Justia Contracts Opinion Summaries

Insurer Cincinnati Specialty Underwriters Insurance Company appealed a trial court's order granting summary judgment to defendants Energy Wise, Inc. and Michael and Shirley Uhler in this declaratory-judgment action. Energy Wise was a Vermont corporation that specialized in insulating buildings and homes. It purchased a commercial general liability (CGL) policy from insurer, effective March 1, 2010 to March 1, 2011. In late 2010, Energy Wise installed spray-foam insulation at the Shrewsbury Mountain School. A school employee, Shirley Uhler, and her husband later filed suit against Energy Wise. Ms. Uhler asserted that she was "exposed to and encountered airborne chemicals and airborne residues" from the spray-foam insulation and suffered bodily injury as a result. The Uhlers raised claims of negligence, res ipsa loquitur, and loss of consortium. Energy Wise requested coverage under its CGL policy, and insurer agreed to defend Energy Wise under a bilateral reservation of rights. In September 2012, insurer filed a complaint for declaratory judgment, asserting that its policy did not cover the claims at issue. Insurer cited the "Total Pollution Exclusion Endorsement" in its policy, which excluded coverage for "[b]odily injury . . . [that] would not have occurred in whole or in part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants' at any time." Insurer argued that the court should have granted summary judgment in its favor because the "total pollution exclusion" in its policy plainly and unambiguously precludes coverage in this case. After review, the Supreme Court agreed with insurer, and therefore reversed the trial court's decision and remanded with instructions to enter judgment in insurer's favor. View "Cincinnati Specialty Underwriters Ins. Co. v. Energy Wise Homes, Inc." on Justia Law

Siloam Springs Hotel, LLC operated a Hampton Inn hotel in Siloam Springs, Arkansas. It purchased a general liability insurance policy from Century Surety Company covering the Hampton Inn for the period of November 13, 2012, through November 13, 2013. Siloam Springs purchased the Commercial Lines Policy through Century Surety's agent, RCI Insurance Group of Claremore, Oklahoma. On January 21, 2013, several guests at the Hampton Inn suffered bodily injury due to a sudden, accidental leak of carbon monoxide from the heating element of an indoor swimming pool. Siloam Springs sought coverage under the Commercial Lines Policy. Century Surety denied coverage, relying on an exclusion set out in the Commercial Lines Policy. That provision (the "Indoor Air Exclusion") excluded from coverage "[b]odily injury' . . . arising out of, caused by, or alleging to be contributed to in any way by any toxic, hazardous, noxious, irritating, pathogenic or allergen qualities or characteristics of indoor air regardless of cause." After Century Surety removed the case to federal court, the parties filed cross-motions for summary judgment. In its motion, Century Surety asserted that because the insurance contract was to be performed in Arkansas, Oklahoma choice-of-law rules made Arkansas law applicable. It further argued that the Indoor Air Exclusion unambiguously excluded coverage for the carbon-monoxide based injuries to the guests at the Hampton Inn. For its part, Siloam Springs "decline[d] to contest" Century Surety's assertion that Arkansas law applied because, it asserted, "Arkansas law does not differ from Oklahoma law in any way material to [the] coverage dispute." As to the merits, Siloam Springs asserted the Indoor Air Exclusion was ambiguous and, as such, had to be construed in favor of coverage. Without definitively resolving whether Oklahoma or Arkansas law applied, but relying on precedent from Arkansas, the district court granted summary judgment to Century Surety. The issue this case presented for the Tenth Circuit's review called for the Court to determine the citizenship, for purposes of diversity jurisdiction, of a limited liability company ("LLC"). Because the materials before the Court did not demonstrate that complete diversity of citizenship existed at the time of the filing of the complaint, the matter was remanded to the district court for further proceedings. View "Siloam Springs Hotel v. Century Surety Co." on Justia Law

In 2005, a Union Pacific freight train carrying steel injection molds to Plano Molding in Illinois derailed in Oklahoma; the molds broke through the floor of their shipping container, causing that train car and many behind it to derail. The molds had been manufactured in China and shipped to the U.S. before being transferred to the train. Three companies that were involved in the shipment and that sustained losses sued Plano, claiming that a company Plano hired packed the molds improperly, causing the floor of the container to break and ultimately causing the derailment, so that Plano was liable for breach of a warranty found in the “World Bill of Lading,” which provided shipping terms. Plano argued that the molds were properly packed and that they fell through the floor of the container because the container was defective. The district court found in favor of Plano, finding that the derailment was caused by deficiencies in the container. The Seventh Circuit affirmed. Plano had no obligation to explain why the accident occurred. Once the court found that plaintiffs had not met their burden of proving that Plano had breached the warranty, the actual cause of the accident became legally irrelevant. View "Kawasaki Kisen Kaisha, Ltd. v. Plano Molding Co." on Justia Law

Plaintiff Ronald Lee Cline was severely injured when his motorcycle collided with a turning car driven by a teenager with a provisional license. He settled with the driver and the driver’s parents for their $100,000 insurance policy limit. Cline executed a release that released the driver and his parents “and any other person, corporation, association, or partnership responsible in any manner or degree” for the accident. Cline subsequently sued defendant Berniece Delores Homuth, the driver’s grandmother and the sole adult in the car with him at the time of the collision, for negligent supervision. Homuth raised the release as an affirmative defense. She moved for summary judgment; the trial court denied the motion. A court trial followed, centering on the validity of the release and whether Homuth was an intended third party beneficiary of the release. Cline appealed the judgment in favor of Homuth, arguing the extrinsic evidence demonstrated that Homuth was not an intended beneficiary of the release. The Court of Appeal affirmed, finding that Cline failed to provide sufficient evidence to counter Homuth’s showing that she was an intended beneficiary of the release. View "Cline v. Homuth" on Justia Law

Plaintiffs were four Delaware-domiciled captive insurance companies. The State Insurance Commissioner prosecuted their claims as their receiver in liquidation, alleging fraudulent conduct on the part of the companies’ president, breach of fiduciary duty on the part of the other directors of the corporation, and, as to the companies’ auditors and their administrative management company, aiding and abetting breaches of fiduciary duty, breach of contract, and negligence. The Court of Chancery dismissed in part the claims against the auditors and their company, holding (1) the doctrine of in pari delicto applies in this case and effectively bars the relevant claims against those defendants; (2) Plaintiffs’ claims for breach of contract and negligence are dismissed on grounds of in pari delicto, but the fiduciary duty exception to in pari delicto covers Plaintiffs’ claims for aiding and abetting a breach of fiduciary duty; and (3) Plaintiffs’ motion to dismiss their claims for aiding and abetting against each of the auditors and the administrative management company is denied, except as they relate to the auditor that was retained second. View "Hon. Karen Stewart v. Wilmington Trust SP Servs., Inc." on Justia Law

Home Orthopedics Corp. was a medical equipment supplier based in Puerto Rico. Raul Rodriguez, the president of another home medical supplier in Puerto Rico, attempted to collect a consulting fee Home Orthopedics agreed to pay him. Home Orthopedics refused to continue paying the fee when it discovered that the contract upon which it was based was fraudulent. Soon companies in the health insurance field started terminating their contracts with Home Orthopedics. Home Orthopedics filed an amended complaint seeking relief against numerous defendants - some of whom worked with Rodriguez and others of whom worked for the companies that terminated their contacts with Home Orthopedics - for violating, among other laws, the Racketeer Influenced and Corrupt Organizations Act (RICO). Specifically, Home Orthopedics alleged that Defendants conspired to help Rodriguez strong-arm more money from Home Orthopedics. The district court dismissed Home Orthopedics’ claims. The First Circuit affirmed, holding (1) Home Orthopedics failed to sufficiently allege a “pattern of racketeering activity” necessary to sustain its RICO claim; and (2) the district court did not err in denying Home Orthopedics’ motion to conduct limited discovery and then to amend its complaint for a second time. View "Home Orthopedics Corp. v. Rodriguez" on Justia Law

The Professional Massage Training Center (PMTC) filed suit against the Accreditation Alliance of Career Schools and Colleges (ACCSC) after ACCSC denied PMTC’s application for re-accreditation. The district court entered judgment in favor of PMTC, finding that ACCSC had violated the school’s due process rights. The court awarded the school more than $400,000 in damages and ordered ACCSC to fully reinstate its accreditation. The Supreme Court reversed in part and affirmed in part, holding (1) the district court erred in conducting a de novo approach to the accreditation process; (2) judged by the correct standard of review, the accreditation decision was well supported and not arbitrary or capricious; and (3) the district court correctly dismissed PMTC’s state law claims for breach of contract, negligence, and tortious interference. Remanded. View "Prof’l Massage Training v. Accreditation Alliance of Career Schs." on Justia Law

Plaintiff, a resident of California, and Defendant, a resident of Michigan, worked together with a third man to develop and market an electrolyte for use in hydrogen fuel cells. When Plaintiff and the third man sold the electrolyte technology without telling Defendant, Defendant threatened to sue if he was not paid what he claimed was his one-third share of the proceeds under an oral agreement. Thereafter, Plaintiff sued Defendant in California seeking a declaration that no oral agreement existed between the parties and for damages for intentional interference with a sales contract. The district court dismissed the suit, concluding that it lacked jurisdiction over Defendant on either of the two claims. The Supreme Court affirmed, holding that because Defendant neither purposefully availed himself of the privilege of conducting activities in California nor expressly aimed his conduct at California, the district court did not err in dismissing the case for lack of personal jurisdiction. View "Picot v. Weston" on Justia Law

Indiana Restorative Dentistry, P.C. (“IRD”) insured its dentist’s office under a policy issued by ProAssurance Indemnity Company, Inc. (“ProAssurance”) and procured through the Laven Insurance Agency, Inc. (“Laven”). After a fire destroyed the entire IRD office, IRD discovered that the contents coverage of its insurance policy was inadequate to cover its loss. IRD sued ProAssurance and Laven in tort and contract. The trial court granted partial summary judgment for ProAssurance, concluding that Laven had no duty to advise based on a special relationship, that Laven had no contractual duty to procure insurance that would have fully covered the fire losses, and that ProAssurance was not vicariously liable for the alleged acts or omissions of Laven. The Supreme Court affirmed in part and reversed in part, holding (1) genuine issues of material fact remained regarding the existence of a special relationship between IRD and Laven and, consequently, a duty to advise; and (2) Laven had no duty to procure full coverage because there was no evidence showing a “meeting of the minds” on an implied contract requiring Laven to procure a policy that would cover all losses to office contents. View "Ind. Restorative Dentistry, P.C. v. Laven Ins. Agency, Inc." on Justia Law

Plaintiff obtained a $23 million judgment against a Corporation. Plaintiff sought to secure payment on that judgment by filing suit in federal district court against the Corporation’s president and its corporate parent, alleging that Defendants had looted the Corporation of more than $18 million in assets in order to render it judgment-proof. After Plaintiff learned that one of the Corporation’s corporate parents planned to merge with an Austrian subsidiary, the district court issued a temporary restraining order, later converted into a preliminary injunction, barring the merger. Defendants nevertheless effected the merger. The district court issued civil contempt sanctions on Defendants for violating the court’s preliminary injunction order. Plaintiff subsequently moved for default judgment based on Defendants’ assertion that they had no intention of complying with the contempt order. The district court entered judgment for Plaintiff and awarded $75 million to Plaintiff. The First Circuit affirmed, holding (1) the district court properly exercised personal jurisdiction over Defendants; (2) Plaintiff’s complaint adequately stated valid causes of action for, inter alia, tortious interference with contractual relations and veil piercing; (3) the district court did not abuse its discretion in entering default judgment as a sanction for Defendants’ discovery violations; and (4) the district court did not err when it entered a damage award without an evidentiary hearing. View "AngioDynamics, Inc. v. Biolitec AG" on Justia Law