Justia Contracts Opinion Summaries

In appeal no. 1140870, Southern Cleaning Service, Inc. ("SCSI"), appealed the grant of summary judgment in favor of Essex Insurance Company and Genesee General Agency, Inc. on SCSI's claims stemming from Essex's refusal to provide SCSI coverage under a commercial general-liability policy ("the Essex policy") based on the alleged failure to timely notify Essex of the facts leading to the claim for coverage. In appeal no. 1140918, the insurance defendants cross-appeal the trial court's denial of their requests for costs. In August 2006, Winn-Dixie Montgomery, LLC ("Winn-Dixie"), entered into a contract with SCSI that obligated SCSI to provide floor-care and general janitorial services to multiple Winn-Dixie grocery stores in central Alabama. In 2011, a store customer allegedly slipped and fell on a wet floor, and sued. Winn-Dixie sought indemnification from SCSI. SCSI sought indemnification from Phase II, one of its cleaning subcontractors. Phase II, SCSI, and Winn-Dixie again asked Essex to provide them with a defense and indemnity under the terms of the Essex policy; however, their requests were denied. With regard to appeal no. 1140870, the Supreme Court concluded that the summary judgment entered in favor of the insurance defendants should have been reversed because there was a genuine issue of material fact as to who among the insurance defendants acted under the doctrine of apparent authority to settle the Winn Dixie customer's slip and fall claim. The Court pretermitted all discussion of the other grounds for reversal SCSI offered. Because the insurance defendants would have been entitled to the costs they seek in appeal no. 1140918 only if there was a final judgment in their favor, that appeal was dismissed as moot. View "Essex Insurance Co. v. Southern Cleaning Service, Inc." on Justia Law

The insured, who had been sued for damages by plaintiffs, entered into a settlement whereby it agreed to assign its rights and interests under the insurance policy to plaintiffs. However, when plaintiffs sought to recover under the policy, the insurer denied coverage because the insured breached the policy's notice conditions. The trial court granted summary judgment to the insurance company, finding that notice was not given as soon as practicable, and that the insurance company need not show appreciable prejudice as a result of the delay in notice in order to refuse coverage. Plaintiffs appealed, and the Appellate Division affirmed substantially for the reasons given by the trial court. After its review, the New Jersey Supreme Court held that because this Directors and Officers claims made policy was not a contract of adhesion but was agreed to by sophisticated parties, the insurance company was not required to show that it suffered prejudice before disclaiming coverage on the basis of the insured's failure to give timely notice of the claim. View "Templo Fuente De Vida Corp., et al. v. National Union Fire Insurance Co." on Justia Law

Plaintiff-Appellant Corey Christy purchased a commercial general-liability insurance policy from Travelers in the name of his sole proprietorship, K&D Oilfield Supply. Subsequently, Christy registered his business as a corporation under the name K&D Oilfield Supply, Inc. Christy renewed his CGL Policy annually, but did not notify Travelers that he had incorporated his business. After Christy formed K&D, Inc., he was in an accident and made a claim under the CGL Policy. Travelers denied coverage based on Christy’s failure to inform it of the change in business form, and Christy filed this action. On cross motions for summary judgment, the district court found in favor of Travelers. Because there was a material factual dispute as to whether Christy knew or should have known Travelers would have considered the formation of K&D, Inc. material to its decision to renew the Policy, summary judgment based on Christy’s legal duty to speak was inappropriate. And because the existence of a legal duty governs whether Christy engaged in a material misrepresentation by not informing Travelers he had formed K&D, Inc., the Tenth Circuit held the district court erred in reforming the Policy on that basis at this stage of the proceedings. Accordingly, the Court reversed the district court’s grant of summary judgment and remanded for further proceedings. But because Christy had not met his burden to come forward with evidence in support of his claim for breach of the implied covenant of good faith and fair dealing, the Tenth Circuit affirmed the district court’s grant of summary judgment on that claim. View "Christy v. Travelers Indemnity" on Justia Law

Seahawk filed suit against insurers for proceeds covering the physical damage to a drilling rig and the loss on a drilling contract. The court concluded that, because there were two occurrences, the district court properly denied Seahawk’s claim for the cost of repairs between February and December 2010. That court’s proximate-cause analysis was the correct legal standard for determining the number of occurrences, and the district court did not clearly err in finding that the February storm was not the proximate cause of the sequence of losses following the July storm. The court also concluded that the district court did not err in rejecting Seahawk’s claim under the Contract Provision. The concurrent-cause doctrine applies, and Seahawk could not recover because it failed to comply with the requirements of that doctrine. Accordingly, the court affirmed the district court's judgment for the insurers. View "Seahawk Liquidating Trust v. Certain Underwriters" on Justia Law

In 2012, plaintiff Heidi Kroeber was shot outside the Bad Monkey Bar in Kent, Washington by Matthew Atkinson, who was driving an uninsured truck belonging to a friend at the time he opened fire. Plaintiff and her boyfriend had antagonized Atkinson earlier that evening. After pleading guilty to the crime of "Drive-By Shooting," Atkinson claimed that he had not intended to injure anyone and later claimed that he did not know that he was shooting where people were standing. There were factual disputes concerning whether Atkinson's truck was stopped or in motion at the time that he opened fire, and whether he accelerated rapidly away from the scene after the shooting. Plaintiff filed a claim with defendant, GEICO Insurance Company, to recover damages under the UIM coverage provision of her own automobile insurance policy. Under the relevant parts of this policy, GEICO was liable for "damages an insured is legally entitled to recover from the owner or operator of an underinsured motor vehicle due to: 1. bodily injury sustained by that insured and caused by an accident; and 2. the liability of the owner or operator for these damages must arise out of the ownership, maintenance or use of the underinsured motor vehicle." GEICO denied plaintiffs claim, asserting that her injuries did not arise out of the use of Atkinson's truck. Plaintiff sued GEICO, claiming that she was entitled to UIM coverage. The case was removed to the United States District Court for the Western District of Washington, and that court certified two questions to the Washington Supreme Court: (1) whether an injury to an insured pedestrian "arose out of" the intentional firing of a gun from an uninsured pickup truck; and (2) whether it is material if the shooter intended to harm anyone when firing the gun. The Washington Supreme Court answered the first question by holding that an injury "arises out of' vehicle use so long as some causal connection is present between a condition of, an attachment to, or some aspect of a vehicle and the resulting injury. "The converse is also true-·-an injury does not 'arise out of' vehicle use under circumstances where no such causal connection exists, making the vehicle the mere situs of the accident." The Court answered the second question in the negative. View "Kroeber v. Geico Ins. Co." on Justia Law

Keller Transport, Inc. leased a tanker truck from Wagner Enterprises, LLC to transport gasoline. The truck’s trailer overturned and spilled 6,380 gallons of gasoline, which flooded several homeowners’ properties. Keller and Wagner were both insured under a commercial transportation policy. Westchester Surplus Lines Insurance Company insured both Keller and Wagner under an excess liability policy. Homeowners initiated suit against Keller and Wagner. Westchester undertook defense of the suit on behalf of Kohler and Wagner pursuant to a reservation of rights and defended Keller and Wagner until the limit of its excess coverage had allegedly been exhausted. Westchester sought a declaration that the limit under its excess policy was $4 million in total and that the limit had been exhausted. As relevant to this appeal, the district court granted summary judgment against Westchester. The Supreme Court affirmed in part and reversed in part, holding that the district court (1) did not err by determining that Westchester’s policy was ambiguous and that it provided an additional $4 million in coverage under the “general aggregate” limit; but (2) erred by holding that Westchester breached its duty to defend the insureds under its policy. View "Westchester Surplus Lines Ins. Co. v. Keller Transport, Inc." on Justia Law

Cherri Porter’s beachfront vacation home was completely destroyed during Hurricane Katrina. Porter claimed the destruction was the result of a barge, owned by Grand Casino of Mississippi, Inc.–Biloxi, breaking free from its moorings and alliding with her home. Because Porter’s all-risk insurance policy excluded from coverage damage caused by water or windstorm, State Farm Fire and Casualty Company denied Porter’s claim. Porter filed suit against the insurance agent who maintained the policy, Max Mullins, against State Farm, and against Grand Casino. The trial court granted summary judgment in favor of each defendant, and the Court of Appeals affirmed. Porter filed a petition for writ of certiorari claiming genuine issues of fact existed as to each defendant, and the Mississippi Supreme Court granted her petition. Because Porter’s all-risk insurance policy unambiguously excluded from coverage loss that would not have occurred absent water damage, no genuine issue of material fact existed as to Porter’s bad-faith denial of coverage claim against State Farm. Additionally, Porter failed to produce sufficient evidence showing a genuine issue of fact as to whether Grand Casino breached its duty to take reasonable measures to prevent foreseeable injury. The Court therefore affirmed the decisions of the trial court and of the Court of Appeals as to all issues. View "Porter v. Grand Casino of Mississippi, Inc.- Biloxi" on Justia Law

In this suit alleging breach of an insurance contract, plaintiff appealed the trial court's grant of defendant's motion for directed verdict. Plaintiff contended that the trial court’s intended jury instruction violated the efficient proximate cause doctrine and there was sufficient evidence to permit the jury to determine whether plaintiff met his burden of proving his claim for punitive damages. The court concluded that plaintiff’s interpretation of the Other Coverage 9 provision is the correct interpretation, consistent with the efficient proximate cause doctrine. A policy cannot extend coverage for a specified peril, then exclude coverage for a loss caused by a combination of the covered peril and an excluded peril, without regard to whether the covered peril was the predominant or efficient proximate cause of the loss. Because the trial court granted the motion for a directed verdict based on the effect the erroneous proposed jury instruction would have had on plaintiff’s case, the court reversed and remanded as to this issue. Because defendant's special instruction No. 12 improperly shifted the burden of proof, the trial court erred in its decision to instruct the jury with defendant’s proposed special instruction and in granting defendant’s motion for directed verdict based on the decision to give that instruction. The court reversed and remanded as to this issue. Finally, the court found no error in the trial court's punitive damages claim. View "Vardanyan v. Amco Ins. Co." on Justia Law

In January 2010, Kory Clark received a telephone call around 3 a.m. from his brother asking for assistance with his pickup, which was stuck in a snowdrift. According to Clark's deposition, after the brothers were unable to pull the pickup out of the snowdrift, he drove to their grandfather's nearby farm to get a tractor to pull it out. Clark stated that after proceeding a short way down the road, the tractor broke down and he was unable to get over to the shoulder of the road or restart it. He then walked back to the farm to get his pickup and pick up his brother, who took him home and said he would take care of the tractor. Before the tractor was removed from the road, Rita Fred collided with it while driving to work. Fred sued Clark and his grandfather to recover for her injuries. At the time of the accident, Clark's grandfather had a farm liability policy with Farmers Union Mutual Insurance. Farmers Union defended the grandfather in the action brought by Fred, but declined to defend Clark, claiming he was not insured under the policy. Clark sought a declaratory judgment that Farmers Union had a duty to defend or indemnify him. He also sought damages for bad-faith refusal to defend. QBE Americas, Inc., joined as the third-party claims administrator for Farmers Union. Both Farmers Union and QBE moved for summary judgment, which the district court granted. Clark appealed, arguing the district court erred in granting summary judgment and holding he was not entitled to coverage under a farm liability policy. He also argued the district court should not have dismissed his claim for breach of duty to defend. Because the Supreme Court concluded the district court correctly held Clark failed to present evidence sufficient to raise genuine issues of material fact in regard to his claims, it affirmed the judgment. View "Clark v. Farmers Union Mutual Ins." on Justia Law

Federal Insurance Company appealed a circuit court order denying its motion to compel arbitration of the breach-of-contract claim asserted against it by Kert Reedstrom. In 2008, Reedstrom entered into a written employment agreement with Marshall-Jackson Mental Health Board, Inc., d/b/a Mountain Lakes Behavioral Healthcare ("MLBHC"), to begin serving as its executive director in Guntersville. During the course of Reedstrom's employment with MLBHC, MLBHC held an executive-liability, entity-liability, and employment-practices-liability policy issued by Federal Insurance that generally protected certain MLBHC officers and employees described as "insureds" in the policy from loss for actions committed in the course of their employment with MLBHC. It was undisputed that Reedstrom was an "insured" covered by the Federal Insurance policy. The Federal Insurance policy contained an arbitration provision. A separate endorsement to the Federal Insurance policy further highlighted the arbitration provision and explained that its effect was that any disagreement related to coverage would be resolved by arbitration and not in a court of law. In July 2010, MLBHC terminated Reedstrom's employment and, in December 2010, Reedstrom sued MLBHC alleging that his termination constituted a breach of his employment contract. MLBHC asserted various counterclaims against Reedstrom based on his alleged misconduct while serving as executive director. Thereafter, Reedstrom gave Federal Insurance notice of the claims asserted against him and requested coverage under the terms of the Federal Insurance policy. Federal Insurance ultimately denied his claim and refused to provide him with counsel to defend against MLBHC's claims. A jury returned a verdict awarding Reedstrom $150,000 on his claim against MLBHC and awarding MLBHC $60,000 on its claims against Reedstrom. Consistent with its previous denial of his request for coverage, Federal Insurance refused Reedstrom's request to satisfy the judgment entered against him. Reedstrom sued Federal Insurance, asserting one claim of breach of contract and seeking $72,000 in damages ($60,000 for the judgment entered against him and $12,000 for the attorney fees he incurred in defending those claims). The Supreme Court reversed and remanded, finding that the trial court did not articulate its rationale for denying the motion to compel arbitration. The denial was apparently based on the court's resolving at least one of the arbitrability issues raised by Reedstrom in his favor and against Federal Insurance. However, because the subject arbitration provision delegated to the arbitrators the authority to resolve such issues, the trial court erred by considering the waiver and nonsignatory issues raised by Reedstrom instead of granting the motion to compel arbitration and allowing the arbitrators to resolve those issues. View "Federal Insurance Company v. Reedstrom" on Justia Law