Justia Contracts Opinion Summaries

In 2012, a competitor sued Creation for trademark violations. Creation requested that Selective Insurance provide coverage. Selective refused. Creation’s settlement with its competitor prevented Creation from selling one of its primary lines. Creation struggled financially. Selective sought a declaration in Illinois state court that it had no duty to defend. Creation countersued and also alleged breach of the insurance policy. The Illinois court entered partial summary judgment for Creation on its duty-to-defend claim, limited to fees Creation incurred before the original trademark litigation was settled.In 2014—in the middle of the state-court litigation—Creation sued Selective in federal court for breach of contract and under the Illinois Insurance Code. In 2016, Creation voluntarily dismissed its state-court breach-of-contract claim with leave to refile. The Illinois court expressly reserved Creation’s right to maintain its federal action on its contract claim. After the 2017 state court award, the federal district court awarded Creation nearly $3 million in damages on the Insurance Code claim. After remand, Creation unsuccessfully sought to amend its complaint to seek punitive damages. The district court then concluded that the doctrines of claim and issue preclusion barred Creation’s remaining contract claim.The Seventh Circuit reversed, noting that the case is an “anomaly.” The state court expressly reserved Creation’s right to file the claim in federal court, so the suit is not precluded by its earlier state-court litigation. View "Creation Supply, Inc. v. Selective Insurance Co. of the Southeast" on Justia Law

The Supreme Court affirmed in part and reversed in part the decision of the court of appeals reversing the judgment of the district court dismissing Millard Gutter Company's suit against Farm Bureau Property & Casualty Insurance Company without prejudice, holding that the district court correctly dismissed the first-party bad faith claims for lack of standing.After a storm, Millard Gutter obtained assignments of the right to insurance proceeds due under policies of Shelter. Thereafter, Millard filed suit against Shelter in its own name, as assignee, alleging breach of contract and first-party bad faith in failing to settle the claims. The district court granted Shelter's motion to dismiss, concluding that the complaint did not contain sufficient factual allegations to establish standing to assert first-party bad faith claims. The court of appeals reversed in part, concluding that Millard Gutter had stated a plausible claim for first-party bad faith. The Supreme Court reversed in part, holding that Millard Gutter lacked standing to prosecute the policyholders' tort actions for first-party bad faith against Shelter. View "Millard Gutter Co. v. Farm Bureau Property & Casualty Insurance Co." on Justia Law

The Supreme Court affirmed the judgment of the district court dismissing this action brought by Millard Gutter Company against Shelter Mutual Insurance Company seeking to recover damages for breach of insurance contracts and for first-party bad faith, holding that the district court did not err in concluding that Millard Gutter did not have standing to assert first-party bad faith claims against Shelter.After a storm, Millard Gutter obtained assignments from various policyholders of Shelter. Thereafter, Millard filed suit against Shelter in its own name, as assignee, alleging breach of contract and first-party bad faith in failing to settle the claims. The district court granted Shelter's motion to dismiss, concluding that the complaint did not contain sufficient factual allegations to establish standing to assert first-party bad faith claims. The Supreme Court affirmed, holding that Millard Gutter lacked standing to prosecute the policyholders' tort actions for first-party bad faith against Shelter. View "Millard Gutter Co. v. Shelter Mutual Insurance Co." on Justia Law

The United States District Court for the Southern District Court  concluded that Lincoln Life & Annuity Company of New York was not obligated under New York Insurance Law Section 3203(a)(2) to refund a payment that Plaintiff had deposited into a policy account associated with her life insurance policy five months before she died. Because no New York court has  analyzed this provision of New York insurance law, and because insurance policy implicates significant New York State interests, the Second Circuit deferred a decision on this appeal in order to certify the following question to the New York Court of Appeals: Whether a planned payment into an interest-bearing policy account, as part of a universal life insurance policy, constitutes a “premium actually paid for View "Nitkewicz v. Lincoln Life & Annuity Co. of N.Y." on Justia Law

Insured Huntington Ingalls Industries, Inc. and insurer Huntington Ingalls Industries Risk Management LLC seek a declaratory judgment stating there is coverage under a property insurance policy for certain losses incurred by Huntington Ingalls Industries due to the COVID-19 pandemic. The trial court concluded that the complaint did not allege facts that would trigger coverage under the policy and granted judgment on the pleadings in favor of reinsurers. After review, the Vermont Supreme Court disagreed, reversed the trial court. and remanded for further proceedings. View "Huntington Ingalls Industries, Inc. et al. v. Ace American Insurance Company et al." on Justia Law

During the covid-19 pandemic, state and local authorities in Louisiana ordered nonessential businesses to close for a time. This required Plaintiff to temporarily shut his jewelry stores and event spaces in New Orleans. To recoup income lost during the closure, Plaintiff claimed reimbursement under his insurance policy’s coverage for “direct physical loss of or damage to” his property. Plaintiff’s insurer, Axis, denied the claim.   Plaintiff sued Axis along with his insurance agent and broker. The district court dismissed Plaintiff’s claims, concluding that Plaintiff suffered no covered loss or damages and that his agent and broker violated no duty to advise Plaintiff about pandemic-related coverage.   The Fifth Circuit affirmed. The court explained that what denied Plaintiff use of his property was the government’s closure orders. Such losses do not involve a “tangible alteration to, injury to, or deprivation of property.” The district court therefore correctly dismissed Plaintiff’s claims against Axis. Further, contrary to Plaintiff’s arguments, what creates a Louisiana insurance agent’s duty to procure particular coverage is not a “close relationship” with the insured but an insured’s “specific” request for “the type of insurance coverage . . . needed.” Here, Plaintiff did not allege he specifically requested pandemic-related coverage from either the wholesale broker or insurance agent, therefore Plaintiff’s claims against those Defendants were properly dismissed. View "Adler & Sons v. Axis Surplus Ins Co" on Justia Law

Petitioners Washington State Department of Transportation (WSDOT) and Seattle Tunnel Partners (STP), sought reversal of a Court of Appeals decision affirming the partial summary judgment rulings that an “all risk” insurance policy did not provide coverage for certain losses. At issue in WSDOT’s petition for review was whether the loss of use or functionality of the insured property constituted “physical loss” or “physical damage” that triggered coverage. STP’s petition asked whether the insurance policy excluded coverage for damage to the insured property caused by alleged design defects and whether the policy covers delay losses. This case arose out of a major construction project to replace the Alaskan Way Viaduct in Seattle. In 2011, STP contracted with WSDOT to construct a tunnel to replace the viaduct. The project started in July 2013. A tunnel boring machine (TBM) used in the project stopped working in December 2013, and did not resume until December 2015. The project was unable to continue during the two-year period while the TBM was disassembled, removed, and repaired. STP and WSDOT tendered insurance claims under the Policy. Great Lakes denied coverage, and STP and WSDOT sued the insurers, alleging wrongful denial of their claims. The Washington Supreme Court affirmed the Court of Appeals, finding that even if it interpreted “direct physical loss or damage” to include loss of use, no coverage under Section 1 is triggered because the alleged loss of use was not caused by a physical condition impacting the insured property. View "Seattle Tunnel Partners v. Great Lakes Reinsurance (UK) PLC" on Justia Law

Defendant OneBeacon Insurance Company reinsured one of three excess insurance policies issued by Plaintiff Fireman’s Fund Insurance Company to policyholder ASARCO, Inc. After developing significant potential liability on claims made by asbestos-injured claimants, ASARCO sought coverage from Fireman’s Fund under all of its excess policies. ASARCO and Fireman’s Fund ultimately settled all of the claims under the three policies. Fireman’s Fund allocated a portion of that settlement to the policy reinsured by OneBeacon and sought reinsurance coverage on the allocated sum. OneBeacon rejected Fireman’s Fund’s claim, arguing that the settlement allocation violated the terms of the excess and reinsurance policies. The district court granted summary judgment to Fireman’s Fund, and OneBeacon appealed.   The Second Circuit affirmed. The court agreed with the district court that Fireman’s Fund’s allocation of a portion of the settlement to the excess policy reinsured by OneBeacon was not contrary to that policy’s exhaustion requirement or to the terms of the reinsurance policy. OneBeacon is therefore obligated under the reinsurance policy’s follow-the-settlements clause to provide the requested coverage. View "Fireman's Fund Ins. Co. v. OneBeacon Ins. Co." on Justia Law

Cherokee Nation filed a declaratory judgment action seeking insurance coverage under the business interruption provision of a policy issued by a number of insurers for the economic losses it incurred when it temporarily closed its properties due to the threat of COVID-19. The district court granted Cherokee Nation's motion for partial summary judgment, holding the phrase "direct physical loss" in the business interruption provision of the policy included coverage for losses sustained by property rendered unusable for its intended purpose. The district court also found that none of the exclusions raised by the insurers applied to Cherokee Nation's loss. The insurers appealed, and the Oklahoma Supreme Court retained the appeal, holding that Cherokee Nation's losses were not covered under the business interruption section of the insurance policy at issue. The district court erred in finding business interruption coverage when Cherokee Nation did not sustain immediate, tangible deprivation or destruction of property. View "Cherokee Nation v. Lexington Insurance Co., et al." on Justia Law

Plaintiff suffered serious injuries when his motorcycle collided with a car driven by a negligent motorist. After exhausting its liability limits, he next looked to the underinsured-motorist benefits of a policy covering just his motorcycle. When those benefits fell short too, he turned to a policy underwritten by Standard Fire Insurance Company that covered vehicles other than his motorcycle.   Relying on what the parties call the owned-but-not-insured exclusion, it denied coverage because the accident occurred with a vehicle that Plaintiff had decided to insure elsewhere. On cross-motions for summary judgment, the district court agreed with Standard Fire that it owed nothing. The Eighth Circuit affirmed. The court rejected Plaintiff’s argument that the exclusion is ambiguous. Even if “this coverage” might lend itself to some ambiguity in isolation, the remainder of the policy points to only one reasonable interpretation: the owned-but-not-insured exclusion applies in precisely this situation. View "John Eberlein v. Standard Fire Ins Co" on Justia Law