Justia Contracts Opinion Summaries

Defendant and her husband (Duckworths) purchased two automobile policies and one motorcycle insurance policy from plaintiff (State Farm) where all three insurance contracts contained "anti-stacking" provisions that precluded recovery of uninsured motorist benefits under any policy other than that covering the damaged vehicles. The Duckworths subsequently moved to Florida, where the husband was struck and killed by an uninsured motorist while driving the motorcycle covered under the Maryland policy. State Farm consequently brought this action in the district court, seeking a declaratory judgment that it had satisfied its contractual obligations to the husband's estate. At issue before the district court was the applicability of the public policy exception to Florida's choice of law rule in disputes over contract terms. The district court declared that State Farm had satisfied its contractual obligations to the husband's estate and dismissed defendant's counterclaims. Taking into account all of the undisputed facts, and assuming that defendant informed a State Farm representative that the Duckworths' move from Maryland to Florida would be "permanent," the court held that State Farm still did not receive reasonable notice sufficient to trigger the public policy exception. The court held that, even if defendant informed the representative as alleged, her later actions overwhelmingly indicated to State Farm that the Duckworths' move was not necessarily permanent and that, consequently Maryland law would continue to govern the Duckworths' policies. Therefore, the issue of fact upon which defendant's appeal rested was immaterial and, as State Farm was deprived of reasonable notice, judgment as a matter of law was proper.

Plaintiff Yvette Bouffard appealed a trial court's denial of her request for a declaratory judgment that she was entitled to uninsured motorist (UM) insurance coverage under her umbrella insurance policy issued by Defendant State Farm Fire & Casualty Company. Plaintiff was injured in 2006 from a car accident. She recovered $250,000 from the other party's insurer and her UM coverage under her personal automobile policy. Because her damages exceeded this sum, Plaintiff sought UM coverage under her umbrella policy. State Farm denied the claim because UM coverage was rejected on her original insurance application. The trial court found that Plaintiff authorized her husband to go to the insurance agency to purchase insurance for both of them, and that because the husband did not elect UM coverage, Plaintiff ratified his decision when she failed to object after reviewing the application in the car or after the policy arrived in the mail. Upon review, the Supreme Court found that the record supported the trial court's conclusion that the husband acted as Plaintiff's agent in rejecting UM coverage and affirmed the court's decision to deny Plaintiff declaratory relief.

3M Company sued Inspired Technologies, Inc. (ITI) for allegedly unfair and false advertising, in violation of the Lanham Act, 15 U.S.C. 1051, et seq., and the Minnesota Uniform Deceptive Trade Practices Act (MDPTA), Minnesota Statutes 325D.43-325D.48, alleging that ITI engaged in an advertising campaign for its Frog Tape product that depicted 3M Tape as performing poorly in certain respects. ITI tendered a defense of the lawsuit to its liability-insurance carrier, AMCO Insurance Company (AMCO), and the lawsuit ultimately settled. Following the settlement, AMCO filed the instant declaratory judgment action against ITI, seeking a declaration that it did not owe ITI any duty to defend or indemnify because the insurance policy's knowledge-of-false exclusion excluded the 3M suit from coverage. The court found that the two interrogatory answers upon which the district court relied did not reflect that 3M alleged ITI's knowledge of falsity as to all the purportedly unfair advertising. Consequently, the court held that AMCO failed to satisfy its burden of demonstrating, as a matter of law, that every claim in 3M's complaint fell clearly outside the policy's coverage. Accordingly, because 3M alleged at least one arguably coverable claim, AMCO owed ITI a duty under Minnesota law to defend the entire suit and therefore, the district court's grant of summary judgment was reversed and remanded.

This case arose when plaintiffs filed a nationwide consumer class action against Life of the South Insurance Company (Life of the South). At issue was whether Life of the South had a right to enforce against plaintiffs the arbitration clause in the loan agreement, between plaintiffs and the car dealership where they purchased their vehicle, where the loan agreement lead plaintiffs to enter into a separate credit life insurance contract with Life of the South. The court held that the loan agreement did not show, on its face or elsewhere, an intent to allow anyone other than plaintiffs, the car dealership, and Chase Manhattan, and the assignees of the dealership of Chase Manhattan, to compel arbitration of a dispute and Life of the South was none of those. The court also held that because the only claims plaintiffs asserted were based on the terms of their credit life insurance policy with Life of the South, which did not contain an arbitration clause, equitable estoppel did not allow Life of the South to compel plaintiffs to arbitrate. Accordingly, the court affirmed the district court's denial of Life of the South's motion to compel arbitration.

Appellants challenged the denial of their claim for benefits arising from an underinsured motorists (UIM) policy issued by appellee. Appellants appealed the adverse grant of summary judgment and the denial of their request for certification of a question of law to the North Dakota Supreme Court. The court held that the negligent driver's excess-liability policy was relevant to determining the underinsured status of his vehicle. Thus, as a matter of law, the negligent driver's vehicle was not underinsured and appellants were not entitled to coverage under the UIM endorsement. The court also declined to certify the question where the case had been decided by summary judgment. Accordingly, the court affirmed the judgment of the district court.

Appellants sued appellee seeking insurance coverage for damages resulting from a pipe rupture in appellants' refrigerated warehouse. Appellants appealed the district court's grant of appellee's motion for summary judgment on appellants' first coverage theory and the dismissal of appellants' vexatious refusal to pay claim. Appellants also raised several claims of error with respect to the second theory of coverage submitted to the jury, including a claim of instructional error. The court held that the district court erred in adopting the restrictive definition of "collapse" discussed by the Missouri Court of Appeals in Williams v. State Farm Fire & Cas. Co., Eaglestein v. Pac. Nat'l Fire Ins. Co., and Heintz v. U.S. Fid. & Guar. Co., because none of those cases addressed the meaning of the term "collapse" when used in conjunction with the expansive definition of the term "buildings" used in this policy. As a result, the district court erred in granting appellee's motion for summary judgment. The court also held that the district court erred when it determined the weight of ice on the refrigerated pipes did not constitute a specified cause of loss under the terms of the policy. The court further held that it was unnecessary to address the claims appellants appealed with respect to alleged trial errors because the only theory of coverage submitted to the jury was appellants' "weight of ice" coverage claim and appellants were entitled to partial summary judgment on the issue of liability under that theory. The court finally affirmed the district court's grant of summary judgment on the vexatious refusal to pay claim where the district court correctly determined that appellee could insist upon a judicial determination of certain questions without being penalized for a vexatious refusal to pay claim.

This case arose when Associates First Capital Corporation (Associates) purchased integrated risk policies from Certain Underwriters of Lloyd's of London (Lloyd's), the primary insurer, and nine excess insurers. Pursuant to the integrated risk policies, Citigroup, Inc. (Citigroup), as successor-in-interest to Associates, timely notified the insurers of two actions filed within the policy period and made claims for coverage. Initially, all of the insurers denied coverage, but later, Lloyd's settled with Citigroup. After the parties filed motions for summary judgment, the district court dismissed Citigroup's claims for coverage. The court affirmed the denial of coverage and held that the plain language of the insurers' policies (Federal, Steadfast, S.R., and St. Paul) dictated that their coverage did not attach when Citigroup settled with Lloyd's and that Citigroup's claim against another insurer (Twin City) was time barred.

Las Vegas Metropolitan Police Department (LVMPD) was named as a defendant in an action alleging civil rights violations. LVMPD had an insurance policy with respondent Coregis Insurance to protect against liability for police officer actions when the damages exceeded a certain amount. Coregis denied LVMPD coverage for the civil rights claims because LVMPD did not notify Coregis of its potential liability until ten years after the incident that led to the lawsuit. After settling the action, LVMPD filed a declaratory-judgment action seeking a judicial determination that Coregis was required to defend and indemnify LVMPD for damages related to the civil rights claims. The district court entered summary judgment in favor of Coregis, concluding that LVMPD's notice was clearly late and that Coregis was prejudiced by the late notice. The Supreme Court reversed the summary judgment, holding (1) when an insurer denies coverage of a claim because the insured party failed to provide timely notice of the claim, the insurer must demonstrate that notice was late and that it was prejudiced by the late notice in order to assert a late-notice defense to coverage; and (2) there were genuine issues of material fact regarding the timeliness of LVMPD's notice. Remanded.

Pedro Gallegos was injured by David Gonzalez in a car accident. At the time of the accident, Gonzalez was driving a car rented from respondent Malco Enterprises, for which he purchased a liability insurance policy issued by respondent First American and managed by respondent Knight Management. Gallegos obtained a default judgment against Gonzalez. After Gallegos was unable to collect on the judgment, he sought a judicial assignment of Gonzalez's unasserted claims against respondents, which was granted. Gallegos brought the assigned claims, which related to Gonzalez's insurance policy with respondents, in a separate district court action. Respondents moved for summary judgment on the basis that the previous district court could not assign the right of action in a proceeding supplementary to the execution of the judgment, and thus, Gallegos lacked standing to bring Gonzalez's claims. The district court granted the respondents' motion for summary judgment, vacating the earlier assignment order. The Supreme Court reversed, holding (1) rights of action held by a judgment debtor are subject to execution toward satisfaction of a judgment and may be judicially assigned; and (2) Gallegos properly asserted a right of action assigned to him by another district court. Remanded.

Employee was injured while working in Minnesota for Wisconsin-based Employer. Employee applied for Wisconsin and Minnesota workers' compensation benefits. Employer's insurance company, Travelers Insurance, covered the Wisconsin benefits but denied the claim for Minnesota benefits based on an exclusion of Minnesota coverage in Employee's policy. Employee then filed a claim for Minnesota benefits with the Minnesota Department of Labor and Industry. After settling the claim, the Department pursued a petition for reimbursement it had filed against Employer. A compensation judge found that Employer was not insured for Minnesota workers' compensation liability and ordered Employer to reimburse the Department. The Workers' Compensation Court of Appeals (WCCA) reversed, concluding that Employer was entitled to coverage from Travelers under the reasonable expectations doctrine. On review, the Supreme Court reversed and remanded for reconsideration in light of a recent Court decision clarifying that the doctrine should not be used to provide coverage in contravention of unambiguous policy terms. On remand, the WCCA again reversed the compensation judge. On review, the Supreme Court reversed, holding that the WCCA had no authority to declare unambiguous language of an insurance contract to be invalid and unenforceable because the exclusion conflicted with Wisconsin statutory provisions and public policy.