Justia Contracts Opinion Summaries

In 2006, Harvey, the insured, was involved in an automobile accident with Potts. Potts, age 51, died as a result, leaving a wife and three children. Harvey’s vehicle was registered in both his name and his business’s name and was covered under a $100,000 GEICO liability policy. Two days after the accident, GEICO resolved the liability issue adversely to Harvey. GEICO did not communicate a request by the estate’s attorney for a statement. GEICO tendered $100,000 to the estate’s attorney. The estate returned GEICO’s check and filed a wrongful death suit. A jury awarded the estate $8.47 million. Harvey filed a bad faith claim against GEICO. The estate's lawyer testified that he did not receive any communication from GEICO following his initial letter and that had he known that Harvey’s only other asset was a business account worth approximately $85,000, he would not have filed suit. The Fourth District Court of Appeal reversed the judgment entered in favor of Harvey, stating that “the evidence was insufficient as a matter of law to show ... bad faith,” and, “even if the insurer’s conduct were deficient, the insurer’s actions did not cause the excess judgment.” The Supreme Court of Florida reversed. The Fourth District failed to properly apply the directed verdict standard and misapplied precedent setting forth the fiduciary duties of insurance companies. An insurer can be liable for bad faith even “where the insured’s own actions or inactions . . . at least in part” caused the excess judgment. View "Harvey v. Geico General Insurance Co." on Justia Law

These appeals relate to life insurance policies that were issued by Sun Life to non-parties and that were subsequently acquired by Imperial. The district court dismissed all claims in both cases.The Eleventh Circuit held that Sun Life waived its opportunity to rely on non-forum law to interpret the policies at issue and thus interpreted the relevant policies under Florida law. In regard to Sun Life's complaint, the court affirmed the district court's dismissal of the fraud conspiracy and declaratory judgment counts; and vacated the dismissal of the RICO, RICO conspiracy, fraud, aiding and abetting fraud, and tortious interference with contractual relations counts. In regard to Imperial's complaint, the court affirmed the breach of contract count to the extent it asserted a breach of the rights-and-privileges clause. The court vacated the district court's dismissal of the breach of contract count to the extent it asserted a breach of the incontestability clause. The court remanded for further proceedings. View "Sun Life Assurance Company of Canada v. Imperial Premium Finance, LLC" on Justia Law

In this insurance dispute, the Supreme Judicial Court reversed the superior court’s allowance of the insurers’ motion for summary judgment, holding that the allegations in the underlying complaint were sufficient to trigger the insurers’ duty to defend the insured in the underlying action.The two insurers in this case had issued several general commercial liability policies to the insured. The insured was sued in federal court for improper advertising. The insurers denied coverage on the ground that a provision in the policies covering improper use of another’s advertising idea did not cover the claims raised in the action but, nevertheless, agreed to fund the insured’s defense under a reservation of rights. The insurers then sought a declaration that they were not obligated to defend the insured in the underlying action. The superior court granted summary judgment for the insurers. The Supreme Judicial Court reversed, holding that the policies that the insured purchased, which provided coverage in the event the insured was sued for alleged advertising injuries, covered the insured for the claims at issue in the underlying action. View "Holyoke Mutual Insurance Co. in Salem v. Vibram USA, Inc." on Justia Law

Belsen Getty, LLC, a registered investment adviser owned by Terry Deru, obtained a claims-made financial-services-liability policy (the Policy) from XL Specialty Insurance Company covering Belsen Getty and its advisers for the period for one year. Under the policy, XL had no duty to defend. During the policy period James, Jenalyn, and Wade Morden brought claims against Belsen Getty and Deru alleging improper and misleading investment advice. XL denied coverage, asserting the Mordens’ claims and claims brought by the Securities and Exchange Commission (SEC) before the policy period concerned “Interrelated Wrongful Acts,” as defined by the Policy, and that the Policy therefore required treating the two claims as one claim made before the policy period. Belsen Getty and Deru then settled with the Mordens, assigning their rights against XL; and the Mordens sued XL in federal district court, raising the assigned claims that XL breached its covenant of good faith and fair dealing and its fiduciary duties to Belsen Getty and Deru in denying coverage under the Policy. XL counterclaimed that the Policy’s Interrelated Wrongful Acts provision precluded coverage. The Mordens moved for partial summary judgment on the counterclaim and on several of XL's affirmative defenses. XL moved for summary judgment based on the policy and for failure to prove bad faith or breach of fiduciary duty. The district court denied XL's counterclaim, but granted summary judgment on the bad-faith and fiduciary-duty claims. The Mordens appealed summary judgment against them on their bad-faith and fiduciary-duty claims and on the denial of their motion to amend their complaint to add a breach-of-contract claim. XL cross-appealed the summary judgment against it on its counterclaim that the Policy’s Interrelated Wrongful Acts provision barred all the Mordens’ claims. The Tenth Circuit reversed the denial of XL’s motion for summary judgment on its counterclaim: this reversal undermined the Mordens’ challenges to the summary judgment against them and the denial of their motion to amend. The Court therefore affirmed summary judgment against the Mordens on their claims and the denial of their motion to amend. View "Morden v. XL Specialty Insurance" on Justia Law

Packgen's customer, CRI, required a new type of intermediate bulk container (IBC) for a chemical catalyst used in refining crude oil into other petroleum products. The new IBC's outer surface consisted primarily of polypropylene fabric rather than metal; it could be collapsed for storage. CRI's catalyst is self-heating and can ignite when exposed to oxygen. Packgen engaged Berry to manufacture a laminate of woven polypropylene chemically bonded to aluminum foil, to strengthen the IBC’s exterior and serve as a barrier to oxygen, ultraviolet light, and infrared radiation. By April 2008, Packgen was selling an average of 1,261 IBCs per month to CRI and was making overtures to other petroleum refiners. While CRI personnel were lifting an IBC full of catalyst, the foil layer separated from the polypropylene, exposing the interior lining. Other failures followed, some resulting in fires. Packgen determined that foil laminate obtained from Berry was defective. CRI canceled pending orders and destroyed and refused to pay for IBCs that Packgen had provided. Word reached other potential Packgen customers. Packgen sued Berry. The First Circuit affirmed an award of $7.2 million in damages. Berry unsuccessfully demanded that Illinois National indemnify it for all but the first $1 million, which Berry’s primary liability insurer agreed to cover. The Seventh Circuit affirmed summary judgment in favor of Illinois National. The policy covers damages that Berry is required to pay “because of … Property Damage.” While some portion of the lost profits award might be attributable to property damage, Berry did not attempt to make that showing. View "Berry Plastics Corp. v. Illinois National Insurance Co." on Justia Law

This appeal concerned the guardianship of a ten-year-old child, Jane Doe II (“Jane”), whose parents passed away in 2017. A family friend petitioned for guardianship; Jane's aunt (twin sister of her mother) also petitioned for guardianship. A guardian ad litem recommended the friend be awarded temporary guardianship for Jane to finish the school year, then the aunt be permanent guardian. The friend appealed. The final decree appointing Aunt as Jane’s permanent guardian was vacated by the Idaho Supreme Court, which remanded the case for the magistrate court to conduct a hearing to determine whether Jane possessed sufficient maturity to direct her own attorney prior to a new trial. View "Western Community Ins v. Burks Tractor" on Justia Law

Some of KVG’s commercial tenants got caught growing marijuana in their rental units and caused substantial damage to the premises before the police caught them. KVG speedily evicted the tenants and sought coverage from its insurers for nearly $500,000 in related losses. Westfield denied the claims. The Sixth Circuit affirmed summary judgment for Westfield, reasoning that the damage was excluded by the policy, which is the Building and Personal Property Coverage Form. Under this Form, Westfield agreed to pay for “direct physical loss of or damage to Covered Property . . . caused by or resulting from any Covered Cause of Loss.” A “Covered Cause of Loss” is any “Risk[] Of Direct Physical Loss,” with several exclusions, including that Westfield “will not pay for loss or damage caused by or resulting from” any “[d]ishonest or criminal act by you, any of your partners, members, officers, managers, employees (including leased employees), directors, trustees, authorized representatives or anyone to whom you entrust the property for any purpose.” While cultivating marijuana is a crime under federal law, it is protected by Michigan law under certain conditions but no reasonable jury could find that KVG’s tenants complied with Michigan law. View "K.V.G. Properties, Inc. v. Westfield Insurance Co." on Justia Law

Allstate Insurance Company denied underinsured motorist (UIM) coverage to Nathan Ball for an accident involving his own vehicle after determining he was not an insured person under his then-fiancée’s parents’ Allstate automobile insurance policy. Ball contended that his fiancée was a “policyholder” for purposes of her parents’ policy, a necessary predicate to his argument for UIM coverage under the policy. But the policy declarations page did not list “policyholders,” it listed only “named insureds” and “drivers.” The superior court granted summary judgment on grounds that the policy language was not ambiguous because “policyholder” referred only to the parents, the “named insureds,” that the fiancée as only a listed driver, had no objectively reasonable expectation that she was a policyholder, and, therefore, that Allstate did not have a duty to provide Ball UIM coverage. The Alaska Supreme Court agreed “policyholder” encompassed only the named insureds, not listed drivers, and therefore affirmed the superior court’s decision. View "Ball v. Allstate Insurance Company" on Justia Law

Third-party defendant Dr. George Likakis was charged with aggravated arson and insurance fraud after a fire destroyed a building he owned (the Property). Plaintiff RSI Bank held a first-priority mortgage on the Property, and defendant/third-party plaintiff The Providence Mutual Fire Insurance Company (Providence) issued a commercial liability policy that covered the Property. Following the fire, Likakis and RSI Bank submitted insurance claims. Providence denied both sets of claims. Providence’s denial of coverage prompted the filing of two actions in the Law Division: (1) filed by Likakis against Providence; and (2) an action gave rise to this appeal: RSI Bank’s claims against Providence for breach of contract, fraudulent misrepresentation, violations of the Consumer Fraud Act, and bad faith. Providence filed a third-party complaint against Likakis, alleging claims for indemnification. Both civil lawsuits were pending when criminal proceedings commenced against Likakis. Likakis was indicted; Providence did not object to Likakis’ admission to the PTI program, provided he paid restitution, committed to protect/compensate Providence from all claims that might be brought by RSI, and dismissal of Likakis’ suit against Providence. With Likakis’s consent - but no assessment of his ability to pay - the court also imposed the three conditions that Providence had requested. During his PTI term, Likakis paid Providence the specific restitution amount and dismissed with prejudice his lawsuit. Likakis did not make any payment related to the separate indemnification provision. With the prosecutor’s consent, the PTI court terminated Likakis’s PTI supervision and dismissed his indictment. RSI Bank and Providence settled their coverage dispute. Providence agreed to pay RSI Bank to settle all of the bank’s claims based on the insurance policy and moved for summary judgment against Likakis based on the provision of the PTI agreement. The court held that the indemnification provision of the PTI agreement was enforceable against Likakis and ordered Likakis to pay Providence the portion of the settlement funds Providence attributed to fire damage, less the amount Likakis had paid during his PTI supervisory period. Likakis appealed, and an Appellate Division panel affirmed. The New Jersey Supreme Court reversed, finding an open-ended agreement to indemnify the victim of the participant’s alleged offense for unspecified future losses was not an appropriate condition of PTI. Moreover, a restitution condition of PTI was inadmissible as evidence in a subsequent civil proceeding against the PTI participant. The indemnification provision of the PTI agreement at issue should have played no role in this civil litigation. View "RSI Bank v. The Providence Mutual Fire Insurance Company" on Justia Law

The First Circuit vacated the district court’s grant of Liberty Mutual Insurance Company’s summary judgment motion in this case alleging that Liberty breached Plaintiff’s contractual rights by wrongfully denying his request for coverage under an insurance policy, holding that the district court’s reasoning in granting Liberty’s motion for summary judgment was flawed.Plaintiff argued in his complaint that Liberty improperly denied his coverage request under the Directors and Officers insurance policy that Liberty had issued to a Puerto Rico hospital where Plaintiff served as the medical director. The district court concluded that, under the policy, the “Claim” that would give rise to the “Loss” for which Plaintiff sought coverage should be “deemed first made” before the policy took effect and, therefore, was not covered by the policy. The First Circuit vacated the district court’s order granting Liberty’s summary judgment motion, holding that the “Claim” for which Plaintiff sought coverage from Liberty was not “first made” prior to the beginning of the policy at issue, and the district court wrongly construed the policy in concluding otherwise. View "Jimenez-Castaner v. Liberty Mutual Insurance Co." on Justia Law