Justia Contracts Opinion Summaries

This matter arose from the suicide of a sixteen-year-old girl, who was residing at the Spring Creek Lodge Academy at the time of her death. Following the girl's death, her mother, Plaintiff, brought an action against the owner of the school, its on-site directors, including Teen Help, and various related entities. Claims against Teen Help were settled before trial, and the settlement was later reduced to a judgment. While Newman I proceeded to trial, Newman filed this declaratory judgment and breach of contract action against Teen Help's two insurers to collect on the settlement and judgment, arguing that the insurers breached their obligation to defend and indemnify Teen Help in Newman I. The district court determined the insurers were severally liable for the underlying judgment and awarded attorney's fees and interest on the underlying judgment. The Supreme Court (1) affirmed the district court's judgment as it pertained to the insurers, its award of interest on the underlying judgment, and its application of Montana law; and (2) reversed the court's ruling on attorney's fees. Remanded for recalculation of reasonable attorney's fees. View "Newman v. Scottsdale Ins. Co." on Justia Law

Phillips was beneficiary of a life insurance policy purchased by her fiancé, Strang, issued by Prudential. When Strang died, Prudential informed Phillips that the default method of payment was the “Alliance Account settlement option,” under which the insurer, instead of paying a lump-sum benefit, creates an interest-bearing account for the beneficiary and sends her checks that can be used to draw the funds, in part or in whole, at any time. The funds are held in Prudential’s general investment account, which allows Prudential to profit from the spread between its investment returns and interest paid to the beneficiary, in Phillips’s case, three percent. In a putative class action, Phillips claimed that establishment of the Alliance Account as the default payment method and her enrollment in it breached the insurance policy and unreasonably delayed payment of benefits in violation of the Illinois Insurance Code and that Prudential breached a fiduciary duty by not disclosing information regarding investments made with her funds and by keeping investment profits. The district court dismissed. The Seventh Circuit affirmed. “Whether this practice is disreputable is open to debate,” but It did not breach the policy, did not effect an unreasonable delay, and did not breach any fiduciary duty. View "Phillips v. Prudential Ins. Co." on Justia Law

Shane Traylor Cabinetmaker, L.L.C. ("STC"), and Michael Shane Traylor sued American Resources Insurance Company, Inc., alleging breach of contract and bad faith, based on American Resources' refusal to defend or to indemnify STC and Traylor on counterclaims filed against them by Robert Barbee and R.L. Barbee Builders, Inc. in a separate action. The circuit court entered a summary judgment in favor of American Resources, and STC and Traylor appealed. Finding no error, the Supreme Court affirmed. View "Shane Traylor Cabinetmaker, L.L.C. v. American Resources Insurance Company, Inc. " on Justia Law

In 2006, Plaintiffs sustained serious injuries in an automobile accident and incurred medical expenses in excess of $1,000,000. Plaintiffs subsequently learned that they had only $5,000 in medical payments coverage and did not have any underinsured motorist (UIM) coverage after a transfer of their Oregon State Farm policy to Montana by the Mark Olson State Farm Agency. The driver who caused the accident carried the statutory minimum automobile liability insurance limits. Plaintiffs sued State Farm and Mark Olson, requesting declaratory relief and a reformation of the contract and alleging negligence, breach of fiduciary duty, and conduct sufficient to support an award of punitive damages. The district court entered summary judgment in favor of Defendants. The Supreme Court reversed, holding that the district court erred in entered summary judgment in favor of State Farm and Olson on Plaintiffs' negligence claims. Remanded for trial. View "Bailey v. State Farm Auto. Ins. Co." on Justia Law

The issue before the Supreme Court in this case concerned the proper procedure by which a workers' compensation insurer may enforce a subrogation claim arising under Mississippi Code Section 71-3-71. Richard Shoemake was injured in Alabama but received workers' compensation benefits from Liberty Mutual Insurance Company under Mississippi law. He brought and settled a third-party action in Alabama state court and reimbursed Liberty Mutual only the amount it was entitled to under Alabama law. Liberty Mutual, which knew of but did not join or intervene in the Alabama lawsuit, then sued Shoemake in the Circuit Court of Newton County, seeking full reimbursement as allowed under Section 71-3-71. In granting Shoemake summary judgment, the circuit court held that Alabama law applied and further concluded that res judicata and Liberty Mutual's failure to intervene in the Alabama action barred Liberty Mutual's claim. The Court of Appeals reversed, holding that Mississippi law governed the amount of Liberty Mutual's subrogation claim and that Liberty Mutual was not required to intervene in the Alabama action to become entitled to reimbursement under Mississippi law. Because the Mississippi Supreme Court found that 71-3-71 requires a workers' compensation insurer to join or intervene in a third-party action to become entitled to reimbursement, it reversed the Court of Appeals and affirmed the circuit court. View "Liberty Mutual Insurance Company v. Shoemake" on Justia Law

This case involved the interpretation of two contractual provisions under Minnesota law: an indemnification clause in a contract between PDSI and Miller and an insurance contract between Harleysville and PDSI which extended insurance coverage to PDSI's indemnification of third parties for tort liability caused, in whole or in part, by PDSI or by those acting on its behalf. The court agreed with the district court's finding that a PDSI employee's suit fell squarely within the indemnity provision of the 1989 Agreement between PDSI and Miller. The court also agreed with the district court's interpretation of the insurance agreements as requiring Harleysville to cover Miller's settlement of the employee's claims. Further, the court concluded that the undisputed facts established as a matter of law that PDSI or those acting on its behalf at least partly caused the employee's bodily injury within the terms of the Harleysville policy. Accordingly, the court affirmed the judgment. View "Harleysville Ins. Co. v. Physical Distrib. Serv., et al" on Justia Law

This case arose out of the payment of benefits pursuant to an Aflac accident insurance policy. Defendant and the decedent's siblings challenged the district court's entry of summary judgment and order compelling arbitration of defendant's claims against Aflac and its agents. At issue was whether defendant's affidavit, which included her opinion that the signature on the arbitration acknowledgment form was a forgery, was sufficient to create a genuine issue of material fact. The court concluded that defendant's affidavit was never made part of the summary judgment record before the district court and therefore failed to create a genuine issue of material fact on the authenticity of the decedent's signature. Accordingly, the court affirmed the district court's judgment. View "American Family Life Assurance Co. of Columbus v. Biles, et al" on Justia Law

In 2005, Curtis McGhee and another individual brought claims against the City alleging violations of civil rights sounding in malicious prosecution. The City sought coverage under insurance policies issued by CIC and Columbia. On appeal, the City and McGhee challenged the district court's order granting summary judgment to CIC and Columbia, on CIC's and Columbia's declaratory judgment claims concerning coverage under the various insurance policies. The court concluded that the district court correctly refused to consider and correctly denied additional discovery of extrinsic evidence. The court also concluded that the alleged malicious prosecution and resulting personal injuries occurred when the underlying charges were filed against McGhee in 1977. Therefore, the court affirmed the district court's judgment that the following policies did not afford coverage to the City for the malicious prosecution claims: the two excess liability policies issued by CIC; four of the special excess liability policies issued by Columbia; and the commercial umbrella liability policy issued by Columbia. As to the 1977-78 special excess liability policy issued by Columbia, the court reversed the district court's judgment regarding the applicability of the reasonable expectations doctrine. The court remanded for further proceedings. View "Chicago Ins. Co., et al v. City of Council Bluffs, et al" on Justia Law

Following a car accident with an uninsured motorist, Lori McDonnell filed suit against her insurer State Farm Mutual Automobile Insurance Company on behalf of herself and her minor son, Luke. McDonnell sought a declaratory judgment that: (1) she was entitled to have her personal injury claims settled by appraisal under the mandatory appraisal statute; and (2) a provision in her State Farm insurance policies requiring her to file suit against the insurance company within two years of the accident was void as against public policy. The superior court ruled that the mandatory appraisal statute did not apply to personal injury claims. The court further ruled that the contractual two-year limitations provision was enforceable, but only if State Farm could show that it was prejudiced by an insured's delay in bringing suit, and that the appropriate accrual date for the limitations period was the date State Farm denied an insured’s claim, rather than the date of the accident. McDonnell and State Farm both appealed that decision. Finding no error in the trial court's decision, the Supreme Court affirmed. View "McDonnell v. State Farm Mutual Automobile Ins. Co." on Justia Law

The question before the Supreme Court in this appeal was whether a defendant who pled no contest to disorderly conduct in a criminal action could be collaterally estopped from relitigating the elements of that crime in a related civil declaratory judgment action regarding insurance coverage, thereby precluding coverage. Kent Bearden pled no contest to disorderly conduct for punching Paul Rasmussen. Rasmussen subsequently filed a civil complaint against Bearden, and Bearden tendered the lawsuit to State Farm Insurance Company to defend and indemnify him under his homeowners insurance policy. State Farm sought declaratory relief and moved for summary judgment on the ground that Bearden's conduct could not be considered an "accident" within the meaning of the insurance policy because his no-contest plea collaterally estopped him from relitigating the issues of mens rea and self-defense. The superior court granted the motion. Finding no error with the superior court's decision, the Supreme Court affirmed. View "Bearden v. State Farm Fire & Casualty Co." on Justia Law