Justia Contracts Opinion Summaries

Brooks Insurance Agency, Sidney Brooks (its agent), and Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company (collectively "Nationwide") petitioned the Supreme Court for a writ of mandamus to direct the Jefferson Circuit Court to vacate its order denying their motion to dismiss an action filed by Guster Law Firm, LLC, and Guster Properties, LLP (collectively "Guster"), against them. Guster made a claim for a fire loss under commercial property policies issued to it by Nationwide. In April 2011, Nationwide filed a declaratory-judgment action requesting that the federal court determine the rights and obligations under the insurance policies it had issued to Guster. Guster answered and asserted compulsory counterclaims against Nationwide, including bad-faith failure to pay an insurance claim and breach of contract, among others. Months later, Guster filed a lawsuit in the Jefferson Circuit Court alleging against the agency, Brooks, and Nationwide: negligent/wanton failure to provide insurance coverage; misrepresentation; suppression and concealment; and negligent/wanton failure to train. The agency, Brooks, and Nationwide moved to dismiss the state court action on the ground that the action violated the state abatement statute and the compulsory-counterclaim rule. The trial court summarily denied the motion to dismiss. The agency, Brooks, and Nationwide then petitioned the Supreme Court for mandamus relief. Upon review, the Supreme Court affirmed in part, reversed in part, and issued the writ. Although the causes of action in the federal court and the state court arose out of the same transaction or occurrence and were thus related, Guster's claims against the agency and Brooks were not compulsory counterclaims in the federal declaratory-judgment action because the agency and Brooks were not "opposing part[ies]" in the federal action. Accordingly, the Alabama abatement statute mandated that the claims against Nationwide in Guster's complaint filed in state court be dismissed. The Court concluded that the agency and Brooks did not show a clear legal right to the dismissal of Guster's claims against them in the state-court action. However, Nationwide did show a clear legal right to the dismissal of Guster's claims against it in the state-court action, therefore the trial court erred in denying the motion to dismiss as to Nationwide. View "Guster Law Firm, LLC v. Brooks Insurance Agency" on Justia Law

After Lumbermens denied Smith Flooring's claim for loss of one of their buildings, Smith Flooring filed suit alleging breach of contract and sought a declaratory judgment as to the terms of the insurance policy. Lumbermens removed the case to the district court and counterclaimed for reformation of the insurance policy. The court held that the district court erred in finding that there were no issues common to the parties' legal and equitable claims; Smith Flooring had a Seventh Amendment right to a trial by jury on the common issue of what the terms of the intended contract were; the district court also erred in treating the jury's verdict as merely advisory under Rule 39 insofar as this issue was concerned; however, the district court's error did not necessitate reversal of its granting post-verdict judgment as a matter of law to Lumbermens. The court further held that the evidence in this case was not sufficient to support the jury's verdict in Smith Flooring's favor. Because there was no coverage for the building, it followed that Lumbermens did not breach its contract in denying Smith Flooring's proof of loss. With no breach, Lumbermens owed Smith Flooring no damages. The district court was correct to find that clear, cogent, and convincing evidence demonstrated that the policy did not accurately set forth the agreement between the parties and that the building at issue be excluded from coverage. Consequently, the district court did not err in reforming the policy. Accordingly, the court affirmed the judgment. View "Smith Flooring v. Pennsylvania Lumbermens Mutual Ins. Co." on Justia Law

Petitioner was a passenger in a motor vehicle accident in which her husband, the driver, was killed and Petitioner suffered serious injuries. At the time of the accident, Petitioner and her husband had a motor vehicle liability insurance policy with State Farm Auto and an umbrella policy with State Farm Fire and Casualty Company (collectively, State Farm). State Farm denied Petitioner's claim under the umbrella policy pursuant to a household exclusion, which excluded coverage in certain instances for injury the insured's family members. Petitioner contended that the household exclusion in the umbrella policy was void in light of Md. Code Ann. Ins. 19-504.1, which requires an insurer to offer liability coverage for family members in the same amount of liability coverage for nonfamily members under a policy of "private passenger motor vehicle liability insurance." The circuit court ruled in favor of State Farm. The Court of Appeals affirmed, holding that the umbrella policy did not fit within the definition of "private passenger motor vehicle liability insurance" as contained in section 19-504.1, such that State Farm was not required to offer Petitioner and her husband liability coverage for family members in the same amount as the liability coverage for nonfamily members. View "Stickley v. State Farm Fire & Cas. Co. " on Justia Law

When a property or casualty insurer becomes insolvent, the Maryland Property & Casualty Insurance Guaranty Corporation (PCIGC) assumes responsibility for any outstanding claims or litigation. In this case, an insurance company settled a claim with an insured party but became insolvent before the agreement could be approved by a court. Respondents filed a complaint against PCIGC seeking declaratory relief, asking the circuit court to find they settled the claim and that PCIGC was obligated to pay the statutory maximum on both an underlying insurance policy and an umbrella policy. PCIGC sought to challenge the settlement reached by the parties and argued that it should not have to pay its statutory maximum on the policies when the claims stemmed from a single incident. The court of special appeals held (1) PCIGC may challenge a settlement only on limited grounds, such as fraud or collusion, and the corporation bears the burden of proving its reason for challenging a claim, and (2) PCIGC was liable for the statutory maximum on both policies. The Court of Appeals affirmed, holding (1) PCIGC had no sufficient grounds for properly challenging the settlement; and (2) requiring PCIGC to pay covered claims under separate policies was within its statutory mandate. View "Prop. & Cas. Ins. Guar. Corp. v. Beebe-Lee" on Justia Law

Employee sustained injuries in the course of his employment with Four Star Transportation. Despite being hired by Four Star, Employee was initially considered an employee of Better Integrated Services. Better Integrated leased Employee to Beacon Enterprises, which then leased Employee to Four Star. Beacon had an insurance policy with Kentucky Employers' Mutual Insurance (KEMI). An ALJ determined (1) Employee's injury entitled him to benefits and a permanent partial disability award, and (2) KEMI's policy covered Employee's injury. The Workers' Compensation Board reversed, finding Employee was not covered under the KEMI policy due to the fact he was unaware that Four Star was leasing him from different entities, including Beacon. The court of appeals affirmed. The Uninsured Employers' Fund appealed. The Supreme Court affirmed, holding (1) Employee could not be considered Beacon's employee because he did not enter into a contract for hire with Beacon; (2) the Board did not act arbitrarily in finding that the ALJ's opinion was not supported by substantial evidence; and (3) the Board and lower court's decision was not based on Better Integrated and Beacon's failure to comply with Ky. Rev. Stat. 342.615. View "Ky. Uninsured Employers' Fund v. Hoskins" on Justia Law

A construction company and its principals (collectively, Appellants) hired a plumbing company (Peters), excavation company (Bostic), and marble company (Esquire) as subcontractors for the construction of Appellants' home. After Buyers purchased the home, Buyers filed a complaint against Appellants, alleging negligence and breach of the implied warranties of habitability, sound workmanship, and proper construction. Appellants filed a third-party complaint against Peters, Bostic, and Esquire, alleging several causes of action. Bostic subsequently filed cross-claims against Peters, and Peters filed cross-claims against both Bostic and Esquire. Thereafter, the circuit court (1) granted Peters' motion for summary judgment on the third-party complaint, (2) granted summary judgment for Bostic on Peters' cross-claim, and (3) granted Esquire's motion for summary judgment on the third-party complaint. Appellants appealed. The Supreme Court dismissed the appeal, holding that the Court lacked jurisdiction because a final order had not been entered disposing of all the claims. View "J-McDaniel Constr. Co. v. Dale E. Peters Plumbing Ltd." on Justia Law

Plaintiff appealed the district court's dismissal of his breach of contract and retaliation claim against Boston Scientific. Plaintiff filed for Chapter 7 bankruptcy and then Boston Scientific terminated his employment shortly after his filing. The court concluded that, because the guaranteed payments at issue, if due at all, were property of the bankruptcy estate, plaintiff lacked standing to assert his breach of contract claim. Plaintiff's argument that had Boston Scientific not terminated him, the payments he received under the Employment Agreement would have been future earnings also failed. Because plaintiff never requested leave to amend his complaint to include a retaliation claim, the district court could not be faulted for failing to allow him to do so. Accordingly, the court affirmed the judgment. View "Longaker v. Boston Scientific Corp., et al" on Justia Law

This was an action brought by the grantor of a deed of trust to stop nonjudicial foreclosure proceedings based upon the contention that MERS, the Mortgage Electronic Registration Systems, which was the named beneficiary as nominee for the lender, could not legally act as the beneficiary. The defendants moved to dismiss this action on the ground that the complaint did not state a claim upon which relief could be granted. The district court agreed and entered judgment in favor of the defendants. Upon review, the Supreme Court affirmed the district court's judgment. View "Edwards v. MERS" on Justia Law

Plaintiff sued his former spouse, seeking rescission and damages arising out of an allegedly fraudulent real estate sales agreement. The district court dismissed Plaintiff's lawsuit for failing to issue summons or file a waiver within ninety days of bringing the action as required by Rule 9(a), Rules for District Courts of Oklahoma. The Court of Civil Appeals affirmed. The Supreme Court granted certiorari to review a discord between Rule 9(a) and 12 O.S.Supp. 2002 section 2004(I), and found the two provisions were in direct conflict to the extent Rule 9(a) shortened plaintiff's allotted time for service of summons. View "Cornett v. Carr" on Justia Law

Plaintiff, purchaser of real property, sought damages resulting from alleged fraudulent misrepresentations. Plaintiff purchased property advertised as development-ready with an active waste-water permit. Plaintiff then learned that the permit had expired, but nevertheless maintained possession of the property and continued making its required financing payments. Plaintiff did not allege fraud until it defaulted on the modified promissory note - the original note having been modified after plaintiff defaulted - and faced foreclosure. The court held that plaintiff, with full knowledge of the alleged fraud, ratified the purchase and sale price of the property. Such ratification foreclosed plaintiff's right to damages, because plaintiff received the benefit of its bargain. Therefore, the court affirmed the judgment of the district court. View "R&L Investment Property, L.L.C v. Hamm, et al" on Justia Law