Justia Contracts Opinion Summaries

Plaintiffs Delbert Soseeah, Maxine Soseeah and John Borrego filed this action against defendants Sentry Insurance, Dairyland Insurance Company, Peak Property and Casualty Insurance Company, and Viking Insurance Company of Wisconsin (collectively Sentry) claiming, in part, that Sentry failed to timely and properly notify them and other Sentry automobile insurance policyholders of the impact of two New Mexico Supreme Court decisions regarding the availability of uninsured and underinsured motorist coverage under their respective policies. The complaint alleged that Delbert Soseeah, after being injured in a motor vehicle accident, made a claim for UM/UIM benefits under two policies of automobile insurance issued by Sentry to Mrs. Soseeah. According to the complaint, Mrs. Soseeah “never executed a valid waiver of UM/UIM coverage under the” two policies and, consequently, Mr. Soseeah “demanded that . . . Sentry reform” the two policies “to provide stacked uninsured/underinsured motorist coverage limits equal to the limits of the liability coverage on each of the vehicles covered by the” policies pursuant to the two New Mexico Supreme Court decisions. Sentry purportedly refused to reform the policies and rejected Mr. Soseeah’s claim for UM/UIM benefits. The complaint alleged that Sentry, by doing so, violated New Mexico’s Unfair Practices Act (UPA), violated a portion of New Mexico’s Insurance Code known as the Trade Practices and Frauds Act (TPFA), breached the implied covenant of good faith and fair dealing, and breached the terms of the two policies. The district court granted plaintiffs’ motion for class certification. Sentry subsequently sought and was granted permission to appeal the district court’s class certification ruling. Because plaintiffs failed to establish that all members of the general certified class suffered the common injury required by Rule of Civil Procedure 23(a)(2), the Tenth Circuit concluded that the district court abused its discretion in certifying the general class. Because the district court’s certification ruling did not expressly address the Rule 23 factors as they applied to each of the identified subclasses, the Court did not have enough information to determine whether the district court abused its discretion in certifying two subclasses. Consequently, the Court directed the district court on remand to address these issues. View "Soseeah v. Sentry Insurance" on Justia Law

David Zerfas swerved to avoid a deer carcass in his lane of travel and lost control of his vehicle. Zerfas died after his vehicle was hit by oncoming traffic. Zerfas’s wife, Stacey, sought uninsured motorist benefits with their automobile insurance company, AMCO Insurance Company, alleging that an unidentified driver left the deer carcass in the lane of travel, which caused Zerfas to lose control of his vehicle. AMCO denied Stacey’s claim on the grounds that Stacey would not legally be entitled to recover damages from the unidentified driver. Stacey subsequently brought a breach of contract action against AMCO. The circuit court granted summary judgment in favor of AMCO, concluding that the unidentified driver did not have a legal duty to Zerfas to remove the carcass or warn of its existence. The Supreme Court affirmed, holding that no common law or statutory duty existed between the unidentified driver and Zerfas, and therefore, the circuit court did not err in granting AMCO summary judgment. View "Zerfas v. AMCO Ins. Co." on Justia Law

Cincinnati Insurance issued a liability policy to Painters, which allowed the insured to add an “additional insured” by oral agreement, if that agreement preceded the occurrence and “a certificate of insurance ... has been issued.” No permission from Cincinnati is required, if the insureds have a relationship consistent with the policy. Painters was hired to paint Vita’s premises and orally agreed to add Vita as an additional insurer. Painters’ worker fell, before there was any written confirmation of the oral agreement, and remains in a coma. In a suit by the insurer, seeking a declaration that Vita was not covered based on a certificate issued to Vita the day after the accident, the court granted summary judgment in favor of Cincinnati. The Seventh Circuit reversed. Summary judgment was premature. The policy is ambiguous. A certificate could be regarded a prerequisite to coverage of the additional insured, but also could be intended merely to memorialize the oral agreement. The policy could also mean that the oral agreement must be memorialized in writing before the insured can file a claim. Oral agreements are valid contracts and the policy is explicit that an oral agreement is sufficient to add an insured. The certificate is not a contract, but “a matter of information only” that “confers no rights upon the certificate holder.” View "Cincinnati Ins. Co. v. Vita Food Prods, Inc." on Justia Law

Plaintiff-appellant Timothy Huether contracted with Nodak Mutual to provide insurance coverage for his house, buildings and structures on his farm. The coverage was under Nodak Mutual's Farm and Ranch Policy. The Farm and Ranch Policy did not provide insurance coverage for grain dryers. Huether added an equipment endorsement insuring his agricultural equipment, which included a grain handler dryer. A fire destroyed the grain handler dryer, fans and parts. Nodak Mutual's agricultural endorsement provided coverage for "direct physical loss or damage caused by perils 1 through 10." Huether's Farm and Ranch Policy listed fire as Peril 1. Damage from fire was a "direct physical loss or damage" and Nodak Mutual paid Huether $278,187.44 for damage to the grain dryer, control room and grain handling equipment. Huether did not contest the coverage or payment for those items, but claimed an additional $82,954.77 in expenses for transporting to and drying his crops at other grain drying facilities. Nodak Mutual denied Huether's claim because the agricultural equipment endorsement covered "direct physical loss or damage" and did not cover loss-of-use. Huether sued Nodak Mutual seeking damages for the denied claim. The district court found Huether's claim was not covered under the policy and granted summary judgment in favor of Nodak Mutual. Huether appealed, arguing the district court erred in granting summary judgment for Nodak Mutual because it misinterpreted the terms of the insurance policy. Finding no error, the Supreme Court affirmed. View "Huether v. Nodak Mutual Ins. Co." on Justia Law

Keizer Trailer Sales, Inc., which was insured by Continental Western Insurance Company (CWIC), sold three trailers to James Black. The installment purchase agreement stated that Keizer would remain the owner of the trailers under the purchase price was paid in full. Black was subsequently involved in an accident while pulling a Keizer trailer that resulted in one fatality and multiple injuries. Wrongful death and negligence claims were filed against Black and his business. CWIC filed a complaint for declaratory judgment seeking a declaration that the commercial and umbrella policies it issued to Keizer on the trailer involved in the accident did not provide coverage for the claims arising from Black’s accident. The district court ruled against CWIC, concluding that Black was insured under the policies’ omnibus clauses because he was driving a vehicle owned by Keizer with Keizer’s permission. The Supreme Court affirmed, holding that because Keizer retained ownership of the trailers, and because Black’s use of the trailers was with Keizer’s permission, coverage was available under the omnibus clauses of Keizer’s CWIC policies. View "Continental W. Ins. Co. v. James Black, JJ Bugs, Ltd." on Justia Law

Pacific Trades Construction & Development, Inc. was a defendant in a lawsuit that alleged, in part, that Pacific Trades was liable for damages for construction defects caused by Pacific Trades's negligent acts or omissions. Underwriters of Interest Subscribing to Policy Number A15274001 (Underwriters) undertook Pacific Trades's defense in that action under its Commercial General Liability (CGL) policy insuring Pacific Trades. ProBuilders Specialty Insurance Company, which also insured Pacific Trades, declined to participate in funding Pacific Trades's defense, claiming (among other things) that a clause in its policy relieved ProBuilders of any duty to defend Pacific Trades when another insurer was doing so. Underwriters sought equitable contribution from ProBuilders for a portion of the defense costs. The parties filed cross-motions seeking summary adjudication of ProBuilders's liability for a portion of the defense costs. The trial court agreed with ProBuilders that a clause in its policy relieved it of any duty to defend Pacific Trades when (as here) another insurer was defending Pacific Trades, and entered summary judgment in favor of ProBuilders. Underwriters appealed that determination. The Court of Appeal concluded that the trial court erred in enforcing the clause in ProBuilders's policy and, because the other arguments raised by ProBuilders in support of its summary judgment motion on Underwriters's claim for equitable contribution did not support the judgment, the Court reversed the judgment. View "Underwriters of Interest v. ProBuilders Specialty Ins. Co." on Justia Law

Morady sold life insurance policies. Davis, a former lawyer, approached elderly African-Americans and paid them small amounts to become the nominal applicant-buyers of the policies, with Morady as the insurance agent, and to put the policies into an irrevocable trust, with Davis as trustee. The beneficial interest in the trust would be sold to an investor who would pay the remaining premiums and wait for the death of the insured. The insurer would not have sold the policies had it known that the premiums would be paid by an unrelated third party in the expectation that the policy would be transferred to him; its contracts with agents, including Morady, required them to conform to an “absolute prohibition against participation in any type of premium financing scheme involving an unrelated third party,” but the law allows an investor to purchase the beneficial interest in an existing life insurance policy. The net loss to Ohio National (beyond $120,000 commissions paid to Morady) was $605,000 in litigation expenses to void the policies. The total death benefits specified in the illegal policies amounted to $2.8 million. The Seventh Circuit agreed that Morady’s conduct constituted fraud and a breach of her contract and affirmed summary judgment, with damages of $726,000. View "Ohio Nat'l Life Assurance Corp. v. Davis" on Justia Law

In 2001, Furnival and its insurer agreed to a Pollution and Remediation Legal Liability Policy, detailing $10 million in liability protection; a 10-year coverage period; and insurance coverage for 12 Furnival locations, including the Elizabethtown Landfill Site, which Furnival was obligated to clean up under a consent decree with the federal government. Insurer knew about the consent decree when the Policy issued. The Policy Endorsements list five reasons for which insurer may “refuse to offer a renewal extension of coverage,” and states that insurer “shall not cancel nor non-renew this Policy except for the reasons stated above.” None of the listed reasons for non-renewal occurred. In 2006, the parties increased the Policy’s limit to $14 million. After the term expired, insurer sent Furnival’s insurance broker its version of a renewal offer, providing $5 million of coverage over a one-year term, omitting coverage for Elizabethtown, the only previously insured site for which Furnival had made a claim, refusing to renew the same terms. The Third Circuit vacated a ruling in favor of insurer, holding that, for a contract to be considered a renewal, it must contain the same, or nearly the same, terms as the original contract. View "Indian Harbor Ins. Co v. F&M Equip., Ltd" on Justia Law

A certified question of Oregon law was certified to the Oregon Supreme Court from the United States Court of Appeals for the Ninth Circuit. The question arose out of a construction contract dispute in which a homeowner's association sued a builder in state court for construction defects. The homeowner's association and the builder settled, and the settlement included an unconditional release and covenant not to execute against the builder. When the homeowner's association attempted to garnish the builder's liability insurance policy, however, the insurer claimed that it had no liability because the settlement unconditionally released its insured from any liability. The state trial court agreed, and the builder appealed. Meanwhile, in response to the state trial court's conclusion that the settlement agreement eliminated the insurer's liability, the homeowner's association and the builder amended their settlement agreement to eliminate the unconditional release and covenant not to execute. Pursuant to the new agreement, the builder initiated this action in federal court against its insurer. In the federal court action, the insurer argued that the state court already had determined that, given the terms of the original settlement, the builder could not recover under its insurance policy and that the parties lacked authority to create any new insurance coverage obligation by amending their settlement agreement. The federal district court agreed. On appeal, the Ninth Circuit certified a question on whether the homeowner's association and the builder could amend their settlement agreement in such a way as to revive the liability of the builder's insurer. After review, the Oregon Court concluded that, although the parties possessed authority to amend the terms of their settlement agreement, they could not do so in a way that retroactively revived the liability that was eliminated in their original agreement (at least not on the basis of the legal theories that they proposed). View "A&T Siding, Inc. v. Capitol Specialty Ins. Corp." on Justia Law

Witasick was covered by a disability policy and a business overhead expense policy. His claims against both policies were honored. A dispute arose concerning coverage of some claimed business expenses. After years of negotiation, the parties settled: the insurer agreed to pay more than $4 million and Witasick agreed to release known, unknown, and future claims. The settlement contained a covenant not to sue, based on “any conduct prior to the date the Parties sign this document, or which is related to, or arises out of” the policies. During negotiations, the U.S. Government notified Witasick that he was the target of a grand jury investigation related to fraud and business expense claims on his income tax returns. Witasick was indicted in 2007. To support its charge of mail fraud, the government relied on information and documents Witasick had submitted to the insurer. An employee of the insurer testified before the Grand Jury and at Witasick’s trial. Witasick was convicted on most counts, but acquitted of mail fraud, and was sentenced to 15 months’ imprisonment. In 2011, Witasick sued the insurer based on the policies and cooperation with the prosecution. The Third Circuit affirmed dismissal, finding the claims prohibited by the settlement agreement. View "Witasick v. Minn. Mut. Life Ins, Co." on Justia Law