Justia Contracts Opinion Summaries

This suit was filed by a daughter against an organ donation charity when she discovered that the charity - contrary to an earlier representation to her - would allegedly profit from harvesting her deceased mother's tissues. The charity requested a defense from its insurer, and the insurer denied a defense. The insurer's subsequent suit against the charity resulted in two certified questions from the Fifth Circuit Court of Appeals. The Supreme Court held (1) the insurance policy provision for coverage of "personal injury" does not include coverage for mental anguish, unrelated to physical damage to or disease of the daughter's body; and (2) the insurance policy provision for coverage of "property damages," does not include coverage for the underlying plaintiff's loss of use of her deceased mother's tissues, organs, bones, and body parts.

At issue in this case was (1) whether a life insurance agent owes a duty of care to the intended beneficiary of a life insurance policy, and (2) whether a life insurance agent can be liable for negligent misrepresentation when he provides information to the insured and the intended beneficiary regarding the beneficiary designation listed on the life insurance policy. The district court granted summary judgment in favor of the agent. The court of appeals affirmed. The Supreme Court reversed, holding (1) a life insurance agent owes a duty of care to an intended beneficiary of a life insurance policy; (2) a life insurance agent can be liable for negligent misrepresentation; and (3) genuine issues of material fact existed in this case, and therefore, summary judgment should not have been granted. Remanded.

Plaintiffs Joseph and Josephine Iozzi owned a home located in Cranston. On October 15, 2005, excessive rainfall overwhelmed the sewer system servicing the Iozzis's home, causing water and sewage to back up and enter their basement, resulting in extensive damage to their home and personal property. Plaintiffs filed suit seeking declaratory relief and compensatory damages from Triton Ocean State, LLC (Triton); U.S. Filter Operating Services, Inc. (Veolia); and Peerless Insurance Company (Peerless). The complaint alleged that Triton and Veolia were jointly and severally liable for negligently "operating, maintaining and repairing the sewer disposal system" in the city. As to Peerless, the complaint alleged that it was liable for breach of contract for rejecting plaintiffs' claim for damages under their homeowner's insurance policy. Peerless moved for summary judgment arguing that the language in the homeowner's policy was clear and unambiguous and excluded coverage for the claims Plaintiffs made. Triton and Veolia filed a joint motion for summary judgment arguing that neither of them had a contractual or common-law responsibility to Plaintiffs for the damage to their property because a lease service agreement with the City of Cranston relieved them of responsibility for the damage and because the flooding that caused Plaintiffs' damages was caused by an "Act of God." Agreeing with the superior court's reasoning for granting defendants' motions for summary judgment, the Supreme Court affirmed dismissal of Plaintiffs' case.

This case arose from a fatal motorcycle accident in which Steven Wadzinski was struck and killed by an uninsured motorist. Steven's wife, Michelle, sought uninsured motorist (UM) coverage under an umbrella insurance policy that Steven's company carried on him at the time of his death. At issue was the meaning of an endorsement to the executive umbrella policy, and whether that endorsement caused contextual ambiguity such that a reasonable insured would expect $2,000,000 of UM coverage under the policy. The circuit court held that the executive umbrella policy was clearly intended to provide only third-party liability coverage and granted summary judgment in favor of Auto-Owners Insurance Company. The court of appeals reversed, concluding that the executive umbrella policy was contextually ambiguous, and therefore, the policy should be construed in favor of the insured to afford coverage. The Supreme Court reversed, concluding that the policy at issue unambiguously did not afford first-party UM coverage, and therefore, the circuit court's summary judgment in favor of Auto-Owners was proper.

Plaintiffs Memorial Properties, LLC (Memorial) and Mount Hebron Cemetery Association (Mt. Hebron) are respectively the manager and owner of Liberty Grove Memorial Gardens. Mt. Hebron was sued in 2007 and 2008 in seven lawsuits in the Superior Court of New Jersey and the Supreme Court of New York by family members of decedents whose remains were sent by funeral directors to Liberty Grove for cremation in 2003, 2004 and 2005. The New Jersey and New York plaintiffs alleged that prior to being sent to Liberty Grove, the decedents’ bodies were unlawfully dissected, and that tissue, bone and organs were removed for commercial sale. The families contended that they did not discover the illegal harvesting scheme until 2006, when law enforcement officials who investigated and prosecuted the perpetrators advised them that their relatives’ body parts had been illegally harvested. Memorial and Mt. Hebron contended that they received the decedents’ remains in closed containers and were unaware that the remains had been tampered with before being turned over to the crematory. Memorial and Mt. Hebron were not prosecuted as a result of the criminal investigation of the illegal harvesting. This appeal arose from Memorial’s and Mt. Hebron’s pursuit of a defense and indemnification with respect to the New Jersey and New York litigation, under two insurance policies. The first policy, issued by Assurance Company of America (Assurance), provided coverage for the year 2003 for claims arising from damage to human remains and bodily injury, including mental anguish. The second, issued by Maryland Casualty Company (Maryland), provided analogous coverage for the year 2006, but contained an "improper handling" exclusionary clause, barring coverage for bodily injury or property damage arising from specified acts and omissions including "[f]ailure to bury, cremate or properly dispose of a 'deceased body.'" In 2008, Memorial and Mt. Hebron demanded that Assurance and Maryland defend and indemnify them. Assurance declined coverage on the ground that the occurrences were outside of the policy period, invoking plaintiffs' claims that they learned of the harvesting scheme in 2006. Maryland declined coverage, citing the "improper handling" exclusionary clause in its 2006 policy. Memorial and Mt. Hebron filed a declaratory judgment action on May 14, 2008, naming as defendants Assurance, Maryland and Zurich North American Insurance Company (Zurich), and demanding defense and indemnification. Assurance and Maryland cross-moved for summary judgment. The trial court denied the summary judgment motion filed by Memorial and Mt. Hebron, but granted defendant insurers' cross-motion for summary judgment, identifying the year 2006 as the time frame of the "occurrence" in the two cases for which the insureds sought coverage. The Appellate Division affirmed both of the trial court’s orders granting the summary judgment motions filed by Assurance and Maryland. After its review, the New Jersey Supreme Court concluded that neither the Assurance policy nor the Maryland policy required the insurer to defend or indemnify Memorial and Mt. Hebron for claims asserted in the New Jersey and New York litigation. The Court affirmed the Appellate Division's ruling.

In February of 2009, a vehicle driven by Antoine Ellis ran a stop sign and struck a vehicle owned and operated by Ann Bernard. Norell Bernard and Andrea Bernard were guest passengers in Ann Bernard's vehicle at the time of the accident. Mr. Ellis was uninsured, and Ann, Norell and Andrea Bernard all filed suit against Imperial (Ann Bernard's insurer) for UM coverage. While Imperial did not dispute its named insured Ann Bernard was entitled to UM coverage, it filed a Motion for Partial Summary Judgment as to Norell and Andrea Bernard's claims on the basis that the guest passengers were not residents of Ann Bernard's household, and therefore did not meet the definition of "insured person" under the terms of the insurance policy for UM coverage. Imperial challenged the court rulings that denied the insurer summary judgment on that issue. After its review of the record, the Supreme Court held that the Plaintiffs were liability insureds under the Imperial policy and therefore entitled to UM coverage. Thus, the Court affirmed the rulings of the lower courts, denying Imperial's motion for partial summary judgment.

Jason McCann was involved in an automobile accident with Jeffrey Kreml. McCann's insurer, Auto Club Insurance Association, defended McCann against Kreml's personal injury action. After Kreml and McCann settled, Auto Club sought contribution from Sentry Insurance, the insurer for McCann's employer, claiming Sentry was obligated to provide co-primary coverage for McCann. The court granted summary judgment to Sentry, finding the Sentry policy only obligated Sentry to provide excess liability coverage, and McCann had no excess exposure because he settled within the limits of the Auto Club policy. The Eighth Circuit Court of Appeals affirmed, holding that the district court's interpretation of the policy was reasonable.

Insurer issued Insured a commercial general liability policy. After a third party sued Insured, Insured rejected the representation offered by Insurer under the policy on the ground that Insurer's reservation-of-rights letter had created a conflict of interest. Insured hired its own independent counsel, and when Insurer refused to reimburse Insured for the cost of its independent counsel, Insured filed an action seeking a declaratory judgment that Insurer had a contractual duty to defend and indemnify Insured in the third party lawsuit. The magistrate judge rejected Insured's claim, ruling that Insurer was not required to reimburse Insured for the cost of independent counsel. The Fifth Circuit Court of Appeals affirmed, holding (1) because the facts to be adjudicated in the third party lawsuit were not the same facts upon which coverage depended, the potential conflict in this case did not disqualify the attorney offered by Insurer to represent Insured; and (2) therefore, Insured was not entitled to reimbursement from Insurer for the cost of hiring independent counsel.

Town & Country Property, L.L.C., and Town & Country Ford, L.L.C. (collectively referred to as "T&C") appealed a circuit court's grant of summary judgment Amerisure Insurance Company and Amerisure Mutual Insurance Company (collectively referred to as "Amerisure"), holding that Amerisure was not obligated to pay a $650,100 judgment entered on a jury verdict in favor of T&C and against Amerisure's insured, Jones-Williams Construction Company, because, the trial court reasoned, the faulty construction of the T&C facility upon which the judgment was based was not an "occurrence" covered under the commercial general-liability ("CGL") insurance policy Amerisure had issued Jones-Williams. On October 21, 2011, the Supreme Court affirmed in part the judgment entered by the trial court, agreeing that faulty construction did not in and of itself constitute an occurrence for CGL-policy purposes and that, accordingly, "Amerisure was not required to indemnify Jones-Williams for the judgment entered against it insofar as the damages represented the costs of repairing or replacing the faulty work." On remand, the parties filed briefs with the trial court: T&C argued that the vast majority of the $650,100 judgment should be attributed to covered damage, while Amerisure argued that the damages T&C sought for the repair and/or replacement of defective construction exceeded the amount of the verdict and thus none of the judgment should be attributed to covered damage to personal property or nondefective portions of the T&C property. In its order resolving the issue on remand, the trial court identified $257,500 in damages claimed by T&C at trial as representing the repair or replacement of faulty construction. It therefore subtracted that amount from the $650,100 awarded by the jury and awarded T&C $392,600 plus interest and costs. Upon a review of the record, the Supreme Court found that the $392,600 judgment entered by the trial court was not supported by the evidence. The judgment entered by the trial court on remand was accordingly reversed, and the case was again remanded for the trial court to enter a final judgment in favor of T&C for the amount of damages the Supreme Court deemed T&C was entitled to: $600.

At issue in this appeal was whether to judicially invalidate an insurance contract requirement that the insured file her lawsuit for underinsured motorist coverage (UIM) within two years of her auto accident. Plaintiff argued the deadline was unenforceable because, although she was still experiencing pain two years after the accident, only later did she discover the full extent of her injuries and realize her claim exceeded the other driver's liability limits. Plaintiff filed this UIM action against her insurer (Defendant) nearly six years after the accident. The district court granted Defendant's motion for summary judgment enforcing the contractual deadline as reasonable. The court of appeals reversed, holding the two-year limitation period was unreasonable under the circumstances. The Supreme Court vacated the court of appeals and affirmed the district court, holding that the two-year UIM insurance policy deadline was enforceable as a matter of law because it matched the two-year statute of limitations in Iowa Code 614.1(2) for personal injury actions.