Justia Contracts Opinion Summaries

Developers and a general contractor of an apartment complex purchased a primary commercial general liability (CGL) insurance policy from Arch Insurance Group and an excess CGL insurance policy from National Surety Corporation (NSC). Westlake Investments, LLC, which purchased the complex, sued the insureds for construction defects. Arch defended the suit on behalf of the insureds, and the parties eventually settled. Pursuant to the settlement agreement, the insureds assigned their claims against NSC on the excess CGL policy to Westlake. Thereafter, NSC initiated this declaratory judgment action seeking a declaration that it had no obligation to pay any portion of the judgment awarded to Westlake. Westlake counterclaimed for breach of contract. The district court granted partial summary judgment in favor of Westlake, concluding that property damage resulting from defective work performed by an insured’s subcontractor may constitute an accident that qualifies as an occurrence covered by the Arch policy, and therefore, the NSC policy. After a trial, the jury returned a verdict in favor of Westlake. The Supreme Court affirmed in part and reversed in part, holding that defective workmanship by an insured’s subcontractor may constitute an occurrence under the terms of the Arch policy incorporated by reference into the NSC policy. View "Nat’l Surety Corp. v. Westlake Invs., LLC" on Justia Law

After Plaintiff was injured, he sought benefits from Defendant-insurer under an indemnity benefit policy. Plaintiff subsequently filed suit alleging that Defendant breached the insurance contract and the implied covenant of good faith and fair dealing. The jury awarded Plaintiff $31,500 in unpaid policy benefits, $35,000 in damages for emotional distress, and $19 million in punitive damages. The parties stipulated that the amount of attorney fees to which Plaintiff was entitled under Brandt v. Superior Court was $12,500, and the court awarded that amount. Defendant moved for a new trial seeking a reduction in the punitive damages award on the grounds that it was unconstitutionally excessive. The trial court granted the motion and reduced the jury’s award to a 10-to-1 ratio of punitive to compensatory damages. In so doing, the court considered only the $35,000 damages award but did not include the $12,500 in Brandt fees. The court of appeal affirmed. The Supreme Court reversed, holding that, in determining whether a punitive damages award is unconstitutionally excessive, Brandt fees may be included in the calculation of the ratio of punitive to compensatory damages, regardless of whether the fees are awarded by the trier of fact as part of its verdict or are determined after the verdict has been rendered. Remanded. View "Nickerson v. Stonebridge Life Ins. Co." on Justia Law

Kut Suen and May Far Lui (the Luis) owned a building that sustained water damage after a pipe burst while the building was vacant. The Luis' insurance policy for the building limited coverage for water damage based on vacancy: coverage was suspended if the building remained vacant for 60 consecutive days and, effective at the beginning of any vacancy, and there was no coverage for certain specified losses, including water damage. The Luis argued that the policy was ambiguous and should have been interpreted in the Luis' favor to mean that the exclusion of coverage for water damage would commence only after a 60-day vacancy. The Washington Supreme Court rejected the Luis' arguments and found that the policy unambiguously excluded coverage for water damage immediately upon vacancy. The Supreme Court reversed the trial court's contrary holding and affirmed the Court of Appeals. View "Lui v. Essex Insur. Co." on Justia Law

Har-Mar Collisions, Inc. appealed a circuit court judgment after a jury verdict of $101,054.40 in favor of Har-Mar Collisions on its breach-of-contract claim against Scottsdale Insurance Company. The trial court offset the jury verdict by the amounts Har-Mar Collisions had recovered from a settlement agreement it had entered into with Auto-Owners Insurance Company and Owners Insurance Company and from a settlement agreement it had entered into with CRC Insurance Services, Inc. ("CRC"). Because the total amount Har-Mar Collisions recovered from those two settlement agreements exceeded the amount of the jury verdict, the trial court entered a judgment awarding Har-Mar Collisions $0. Har-Mar Collisions appeals, challenging the setoff. Scottsdale cross-appealed from the judgment against it. After review, the Supreme Court reversed the judgment to the extent it applied a setoff against the jury verdict returned against Scottsdale and remanded the case for the trial court to enter a judgment reinstating the jury verdict of $101,054.40. The Court remanded for the trial court to reconsider Har-Mar Collisions' motion to tax costs. The trial court was affirmed in all other respects. View "Scottsdale Insurance Company v. Har-Mar Collisions, Inc." on Justia Law

Sweet Valley Missionary Baptist Church appealed a circuit court order denying its request for prejudgment interest against Alfa Insurance Company. This suit arose from a 2005 insurance claim Sweet Valley filed with Alfa Insurance Corporation (“Alfa”), following storm damage to its property caused by Hurricane Katrina. Sweet Valley had a commercial insurance policy with Alfa Insurance. Sweet Valley filed suit against Alfa for breach of contract and alleged that Alfa had undervalued its claim. Sweet Valley requested prejudgment interest in its complaint. It was determined that Sweet Valley was entitled to $462,761.89. Alfa remitted the full amount to Sweet Valley. Subsequently, Alfa filed a motion for summary judgment, alleging that, since an appraisal had been conducted and it already had paid Sweet Valley $462,761.89, no genuine issues remained. The trial court granted Alfa’s motion. Because there was no judgment in this instance upon which interest could accrue, the Supreme Court affirmed the trial court’s judgment. View "Sweet Valley Missionary Baptist Church v. Alfa Insurance Corporation" on Justia Law

Travelers Property Casualty Company of America (Travelers) petitioned for review of a court of appeals judgment affirming the district court’s denial of its motion for directed verdict in a lawsuit brought by its insured, Stresscon Corporation. Stresscon, a subcontracting concrete company, filed suit against Travelers, alleging, among other things, that Travelers acted in bad faith, unreasonably delaying or denying its claim for covered insurance benefits; and Stresscon sought awards of two times the covered benefits along with fees and costs, as prescribed by statute. Stresscon’s claims for relief arose from a serious construction accident in July 2007, which was caused by a crane operator employed by a company that was itself a subcontractor of Stresscon. Stresscon’s general contractor, Mortenson, sought damages from Stresscon, asserting Stresson’s contractual liability for the resulting construction delays, and Stresscon in turn sought indemnification from Travelers. Although there was much dispute over the factual and legal import of Travelers’ reservation of rights and other of its communications with both Stresscon and Mortenson concerning Mortenson’s claim, there was no dispute that by December 31, 2008, Travelers had not paid the damages asserted by Mortenson. The appellate court rejected Travelers’ contention that the no-voluntary-payments clause of their insurance contract relieved it of any obligation to indemnify Stresscon for payments Stresscon had made without its consent. Instead, the court of appeals found that the Colorato Supreme Court's opinion in "Friedland v. Travelers Indemnity Co.," (105 P.3d 639 (2005)) had effectively overruled prior “no voluntary payments” jurisprudence to the contrary and given Stresscon a similar opportunity. The Supreme Court found that its adoption of a notice-prejudice rule in "Friedland" did not overrule any existing “no voluntary payments” jurisprudence in Colorado, and because the Court declined to extend notice-prejudice reasoning in Friedland to Stresscon’s voluntary payments, made in the face of the no-voluntary-payments clause of its insurance contract with Travelers, the judgment of the court of appeals was reversed. View "Travelers Prop. Cas. Co. v. Stresscon Co." on Justia Law

Bellingham filed a beach of contract claim against BancInsure after BancInsure denied coverage for loss that BancInsure claimed was not caused by employee-caused loss exclusions, exclusions for theft of confidential information,nor exclusions for mechanical breakdown or deterioration of a computer system. The district court granted summary judgment to Bellingham. The court concluded that no Minnesota case precludes application of the concurrent-causation doctrine to financial institution bonds. The court found that Minnesota courts would adhere to the general rule of treating financial institution bonds as insurance polices and interpreting those bonds in accordance with the principles of insurance law. Furthermore, the court rejected BancInsure’s argument that the Bond imposes a higher standard-of-proof than the concurrent-causation doctrine. Bellingham still had to show that its loss was directly caused by the fraudulent transfer, and the application of the concurrent-causation doctrine did not interfere with that requirement. The court also rejected BancInsure’s argument that the parties successfully drafted around the concurrent-causation doctrine in the Bond. As a matter of law, the Bond’s reference to “indirectly” is not a sufficient invocation of the “anti-concurrent causation” provision, and thus the Bond at issue in this matter does not contain such a provision. Finally, the court agreed with the district court's conclusion that the efficient and proximate cause of the loss was the illegal transfer of the money and not the employees' violations of policies and procedures. In this case, the overriding cause of the loss Bellingham suffered remains the criminal activity of a third party. Accordingly, the court affirmed the judgment. View "State Bank of Bellingham v. BancInsure, Inc." on Justia Law

Stampley, an independent truck driver, sued Altom Transport, alleging that Altom had failed to pay him enough for driving his truck for it. Altom turned to its insurer, Westchester, for coverage in the suit. Westchester denied coverage; Altom handled its own defense; and the parties tried to settle. At that point, counsel for both Stampley and Altom tried to pull Westchester into the case, by making settlement offers within the limits of the Westchester policy and seeking Westchester’s approval. Westchester did not participate. Altom sought a declaratory judgment establishing that Westchester had a duty to defend, that it wrongfully had failed to do so, and that its handling of the matter had been unreasonable and vexatious. The Seventh Circuit affirmed dismissal of the suit, finding that all of the claims in the underlying suit arise directly from Stampley’s lease agreement with Altom and fell within the policy’s contract claim exception. View "Stampley v. Westchester Fire Ins. Co." on Justia Law

In appeal no. 1140870, Southern Cleaning Service, Inc. ("SCSI"), appealed the grant of summary judgment entered favor of Essex Insurance Company and Genesee General Agency, Inc. (collectively, "the insurance defendants"), on SCSI's claims stemming from Essex's refusal to provide SCSI coverage under a commercial general-liability policy based on an alleged failure to timely notify Essex of the facts leading to the claim for coverage. In appeal no. 1140918, the insurance defendants cross-appealed the trial court's denial of their requests for costs. Winn-Dixie Montgomery, LLC entered into a contract with SCSI for provide floor-care and general janitorial services to multiple grocery stores in central Alabama. SCSI entered into a subcontract with Phase II Maintenance Systems, LLC, whereby Phase II became responsible for providing those services. That subcontract required Phase II to carry a minimum level of liability insurance and to list both SCSI and Winn-Dixie as "additional insureds" on such policies. Phase II contacted Alabama Auto Insurance Center ("Alabama Auto") for a policy; Alabama Auto in turn contacted Genesee, a managing general agency located in Georgia that connected independent agents like Alabama Auto with different insurance companies that provided the type of coverage being sought by the independent agent's customer. Ultimately, Genesee sent Alabama Auto a quote for a commercial general-liability policy issued by Essex that would meet Phase II's needs, and Alabama Auto presented that quote to Phase II. Phase II accepted the quote; Alabama Auto transmitted notice of that acceptance to Genesee; and Genesee, which held issuing authority for Essex, then issued Phase II the desired policy on behalf of Essex. In 2011, Beverly Paige was shopping at a Phase II-serviced Winn-Dixie in Montgomery when she allegedly slipped on a wet floor, fell, and was injured. A Phase II employee on duty at the store at the time of the fall reported the incident to Phase II's owner and president, William Wedgeworth, that same day, and Wedgeworth has given sworn testimony indicating that he separately notified both SCSI and Alabama Auto of the incident on the next available business day,and further specifically asked Alabama Auto to notify Genesee of the incident. After review of the trial court record, the Supreme Court concluded the trial court erred in granting summary judgment, citing several disputes of material fact that should have precluded the court's ultimate decision. As such, the Supreme Court reversed and remanded the outcome for further proceedings. The cross appeal was rendered moot. View "Essex Insurance Company and Genesee General Agency, Inc. v. Southern Cleaning Service, Inc." on Justia Law

In 2003, a closely held corporation purchased a United life insurance policy on Clark, then its President. Buck, its COO, was the beneficiary. Clark thought that the $1 million death benefit would enable Buck to buy out his stock from Clark’s family. The policy was amended so that the benefit would go to the corporation. In 2005 Clark retired and sold his interest to Holtz, the firm’s new President. Buck remained as COO. Holtz owned 61% of the stock and Buck the rest. Holtz received a copy of the policy, including the amendment naming the corporation as the beneficiary. Another copy was in corporate files. Clark died in 2011. Buck told Holtz that the company was the beneficiary, but United paid the money to Buck. When Buck tried to use the proceeds to buy Holtz’s stock, he was removed from the board and quit as COO. The corporation sued. United conceded that the corporation was the beneficiary, but argued that the corporation knew the truth and allowed Buck to claim the money, carrying out the plan devised by Clark and Buck. During discovery,the corporation then admitted finding the amendment earlier. The judge entered summary judgment in favor of United. The Seventh Circuit affirmed, rejecting an argument that Holtz was misled by United’s error and had no reason to think that the corporation was the beneficiary. The corporation’s knowledge, not Holtz’s, is dispositive. View "Samaron Corp. v. United of Omaha Life Ins. Co." on Justia Law