Justia Contracts Opinion Summaries

Timothy Hop's automobile was damaged in an accident with a driver insured by Safeco Insurance Company. In addition to the costs of repair, Hop sought "residual diminished value" (RDV) for his vehicle. When Safeco failed to pay RDV, Hop filed a class action complaint for declaratory relief in the district court, seeking a declaration that Safeco was required to investigate and pay class members, people whose vehicles were damaged by a Safeco insured and who were not paid RDV by Safeco, for RDV of their vehicle. The district court granted Hop's motion for class certification. The Supreme Court reversed, holding that the district court abused its discretion in certifying a class action before Hop had satisfied the statutory requirements to bring an individual third party action against Safeco. Remanded with instructions to dismiss Hop's class action without prejudice.

Jefferson Block submitted a claim under the London OPA Insurance Policy for Offshore Facilities (OPA Policy) for indemnification of the removal costs it incurred in responding to a pipeline leak. Underwriters denied the claim and Jefferson filed suit against Underwriters in district court, alleging that Underwriters wrongfully refused to indemnify it for oil pollution removal costs. The court held that the district court erred when it refused to apply the contra-insurer rule where the OPA Policy was ambiguous with respect to the issue of coverage for Jefferson Block's 16-inch pipeline and extrinsic evidence in the record did not conclusively resolve this ambiguity. Therefore, the court held that, since Jefferson Block offered a reasonable interpretation of the policy and did not completely draft the ambiguous provisions of the OPA Policy, the contra-insurer rule should apply and the ambiguity should be resolved in favor of the insured, Jefferson Block.

At issue in this case were coverage limits associated with underinsured motorist (UIM) insurance and whether coverage provided under disputed insurance policies complies with the requirements of Alaska insurance statutes. The Respondent families hold UIM policies. They alleged they suffered emotional distress and loss of consortium as a result of a collision that killed one familyâs child and severely injured the other familyâs child. The insurer accepted that the policyholders incurred damages. However, it contended that the families exhausted the coverage limits available to them under the UIM policies because the family members seeking damages were not âinâ the fatal collision. The superior court concluded that the families had not exhausted their UIM coverage under Alaska insurance statutes and reformed the insurance policies to allow the emotional distress claims to proceed to arbitration. The superior court dismissed the familiesâ loss of consortium claims as outside the coverage of the policies. Because the Supreme Court concluded that the families exhausted the coverage limits available under their policies and that these policies were consistent with statutory requirements, the Court reversed the superior courtâs decision to reform the policies. Because coverage limits are exhausted, the Court declined to consider whether loss of consortium was covered under the policies.

While away for a competition in a school-supported event, students caused damage to a motel where they were lodging. The motel's property insurer paid to repair the damage then exercised its right of subrogation pursuant to its insurance contract with the motel to seek to recover compensation for those responsible for the loss. The insurer filed a complaint against the school district, alleging it was liable for breach of contract based on its failure to protect and safeguard the property from damage during the period of occupancy and to refrain from activities that would damage the property. The superior court granted the school district's motion for summary judgment. The Supreme Court affirmed, holding that because the school district did not undertake to be responsible to pay damages in a subrogation action, the insurer's action against the school board was barred.

This case was an interlocutory appeal. Riverbend Utilities alleged that the trial court erred by: (1) adding Arch Insurance Company as an involuntary counterplaintiff, and (2) ordering Riverbend to make four individuals available for deposition. In August 2006, sewage backed up into a home occupied by Hugh Brennan, Shanda Brennan, Meranda Brennan, Diana Marut, and Sarah Marut1 (âthe Brennansâ) in Saucier. During discovery, Riverbend learned that the Brennansâ home had suffered damage from Hurricane Katrina in August 2005. In August 2009, with leave of the trial court, Riverbend counterclaimed, alleging that the Brennans had submitted the same invoices to Riverbend that they previously had submitted to their homeownerâs insurance provider and that they had been paid by that insurer. Upon review of the trial court record, the Supreme Court found that the trial court erred in ordering that Arch be made a party to the counterclaim. Furthermore, the Court held that the individuals noticed for depositions were not parties, Mississippi residents, or Riverbend employees, and concluded the trial court abused its discretion in ordering Riverbend to make them available for deposition. The Court reversed the trial court and remanded the case for further proceedings.

After self-insured Employer filed for bankruptcy, it continued to take payroll deductions from Employees for medical coverage but stopped paying the provider hospital for the covered charges. The hospital then directly billed Employees for services that should have been paid by Employer. Employees filed suit to stop the hospital's attempts to collect payment, seeking relief under the theories of declaratory judgment, injunction, breach of contract, negligent infliction of emotional distress, and bad faith breach of contract. The circuit court granted summary judgment in favor of the hospital on all of Employees' claims. The Supreme Court reversed, holding (1) Employees had standing as third party beneficiaries to enforce the provisions of the hospital agreement and payer agreement; and (2) Employees were not obligated to pay for covered medical services under the agreements. Remanded.

Five years after Homeowners contracted for the construction of their home, Homeonwers sued Elite Homes, the construction company that built their home, and Motorists Mutual Insurance, the insurance company that provided commercial general liability (CGL) insurance to the construction company while the home was under construction, claiming the house was so poorly built it was beyond repair. Motorists settled Homeonwers' claims against itself and Elite. Under the terms of the settlement, Homeowners and Elite assigned to Motorists all claims they may have had against Cincinnati Insurance, which was a successor to Motorists as Elite's CGL insurer. Motorists then filed a third-party complaint against Cincinnati. The trial court granted summary judgment to Cincinnati, holding that Homeowners' claims of intangible economic loss did not qualify as an "occurrence" causing property damage under Cincinnati's CGL policy. The court of appeals vacated the grant of summary judgment. At issue on appeal was whether faulty construction-related workmanship, standing alone, qualifies as an "occurrence" under a CGL policy. The Supreme Court reversed the court of appeals and reinstated the judgment of the trial court, holding that the trial court's conclusion that the claims were not an "occurrence" was correct.

Plaintiff was injured while driving his employer's tow truck. Plaintiff filed suit against the driver of the other car involved in the accident, and later sought to invoke his employer's uninsured motorist policy in an amount equal to the liability coverage for bodily injury. The employer's insurer filed a motion for partial summary judgment, seeking to limit uninsured motorist coverage to the amount listed in the policy rather than the amount fixed by statute. The trial court denied the motion. The court of appeals reversed, directing that the insurer's motion for partial summary judgment be granted. The Supreme Court affirmed, holding that when the insured signs an application indicating the selection of uninsured motorist coverage lower than the liability limits but neglects to initial a provision designed to confirm the selection of coverage less than the standard provided by statute, the requirement under Tenn. Code Ann. 56-7-1201(a)(2) that the selection be in writing has been satisfied.

State Farm petitioned for review of the Third District's determination that the household exclusion in its policy issued to respondents was ambiguous and therefore could not be enforced to eliminate coverage for bodily injuries suffered by members of the household of a permissive-driver insured. The court held that the plain language of the household exclusion precluded coverage for bodily injuries suffered by members of the household of a permissive-driver insured, such as the parents in this case. Therefore, the court quashed the Third District's decision, approved Linehan v. Alkhabbaz, and remanded for further proceedings.

Insured submitted a claim to Insurer after his house was damaged by a storm. Insured returned the payment tendered to him by Insurer, deeming the amount insufficient to cover the damage to his home. Almost two years after the house was damaged, Insured filed suit against Insurer. Insurer argued the lawsuit was barred by a clause in the insurance contract that stated that any action must be started within one year after the date of loss or damage. The trial court granted Insurer's motion for summary judgment. The court of appeals reversed, concluding the policy language was ambiguous and that Insurer, by its actions, had waived its right to enforce the one-year limitation clause. The Supreme Court reversed the judgment of the court of appeals and reinstated the trial court's grant of summary judgment, holding that Insurer could enforce the limitation-of-action clause contained in its contract because (1) the policy language was not ambiguous, and (2) Insurer did not waive its right to enforce the clause.