Justia Contracts Opinion Summaries

This insurance coverage dispute arose from a policy designed to protect financial institutions from losses caused by dishonest employees. Trying to recover nearly one million dollars stolen by an employee from client brokerage accounts, three financial institutions sued the insurance company that issued the policy. The district court held that the policy covered the losses and granted summary judgment to the financial institutions. The Sixth Circuit Court of Appeals affirmed the court's liability judgment and all but one of its damages calculations, holding (1) the stolen money was covered property; (2) the employee's theft caused a direct loss to the bank; (3) the employee committed his dishonest acts with the manifest intent to cause the loss; and (4) the district court's decision to subtract another insurance company's $50,000 pay-out to the banks based on another employee-dishonesty policy from the damages award was error. Remanded. View "First Defiance Fin. Corp. v. Progressive Cas. Ins." on Justia Law

This insurance coverage dispute arose from a policy designed to protect financial institutions from losses caused by dishonest employees. Trying to recover nearly one million dollars stolen by an employee from client brokerage accounts, three financial institutions sued the insurance company that issued the policy. The district court held that the policy covered the losses and granted summary judgment to the financial institutions. The Sixth Circuit Court of Appeals affirmed the court's liability judgment and all but one of its damages calculations, holding (1) the stolen money was covered property; (2) the employee's theft caused a direct loss to the bank; (3) the employee committed his dishonest acts with the manifest intent to cause the loss; and (4) the district court's decision to subtract another insurance company's $50,000 pay-out to the banks based on another employee-dishonesty policy from the damages award was error. Remanded. View "First Defiance Fin. Corp. v. Progressive Cas. Ins." on Justia Law

In 2004-2005, Costa & Son Construction performed site work for the general contractor (Braitt) on such a project in Bridgewater. After Braitt terminated the relationship Costa sued, alleging breach of contract and violations of G.L. c. 93A. Costa sought to recover damages under a payment bond obtained by Brait from Arch Insurance, G.L. c. 149, 29. Brait asserted similar counterclaims against Costa. Arch argued that Costa had relinquished any right to claim against the bond pursuant to a provision of his subcontract with Brait. The trial court granted Brait and Arch directed verdict with respect to claims under the bond. A jury returned a verdict for Costa, against Brait. The Massachusetts Supreme Court vacated the directed verdict. A subcontractor on a public construction project for which a payment bond has been obtained by the general contractor pursuant to G.L. c. 149, 29, may not by private agreement forgo its right to pursue payment under the bond. The court also vacated the portion of the amended judgment granting consequential damages to Costa; consequential damages were precluded by the contract. View "Costa v. Brait Builders Corp." on Justia Law

The issues before the Supreme Court in this case was whether the services provided by plaintiff's wife constituted services "for an injured person's care," whether the Court of Appeals properly remanded this case to the circuit court for findings of fact regarding the extent to which expenses for services for plaintiff's care were actually incurred, and whether the circuit court erred by awarding an hourly rate that corporate agencies charge for rendering services, rather than an hourly rate that individual caregivers receive for those services. Upon review, the Court held that "allowable expenses" must be "for an injured person's care, recovery, or rehabilitation." Because the Michigan no-fault act does not create different standards depending on who provides the services, this requirement applies equally to services that a family member provides and services that an unrelated caregiver provides. For this case, the Supreme Court held that the Court of Appeals correctly determined that plaintiff may recover "allowable expenses" to the extent that they encompass services that are reasonably necessary for plaintiff's care when the care is "related to [plaintiff's] injuries." However, because the circuit court erred by awarding damages for allowable expenses without requiring proof that the underlying charges were actually incurred, the Court agreed with the decision of the Court of Appeals to remand this case to the circuit court for a determination whether charges for allowable expenses were actually incurred. In determining the hourly rate for attendant care services, the circuit court "clearly erred" by ruling that plaintiff was entitled to an hourly rate of $40 for attendant care services because that rate was entirely inconsistent with the evidence of an individual's rate of compensation, including the compensation that plaintiff's wife, actually received as an employee hired to care for plaintiff. The case was remanded to the circuit court for further proceedings. View "Douglas v. Allstate Insurance Co." on Justia Law

Ruth Mendenhall appealed a summary judgment in favor of Property and Casualty Insurance Company of Hartford on her equitable garnishment claim seeking insurance coverage for the death of her husband, Len Mendenhall. The trial court's judgment was premised on the conclusion that Len was an "employee" under the terms of the Hartford policy and, therefore, was excluded from coverage. The Supreme Court reversed the judgment of the trial court, holding that, given the facts of this case and the policy language, Len was not an "employee" but was instead a "temporary worker" subject to coverage under the terms of the Hartford policy. View "Mendenhall v. Prop. & Cas. Ins. Co. of Hartford" on Justia Law

Attorneys Post and Reid were retained to defend a medical malpractice action. At trial, plaintiffs introduced evidence suggesting that Post and Reid had engaged in discovery misconduct. Fearing that the jury believed that there had been a “cover-up” involving its lawyers, and concerned with the “substantial potential of uninsured punitive exposure,” the hospital, represented by new counsel, settled the case for $11 million, which represented the full extent of its medical malpractice policy limits. The settlement did not release Post, Reid, the law firm where they began representation of the hospital, or their new firm from liability. The hospital threatened Post with a malpractice suit and sought sanctions. Post eventually brought claims of bad faith and breach of contract against his legal malpractice insurer. The district court awarded $921,862.38 for breach of contract. The Third Circuit affirmed summary judgment in favor of the insurer on the bad faith claim and remanded for recalculation of the award, holding that, under the policy, the insurer is responsible for all costs incurred by Post in connection with the hospital’s malpractice claim from October 12, 2005 forward and for all costs incurred by Post to defend the sanctions proceedings from February 8, 2006 forward. View "Post v. St. Paul Travelers Ins. Co." on Justia Law

The issue in this case arose from a judgment which held that a "Designated Project or Premises" endorsement of a commercial general liability insurance policy purchased by a sporting goods store excluded coverage for a claim arising out of the sale of improperly reloaded ammunition. Petitioner Tom Erekson purchased a used .500 revolver from a sporting goods store, along with three boxes of handloaded ammunition, all of which the store purchased from the gun's previous owner. Erekson and his sons took the revolver to a shooting range, loaded five chambers with the reloaded ammunition, and fired. The one cartridge discharged, but two others detonated simultaneously. When the cartridge under the loading gate detonated, it sheared off the gate, a portion of the cartridge rocketed rearward, and struck Erekson in the forehead, lodging three inches into his brain. He also lost a portion of his thumb. The store held a general liability policy through Markel International Insurance Company. The store brought suit for a court order to declare Erekson's injuries were covered under the policy. The district court held that the injury was excluded; Erekson unsuccessfully moved for reconsideration. Upon review of the policy, the Supreme Court affirmed, finding coverage was excluded under the endorsement.

Patrick McGinness, driving a vehicle owned by his adult daughter, negligently struck and injured Marie DeMeo. DeMeo obtained a $350,000 state-court judgment against McGinness. McGinness's daughter's insurer, American Family Insurance Company, paid its $100,000 policy limit under an owner's liability policy that covered McGinness as a permitted driver. State Farm insured McGinness under four liability policies issued for the cars he owed. Each policy provided coverage to McGinness when operating a non-owned vehicle such as his daughter's. Invoking the policies' "anti-stacking" provisions, State Farm paid the per-person limit of one policy, $50,000. De Meo filed this action to recover an additional $150,000, the combined limits of the other three policies. The district court held that the anti-stacking provisions did not conflict with Missouri's Motor Vehicle Financial Responsibility Act (MVFRL) requirements, which mandate that motor vehicle owners and operates maintain minimum levels of financial responsibility for damages arising out of their ownership or use of a motor vehicle, and granted summary judgment in State Farm's favor. The Eighth Circuit Court of Appeals affirmed, holding that there was no basis to conclude that the MVFRL demands stacking when there are multiple policies.

South Carolina Farm Bureau Mutual Insurance Co. (Farm Bureau) brought a declaratory judgment action to determine whether Henry Kennedy was entitled to underinsured motorist (UIM) coverage for an accident. The trial court found Kennedy was entitled to UIM coverage under the terms of the policy because Kennedy was "upon" and thus "occupying" the insured vehicle at the time of the accident. The Court of Appeals reversed. The Supreme Court granted Kennedy's petition for a writ of certiorari to review the appellate court's decision. Initially, the Supreme Court concluded that the trial court's finding of actual physical contact was supported by the evidence. The trial court found Kennedy had left the engine running on his employer's vehicle; that he was in physical contact with the covered vehicle (with his hand on the truck) when the other vehicle careened towards him, forcing him to relinquish his contact in order to attempt to avoid injury; that Kennedy was "upon" and "occupying" the vehicle at the time of the accident; and he was entitled to UIM coverage under the Farm Bureau policy. Moreover, a second, resultant physical contact was established when Kennedy was pinned against the insured vehicle. The Supreme Court concluded that a requirement that an insured remain in physical contact with the insured vehicle in the face of imminent danger was unreasonable and unconscionable. Consequently, the Court reversed the decision of the Court of Appeals.

The issue before the Supreme Court in this was the denial of attorney fees under Idaho Code section 41-1839 on the ground that the insured's proof of loss was insufficient under the statute because it did not provide the insurer with the legal theory upon which coverage was later determined to exist. Upon review of the matter, the Supreme Court vacated the judgment because a proof of loss need not include an analysis of the proper theory of coverage under the insurance policy.