Justia Contracts Opinion Summaries

Appellee, as executrix of the estate of her father, and her sister, brought a breach of contract action in which they asserted that their father's second wife, appellant, contractually waived her right to retain the proceeds of their deceased father's employer-provided 401K plan and life insurance policy by entering a settlement agreement incorporated into an order of separate maintenance executed approximately a year prior to the father's death. At issue was whether the court of appeals erred in finding that decedent's children could maintain a state law action against the decedent's surviving spouse to recover proceeds distributed to the spouse as the beneficiary of the decedent's ERISA-governed benefits plans, 29 U.S.C. 1001 et seq., where the state law claims were based on a contention that the spouse waived her rights to such proceeds. The court answered in the negative, concluding that, in this case, since the proceeds of the ERISA-covered plans were paid out to appellant and were no longer in the control of the plan administrator, the trial court erred when it dismissed appellees' breach of contract claim against appellant.

Plaintiff appealed the dismissal of her complaint against Safety, which alleged that Safety improperly denied coverage under her homeowner's insurance policy for damage to her house. The court concluded that plaintiff satisfied her initial burden of proving that her claimed loss fell within the coverage of her homeowner's insurance policy. Safety then satisfied its burden of showing that the exclusion for damage caused directly or indirectly by surface water was applicable to plaintiff's claim. In light of the anticoncurrent cause provision in the exclusions section of plaintiff's policy, where the excluded peril was a direct or indirect cause of the damage to plaintiff's home, Safety was not obligated to provide insurance coverage "regardless of any other cause or event contributing concurrently or in any sequence to the loss." Accordingly, the court affirmed the grant of Safety's motion for summary judgment.

Travelers, an insurer, was being sued for insurance benefits in a New Jersey court. Plaintiff there was a subsidiary of a defendant here, Sequa. Travelers sought specific performance of, and a declaratory judgment arising from, a release of claims by Sequa in favor of Travelers, made in connection with the settlement of coverage litigation in the Delaware Superior Court in 1997. The relief sought by Travelers here would relieve it from, or indemnify it for, liability in the coverage litigation being undertaken in New Jersey. Because the explicit language of the release excluded the sites for which plaintiff in the New Jersey action sought coverage, as a matter of contract law Travelers was not entitled to the specific performance or declaratory judgment it sought here. Accordingly, the court dismissed the matter.

Plaintiffs, employees at a defense plant in Arizona, collectively bargained for the right to receive employer-provided healthcare coverage after they retired. At issue was whether those employees, now retirees, were contractually entitled to receive premium-free healthcare coverage until age 65, or whether the contracts on which the retirees relied as providing that entitlement allowed their prior employer to start charging them for their insurance. The court held that Raytheon expressly agreed to provide 100% company-paid healthcare coverage for eligible retirees; that Raytheon's obligation survived the expectation of the collective bargaining agreements (CBAs); and that Raytheon's agreed-upon obligation could not be unilaterally abrogated by Raytheon, regardless of the rights Raytheon reserved for itself in Plan documents, because the CBAs did not incorporate the Plans' reservation-of-rights provisions with respect to employer contribution issues, as opposed to issues relating to the provision of monetary or in kind benefits for particular medical services. The court further held that the district court did not err in rejecting plaintiffs' claim for punitive and extra-contractual damages.

This case involved the proper interpretation of a "resulting loss" clause in an all-risk insurance policy. It also provided an opportunity to clarify application of the efficient proximate cause rule. The Court of Appeals overturned a jury verdict in favor of the insured, reasoning that the resulting loss clause did not apply in the absence of a secondary covered peril that proximately caused the loss. The court remanded for a jury determination as to the efficient proximate cause of the insured's loss, holding that if the efficient proximate cause was not itself a covered peril, then the policy did not provide coverage. Upon review, the Supreme Court reversed the Court of Appeals. Because the loss at issue was not excluded under the policy, coverage exists under the ensuing loss provision. And, because there is no rule of law excluding coverage under an efficient proximate cause analysis, and the insurer was precluded from changing the ground for its denial of coverage, there is no basis for a jury to determine the efficient proximate cause of the loss. Accordingly, the Court reinstated the judgment of the trial court.

The supports for the deck system at Respondents Max and Krista Sprague's house rotted out due to improper construction techniques exposing the supports to the elements. Their claim for homeowners' insurance coverage was denied due to exclusions for rot and defective construction. The trial court granted summary judgment to their insurer, Safeco Insurance Company of America. The Court of Appeals reversed, finding that the ensuing loss provision provided coverage for the otherwise excluded losses. Upon review, the Supreme Court concluded that the homeowners policies in this case excluded coverage for both rot and defective construction, the deterioration of Respondents' deck were not covered conditions. The Court reversed the Court of Appeals and reinstated the judgment of the trial court.

Respondent Liberty Mutual Fire Insurance Company appealed a superior court order that denied its motion for summary judgment and granted summary judgment in favor of Petitioner Rebecca Rivera. The court ruled that an automobile policy (policy) issued to Rivera’s parents excluded liability coverage but afforded uninsured motorist coverage for injuries Rivera sustained in a single-vehicle accident in Dracut, Massachusetts. Upon review, the Supreme Court affirmed the grant of summary judgment in Petitioner's favor: "the terms of the owned vehicle exclusion appear to remove [Petitioner's vehicle] from the definition of uninsured motor vehicle even though, as to Rivera, there [was] no insurance available. While Liberty Mutual is free to limit the extent of its liability through the use of an exclusion it cannot do so in contravention of statutory provisions or public policy."

This insurance-coverage dispute arose after a driver of a leased vehicle struck and seriously injured a pedestrian. The vehicle, a BMW, was owned by BMW Financial Services. The pedestrian and her family sued the driver and BMW Financial for damages. Citizens Insurance Company provided a personal automobile policy listing the driver as an insured and BMW Financial as an additional insured lessor. A separate business auto insurance policy was issued by Empire Fire and Marine Insurance Companies to BMW Financial. The case settled, with Citizens and Empire paying their policy limits. Citizens reimbursed Empire for a portion of the costs Empire expended in legal expenses defending BMW Financial in the civil action but refused to provide Empire with any further reimbursement. Empire subsequently filed a complaint for declaratory judgment seeking a determination that Citizens was liable for reimbursement of all attorneys' fees it incurred. The superior court granted Empire's motion for summary judgment. Citizens appealed, arguing that Empire was entitled only to a pro-rata apportionment of defense costs. The Supreme Court affirmed, holding that it would be improper to resort to a pro-rata apportionment of liability.

This appeal concerned the 2003 fire that occurred at the Station nightclub, wherein one hundred people died. The nightclub was co-owned by Plaintiffs, Michael and Jeffrey Derderian. A grand jury returned separate criminal indictments against Plaintiffs on charges of involuntary manslaughter. Prior to the fire, Essex Insurance Company had issued an insurance policy to Michael. Plaintiffs demanded, pursuant to R.I. Gen. Laws 12-28-5 and the policy, that Essex afford them a defense against the criminal prosecutions. When Essex refused, Plaintiffs filed a complaint against Essex, seeking a declaratory judgment that the grand jury indictments against them constituted a suit as defined in the Essex policy and that, accordingly, Essex had a duty to provide them with a defense in the related criminal proceedings. The superior court granted summary judgment in favor of Essex. The Supreme Court affirmed, holding that the language of the policy clearly showed that the parties' intention when entering into the contract was that Essex would provide Plaintiffs with a defense only in civil proceedings in which bodily injury or property damage were alleged, and therefore, Essex had no duty to defend Plaintiffs in their criminal prosecutions.

Lynne Swartzbaugh purchased motor vehicle insurance with Encompass Insurance Company. The policy named Lynne, her husband, and their daughter Kelly (Petitioners) as drivers. Lynne executed a waiver of higher uninsured motorist (UM) coverage on the standard Maryland Insurance Administration form. Immediately beneath the signature line below the waiver appeared the legend: "Signature of First Named Insured." By its terms, consistent with Maryland law, the waiver remained in effect until withdrawn, and the waiver was never withdrawn. Later, Kelly was injured in an accident involving an under-insured driver. Kelly was unable to collect further damages from Encompass under that policy's UM coverage. Petitioners sought a declaration that the waiver was ineffective because Lynne was not in fact the "first named insured" on the policy. The circuit court ruled that the waiver signed by Lynne was valid and enforceable. The court of special appeals affirmed. The Court of Appeals affirmed, holding that, in the context of a motor vehicle insurance policy, the phrase "first named insured" refers to a person insured under the policy and specifically named in the policy who acts on behalf of the other insured parties and is designated as "first named insured" in the policy documents.