to conduct and employ its
normal ‘shock loss’ investigative procedures and techniques on the day (o[r] in
some circumstances within hours or minutes after) the accident occurred.” In
SRS’s view, OSHA’s and the local authorities’ investigations do not alleviate the
alleged prejudice because only SRS’s specialized “shock-loss investigation”
inquires into essential issues and immediately takes post-accident measures in
an effort to decrease liability. Relying on, inter alia, two declarations — one
from Robert Moore, an attorney with vast crane-investigation experience who
had helped design SRS’s shock-loss program and another from Sarah
Breitmeyer, an SRS risk management coordinator26 — SRS advances at least
five reasons in support of this view: (1) an SRS investigation “is oriented
entirely towards the on-the-spot determination of indemnity and liability
responsibilities and focuses on the immediate resolution of any fact issues” in a
manner distinct from that of the three investigating entities which had no
interest in protecting Trumble from liability; (2) an SRS investigation attempts
to present facts to the general contractor in an effort to have it accept
responsibility for the loss, thereby mitigating the loss to its subcontractor
policy-holder; (3) SRS lost the opportunity to attempt to persuade the contractor,
Deerwood, to defend and indemnify Trumble; (4) as part of its investigation, SRS

       26
           On appeal, SRS asserts that the district court erred by striking four portions of
Robert Moore’s declaration as “[c]onclusory allegations, speculation, unsubstantiated
assertions, and improbable inferences.” See Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir. 1994)
(indicating that such material is not competent summary judgment evidence). Upon careful
review of the record, it is clear that our decision as to prejudice would not differ with or without
the excluded items. We thus have no need to reach this issue.

                                                 8
                                       No. 06-10608

would have questioned Trumble’s crane operator in hopes of emphasizing that
he could not have seen the overhead power lines and was wholly reliant on
Deerwood signalmen to prevent the crane from contacting the power lines — a
line of questioning that the other investigating entities did not pursue; and (5)
SRS would have prevented the crane from being moved so that an accident
reenactment could have been performed.
      Although failure to receive notice timely deprived SRS of its desired shock-
loss investigation, SRS had an opportunity to rely on and collaborate with the
three other investigating entities and also had the ability to complete its own
discovery and investigation soon after Tankersley initiated legal proceedings and
well before the trial date. Additionally, at deposition, Timothy Hillegonds, an
SRS risk management coordinator testified: “I don’t know what I would have
been able to learn had I been able to get my investigation under way”
immediately.        Hillegonds also conceded that it was possible that the
investigation would not “have generated any additional information that would
have been helpful to SRS or Trumble.”
      3.       SRS Failed to Create a Material Fact Issue as to Prejudice
      Even when we construe all facts and draw all inferences in favor of SRS
standing in the shoes of Trumble, we are satisfied that SRS has failed to create
a genuine issue of material fact that would have enabled it to withstand the
K&S Defendants’ motion for summary judgment. We first evaluate SRS’s
assertion that three relevant cases — (1) our decision in Motiva Enterprises, LLC
v. St. Paul Fire & Marine Insurance Co.;27 (2) our unpublished decision in
Clarendon National Insurance Co. v. FFE Transportation Services, Inc.;28 and (3)




      27
           445 F.3d 381 (5th Cir. 2006).
      28
           176 F. App’x 559 (5th Cir. 2006) (per curiam) (unpublished).

                                              9
                                      No. 06-10608

the Texas Court of Appeals decision in Blanton v. Vesta Lloyds Insurance Co.29
— support a holding in its favor. Rejecting this contention, we then proceed by
explaining that, based on persuasive authority, the district court’s decision to
grant summary judgment was correct.
      Our decisions in Motiva and Clarendon are distinguishable from the
instant case. Unlike the instant case, they involved exclusions from settlement.
The insurance policy in Motiva contained a consent-to-settle provision that
required the insurer’s prior consent to any settlements that it would be asked to
fund.30 After a refinery explosion, the policyholder reached a settlement in the
underlying litigation without first seeking the insurer’s consent.31 We concluded
that “[w]hen . . . the insurer is not consulted about the settlement, the
settlement is not tendered to it[,] and the insurer has no opportunity to
participate in or consent to the ultimate settlement decision, . . . the insurer is
prejudiced as a matter of law.”32 This result is required in settlement-exclusion
cases because “[a]n insurer’s right to participate in the settlement process is an
essential prerequisite to its obligation to pay a settlement.”33 Depriving the
insurer of this right constitutes a material breach, or prejudice.34
      In Clarendon, a policyholder waited for over four years to give its insurer
notice of an accident.35 By that time, a jury had rendered a verdict of $1.1
million against the insured party who had previously rejected a pre-trial

      29
           185 S.W.3d 607 (Tex. App. — Dallas 2006, no pet.).
      30
           445 F.3d at 383.
      31
           Id. at 384.
      32
           Id. at 386.
      33
           Id.
      34
           Id.
      35
           176 F. App’x at 560.

                                            10
                                        No. 06-10608

settlement offer of $700,000.36 We held that the insurer had shown actual
prejudice as a matter of law — that, pursuant to Motiva, demonstrating loss of
a valuable settlement right constituted sufficient prejudice.37
       Even though Motiva and Clarendon offer examples of situations when an
insurance company suffers prejudice, they do not contradict a determination of
no prejudice in the instant case. SRS offers no authority for the proposition that
the ability to investigate an occurrence when and how it would like deprives it
of an essential benefit of the bargain of its insurance contract in the same
manner as exclusion from settlement, a more tangible and quantifiable loss.38
       In Blanton, the trial court granted summary judgment in favor of an
insurer, holding that it had conclusively established prejudice from untimely
notice.39 In that case, appellant Blanton leased his property to an individual,
who on many occasions complained that the roof leaked, allegedly causing
significant water damage.40 For more than two years, Blanton neglected to
notify his insurer of these complaints.41 The lessee eventually sued Blanton,
asserting causes of action based on Blanton’s representations of the roof’s
condition. Only then — six weeks after he was served with the lessee’s petition


       36
            Id.
       37
            Id. at 561–62 (citing Motiva, 445 F.3d at 383).
       38
           See Md. Cas. Co. v. Am. Home Assurance Co., --- S.W.3d ---, 2008 WL 4530698, at *8
(Tex. App. — Houston [1st Dist.] 2008, no pet.) (stating that a late-notice case involves a
different inquiry than that used in cases where notice is “wholly lacking” such as when notice
is provided only after a claim has settled); Coastal Ref. & Mktg., Inc. v. U.S. Fid. & Guar. Co.,
218 S.W.3d 279, 291–92 (Tex. App. — Houston [14th Dist.] 2007, pet. denied) (distinguishing
possible prejudice in a late-notice case from the prejudice in Motiva and Clarendon that arose
from settlement exclusion).
       39
            Blanton v. Vesta Lloyds Ins. Co., 185 S.W.3d 607, 609–10 (Tex. App. — Dallas 2006,
no pet.).
       40
            Id. at 612.
       41
            Id. at 613.

                                               11
                                      No. 06-10608

— did Blanton forward notice to the insurer.42 Relying on an affidavit from the
insurer’s litigation specialist, the court found that the insurer suffered prejudice
as a matter of law.43        The litigation specialist averred that the insurer’s
“standard procedure was to record and promptly investigate complaints and
occurrences” and that it “would have followed this procedure and investigated
the matter” if it had received timely notice.44 Further, the specialist’s affidavit
stated that delay prevented the insurer from urging Blanton to correct the
premises defects, action that could have avoided the underlying litigation.45
Blanton asserted that (1) the insurer had ample opportunity to conduct discovery
and defend against the lessee’s suit, and (2) the litigation specialist’s statements
were self-serving, conclusional, and speculative.46 The court rejected both of
these arguments and held that prejudice may arise from inability to investigate,
not just from inability to prepare for trial.47
       Although similarities exist between Blanton and the instant case, they are
distinguishable. First, Blanton involved a chronic problem that presumably
could have been resolved prior to the lessee’s decision to sue if only the insurer
had received notice of the lessee’s complaints. In contrast, even immediate
notice of the accident to SRS would not have prevented Tankersley’s death, the
immediate result of an unexpected fatal accident. Second, Blanton withheld
notice for over two years — as he continued to receive complaints from his lessee


       42
            Id. at 609.
       43
          Id. at 613 (citing Employers Cas. Co. v. Glens Falls Ins. Co., 484 S.W.2d 570, 575
(Tex. 1972) (discussing prejudice arising from inability to investigate)).
       44
            Id. at 612.
       45
            Id. at 612–13.
       46
            Id. at 615.
       47
            Id.

                                            12
                                        No. 06-10608

— and no other entity had performed a timely investigation. In contrast, the
delay here was only three months and SRS had access to three contemporaneous
accident investigations. These distinctions demonstrate that Blanton does not
provide support to SRS. None of SRS’s three cited cases instruct that inability
to conduct its shock-loss investigation creates a genuine issue of material fact as
to prejudice.48
       In deciding the instant case, we have no occasion to speculate how Texas
courts might one day define the contours of what constitutes a showing of
sufficient prejudice.        Instead, we are persuaded by the straight-forward
proposition that an insurer must offer “‘more than the mere fact that it cannot
employ its normal procedures in investigating and evaluating the claim.’”49 This
rule is only an extension of the general rule that “a party cannot defeat summary
judgment with conclusory allegations, unsubstantiated assertions, or ‘only a

       48
           SRS did not cite Renner v. State Farm Mutual Auto Insurance Co., 392 F.2d 666 (5th
Cir. 1968). There, we said that the district court did not clearly err in finding actual prejudice
when delayed notice of an automobile accident deprived the insurer of the ability (1) to
photograph the automobiles, (2) to learn about the severity of the collision’s impact, (3) to
discuss settlement as soon as possible — before the parties had a chance to obtain counsel —
and (4) to interview one of the injured persons who died nineteen days after the accident. Id.
at 666–68. In the instant case, any Renner-type prejudice was alleviated by SRS’s access to
the investigation materials from the three other entities, investigations in which the main
“drawback” was that the information was objective rather than obtained in pursuit of a goal
to limit liability. Additionally, SRS does not point to specific identifiable harm analogous to
the death of one of the injured parties between the time when the insured should have
provided notice and when it did. The instant case is thus distinguishable from Renner as any
lost opportunity here is more attenuated from material prejudice than were those opportunities
lost in Renner.
       49
          Transportes Ferreos de Venezuela II CA v. NKK Corp., 239 F.3d 555, 561 (3d Cir.
2001) (quoting Kitchnefsky v. Nat’l Rent-A-Fence of Am., Inc., 88 F. Supp. 2d 360, 368 (D.N.J.
2000)). We are aware that the Third Circuit’s NKK Corp. decision interpreted New Jersey law,
which requires that the insurer show that it suffered appreciable prejudice, see id., a burden
that may be stricter than the requisite Texas showing. Nevertheless, the Third Circuit’s
statement that we quote approvingly was made in the context of the uncontroversial
proposition that “mere conjecture or suspicions may not form the basis for establishing
appreciable prejudice.” Id. That “the mere fact that [an insurer] cannot employ its normal
procedures” constitutes an insufficient prejudice showing holds true irrespective of whether the
proper standard is appreciable prejudice or some other degree of prejudice.

                                               13
                                        No. 06-10608

scintilla of evidence.’”50 Evidence of an inability to investigate when and in the
manner that an insurer would have liked merely creates the possibility that
prejudice could occur. Yet, inability to investigate — even if that investigation
involves specialized techniques such as shock-loss — does not in itself constitute
material prejudice. Without more specific evidence regarding the prejudice that
arose from the insurer’s inability to investigate, courts are powerless to bridge
the gap between the creation of an environment in which prejudice could occur
and the requisite prejudice showing.
       In the instant case, the following facts are together dispositive: (1) SRS
had access to extensive investigations performed by three other entities; (2) SRS
has pointed to no significant deficiencies in those investigations other than that
they were presumably objective rather than aimed at decreasing liability; (3)
SRS received notice in the relatively short time of three months after the
accident and had sufficient time to conduct discovery, settlement negotiations,
and independent, albeit delayed, investigation; (4) at his deposition, SRS risk
coordinator Timothy Hillegonds was unable to offer a clear indication of how a
shock-loss investigation would have improved on the existing investigation
information, i.e., how SRS was prejudiced; and (5) SRS presented evidence that
delayed notice deprived it only of that which was overly attenuated from
demonstrating actual prejudice — lost opportunities to engage in early
settlement talks, to attempt to persuade others to accept responsibility, and to
perform its own investigation immediately. These facts are inadequate to defeat
the K&S Defendants’ motion for summary judgment.51


       50
            Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007).
       51
           SRS also argues that the district court erred in alternatively granting summary
judgment on the basis of lack of damages. As we affirm summary judgment on the basis of
lack of prejudice, we do not reach the issue of the district court’s alternative holding. See BMG
Music v. Martinez, 74 F.3d 87, 89 (5th Cir. 1996) (“This Court can affirm the district court’s
decision based on any legally sufficient ground . . . .”).

                                              14
                               No. 06-10608

                           III. CONCLUSION
     We affirm the district court’s grant of summary judgment in favor of the
K&S Defendants because SRS, standing in the shoes of Trumble, did not
demonstrate the existence of a genuine issue of material fact whether its
untimely receipt of notice of the occurrence caused it material prejudice.
AFFIRMED.




                                    15
