Justia Contracts Opinion Summaries

Privilege Underwriters Reciprocal Exchange ("PURE"), a Florida-domiciled insurance exchange, obtained a judgment, entered on a jury verdict, declaring that Peter Grayson was not entitled to coverage under the uninsured-motorist ("UM") portion of an automobile insurance policy under which Grayson's sister, Alice Grayson, was a named insured. The Circuit Court granted Grayson's motion to set aside that judgment on the basis that it was void for lack of subject-matter jurisdiction. PURE now appealed. Finding that the trial court had jurisdiction over the matter, the judgment in favor of PURE was not void. The Court therefore reversed the Circuit Court and remanded. View "Privilege Underwriters Reciprocal Exchange v. Grayson" on Justia Law

Prather, age 31, tore his left Achilles tendon playing basketball. He scheduled surgery for July 22. On July 21, he called the surgeon’s office complaining of swelling and that an area of the left calf was sensitive and warm to the touch. The surgery was uneventful and he was discharged from the hospital the same day. He returned to work and was doing well in a follow-up visit to his surgeon on August 2. Four days later he collapsed, went into cardiopulmonary arrest, and died as a result of a blood clot in the injured leg that had traveled to a lung. Prather’s widow applied for benefits under his Sun Life group life insurance policy (29 U.S.C. 1132(a)(1)), which limited coverage to “bodily injuries ... that result directly from an accident and independently of all other causes.” The district court granted Sun Life summary judgment. The Seventh Circuit reversed, noting that deep vein thrombosis and pulmonary embolism are risks of surgery, but that even with conservative treatment, such as immobilization of the affected limb, the insured had an enhanced risk of a blood clot. The forensic pathologist who conducted a post-mortem examination of Prather did not attribute his death to the surgery. View "Prather v. Sun Life & Health Insurance Co." on Justia Law

In 2005, John Sebo purchased a home. American Home Assurance Company (AHAC) provided homeowners insurance as of the date of the purchase. It later became clear that the house suffered from major design and construction defects when water began to intrude during rainstorms. Hurricane Wilma further damaged the residence. AHAC denied coverage for most of the claimed losses. Sebo sued AHAC seeking a declaration that the policy provided coverage for his damages. The jury found in favor of Sebo, and the trial court entered judgment against AHAC. The Second District Court of Appeal reversed and remanded for a new trial, concluding that coverage did not exist under Sebo’s all-risk policy when multiple perils combined to create a loss and at least one of the perils was excluded by the terms of the policy. The Supreme Court quashed the Second District’s opinion, holding that the plain language of the policy did not preclude recovery in this case. View "Sebo v. American Home Assurance Co." on Justia Law

A fire destroyed a house. The homeowner’s insurer agreed to pay for the damages resulting from the fire, then sued the contractor who installed the fireplace several years earlier, claiming negligence. The contractor tendered defense of the action to its liability insurer, asserting that even though the fire occurred after the relevant policy periods ended, there was a possibility of coverage because the fire may have been the result of ongoing damage to the wood in the chimney during one or more policy periods due to the exposure of that wood to excessive heat from the chimney every time a fire was burned in the fireplace. The issue this case presented for the Court of Appeal’s review was whether, under the standard language of the commercial general liability policy at issue here, did the liability insurer have a duty to defend the contractor? After review of that policy, the Court answered “yes” and reversed the trial court’s judgment that concluded otherwise. View "Tidwell Enterprises v. Financial Pacific Ins. Co." on Justia Law

In the 1990s, Stryker purchased a Pfizer subsidiary that made orthopedic products, including the “Uni-knee” artificial joint. It was later discovered that those devices were sterilized using gamma rays, which caused polyethylene to degrade. If implanted past their five-year shelf-life, the knees could fail. Expired Uni-Knees were implanted in patients. Stryker, facing individual product-liability claims and potentially liable to Pfizer, sought defense and indemnification under a $15 million XL “commercial umbrella” policy, and a TIG “excess liability” policy that kicked in after the umbrella policy was fully “exhausted.” XL denied coverage, arguing that the Uni-Knee claims were “known or suspected” before the inception of the policy. Stryker filed lawsuits against the insurers, then unilaterally settled its individual product-liability claims for $7.6 million. Stryker was adjudicated liable to Pfizer for $17.7 million. About 10 years later, the Sixth Circuit held that XL was obliged to provide coverage. XL paid out the Pfizer judgment first, exhausting coverage limits. TIG declined to pay the remaining $7.6 million, arguing that Stryker failed to obtain “written consent” at the time the settlements were made. Stryker claimed that the policy was latently ambiguous because XL satisfied the Pfizer judgment first, Stryker was forced to present its settlements to TIG years after they were made. The district court granted Stryker summary judgment. The Sixth Circuit reversed, finding the contract unambiguous in requiring consent. View "Stryker Corp. v. National Union Fire Insurance Co." on Justia Law

Advanced Specialty Pharmacy LLC, Meds I.V., Inc. (collectively referred to as "Meds I.V."), and several others were sued by individuals asserting various wrongful-death and personal-injury claims. Meds I.V. was insured by Pharmacists Mutual Insurance Company. Pharmacists Mutual filed an interpleader complaint in the action and submitted $4 million to the circuit court, which Pharmacists Mutual alleged was the limits to Meds I.V.'s insurance policies with it, and requested that the circuit court divide the insurance moneys among the claimants. The claimants alleged that the policy limits were $7 million. The parties filed cross-motions for a summary judgment, and the circuit court entered a summary judgment in favor of the claimants. The Supreme Court affirmed the summary judgment insofar as it held that the general aggregate limit applied to limit Pharmacists Mutual's liability to $4 million. However, the Court reversed the circuit court's judgment insofar as it held that the products/completed-work-hazard aggregate limit also applied to expand Pharmacists Mutual's liability by $3 million to $7 million. The case was remanded back to the circuit court for further proceedings. View "Pharmacists Mutual Ins. Co. v. Advanced Specialty Pharmacy, LLC" on Justia Law

This action arose from the murder of a teenager by her two friends. The victim’s parents filed a wrongful death action against the killers and the two women they lived with, Tara Clendenen and Rachel Shoaf. Clendenen and Shoaf were insured under homeowner’s insurance policies issued by American National Property and Casualty Company (ANPAC) and Erie Insurance Property and Casualty Company (Erie). Although not parties to the state court action, ANPAC and Erie filed declaratory judgment actions in the federal district court seeking a determination that the homeowner’s insurance policies did not provide coverage for the claims being asserted in the complaint and that the insurers had no duty to defend or indemnify the defendants. The federal court found that it was unclear whether coverage was available to Sheaf and Clendenen in the state court action and certified questions to the Supreme Court. The Supreme Court held (1) the unambiguous intentional/criminal acts exclusions in the insurers’ policies precluded liability coverage to Clendenen and Shoaf for the claims in the underlying case because the murder was expected or intended by the killers, co-insureds under their respective policies; and (2) the unambiguous severability clauses in the insurers’ policies did not prevail over the unambiguous intentional/criminal acts exclusions. View "American National Property & Casualty Co. v. Clendenen" on Justia Law

Scott and Dawn Smith (together, Insureds) filed an insurance claim with Erie Insurance Company (Insurer) seeking uninsured-motorist coverage as a result of injuries suffered by Scott in a no-contact accident allegedly caused by an unidentified vehicle. Insurer denied the claim. The trial court granted summary judgment to Insurer, concluding that a provision in the policy requiring Insureds to provide “independent corroborative evidence” that the unknown driver caused the injury meant that Insureds had to submit evidence, independent of Scott’s own testimony, corroborating that the accident was caused by an unknown motorist, and this they failed to do. The court of appeals reversed. The Supreme Court affirmed, holding that the policy’s requirement of independent corroborative evidence could be met using evidence derived from the insured’s testimony. View "Smith v. Erie Insurance Co." on Justia Law

Terrill Graf, bought his fiancee a van for her 50th birthday. Celebrating the birthday and new purchase, Graf drank liquor and then gathered four friends in the van. Plaintiff Wendy Peden was one of those friends. She says that she expected Graf only to show off the van and to photograph the group. But Graf drove away with his friends in the van, crashing it, and causing serious injuries to Peden. She obtained $240,000 in insurance benefits. But Peden claimed more under her insurance policy for underinsured-motorist benefits. The insurer (State Farm) initially denied the claim, but ultimately paid her an additional $350,000, the maximum amount that she could receive under the underinsured-motorist coverage. Peden sued State Farm under Colorado’s common law and statutory law, claiming an unreasonable denial or delay in paying benefits. The issue this case presented for the Tenth Circuit’s review was whether a reasonable fact-finder could conclude that State Farm unreasonably denied or delayed payment of benefits. The district court answered “no.” But the Tenth Circuit disagreed after careful consideration of the facts of this case, and reversed the grant of summary judgment to State Farm. The denial of Peden’s motion for partial summary judgment was vacated, and the entire matter remanded for further proceedings. View "Peden v. State Farm Mutual Auto Ins Co" on Justia Law

Insured Kourtni Martin suffered serious injuries from an automobile collision in Oklahoma City with Nicholas Gray. At the time of the collision, Insured had UM coverage with Goodville Mutual Casualty Company. The policy was purchased by her parents while they lived in Kansas. She was, however, a listed/rated driver in the policy. Before the collision, Martin's parents notified the Kansas agent that she was moving to Oklahoma to live with her grandmother and that her vehicle would be garaged in Oklahoma. After the collision, the claim was reported to the agent in Kansas who then transmitted the claim to Insurer which was located principally in Pennsylvania. The claim was adjusted out of Pennsylvania. Martin was unable to locate Gray. Her attempts to serve Gray, or his insurer, in Oklahoma and Texas failed. Martin filed this lawsuit against Gray alleging negligence (later adding breach of contract and bad faith against her Insurer). After service by publication, Gray answered asserting a general denial. Martin sought compensation from the Insurer pursuant to her UM policy and negotiations began between Insured and Insurer regarding medical bills and projected future medical bills substantially in excess of $100,000. Insurer offered $27,000 for medical expenses under the "Kansas No Fault Benefits" and $10,000 in UM coverage. The trial court, after reviewing the policy at issue here, applied Kansas law to this case and dismissed Martin's bad faith claim against the Insurer (with prejudice). After review, however, the Oklahoma Supreme Court concluded the trial court erred in applying Kansas law, finding that the actions by Insurer related to the bad-faith claim appear to have occurred primarily in Oklahoma and Pennsylvania: (1) any injury from the alleged bad faith occurred in Oklahoma where Insured is located; (2) the alleged conduct causing injury from bad faith occurred in Oklahoma or Pennsylvania, where the claim was handled; (3) the domicile of Insurer and Insured are Pennsylvania and Oklahoma, respectively, and (4) the place where the relationship between the parties occurred had yet to be determined. However, because the trial court did not apply the "most significant relationship test," there was no evaluation of these factors according to their relative importance. Despite the parties' voluntary settlement of this case, the Supreme Court nevertheless remanded this case for the trial court to make findings with respect to the "most significant relationship test," and then to dismiss. View "Martin v. Gray" on Justia Law