Justia Contracts Opinion Summaries

Plaintiff filed suit against defendants, alleging claims of breach of fiduciary duty, breach of contract, and negligence. The Eighth Circuit affirmed the district court's motion to dismiss the breach of contract and negligence claims because plaintiff failed to plead sufficient facts to state a plausible claim for breach of contract or negligence. In this case, the language of the policy was unambiguous in describing what the parties intended their contract to be—the policy itself and the written application for the policy. Because the loan forms plaintiff relied on to support the breach of contract claim were not part of the insurance policy, the claim failed. Likewise, the negligence claim failed because it relied on the loan forms being part of the insurance contract. View "Torti v. John Hancock Life Insurance Co." on Justia Law

A tree fell on Kaitlyn and Joshua. Kaitlyn died. She was pregnant. Doctors delivered the baby, but he died an hour later. Joshua survived with serious injuries. A state jury found the Somerset Housing Authority liable and awarded $3,736,278. The Authority belonged to the Kentucky Housing Authorities Self-Insurance Fund, which provided a policy with Evanston. Evanston sought a declaratory judgment limiting its liability under the Fund’s policy to $1 million. Meanwhile, through mediation of the state court case, Evanston agreed to pay the “policy limits” in return for an agreement to dismiss the state court action and release the Authority from further liability. Evanston claimed that $1 million was the coverage cap; the defendants claimed it was $2 to $4 million. The district court determined that there was complete diversity and ruled for Evanston on the merits. The Sixth Circuit affirmed. The district court properly aligned the parties given their respective interests in the primary dispute at the time of filing, so that diversity jurisdiction was not destroyed. The policy obligates Evanston to provide a maximum of $1 million of coverage per “occurrence,” with an aggregate limit of $2 million for more than one occurrence. The contract defines “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” When one tree falls at one time, that is one occurrence and one accident. View "Evanston Insurance Co. v. Housing Authority of Somerset" on Justia Law

In 2014, Haley and others filed a putative class action against Kolbe & Kolbe Millwork, claiming that windows purchased from Kolbe were defective and had allowed air and water to leak into (and damage) the plaintiffs’ homes. Kolbe tendered the defense of the defective-product claims to several insurance companies. Two companies—United States Fire Insurance and Fireman’s Fund—obtained permission to intervene in the case. United States Fire successfully moved for summary judgment, arguing that a 2016 decision of the Wisconsin Supreme Court (Pharmacal) absolved the insurers of their duty to defend Kolbe in the underlying suit. The court sua sponte awarded judgment to Fireman’s Fund. The Seventh Circuit reversed the judgment that the insurance companies had no duty to defend. The “Pharmacal” analysis does not apply because the homeowners sought compensation for the repair or replacement of individual elements of a larger structure. This kind of particularized demand was not at issue in Pharmacal, which applied an "integrated structure" analysis. Whether the walls and other elements of the plaintiffs’ homes constitute Kolbe’s “product,” such that coverage for any damage to those materials is extinguished by a policy exclusion is ambiguous. View "Haley v. Kolbe & Kolbe Millwork Co." on Justia Law

From 1977-1984 Banco reinsured 2% of the Insurer’s business. The Insurer stopped writing policies in 1985, went into receivership in 1986, and began liquidating in 1987. Through 1993 the liquidator complied with contractual provisions requiring balances to be calculated quarterly and statements sent. If the Insurer owed reinsurers net balances for the previous quarter, it paid them; if the reinsurers owed the Insurer, bills were sent. In 1993, the liquidator stopped sending checks or bills without explanation. In 2008, the liquidator notified Banco that Banco was owed $225,000 as the net on 1993-1999 business. For periods before 1993, the Insurer was owed $2.5 million. In 2010, Banco protested the bill as untimely. Pine bought the Insurer’s receivables and, in 2012, sued Banco. Litigation about procedural issues, arising from the fact that Banco is wholly owned by Uruguay, consumed several years. The Seventh Circuit affirmed summary judgment, holding that Pine’s claim is untimely. Each contract required scheduled netting of claims and payment of the balance. Claims against Banco accrued no later than 1993. The contracts specify application of Illinois law, which allowed 10 years (until 2003) to sue on contracts. A statute concerning insurance liquidation, 215 ILCS 5/206, does not permit a liquidator to wait until the end to net the firm’s debits and credits. View "Pine Top Receivables of Illinois, LLC v. Banco de Seguros del Estado" on Justia Law

A newly-constructed multi‐story condominium building suffered water damage, allegedly caused by the painting subcontractor, National, failing to apply an adequate coat of sealant to the exterior. In Illinois state court, the condominium association sued the general contractor, developer, and subcontractors. The defendants tendered the defense to Westfield, National’s insurer, Westfield filed a federal action seeking a declaration that it owed no duty to defend in the underlying action. The district court determined that the complaint triggered Westfield’s duty to defend. The Seventh Circuit affirmed the grant of summary judgment, rejecting an argument that failure to apply an adequate amount of paint cannot be considered an “accident” that would constitute a covered “occurrence” under the policy. Westfield also argued that because the damage is to the building itself, which was a new construction and not an existing structure, the association has not demonstrated that there was property damage that is subject to its policy. The policy defines “occurrence” to include the “continuous or repeated exposure to substantially the same harmful conditions,” so the allegation that National acted negligently was sufficient under Illinois law to constitute an “occurrence.” National’s actions allegedly damaged parts of the building that were outside of the scope of its work, so the complaint alleges potentially covered property damage sufficient to invoke the duty to defend. View "Westfield Insurance Co. v. National Decorating Service, Inc." on Justia Law

This appeal arose out of an agent contract dispute between Bret Kunz (“Bret”) and Nield, Inc. (“N.I.”) authorizing Bret to sell insurance on behalf of N.I. N.I. is owned by two brothers, Bryan Nield (“Bryan”) and Benjamin Nield. A dispute arose concerning the method and type of compensation available to Bret under the Contract. Bret filed a complaint seeking, inter alia, a declaratory judgment interpreting the Contract. The district court held the 2009 Contract did not provide for profit sharing as Bret claimed. Bret and his wife, Marti, (collectively, the “Kunzes”) appealed. Finding no reversible errors with respect to how the district court interpreted the Contract, the Idaho Supreme Court affirmed. View "Kunz v. Nield, Inc." on Justia Law

The rights that flow through a subrogation clause allow an insurer to seek reformation of a contract between its insured and a third party. After Associated paid the portion of the underlying settlement that was in excess of the Westfield policy, Associated sought reimbursement from Scottsdale, an insurer that issued a commercial umbrella policy to Alpha. The Fifth Circuit held that the district court erred in reading reformation’s privity requirement to necessitate a specific connection to the Alpha-Scottsdale insurance policy. Rather, privity in Texas focuses on the relationship to a party. In this case, the subrogation clause in the Associated-Alpha policy provided that connection. Accordingly, the court reversed and remanded. View "Associated International Insurance Co. v. Scottsdale Insurance Co." on Justia Law

This case presented for the Washington Supreme Court's review an award of attorney fees against five surety companies following a jury trial for breach of contract in a public works project. The parties litigated the issue of whether three construction firms had defaulted on a contract, thus triggering coverage under a performance bond issued by the surety companies. At issue was whether the existence of a statutory fee provision barred equitable remedies available at common law for coverage disputes and whether the trial court correctly determined that segregation between covered and uncovered fees was impossible. The Court of Appeals affirmed the award of Olympic Steamship fees and held that the trial court did not abuse its discretion in determining that the fees could not be segregated. Finding no reversible error in that judgment, the Washington Supreme Court affirmed. View "King County v. Vinci Constr. Grands Projets" on Justia Law

This appeal arose out of the Ponzi scheme orchestrated by Scott Rothstein through his law firm, Rothstein Rosenfeldt Adler (RRA). Trustees of RRA filed suit alleging breach of contract and bad faith claims against insurance carriers that reached a settlement with Gibraltar and its executives after originally denying coverage. The Eleventh Circuit applied Florida law and exercised plenary review, holding that coverage was barred by a "professional services exclusion" found in each of the policies. Accordingly, the court affirmed the district court's grant of the insurers' motion to dismiss. View "Stettin v. National Union Fire Insurance Co." on Justia Law

Plaintiff, a gas station owner, filed suit demanding that its insurer pay for damages when the fiberglass sheath of one of its underground gasoline storage tanks split after resting on a rock for 16 years. The Court of Appeal affirmed summary judgment to the insurer, holding that a substantial impairment of the tank's structural integrity did not constitute a "collapse" as a matter of law. View "Tustin Field Gas & Food v. Mid-Century Insurance Co." on Justia Law