Justia Contracts Opinion Summaries

Employee was injured in an automobile accident while working for Employer. Employer had a state-certified workers' compensation plan in effect that provided coverage to Employee, and some of Employee's medical bills were paid by the workers' compensation carrier. Employee had a policy with State Farm that included no-fault medical coverage. State Farm, however, denied coverage to Employee under a policy exclusion that denied coverage for an insured if any workers' compensation law applied to the insured's bodily injury. Employee filed an action against State Farm, seeking recovery of benefits under the no-fault medical provision. The circuit court granted summary judgment in favor of State Farm. The Supreme Court affirmed, holding that Employer was entitled to judgment as a matter of law where, in accordance with previous precedent, the exclusion clearly applied in all scenarios where workers' compensation benefits either had been paid in whole or in part or could be paid in whole or in part.

The district court affirmed a bankruptcy court's confirmation of a Chapter 11 plan of reorganization under 11 U.S.C. 524(g), a special provision for the reorganization of companies facing substantial asbestos-related liability. Appellants were several insurance companies that did not reach settlements with Thorpe and Pacific, together with Debtors in bankruptcy court, and who were denied standing to challenge the reorganization plan. The court affirmed the district court's conclusion that the plan preempted appellants' state law contract rights; disagreed with the position of Debtors that the appeal was equitably moot; and in reaching the merits, reversed the district court's conclusion that appellants lacked standing. The court remanded to the district court with instructions that it return the case to the bankruptcy court to give appellants the opportunity to present their proof and argument.

This case arose when Norma Sandoval and her sister, Nora Martinez, jointly filed suit against SCI alleging fraud, deceptive trade practices, and other tort claims arising from their respective interment rights and services contracts for family burial plots at Mont Meta Memorial Park. Martinez's contract allowed the court to appoint an arbitrator, while Sandoval's contract required the American Arbitration Association (AAA) to appoint the arbitrator if the parties could not reach a mutual agreement. The trial judge severed the cases and then appointed an arbitrator for Martinez's case. Over the objection of SCI, the trial court also appointed the same arbitrator to arbitrate Sandoval's case. At issue on appeal was whether SCI allowed a lapse or mechanical breakdown in the contractual process for selection of an arbitrator, thereby validating the trial court's intervention to appoint the arbitrator. The court held that the trial court abused its discretion by appointing an arbitrator instead of following the agreed-upon method of selection outlined in the contract. As a matter of law, the two-month delay in the selection of an arbitrator in this case, by itself, did not establish a lapse or failure of the parties to avail themselves of the contractual selection method. Accordingly, without hearing oral argument, the court conditionally granted SCI's petition for writ of mandamus and directed the trial court to vacate its prior order appointing David Calvillo as arbitrator.

This case involved a property dispute between the parties over easements and right-of-ways on plaintiffs' property. Defendant contended that the tort claims against it were barred by the two-year statute of limitations and that the declaratory judgment against it was unwarranted. The court held that plaintiffs' common-law tort claims were barred by the applicable two-year statute of limitations and the estoppel effect of the alleged fraudulent concealment ended in December 2002. Because plaintiffs did not file suit until more than two years after this date, their claims were time-barred. The court agreed that claims for declaratory judgment were moot because defendant had removed its cable lines from plaintiffs' properties prior to trial. Accordingly, the court granted defendant's petition for review and reversed the court of appeals' judgment.

Appellant Jacob Ennen was seriously injured while he was a passenger in Gordon Shanigan's car. Shanigan's insurer, Integon Indemnity Corporation (Integon), paid $50,000 to cover Shanigan's possible liability to Appellant. Under Alaska insurance statutes, Appellant would also likely have been entitled to underinsured motorist benefits under Shanigan's policy. However, Integon's policy was inconsistent with these statutes, and Integon told Ennen that he was not entitled to any additional money. Six years later, some time after Integon learned that its underinsured motorist provision violated Alaska insurance statutes, Integon paid Appellant underinsured motorist benefits plus interest and fees. Appellant sued Integon for bad faith. Integon filed a third-party complaint against Appellant's attorney, Craig Allen. Before trial, the superior court dismissed Integon’s claims against Allen on the ground that allowing Integon to implead Appellant's attorney would violate public policy. The superior court held that because Appellant did not own the insurance policy, Integon did not owe him a duty of good faith and fair dealing. Accordingly, the superior court concluded that Appellant had no cause of action for bad faith. But, in the event this ruling were to be reversed on appeal, the superior court made an alternate finding that while Integon had committed the tort of bad faith, Appellant had suffered no damages as a result. Upon review, the Supreme Court reversed on both counts. "The superior court was justifiably cautious about extending the bad faith cause of action to a new class of plaintiffs, but we conclude that Ennen, as an insured, is eligible under our existing case law to bring a cause of action for bad faith." The Court concluded that Appellant established facts that would entitle him to damages. Furthermore, the Court affirmed the dismissal of Integon's third-party claim against Allen on the alternative ground that Allen was not a proximate cause of Appellant's harm.

Plaintiffs, Northern Virginia Real Estate and its principal broker, Lauren Kivlighan, filed an eight-count second amended complaint against McEnearney Associates, its real estate agent Karen Martins, and David and Donna Gavin (collectively, Defendants), alleging conspiracy to harm in business, interference with contract expectancy, and defamation. The trial court eventually entered an order granting Plaintiffs' motion to nonsuit all counts and dismissing the case as to all counts and all parties. Defendants subsequently filed motions for sanctions against Plaintiffs and Plaintiffs' counsel, Forrest Walpole, seeking attorneys' fees and costs and arguing that Plaintiffs violated Va. Code Ann. 8.01-271.1 by filing the suit without any basis in fact, without support in law, and with improper purposes. The trial court granted the motions. The Supreme Court affirmed, holding (1) the trial court did not err when it imposed sanctions jointly and severally against Plaintiffs and Walpole; and (2) the trial court applied an objective standard of reasonableness in concluding that the facts of this case could not support a reasonable belief that the Plaintiffs' claims along with the damages sought were well grounded in fact or law as required by section 8.01-271.1.

Geographic Services, Inc. (GSI) hired Anthony Collelo for work that exposed Collelo to confidential information and alleged trade secrets. GSI and Collelo executed an employment agreement that included a non-disclosure provision prohibiting Collelo from disclosing GSI's confidential information. Collelo later resigned from GSI and was hired by Boeing. GSI subsequently filed suit against Boeing, Autometric, a wholly-owned subsidiary of Boeing, and Collelo (collectively, Defendants), alleging breach of contract, violation of the Trade Secrets Act, and tortious interference with GSI's contract with Collelo. The trial court granted Defendants' motion to strike and dismissed GSI's entire case with prejudice. The Supreme Court affirmed in part and reversed in part, holding (1) the trial court erred when it dismissed GSI's claims under the Trade Secrets Act; (2) the trial court did not err when it dismissed GI's remaining claims; and (3) the trial court did not err when it denied Collelo's motion for attorneys' fees in relation to GSI's breach of contract claim. Remanded for a new trial on GSI's claims under the Trade Secrets Act.

The parents of a child who suffered an injury during an adult softball game sued the United States Specialty Association (USSSA) and several other defendants. At the time of the accident, USSSA was insured by United States Fidelity and Guarantee Co. (USF&G). USF&G assumed the defense of USSSA, and a jury entered a verdict against USSSA. USF&G posted a bond of $4 million to secure the remainder of the judgment and, simultaneously, filed an action in federal court seeking a judicial declaration that it could not be compelled to pay more than the $2 million policy limit. USSSA later moved for partial summary judgment, contending that USF&G had no right to restitution against its insured for the amounts paid in excess of policy limits. The Supreme Court accepted certification to answer questions of law that controlled the parties' motions, answering (1) an insurer may not seek restitution based on the theory of unjust enrichment where there is an express contract governing the subject matter of the dispute; and (2) an insurer's right to reimbursement from an insured affects the parties' risk relationship and therefore may only arise under the express terms of their insurance contract.

Plaintiff, a professional limousine driver, was injured when he was struck by a car while unloading luggage from a limousine at an airport. Plaintiff reached settlements with his employer's insurance company and the driver whose car struck him but remained less-than-fully compensated for his injuries. Plaintiff subsequently filed an underinsured-motorist claim with his Insurer under the terms of his personal automobile policy. Insurer denied the claim, citing two exclusions from the policy's provisions for uninsured-motorist coverage. Plaintiff filed suit, and the superior court ruled that the exclusions were void on grounds of public policy. The Supreme Court vacated the judgment of the superior court, holding that Insurer's denial of coverage was both lawful and not inconsistent with public policy. Remanded.

Fore LLC, a Maine entity, purchased a Maine business from a New Hampshire client of William Benoit, a Massachusetts-based accountant. Fore sued Benoit, alleging that Benoit fraudulently misrepresented that the tax returns he prepared for the Maine business were accurate. The superior court granted Benoit's motion to dismiss for lack of personal jurisdiction. The Supreme Court vacated the superior court's judgment, concluding that Fore made the requisite prima facie showing that Benoit's contacts with Maine were related to the claims in this case and that they were sufficient for the exercise of personal jurisdiction. Remanded to determine whether it was reasonable to require Benoit to defend this action in Maine.