Justia Contracts Opinion Summaries

Plaintiff sued the servicer of his loan (Bank) in a putative class action, asserting that the Bank's requirement that he maintain flood insurance coverage in an amount sufficient to cover the replacement value of his home breached the terms of his mortgage contract. The mortgage was insured by the Federal Housing Administration (FHA). Specifically, Defendant contended that the Bank, under a covenant of the mortgage contract, could not require more than the federally mandated minimum flood insurance. The covenant was a standard uniform covenant prescribed by the FHA pursuant to federal law. The district court dismissed the complaint for failure to state a claim. The judgment of dismissal was affirmed by an equally divided en banc First Circuit Court of Appeals, holding that Plaintiff failed to state a claim for breach of contract, as (1) the Bank's reading of the contract was correct and Plaintiff's was incorrect; (2) Plaintiff could not avoid dismissal on the grounds that his specific understanding or the actions of the parties created an ambiguity; and (3) the United States' position articulated in its amicus brief, which stated that Plaintiff's interpretation of the contract was incorrect, reinforced the Court's conclusion. View "Kolbe v. BAC Home Loans Servicing, LP" on Justia Law

Plaintiff was a Pennsylvania resident who was injured in Kentucky. Plaintiff's daughter, with whom Plaintiff resided, was driving the vehicle involved in the accident. Plaintiff brought suit against her insurance carrier, State Farm Mutual Automobile Insurance Company, for underinsured motorist (UIM) coverage under a policy issued in Pennsylvania and covering a vehicle that Plaintiff registered and used exclusively in Pennsylvania. The trial court and court of appeals concluded that Pennsylvania law governed the dispute between Plaintiff and State Farm, but the two courts reached different results. The trial court concluded that Plaintiff was not entitled to UIM coverage because her policy disallowed coverage when she was injured in an underinsured vehicle owned or regularly used by a "resident relative." The court of appeals found Kentucky public policy would prohibit enforcement of the policy provision and concluded Plaintiff was entitled to UIM coverage despite the plain language of her policy. The Supreme Court reversed, holding (1) Pennsylvania law applied to this dispute; and (2) there was no prohibition on the type of UIM exclusion at issue in this case. View "State Farm Mut. Ins. Co. v. Hodgkiss-Warrick" on Justia Law

Bennett was walking her dog in Garfield Heights, Ohio when she was struck on the left knee by a vehicle driven by Pastel. The accident threw Bennett onto the car’s hood. Bennett sued Pastel’s insurer, State Farm, which characterized as “ridiculous” her assertion that she was an “occupant” of the car, as that term is defined by State Farm’s policy, at the time she was on the vehicle’s hood. The district court granted summary judgment to State Farm. The Sixth Circuit reversed. The policy defines “occupying” as “in, on, entering or alighting from.” The court stated that “we have no reason to explore Bennett’s relationship with the car… the policy marks out its zone of coverage in primary colors.” View "Bennett v. State Farm Mut. Auto. Ins." on Justia Law

Claimant suffered a lower back injury during the course of his employment and filed notice of a workers' compensation claim. Employer later informed Claimant he would be discharged from his employment. Claimant signed a termination agreement in order not to forfeit his severance pay. The agreement stipulated that Claimant released his previously accepted workers' compensation claim. The Workers' Compensation Commissioner refused to approve the termination agreement, finding there was no consideration offered by Employer to Claimant in exchange for Plaintiff's release of the workers' compensation clim. The Workers' Compensation Review Board affirmed. The Supreme Court affirmed, holding that the Board properly affirmed the Commissioner's decision not to approve the agreement as a "voluntary agreement" or stipulation in light of its finding that Claimant's release of his workers' compensation claim was not supported by consideration. View "Leonetti v. MacDermid, Inc." on Justia Law

Owners Insurance Company appealed a circuit court judgment declaring Owners was obligated to pay an arbitration award entered against Jim Carr Homebuilder, LLC ("JCH"), under the terms of a commercial general-liability insurance policy Owners had issued. Owners initiated a declaratory-judgment action against JCH seeking a declaration that it was not obligated to indemnify JCH for any judgment entered against JCH arising from a dispute that a house JCH constructed was poorly built. After the homeowners prevailed in their action against JCH, the trial court in the declaratory-judgment action entered a summary judgment holding that Owners was required to pay pursuant to the terms of the Owners policy. Upon review, the Supreme Court found that because JCH's faulty workmanship was not an "occurrence," the trial court's judgment was in error, and it was hereby reversed. View "Owners Insurance Company v. Jim Carr Homebuilder, LLC et al. " on Justia Law

Real party in interest, a homeowner's association (HOA), filed construction defect actions against Petitioners. During discovery, Petitioners disclosed some of their primary insurance agreements to the HOA pursuant to Nev. R. Civ. P. 16.1(a)(1)(D). Petitioner refused to disclose additional undisclosed policies covering it that may have been purchased by its parent companies. A special master ordered Petitioner to disclose those agreements. Petitioner objected to the order and filed this writ petition, contending that the disclosed insurance policies were more than sufficient to satisfy any judgment that may be entered against them. The Supreme Court denied the petition, holding that section 16.1(a)(1)(D) requires disclosure of any insurance agreement that may be liable to pay a portion of a judgment. View "Vanguard Piping v. Eighth Judicial Dist. Court" on Justia Law

This case presented an issue of first impression for the Supreme Court: the allocation of defense costs incurred by the common insured of several carriers. Specifically, the issue was whether one insurer with an obligation to indemnify and defend the insured had a direct claim for contribution against its co-insurer for defense costs arising from continuous property damage litigation. Furthermore, the Court considered whether such a claim was extinguished when the insured gave up its claims against the co-insurer in a release negotiated and signed only by the insured and the co-insurer. The dispute arose from construction litigation brought by the Township of Evesham against a contractor, Roland Aristone Inc. for property damage. Although plaintiff, OneBeacon Insurance Company paid half of Aristone's legal fees and defense expenses, Pennsylvania Manufacturers’ Insurance Company, which also insured Aristone, initially disclaimed coverage and did not pay any of Aristone’s defense costs. The Appellate Division affirmed the portion of the trial court’s decision allocating defense costs among the several insurers. It recognized OneBeacon’s claim for contribution against PMA and affirmed the trial court’s holding that OneBeacon’s claim was not extinguished by the release negotiated by Aristone and PMA. Upon review, the Supreme Court held that, in light of each insurer’s obligation to indemnify and defend Aristone for a portion of the period in which the continuing property damage occurred, the trial court properly held that OneBeacon had a contribution claim against PMA. View "Potomac Ins. Co. of Ill. v. Pa. Mfrs. Ass'n Ins. Co." on Justia Law

GM provides its salaried retirees with continuing life insurance benefits under an ERISA-governed plan. MetLife issued the group life insurance policy and periodically sent letters to participants advising them of the status of their benefits. The plaintiffs, participants in the plan, allege that those letters falsely stated that their continuing life insurance benefits would remain in effect for their lives, without cost to them. GM reduced their continuing life insurance benefits as part of its 2009 Chapter 11 reorganization. The plaintiffs sued MetLife under the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1132(a)(2) & (a)(3) and state law. The district court dismissed. The Sixth Circuit affirmed. MetLife did not tell participants that the benefits were fully paid up or vested upon retirement, but that their benefits would be in effect for their lifetimes, which “was undeniably true under the terms of GM’s then-existing plan.” The court rejected claims of estoppel, of breach of fiduciary duty, unjust enrichment, breach of plan terms, and restitution. View "Merrill Haviland v. Metro. Life Ins. Co." on Justia Law

The issue before the Court in this matter concerned interpretation of an errors-and-omissions policy. The policy excluded coverage for claims "arising out of" bankruptcy or insolvency. The dispute grew from a stop-loss policy issued by United Re to a company that had hired Plaintiff-Appellee C.L. Frates as a broker. After the policy was issued, United filed for bankruptcy protection. When Frates learned of the bankruptcy, it learned that United had been sued in Ohio, and filed for bankruptcy to stall the litigation. Ultimately, Frates recommended to its client that it move the stop-loss insurance to another insurer. The client agreed. However, Frates had to reimburse the client for what it lost through higher deductibles. Frates then sued Westchester Fire Insurance Company under its errors-and-omissions policy. In cross-motions for summary judgment, Westchester contended that Frates's claim "arose out of" United's bankruptcy or insolvency. Frates contended that the claim "arose out of" United's deception. The district court agreed with Frates and granted its motion for summary judgment. The Tenth Circuit disagreed with the district court. It held that a reasonable trier of fact could have concluded that Frates's claim arose out of United's bankruptcy or insolvency. Accordingly the Court reversed the award of summary judgment to Frates. View "CL Frates v. Westchester Fire" on Justia Law

Defendants, Nancy and Thomas Bernheim, appealed the trial court’s summary judgment decision granting plaintiff GEICO Insurance Company’s claim against them for reimbursement of $10,000 that GEICO had paid defendants under the medical-payments provision of their automobile insurance policy. Although the Supreme Court agreed with the trial court that defendants should have reimbursed GEICO, it reversed and remanded for a determination of the proper reimbursement amount. View "GEICO Insurance Co. v. Bernheim" on Justia Law