Justia Contracts Opinion Summaries

Brown filed a class action complaint, alleging that she contacted Defender by telephone in response to its advertisement for a home security system; that, during several calls, she provided Defender with personal information; and that Defender recorded those calls without her permission and without notifying her of the recording. Brown claimed violations of California Penal Code 632, which prohibits the recording of confidential telephone communications without the consent of all parties. Defender owned a commercial general liability insurance policy issued by First Mercury, covering “personal injury” and “advertising injury.” In a separate definitions section, the policy defined both “advertising injuries” and “personal injuries” as those “arising out of … [o]ral or written publication of material that violates a person’s right of privacy.” The parties eventually reached a settlement. Defender provided First Mercury with timely notice of the Brown suit. First Mercury denied coverage and refused to defend. The Seventh Circuit affirmed dismissal of Defender’s suit against First Mercury. Defender’s Policy requires “publication,” which was neither alleged nor proven. View "Defender Sec. Co. v. First Mercury Ins. Co." on Justia Law

Sentinel Insurance Company, Limited appealed a declaratory judgment entered in favor of Alabama Municipal Insurance Corporation ("AMIC") in this dispute between Sentinel and AMIC over which insurance company was responsible for providing primary insurance coverage in an underlying automobile-accident case. After reviewing the AMIC policy and the Sentinel policy, the Supreme Court concluded that the language in each was unambiguous as to which provided primary coverage: the AMIC policy provided primary coverage, and the Sentinel policy provided excess coverage. The Court held that the trial court erred in concluding that the Sentinel policy provided primary coverage. Therefore, the trial court's judgment was reversed, and the case was remanded for further proceedings. View "Sentinel Insurance Company, Ltd. v. Alabama Municipal Insurance Corp." on Justia Law

Stephen Hansen was injured when Brad Aguilar struck Hansen’s vehicle. Hansen sued Aguilar, who was insured by State Farm Mutual Automobile Insurance Company. State Farm agreed to defend Aguilar under a reservation of rights. Aguilar agreed to a settlement with Hansen in which he assigned his rights against State Farm to Hansen. Hansen filed this action in federal district court alleging, among other claims, that State Farm breached a contract in its representation of Aguilar. The federal district court concluded that State Farm breached its contractual duty to defend Aguilar because it did not provide Aguilar with independent counsel of his choosing. State Farm moved for reconsideration. The federal district court granted the motion in part and certified two questions to the Supreme Court concerning Nevada’s conflict-of-interest rules in insurance litigation. The Supreme Court answered (1) Nevada law requires an insurer to provide independent counsel for its insured when a conflict of interest exists between the insurer and its insured; and (2) an insurer is only obligated to provide independent counsel when an actual of conflict exists, and a reservation of rights letter does not create a per se conflict of interest. View "State Farm Mut. Auto. Ins. Co. v. Hansen" on Justia Law

In 2006, fire destroyed Calvin’s home. His insurer paid the claim, but indicated that it would not reinsure him. Calvin rebuilt on the same land and applied for a policy through the Mackey Agency. Calvin answered questions posed to him by Eleen Mackey, an employee, who entered the information into a computer. Asked if he had a fire loss within the previous three years, Calvin stated that he had a fire at the same location. Mackey printed the application. Calvin signed without reading it. The “No” box next to the question about prior fire loss was marked, but the blank within the question was not filled in. The space for Calvin's initials is also blank. Metropolitan issued a homeowner’s policy in 2007. Calvin paid the premiums regularly. In 2011, Calvin’s rebuilt home was destroyed by fire while the family was on vacation. Metropolitan’s investigation was inconclusive; no cause could be determined. Metropolitan denied Calvin’s claim and sought a declaratory judgment to void the policy, based on material misrepresentations in the application and the claims process, claiming that Calvin caused the fire to be set. Calvin counterclaimed breach of contract, slander, outrage, and bad faith. The district court determined that Calvin misrepresented his prior loss and that there was no evidence that Metropolitan acted in a dishonest, malicious, or oppressive manner. The Eighth Circuit reversed as to misrepresentation in the application and breach of contract, but affirmed with respect to bad faith and on Metropolitan’s defense of arson claim. Metropolitan can seek rescission of the contract. View "Metro. Prop. & Cas. Ins. Co. v. Calvin" on Justia Law

Jennifer Ploutis’ home was insured under a policy issued by Allstate Property and Casualty Insurance Company when water pipes in the home burst, damaging the home and certain contents. When the parties were unable to reach an agreement on the cost of certain repairs, Ploutis filed a complaint for breach of contract against Allstate. Upon the request of Ploutis, the action was nonsuited. Well after two years after the damage was sustained, Ploutis filed the present action. Allstate filed a demurrer asserting that Ploutis failed to comply with the conditions precedent under the policy by bringing the action within two years “after the inception of loss or damage.” The circuit court overruled the demurrer, concluding that the limitations period was tolled pursuant to Va. Code Ann. 8.01-229(E)(3), which tolls the “statute of limitations” with respect to nonsuited actions. Judgment was entered in favor of Ploutis. The Supreme Court reversed the judgment of the circuit court and entered final judgment for Allstate, holding that the circuit court erred in ruling that section 8.01-229(E)(3) applies to the contractual period of limitations for filing an action under Allstate’s policy. View "Allstate Prop. & Cas. Ins. Co. v. Ploutis" on Justia Law

Vittorio and Lydia Gentile were policyholders under a Massachusetts automobile insurance policy issued by Commerce Insurance Company. Their grandson, Vittorio Gentile, Jr. (Junior), an “excluded operator” under the policy, was operating one of the Gentiles’ vehicles covered by the policy when he caused an accident that injured Douglas and Joseph Homsis. Commerce filed this action seeking a declaratory judgment that the Gentiles’ violation of the operator exclusion form relieved it of the duty to pay the Homsises under the optional bodily injury provisions of the insurance contract. A superior court judge concluded that Commerce was relieved of its duty to pay the optional coverage for the Homsis’ injures because the Gentiles had violated their duty of “continuing representation” as to whether Junior was, in fact, operating their vehicles. The Appeals Court affirmed both on that basis and on the basis that the Gentiles had breached the insurance contract. The Supreme Judicial Court affirmed on the ground that, by allowing Junior to operate their vehicle, the Gentiles committed a breach of a material term of the insurance contract. View "Commerce Ins. Co., Inc. v. Gentile" on Justia Law

Joseph and Janice Boyle sued C&N Corporation. C&N held an insurance policy issued by Zurich American Insurance Company requiring that C&N provide notice to Zurich of any lawsuit brought against it. C&N did not notify Zurich about the lawsuit, but the Boyles’ counsel did. Zurich did not defend against the suit. Judgement by default was entered for the Boyles. The Boyles then sued Zurich, asserting the claims of C&N, which had assigned to the Boyles. A superior court judge ruled that Zurich breached its contractual duty to defend C&N. The Supreme Judicial Court affirmed in part and reversed in part, holding (1) an insured’s failure to comply with a notice obligation in an insurance policy does not relieve the insurer of its duties under the policy unless the insurer demonstrates that it suffered prejudice as a result of the breach; and (2) the superior court judge did not err in determining that Zurich committed a breach of its contractual duty to defend C&N, as Zurich failed to show that it was prejudiced as a result of C&N’s failure to comply with the policy’s notice obligation in this case. View "Boyle v. Zurich Am. Ins. Co." on Justia Law

Defendant Cy Tapia, a teenager living with his aunt and grandmother, was driving a vehicle which crashed, inflicting severe and eventually fatal injuries on his passenger, Cory Driscoll. Before his death Driscoll and his mother filed an action for damages. The parties established that the vehicle driven by Tapia was owned by his grandfather and that Tapia was entitled to $100,000 in liability coverage under an auto policy issued to Melissa McGuire (Tapia’s sister), which listed the vehicle as an insured vehicle and listed Tapia as the driver of the vehicle. The policy was issued by petitioner-defendant 21st Century Insurance Company. 21st Century offered to settle the action for the policy limits of the McGuire policy ($100,000). However, plaintiff1 also believed that Tapia might be covered under policies issued to his aunt and grandmother, each offering $25,000 in coverage and also issued by 21st Century. Plaintiff communicated an offer to settle for $150,000 to Tapia’s counsel; 21st Century contended that it never received this offer (although there was certainly evidence to the contrary). Inferrably having realized the seriousness of its position, 21st Century affirmatively offered the “full” $150,000 to settle the case against Tapia. Plaintiff did not accept this offer, but a month later plaintiff’s counsel served a statutory offer to compromise seeking $3,000,000 for Cory Driscoll and $1,150,000 for his mother Jenny Driscoll. Shortly before the expiration of this offer, 21st Century sent Tapia a letter warning him that it would not agree to be bound if Tapia personally elected to accept the offer. Nonetheless, Tapia agreed to the entry of a stipulated judgment in the amounts demanded by plaintiff. 21st Century paid $150,000 plus interest to the plaintiff. Tapia then assigned any rights he had against 21st Century to plaintiff. This assignment and agreement included plaintiff’s promise not to execute on the judgment against Tapia so long as he complied with his obligations, e.g., to testify to certain facts concerning the original litigation and 21st Century’s actions. This bad faith action followed. Petitioner's unsuccessfully moved for summary judgment, and petitioned the Court of Appeal for a writ of mandate to overturn the trial court's denial. Upon review, the Court of Appeal found that plaintiff’s efforts to pursue essentially a “bad faith” action as assignee of the insured was misguided. Accordingly, petitioner was entitled to summary judgment. View "21st Century Ins. v. Super. Ct." on Justia Law

Rent-A-Roofer, Inc. (Appellant) settled a lawsuit filed by the National Research Corporation (NRC) without notifying its insurer, Farm Bureau Property & Casualty Insurance Company (the Insurer), of the lawsuit. Appellant later notified the Insurer of its involvement in litigation and made a demand under Appellant’s policy with the Insurer. The Insurer declined coverage on the grounds that Appellant breached the policy’s notice provision and the voluntary payments provision. Appellant subsequently brought this action against the Insurer, alleging breach of contract and bad faith. The district court granted summary judgment for the Insurer. The district court first concluded that for an insurer to deny coverage based on breach of a voluntary settlement condition, the insurer must show prejudice in connection with its claim. The court then ruled that, where Appellant failed to meet both the notice and voluntary payments provisions, prejudice had been established as a matter of law. The Supreme Court affirmed, holding that the district court correctly found that the Insurer was not liable for settlement by NRC against Appellant and not liable for Appellant’s defense costs. View "Rent-A-Roofer v. Farm Bureau Prop. & Cas. Ins. Co." on Justia Law

"For more than one hundred and thirty years," the Mississippi Supreme Court has held that an insurance company may void a policy when the insured made material misrepresentations during the application process. While driving his mother’s 2003 Chevy Silverado in Rankin County, sixteen-year-old William Busby crashed into Kenneth Tarlton’s car, which in turn collided with a car driven by Katrice Jones-Smith. When William’s mother, Michelle, applied to Safeway Insurance Company for an insurance policy on the Silverado, the application required her to warrant that she had provided the names of all regular frequent drivers of the covered vehicles, as well as all residents of her household fourteen years old or older. Michelle failed to disclose that fifteen-year-old William resided in her home, and Safeway issued her a policy on the Silverado at a premium that was lower than the premium would have been had Safeway known about William. When Safeway learned that Michelle made a material misrepresentation when she applied for the motor-vehicle-liability policy at issue here, it had the policy declared void. The Supreme Court found no reason to disturb the trial court's grant of summary judgment in this case in favor of Safeway, so it affirmed. View "Jones-Smith v. Safeway Insurance Company" on Justia Law