Justia Contracts Opinion Summaries

Chad Jones sued his insurance company, Farmers Insurance Exchange, for breach of contract, bad faith breach of contract, and intentional infliction of emotional distress after Farmers denied his claim. Farmers defended by arguing that it did not breach its contract because Jones's claim was "fairly debatable." Farmers claimed this defense must be resolved through summary judgment. The district court granted Farmers' motion for summary judgment. The Supreme Court reversed, holding that the fairly-debatable defense should not be resolved through summary judgment if reasonable minds could differ as to whether the defendant's conduct measures up to the standard required for insurance claim investigations. Remanded. View "Jones v. Farmers Ins. Exch." on Justia Law

In a diversity action involving an insurance dispute, Union Electric appealed the district court's grant of EIM's motion to dismiss. Union Electric is a Missouri Utility and EIM is a mutual insurance company incorporated in Barbados and with a principal place of business in Florida. At issue was an insurance contract, which specified that New York law applied, which was drafted by the member insureds, in contrast to the insurer-drafted contracts commonly found in insurance disputes. While the district court correctly determined that M/S Bremen v. Zapata Off-Shore Co. provided the standard for evaluating a motion to dismiss based on a contractual forum selection clause, the court reversed and remanded for the district court to consider in the first instance whether Missouri's public policy against the enforcement of mandatory arbitration provisions invalidated the forum selection clause. View "Union Electric Co. v. Energy Ins. Mutual" on Justia Law

The United States District Court for the Northern District of Alabama, Eastern Division certified two questions of first impression to the Alabama Supreme Court: whether a coverage exclusion clause in an automobile insurance policy applied to the use of the vehicle used for transporting people or delivering newspapers (as part of the insured's job) was enforceable. A secondary issue was whether that exclusion applied when an accident takes place after the delivery of the last paper, "but while the insured is driving back to his point of origin or some other location." Scott and Lori Touart Thomas were injured as the result of an automobile accident; Lori had been driving. The Thomases recovered a judgment in state court against defendant Kenneth Gooden, Jr., the driver of the other vehicle. The dispute involved whether the Thomases were entitled to recover from Nationwide under the provisions of a Nationwide automobile liability insurance policy naming Gooden as an insured. Upon review, the Supreme Court concluded that the answer to the first certified question is "yes:" a clause in an automobile liability-insurance policy excluding coverage for the "use of any motor vehicle to carry persons or property for a fee" could be enforced as to an insured if the finder of fact concludes that the insured delivers newspapers for a fee and that the insured was using the covered vehicle for that purpose at the time of the accident. With regard to the second question, the Court concluded that the answer to the second certified question is "no:" a clause in an automobile liability-insurance policy excluding coverage for the "use of any motor vehicle to carry persons or property for a fee" cannot be enforced as to an insured after the delivery of the "property," i.e., newspapers in this case, is complete. View "Nationwide Mutual Ins. Co. v. Thomas" on Justia Law

Appellants James Baldwin and Ronda Reynolds allegedly sustained injuries in separate highway incidents after objects came loose from unidentified vehicles and collided with their vehicles. Both Appellants sought uninsured motorist (UM) coverage for hit-and-run accidents through their automobile insurance policies. Baldwin's State Farm policy provided coverage when an uninsured motor vehicle "strikes" the insured vehicle, and Reynolds's Safeco policy covered damages when an uninsured motor vehicle "hits" the insured vehicle. The Supreme Court accepted review in these consolidated cases to focus on whether Appellants' accidents satisfied the impact requirements contained in the UM clauses of their insurance policies. The Supreme Court held that the impact requirements of the UM clauses of Baldwin's and Reynolds's insurance policies were not met, and therefore, UM coverage was not applicable to Appellants' hit-and-run accidents. View "State Farm Mut. Auto. Ins. Co. v. Baldwin" on Justia Law

This appeal concerned the construction of a single word, "sudden," within a pollution exclusion clause in a series of liability insurance policies barring coverage for certain damages unless the events causing those damages were "sudden and accidental" (an issue of first impression in New Mexico). Concluding that "sudden" lacks a single clear meaning, the Supreme Court reversed the Court of Appeals' holding that the word unambiguously signifies "quick, abrupt, or a temporarily short period of time. . . .Under well-established principles of insurance law," the Court construed this ambiguity in favor of the insured, Petitioner United Nuclear Corporation, and interpreted the term "sudden" in the insurance policies at issue in this dispute to mean "unexpected." the case was remanded to the district court for further proceedings. View "United Nuclear Corp. v. Allstate Ins. Co." on Justia Law

Jerry and Martha Garrison witnessed their son's injuries after he was struck by a car. The son died afterwards. The Garrisons filed a claim for negligent infliction of emotional distress against the owner and driver of the car. The Garrisons also served a copy of the complaint upon their insurance company, State Farm, pursuant to the uninsured motorist provisions of their policy. The policy covered damages for "bodily injury," and "bodily injury" was defined in the policy as "bodily injury to a person and sickness, disease, or death that results from it." The trial court determined that the "bodily injury" provision of the uninsured motorist statute covered mental injuries, and therefore, the policy provided, by operation of law, coverage for the Garrisons' emotional distress claim. The court of appeals reversed. The Supreme Court affirmed, holding (1) as applied to this case, "bodily injury" did not include damages for emotional harm alone; and (2) the definition of "bodily injury" in the policy did not conflict with the uninsured motorist statute. View "Garrison v. Bickford " on Justia Law

A home remodeling contractor (Contractor) received a demand for arbitration regarding allegedly defective work it performed on a remodeling project. Contractor's insurer (Insurer) accepted defense of the claim under a reservation of rights. The arbitrator issued an arbitration award in favor of the homeowners. When Insurer refused to pay the award, Contractor paid the homeowners and sued Insurer for indemnification under the policy. The district court granted Contractor's motion for summary judgment, concluding that a vague arbitration award made it impossible to determine whether the insurance policy covered any of the homeonwers' successful claims and was directly attributable to the inaction of the attorney appointed by Insurer to represent Contractor. The court of appeals reversed. The Supreme Court reversed, holding (1) a portion of the homeowners' claim may be covered under the policy; (2) Insurer was not vicariously liable of the absence of an explanation of the arbitration award; and (3) Insurer was directly liable to Contractor for the failure of the attorney to request an explanation of the arbitration award to determine what portion of the award, if any, was for the covered claim. Remanded. View "Remodeling Dimensions, Inc., v. Integrity Mut. Ins. Co." on Justia Law

This case involved a claim by a former professional football player (the athlete) for benefits under the Maryland Workers' Compensation Act based on an injury during pre-game warm-up at the employer's stadium in Maryland. The employment agreement contained a forum selection clause providing, inter alia, that claims for workers' compensation benefits should be governed by Virginia law and that the Virginia Workers' Compensation Commission should have exclusive jurisdiction to resolve such claims. The Maryland Workers' Compensation Commission decided that it could properly exercise jurisdiction over the athlete's claim, that the athlete had sustained an accidental injury arising out of the course of his employment, and that the athlete's disability was causally related to his accidental injury. The circuit court upheld the decision. The court of special appeals affirmed. The Court of Appeals affirmed, holding (1) the forum selection clause in the employment contract was ineffective to divest the Commission of the ability to exercise jurisdiction; and (2) injuries occurring while playing and practicing professional football are accidental injuries and thus compensable under the Act. View "Pro-Football, Inc. v. Tupa" on Justia Law

Candice Brilz filed an action in Montana state court purportedly asserting statutory and common law bad-faith claims against Metropolitan General Insurance Company (Metropolitan). Metropolitan removed the action to federal court and filed a motion for summary judgment, which the federal court granted. Thereafter, Brilz commenced this suit district court seeking a determination that she may pursue her common law bad-faith claim against Metropolitan. Because the statute of limitations on that claim had since expired, Brilz requested a ruling that she may pursue the claim pursuant to 27-2-407, MCA, or the Supreme Court's doctrine of equitable tolling. The District Court dismissed the action, and Brilz appealed. The Supreme Court concluded that principles of claim preclusion barred her from filing a second action against Metropolitan arising out of the same underlying facts. Accordingly the Court affirmed the District Court's judgment. View "Brilz v. Metropolitan General Ins." on Justia Law

Ronald Bole appealed a superior court's order that affirmed an arbitration award that denied him recovery of underinsured motorist benefits. The Supreme Court allowed the appeal to determine whether the rescue doctrine allowed a volunteer firefighter responding to a crash to recover despite finding his injuries were the result of a superseding cause. Upon review, the Supreme Court concluded that Bole could not, and did not disturb the arbitrator's determination. View "Bole v. Erie Insurance Exchange" on Justia Law