Justia Contracts Opinion Summaries

Appellant was among a number of homeowners in multiple states claiming that their mortgage companies wrongfully demanded an increase in flood insurance coverage to levels beyond the amounts required by their mortgages. In this case, the First Circuit Court of Appeals concluded that the pertinent mortgage provision explicitly gave the lender discretion to prescribe the amount of flood insurance. However, the Court held that the district court dismissal of Appellant's complaint must be vacated, as (1) a supplemental document given to Appellant at her real estate closing entitled "Flood Insurance Notification" reasonably may be read to state that the mandatory amount of flood insurance imposed at that time would remain unchanged for the duration of the mortgage; and (2) given the ambiguity as to the Lender's authority to increase the coverage requirement, Appellant was entitled to proceed with her breach of contract and related claims. View "Lass v. Bank of America, N.A." on Justia Law

This putative class action was one of a number of breach-of-contract suits being brought against financial institutions nationwide by mortgagors who claimed that they were improperly forced to increase flood insurance coverage on their properties. The plaintiff in this case asserted that Bank of America's demand that he increase his flood coverage by $46,000 breached both the terms of his mortgage contract and the contract's implied covenant of good faith and fair dealing. The district court concluded that the pertinent provision of the mortgage unambiguously permitted the lender to require the increased flood coverage and, hence, it granted the defendants' motion to dismiss the complaint. The First Circuit Court of Appeals vacated the judgment of dismissal in favor of the Bank, holding that the mortgage was reasonably susceptible to an understanding that supported the plaintiff's breach of contract and implied covenant claims. Remanded. View "Kolbe v. BAC Home Loans Servicing, LP" on Justia Law

This appeal came before the Supreme Court from a declaratory judgment action brought by Farm Bureau Mutual Insurance Company of Idaho (Farm Bureau). Farm Bureau brought suit in response to a claim for insurance benefits filed by the personal representatives of the estate of a deceased policyholder (the Estate). Farm Bureau requested a judgment declaring that the Estate was not an "insured" under the decedent's insurance policy and was therefore not entitled to payment of wrongful death damages under the Policy's underinsured motorist coverage. The district court granted the Estate's motion for summary judgment, determining that Idaho's wrongful death statute, entitled the insured's Estate to recover damages for wrongful death and that the Policy provided coverage for those damages. Farm Bureau appealed. Upon review, the Supreme Court reversed: as to the Estate, the Court determined that under the plain language of the wrongful death statute, the Estate was not legally entitled to recover damages for itself, but only to bring an action on behalf of the heirs to recover their damages. "The Estate stepped into [the decedent's] shoes for those claims, and Farm Bureau made those payments to the Estate. Farm Bureau's payment of these legitimate claims under the insurance contract does not constitute a change of position or an admission that coverage exists for other claims. We hold that these payments do not prevent Farm Bureau from arguing that it is not required to pay the Estate for damages that [the decedent] was not legally entitled to recover." View "Farm Bureau v. Estate of Eisenman" on Justia Law

Zaloudek Grain Company held a workers' compensation policy with CompSource Oklahoma for approximately ten years prior to 2011. Zaloudek was required each year to provide payroll audit information to CompSource. The audit information was used to determine the proper premium for each year. CompSource sent a notice in late 2010 to Zaloudek requesting audit information. In January, 2011, Zaloudek's policy was renewed for all of 2011 through January 1, 2012. On January 18, 2011, CompSource sent another letter requesting Zaloudek provide the necessary payroll audit information, but Zaloudek was unresponsive. Subsequently, CompSource sent Zaloudek a notification to inform the company that the process of canceling its policy would begin if CompSource did not receive the audit information. The audit information was not provided; CompSource ultimately canceled the policy when Zaloudek ignored several subsequent requests. CompSource issued a refund for payments made under the policy. Later that summer, two teenage workers were seriously injured in the grain auger at Zaloudek's facility. CompSource did not accept the company's new insurance application because it was incomplete and was not signed by an owner of Zaloudek. Zaloudek sued a few weeks following the rejection of its application, asking for a judgment against CompSource for breach of contract and bad faith and further requested declaratory relief in the form of an order requiring CompSource to provide workers' compensation coverage. Zaloudek filed a motion for summary judgment claiming CompSource lacked legal justification for terminating its policy and requested orders to establish there was no lapse in coverage and requiring CompSource to provide coverage for its two injured employees. Zaloudek further requested a finding that CompSource was in breach of contract. CompSource moved for summary judgment, arguing Zaloudek was not covered at the time of the incident and its policy was properly canceled. Zaloudek filed a counter-motion for summary judgment asserting CompSource should be estopped from denying coverage because it retained premiums and acted in a manner toward Zaloudek consistent with continued coverage. The trial court issued an order dismissing Zaloudek's bad faith claim but left pending its claims for breach of contract and declaratory relief. CompSource appealed. After its review, the Supreme Court concluded that CompSource was authorized to cancel a policy for an insured's failure to participate in the audit. The Court remanded the case for further proceedings on the other contract issues raised. View "Zaloudek Grain Co. v. CompSource Oklahoma" on Justia Law

Plaintiffs brought a declaratory action seeking a ruling that their insurance policies issued to defendants did not cover class claims brought in state court by Percic Enterprises. The state court complaint alleged that defendants violated the Telephone Consumer Protection Act (TCPA), 47 U.S.C. 227(b)(1)(C), by sending unsolicited fax advertisements. After a settlement was reached in the state action, the federal district court concluded that damages sustained by sending unsolicited fax advertisements in violation of the TCPA were covered under the advertising provision of the policies. The court affirmed, applying standard Minnesota principles of insurance contract interpretation where unambiguous words were given their plain, ordinary, and popular meaning, and ambiguous language was construed in favor of the insured. View "Owners Ins. Co., et al v. European Auto Works, Inc., et al" on Justia Law

In a 2009 opinion, the Sixth Circuit held that, in a 1998 collective bargaining agreement, CNH agreed to provide health-care benefits to retirees and their spouses for life, but rejected the suggestion that the scope of this commitment in the context of healthcare benefits, as opposed to pension benefits, meant that CNH could make no changes to the healthcare benefits provided to retirees. The court remanded for a determination of reasonableness with respect to CNH’s proposed changes to its retiree healthcare benefits, under which retirees, previously able to choose any doctor without suffering a financial penalty, would be put into a managed-care plan. The court listed three considerations: Does the modified plan provide benefits “reasonably commensurate” with the old plan? Are the proposed changes “reasonable in light of changes in health care”? And are the benefits “roughly consistent with the kinds of benefits provided to current employees”? On remand, the district court granted CNH summary judgment without reaching the reasonableness question or creating a factual record from which the determination could be made on appeal. The Sixth Circuit again remanded.View "Reese v. CNH America LLC" on Justia Law

TMTA obtained a policy, known as the CrimeShield Policy to transfer the risk of employee theft from the TMTA to Hartford. Almost immediately after the parties signed the Policy a TMTA employee began diverting funds into his own accounts from the TMTA Insurance Agency, a limited liability corporation controlled by the TMTA and from which the TMTA receives a significant portion of its income. The Agency is not a named insured under the policy. Hartford took the position that the Agency, not the TMTA, suffered the loss. The Sixth Circuit affirmed the district court, holding that the Agency a party is not directly covered by the policy, and that the policy does not otherwise provide for the TMTA to recover funds that were diverted from the Agency.View "Tooling, Mfg.& Tech. Ass'n v. Hartford Fire Ins. Co." on Justia Law

Judith Koenig rented a car from a car rental company and was involved in an accident. PurCo sued Koenig to collect damages related to the incident, including damages for loss of the vehicle's use during the time it was being repaired. PurCo sought to measure loss of use damages by using the reasonable rental value of a substitute vehicle. Koenig filed a motion for summary judgment which the trial court granted, holding that PurCo could prevail on its loss of use damages claim only if it suffered actual lost profits. The court of appeals reversed the trial court's summary judgment ruling and remanded the case. It agreed with the trial court's conclusion that, in general, the appropriate measure of loss of use damages in a commercial setting is actual lost profits, but concluded the rental agreement in this case altered the measure of loss of use damages and held that PurCo was required to show certain loss prerequisites. Upon review, the Supreme Court affirmed the court of appeals judgment on different grounds, holding that loss of use damages in a commercial setting may be measured either by actual lost profits or by reasonable rental value. PurCo was entitled to recover loss of use damages irrespective of its actual lost profits. Accordingly, this case was remanded for calculation of the reasonable rental value of a substitute vehicle. View "Koenig v. PurCo Fleet Services, Inc." on Justia Law

This case arose from claims asserted by multiple persons against Blue Cross and Blue Shield of Montana (BCBSMT) and Montana Comprehensive Health Association (MCHA). Claimants asserted that while they were fully insured by BCBSMT or MCHA, they submitted claims that the insurers denied based upon exclusions contained in their insurance policies. These exclusions were subsequently disapproved by the Montana Commissioner of Insurance (Commissioner) and the insureds sought the previously-denied benefits. The matter evolved into a class action and three of the claimants, Krista Lucas, Brittany Smith, and Alice Speare, were named class representatives. Subsequently, a settlement was negotiated. Three other claimants, Tyson Pallister, Kevin Budd and Jessica Normandeau, objected to the settlement and sought review by the Second Judicial District Court. The District Court approved the settlement. Pallister, Budd and Normandeau appealed asserting numerous errors by the District Court including but not limited to the court’s error in denying Pallister’s motion to conduct discovery. Upon review, the Supreme Court reversed and remanded on a discrete issue of discovery and vacated the District Court’s approval of the Settlement Agreement. View "Pallister et al v. Blue Cross & Blue Shield of Montana" on Justia Law

Plaintiff James Bannister was injured in a motorcycle accident on the freeway near Oklahoma City in 2009. According to Bannister, he was forced to lay down and slide his motorcycle at a high speed when a car in front of him braked suddenly, that car having been cut off by another car. Bannister slammed into the wall of the freeway and suffered substantial injuries. He did not collide with any other vehicle; neither of the aforementioned cars remained at the scene of the accident; and no witnesses besides Bannister ever gave an account of the crash. Bannister filed an insurance claim with his insurer, defendant State Farm Automobile Insurance Company (State Farm). State Farm denied Bannister’s claim, finding him to be majority at fault in the accident. Bannister subsequently filed suit in Oklahoma state court, and State Farm removed the case to the Western District of Oklahoma. By the time the case went to trial, Bannister sought relief solely on a tort theory: that State Farm violated its duty of good faith and fair dealing in denying his claim. The jury found in favor of Bannister, but the district court granted State Farm’s renewed motion for judgment as a matter of law (“JMOL”), ruling essentially that the evidence showed that State Farm’s denial of Bannister’s claim was based on a reasonable dispute regarding whether Bannister was majority at fault, and that no evidence suggested that further investigation would have undermined the reasonableness of that dispute. Bannister failed to “make a showing that material facts were overlooked or that a more thorough investigation would have produced relevant information” that would have delegitimized the insurer’s dispute of the claim. As such, the Tenth Circuit concluded his inadequate-investigation theory of bad faith was without merit, and JMOL in favor of State Farm was appropriate. View "Bannister v. State Farm Mutual Auto Ins Co" on Justia Law