## Facts

- Dixie K. Davies was injured in an August 2, 1974 collision with a vehicle operated by Patricia Ann Turner.
- Turner was insured under an automobile liability policy issued by State Farm Mutual Automobile Insurance Company that included a cooperation clause requiring the insured to cooperate and attend hearings and trials.
- Davies carried uninsured-motorist coverage with Government Employees Insurance Company (GEICO).
- Davies sued Turner for personal injuries; Turner delivered the suit papers to State Farm.
- Turner failed to appear at the tort trial; State Farm defended under a reservation of rights.
- The jury returned a $10,725 verdict and judgment for Davies, which remained unpaid.
- Davies then filed a declaratory-judgment action to determine whether State Farm or GEICO was responsible for payment.
- State Farm denied coverage, asserting Turner materially breached the cooperation clause by failing to appear and that the breach prejudiced its defense.
- GEICO contended State Farm’s disclaimer was ineffective, so Turner was not “uninsured” and GEICO’s UM coverage was not implicated.
- The record showed Turner had previously communicated with State Farm and provided statements about the accident, but State Farm could not produce her for trial.

## Issues

1. Whether Turner’s failure to appear at trial, in breach of the policy’s cooperation clause, prejudiced State Farm’s defense so as to relieve State Farm of liability under Virginia law.
2. What showing is required to establish “prejudice” from noncooperation—specifically, whether the insurer must prove the insured’s testimony would have changed the tort verdict.

## Decision

- The Supreme Court of Virginia reversed the declaratory judgment that held State Farm liable and dismissed GEICO.
- The court held Turner’s willful failure to appear was a clear, material breach of the cooperation clause.
- The court held the breach prejudiced State Farm as a matter of law because it deprived State Farm of evidence sufficient to create a jury issue on liability.
- The court rejected any requirement that State Farm prove Turner’s appearance and testimony would have produced a different result.
- Because State Farm’s disclaimer was effective, Turner was treated as an uninsured motorist for purposes of Davies’s recovery, making GEICO’s UM coverage applicable.

## Legal Principles

- An insurer asserting breach of a cooperation clause bears the burden to prove prejudice.
- Prejudice does not require proof that the insured’s appearance or testimony would have changed the outcome of the underlying tort trial.
- Prejudice is shown where noncooperation deprives the insurer of a substantial defense or of evidence of sufficient quality and weight to create a jury issue on liability or damages.
- A willful failure to attend trial can constitute a material breach of the cooperation clause that, if prejudicial, relieves the liability insurer of responsibility and may shift the claim to uninsured-motorist coverage.

## Conclusion

The court held that an insured’s willful nonappearance at trial prejudices the liability insurer when it deprives the insurer of evidence that could have created a genuine jury issue, and the insurer need not prove the testimony would have changed the verdict; thus State Farm was relieved of liability and the claim fell within GEICO’s uninsured-motorist coverage.


State Farm Mut. Auto. Ins. Co. v. Davies, 226 Va. 310, 310 S.E.2d 167 (1983)