Justia Contracts Opinion Summaries

While Timothy Allen worked as a sales associate for respondent Burnet Realty, he executed agreements to participate in respondent's legal administration program (LA Program). Under the LA Program contracts, Allen and respondent agreed to an allocation of expenses should a dispute arise related to Allen's work for respondent. In litigation commenced after he stopped working for respondent, Allen claimed that respondent violated Minn. Stat. 60K.47 because the LA Program contracts were insurance, and, as a result, respondent was required to be, but was not, authorized to engage in the business of insurance in Minnesota. Allen also claimed other relief on the basis that the contracts were insurance. The district court granted summary judgment in favor of respondent, concluding that the contracts were not contracts of insurance. The court of appeals affirmed. The Supreme Court affirmed the grant of summary judgment to respondent, holding that the LA Program was not "insurance" under statutory definitions on statute or case law.

The insurance company sought a declaratory judgment that a plane crash that killed five people did not trigger coverage under a fleet insurance policy issued to an aircraft maintenance and charter company. The policy identifies the company's clients (including Wyndham) as "named insureds" and as "insured owners," but Wyndham did not participate in its negotiation. Wyndham filed a counterclaim seeking coverage. The crash involved a plane rented by a Wyndham employee to attend a work-related meeting, but did not involve the charter company in any way. The court held that Wyndham was entitled to coverage. The Third Circuit reversed. New Jersey law allows reformation, on the basis of mutual mistake, against a party that did not participate in negotiation of a contract and the insurance company sufficiently pled mutual mistake. Although the contract appears to provide third parties with coverage when using aircraft without the charter company's involvement, both contracting parties believed that the language did not expand coverage to entities unaffiliated with the charter company, such as Wyndham. The premium went down with the addition of the language at issue because the intent was to limit coverage for to aircraft owned, used by, or at the direction of the charter company.

This case involved a dispute between Companion Property (Companion) and Casualty Insurance Company and Triple H Debris Removal, Inc. (Triple H) over the cancellation of a workers' compensation insurance policy based on an unpaid premium. The case was tried to a jury and the jury returned a verdict in favor of Companion. On appeal, Triple H claimed that the district court erred in denying its motion to take judicial notice of an agency relationship, that the district court erred in denying Triple H's motion for a directed verdict, that the district court erred in instructing the jury, and that the jury's verdict and the district court's order in favor of Companion were not supported by sufficient evidence. The court held that due to the nature of the summary judgment proceedings and the district court's cautionary belief that the agency issue remained a litigated issue for the jury's determination, the district court did not abuse its discretion in denying Triple H's motion to take judicial notice. The court also held that the district court properly instructed the jury concerning the issues of agency, breach of contract, and ambiguity of contract and that any error, if present, was harmless. The court further held that the evidence was sufficient for the jury to find that Companion properly canceled Policy Two and that Triple H failed to raise a bona fide dispute as to the premium owed. Accordingly, the judgment of the district court was affirmed.

Plaintiff Kevin Krohn suffered a severe spinal fracture that left him a paraplegic. Plaintiff brought suit under the state no-fault act seeking personal protection insurance benefits from Defendant Home-Owners Insurance Company to cover costs incurred for a surgical procedure performed in Portugal. The procedure was experimental and was not considered a generally accepted treatment for Plaintiff's injury. The issue before the Supreme Court was whether the experimental procedure was a reasonably necessary service for Plaintiff's care, recovery or rehabilitation under state law. Upon review of the record below, the Court concluded that if a medical treatment is experimental and not generally accepted within the medical community, an insured seeking reimbursement for the treatment must present objective and verifiable medical evidence to establish that the treatment was efficacious. In this case, the Court found the procedure was an "understandable" personal decision that offered Plaintiff only a medically unproved "possibility" for an efficacious result. The Court held the procedure was not an allowable expense for insurance reimbursement. The Court affirmed the appellate court that ruled in favor of Defendant.

Developer refused to pay nearly $6.5 million under the prime contract ($5 million was due subcontractors) claiming deficient work. General contractor declined to pay a subcontractor, who sued on the surety bond. The surety asserted that term 6.f conditioned subcontractor's right to payment on contractor's receipt of payment. In the meantime, contractor settled with developer for $1 million--all it was able to pay--and subcontractor declined a pro rata share in return for a release of claims. The district court granted partial summary judgments in favor of subcontractor for an amount $91,790 less than the claimed $1,074,260. The Third Circuit reversed interpretation of the subcontract and rejection of surety's claim for proportional offset for legal fees incurred in the suit against developer, but affirmed denial of subcontractor's waiver claim, and remanded. The parties intended to share the risk of non-payment. Under 6f developer's payment to contractor is a condition precedent to contractor's obligation to pay subcontractor, yielding after six months to provide a mechanism that specifies when and for how much subcontractor may sue contractor. The contract created a mechanism for passing through subcontractor's remaining claims and pegging recovery to the amount that contractor received from developer for subcontractor's work.

This suit arose out of a dispute between a ship repair contractor, barge owner, and insurance company over the terms of a ship repair service contract and a maritime insurance policy. The contractor appealed from the district court's ruling that that the contractor breached its contractual obligation to procure insurance coverage for the barge owner and that it was contractually obligated to defend and indemnify the barge owner against damages ensuing from a workplace injury that occurred while the barge was being repaired. The barge owner cross-appealed from the district court's ruling that it was not entitled to additional insured coverage under the contractor's insurance policy. The court affirmed the district court's holding that there was a written agreement between the contractor and the barge owner which obligated the contractor to defend, indemnify, and procure insurance for the barge owner. The court also affirmed the district court's holding that the barge owner, which was not named in the policy, was not an additional insured under the policy. The court held, however, that the district court made no ruling regarding attorney's fees and therefore, the court remanded to the district court for a determination of the barge owner's entitlement, if any, to attorney's fees.

In one of Plaintiff Leprino Foods Company's warehouses, flavoring compounds derived from nearby-stored fruit products contaminated a large quantity of cheese. Leprino's "all-risk" insurance policy with Defendant Factory Mutual Insurance Company excluded contamination unless with was caused by "other physical damage." When Factory Mutual refused coverage on the basis of the contamination exclusion, Leprino sued. A jury determined that the contamination was caused by other physical damage and therefore was covered by the Factory Mutual insurance policy. On appeal, Factory Mutual contended the verdict was not supported by the evidence presented at trial. Specifically, Factory mutual argued that: (1) expert testimony was not presented to prove causation; (2) the jury instructions pertaining to Leprino's cold-storage guidelines were given in error; and (3) Leprino's damages should have been reduced by its settlement with the warehouse. Upon review of the trial record and applicable legal authority, the Tenth Circuit found that Leprino presented sufficient evidence with regard to expert testimony to prove causation. The Court did not find jury instructions to be erroneous. The Court did agree that Leprino's damages should be reduced by the amount of the settlement received from the warehouse. The Court therefore affirmed part and reversed part of the lower court's decisions and remanded the case for recalculation of damages.

Appellant sued Prudential Financial, Inc., for breach of contract, contending that Prudential, which issued a group long-term disability insurance policy to his employer, breached the policy by denying his claim for disability benefits. At issue was whether the district court properly granted Prudential's motion for summary judgment. The court affirmed summary judgment and held that Prudential's prompt subsequent request for raw data in lieu of an independent medical examination was reasonable as a matter of law.

Plaintiff filed suit against Liberty Mutual, both personally and on behalf of a putative class of similarly situated individuals, alleging that the company's failure to disburse "medical payments" coverage (MedPay) benefits to her constituted a breach of contract, a breach of implied covenant of good faith and fair dealing, and a violation of G.L.c. 93A, 2. At issue was whether a claimant could seek medical expense benefits under the MedPay of a standard Massachusetts automobile insurance policy where she had already recovered for those expenses under a separate policy of health insurance. The court held that plaintiff's complaint and the extrinsic materials submitted by Liberty Mutual contained alleged facts sufficient to "raise a right to relief above the speculative level." The court also held that Liberty Mutual had not demonstrated as a matter of law that plaintiff could not receive MedPay benefits when she already had received medical expense benefits under her policy of health insurance. Accordingly, the order allowing Liberty Mutual's motion to dismiss was reversed and the matter remanded.

Appellees Floyd Demaray and James Hagemann were sued for repeated tortious activity in discharging of pollutants into lakes and streams of a nearby property. Appellees, who owned separate but identical insurance policies with De Smet Farm Mutual Insurance, notified De Smet of the lawsuit. De Smet declined defense of the suit, asserting it owed no duty to defend under the insurance contract. Appellees obtained their own defense counsel and defended the matter through trial, where a jury ruled in their favor. Appellees then sued De Smet, alleging that the company breached its duty to defend them in the previous lawsuit and seeking indemnification for all costs and fees incurred as a result. The trial court granted Appellees' motion for summary judgment, holding that De Smet owed Appellees a duty to defend because the alleged claim, if true, fell within policy coverage. On appeal, the Supreme Court reversed, holding that the policy language was unambiguous and the complaint asserted no claim that would arguably invoke coverage. Remanded with directions to grant summary judgment for De Smet.