Justia Contracts Opinion Summaries

The Georgia Supreme Court granted certiorari review to consider whether the Court of Appeals erred in reversing a trial court’s order confirming an arbitration award against Interstate National Dealer Services, Inc. (“INDS”), in favor of Southern Mountain Adventures, LLC (“Dealer”), and Adventure Motorsports Reinsurance Ltd. (“Reinsurer”). The dispute arose from the parties’ contractual relationship pursuant to which Dealer sold motorsports vehicle service contracts, which were underwritten and administered by INDS, to Dealer’s retail customers, and Reinsurer held funds in reserve to pay covered repair claims. The Supreme Court concluded the Court of Appeals erred in reversing the confirmation of the award because the arbitrator manifestly disregarded the law in rendering the award. In Case No. S21G0015, the Supreme Court reversed the Court of Appeals’ decision reversing the order confirming the arbitration award on that basis, and remanded for resolution of INDS’s argument that the arbitrator overstepped his authority in making the award. In Case No. S21G0008, the Supreme Court vacated the Court of Appeals’ decision dismissing as moot Dealer and Reinsurer’s appeal of the trial court’s failure to enforce a delayed-payment penalty provided in the arbitration award, and remanded for reconsideration of that issue. View "Adventure Motorsports Reinsurance, Ltd., et al. v. Interstate National Dealer Services, Inc." on Justia Law

Hodroj, a passenger, was injured in a single-car collision. The driver was insured by CSAA. Hodroj’s attorney wrote to CSAA offering that Hodroj would settle his claim for bodily injuries in exchange for payment of the driver’s insurance policy limits if CSAA provided a sworn declaration confirming the policy limits and delivered a check within 21 days of acceptance. CSAA could condition its acceptance on Hodroj signing a written release of all bodily injury claims. CSAA responded: “We accept ... [and] are tendering ... $100,000[.]” Enclosed were a sworn declaration attesting to the policy limits, and a written release to be signed by Hodroj. A $100,000 check was sent separately, providing that it should not be presented until the release was signed. Hodroj reneged on the settlement because the release included a release of claims for property damage. Hodroj sued the driver. CSAA sued Hodroj for breach of contract.The court of appeal affirmed judgment in favor of CSAA. An objective observer would conclude that the parties intended to settle Hodroj’s bodily injury claim for the policy limits. That the proposed document contained terms materially different from what had been agreed did not change the binding effect of the agreement. Hodroj was not obliged to sign a release that was inconsistent with what he agreed to but a proposal that does not accurately reflect the agreement does not unwind the entire deal. Hodroj breached the contract by filing suit. View "CSAA Insurance Exchange v. Hodroj" on Justia Law

Plaintiffs filed suit alleging that Allstate breached the terms of their insurance policies by not using either the "Cost Approach" or "Comparable Sales Approach" to determine the "Actual Cash Value" (ACV) of their automobiles. The Fifth Circuit affirmed the district court's grant of Allstate's motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), concluding that neither the contract nor Texas state law requires either the Cost or the Comparable Sales Approach. View "Cody v. Allstate Fire and Casualty Insurance Co." on Justia Law

Plaintiff filed a class action complaint against Farm Bureau, alleging breach of contract and seeking a declaratory judgment. Plaintiff's breach of contract claim was based, in part, on an alleged violation of Arkansas Insurance Rule and Regulation 43, which he claimed was incorporated into the policy. The district court granted Farm Bureau's motion to dismiss for failure to state a claim. Plaintiff then filed a motion to clarify whether the order also disposed of the common law breach of contract theory, which the district court dismissed.The Eighth Circuit agreed that the Arkansas regulation that Farm Bureau allegedly violated is not incorporated into plaintiff's policy, and thus he cannot use it as the basis for a breach of contract claim. However, because plaintiff also states a breach of contract claim based on the policy language, the court reversed in part. In this case, plaintiff alleges that "a 9% reduction on a used vehicle is not typical and does not reflect market realities," and that dealers' actual practice is not to inflate prices above market value because of the "intense competition in the context of internet pricing and comparison shopping." The court explained that, if this is true, then Farm Bureau did not consider the truck's fair market value. Rather, it considered an artificially lower value, in breach of its contractual duty and thus plaintiff stated a claim for breach of contract based on the policy language. Finally, the court denied plaintiff's motion to certify questions of law to the Arkansas Supreme Court. View "Smith v. Southern Farm Bureau Casualty Insurance Co." on Justia Law

In 2001, Lavastone Capital LLC (Lavastone) entered into an agreement with Coventry First LLC (Coventry) to purchase “life settlements” – life-insurance policies sold on the secondary market. One was that of Beverly Berland. Lincoln Financial (Lincoln) issued the policy to Berland in 2006. But Berland did not act alone in acquiring it. A few months before, she approached a business called “Simba.” As Simba pitched it, the transaction allowed clients to “create dollars today by using a paper asset, (a life insurance policy not yet issued from a major insurance carrier insuring your life)” by selling it on the secondary market. Clients did not need to put up any money upfront. Instead, they got nonrecourse loans to finance the transactions, which allowed them to make all necessary payments without tapping into personal funds. The only collateral for the loan was the life-insurance policy itself. Berland agreed to participate in several transactions with Simba, profiting greatly. Lavastone kept the policy in force, paying all relevant premiums to Lincoln Financial. Upon Berland’s death more than seven years later, Lincoln paid Lavastone $5,041,032.06 in death benefits under the policy. In December 2018, Berland’s estate filed a complaint against Lavastone in the District Court, seeking to recover the death benefits that Lavastone received under 18 Del C. 2704(b). In 2020, the parties filed cross-motions for summary judgment. In 2021, the District Court certified the three questions of law to the Delaware Supreme Court. The Supreme Court responded: (1) a death-benefit payment made on a policy that is void ab initio under 18 Del. C. 2704(a) and PHL Variable Insurance Co. v. Price Dawe 2006 Insurance Trust was made “under [a] contract” within the meaning of 18 Del. C. 2704(b); (2) so long as the use of nonrecourse funding did not allow the insured or his or her trust to obtain the policy “without actually paying the premiums” and the insured or his or her trust procured or effected the policy in good faith, for a lawful insurance purpose, and not as a cover for a wagering contract; and (3) an estate could profit under 18 Del. C. 2704(b) where the policy was procured in part by fraud on the part of the decedent and the decedent profited from the previous sale of the policy, if the recipient of the policy benefits cannot establish that it was a victim of the fraud. View "Lavastone Capital LLC v. Estate of Beverly E. Berland" on Justia Law

This appeal presented an issue of first impression for the Court of Appeals: does a commercial property insurance policy provide coverage for a business’s lost income due to the COVID-19 pandemic? After review of the specific insurance policy that California Mutual Insurance Company (California Mutual) issued to The Inns by the Sea (Inns) for its five lodging facilities, the Court determined Inns could not recover from California Mutual for its lost business income resulting from the COVID-19 pandemic. Further, Inns did not identify any manner in which it could amend its complaint to state a claim for coverage. Accordingly, the Court affirmed the trial court’s order sustaining California Mutual’s demurrer without leave to amend. View "The Inns by the Sea v. Cal. Mutual Ins. Co." on Justia Law

Anderson, the lead plaintiff in a putative class action against her life insurance provider, Wilco, alleged that in 2011-2016, the company breached the terms of her universal life insurance policy by increasing her monthly rate for impermissible reasons. Her policy provides for a “guaranteed maximum monthly cost of insurance rate” and a “current monthly cost of insurance rate.” The guaranteed rate is calculated “based on” Anderson’s “age, sex, and premium class.” The current rate, by contrast, “will be determined by the Company” but cannot exceed the guaranteed rate. As a typical universal life insurance policy, Anderson’s policy was a hybrid investment vehicle and life insurance policy. As her policy aged, Wilco began to increase Anderson’s current rate sharply; her policy’s accumulation value (essentially the investment earnings from which Anderson could cover her monthly payments) was wiped out, and Anderson failed to make the monthly payments out-of-pocket. Her policy lapsed, and Anderson sued.The Eleventh Circuit affirmed the dismissal of her complaint. The policy gave Wilco discretion to set Anderson’s current rate as long as that rate was less than the guaranteed rate and unambiguously gave Wilco discretion to set Anderson’s current monthly rate. View "Anderson v. Wilco Life Insurance Co." on Justia Law

The Supreme Court reversed in part and affirmed in part the judgment of the district court concluding that Appellant was not entitled to underinsured motorist (UIM) and medical payment (MP) coverages under his automobile policy with USAA Casualty Insurance Company, holding that the court erred in part.The district court granted summary judgment for USAA on both coverages. The Supreme Court reversed in part, holding (1) as to the UIM coverage, the district court erred by interpreting the contract and determining its terms were not contrary to public policy; and (2) as to the MP coverage, the district court properly granted summary judgment in favor of USAA. View "Goss v. USAA Casualty Insurance Co." on Justia Law

In 1993, the County and the Orange County Employee Retirement System (OCERS) entered into a Memorandum of Understanding (MOU), allowing the County to access surplus investment earnings controlled by OCERS and depositing a portion of the surplus into an account to pay for county retirees' health insurance. The county adopted the Retiree Medical Plan, funded by those investment earnings and mandatory employee deductions. The Plan explicitly provided that it did not create any vested rights. The labor unions then entered into MOUs, requiring the county to administer the Plan and that retirees receive a Medical Insurance Grant. In 1993-2007, retired employees received a monthly grant benefit to defray the cost of health insurance. In 2004, the county negotiated with its unions to restructure the underfunded program, reducing benefits for retirees.Plaintiffs filed suit. The Ninth Circuit affirmed summary judgment in favor of the county. The 1993 Plan explicitly provided that it did not create any vested right to benefits. The Plan was adopted by resolution and became law with respect to Grant Benefits, part of the MOUs. The MOUs expired on their own terms by a specific date. Absent express language providing that the Grant Benefits vested, the right to the benefits expired when the MOUs expired. The Plan was not unilaterally imposed on the unions and their employees without collective bargaining; the unions executed MOUs adopting the Plan. The court rejected an assertion that the Grant Benefit was deferred compensation and vested upon retirement, similar to pension benefits. View "Harris v. County of Orange" on Justia Law

The Supreme Judicial Court remanded these consolidated actions against two insurance companies to the superior court for further proceedings, holding that inherent diminished value (IDV) damages, if adequately proved, are recoverable under part 4 of the standard Massachusetts automobile insurance policy, 2008 edition.The three plaintiffs in these actions each owned an automobile that was involved in a collision with an automobile owned or operated by a party insured by either of the two insurance company defendants. Defendants compensated Plaintiffs' for the cost to repair their automobiles to their precollision condition but did not pay Plaintiffs for alleged IDV damages to the vehicles. The judge granted summary judgment in favor of Defendants. The Supreme Judicial Court vacated the judgment in part and affirmed in part, holding (1) the motion judge erred in allowing summary judgment with respect to Plaintiffs' claims of breach of contract; and (2) the motion judge properly granted summary judgment in favor of Defendants on Plaintiffs' unfair business practices claims. View "McGilloway v. Safety Insurance Co." on Justia Law