Justia Contracts Opinion Summaries

Plaintiffs Brett Woods and Kathleen Valdes were state employees and representatives of a class of New Mexico state and local government employees who alleged they paid for insurance coverage through payroll deductions and premiums pursuant to a policy issued by Standard Insurance Company (Standard), but did not receive the coverage for which they paid and, in some cases, were denied coverage entirely. Plaintiffs filed suit in New Mexico state court against three defendants: Standard, an Oregon company that agreed to provide the subject insurance coverage; the Risk Management Division of the New Mexico General Services Department (the Division), the state agency that contracted with Standard and was responsible for administering benefits under the policy; and Standard employee Martha Quintana, who Plaintiffs allege was responsible for managing the Division’s account with Standard and for providing account management and customer service to the Division and state employees. Plaintiffs' ninety-one-paragraph complaint, stated causes of action against Standard and the Division for breach of contract and unjust enrichment; against Standard for breach of fiduciary duty, breach of the implied duty of good faith and fair dealing, and Unfair Practices Act violations; and against Standard and Ms. Quintana for breach of the New Mexico Trade Practices and Fraud Act. The issue this appeal presented for the Tenth Circuit's review centered on whether remand to the state court pursuant to the Class Action Fairness Act (CAFA) was required under either of two CAFA provisions: the state action provision, which excludes from federal jurisdiction cases in which the primary defendants are states; or the local controversy exception, which requires federal courts to decline jurisdiction where, among other things, there is a local defendant whose alleged conduct forms a significant basis for the claims asserted by plaintiffs and from whom plaintiffs seek significant relief. The Court concluded that neither provision provided a basis for remand, and therefore reversed the decision of the magistrate judge remanding the case to state court. But because the Tenth Circuit could not determine whether Defendants have established the amount in controversy required to confer federal jurisdiction, the case was remanded to the district court for the resolution of that issue.View "Woods v. Standard Insurance Co." on Justia Law

Appellant North River Insurance Company appealed the Court of Chancery’s denial of its request for permanent injunctive relief. This multi-forum litigation concerned policies issued by North River to a safety products company, Mine Safety Appliances Company (“MSA”). North River issued thirteen policies to MSA covering periods from August 28, 1972 through April 1, 1986. MSA was defending against thousands of personal injury claims allegedly caused by defects in its mine safety equipment. MSA sought coverage under North River’s policies as well as from several other insurers. The issue this case presented for review was whether North River’s coverage under these policies was “triggered” (a matter of Pennsylvania law) was being litigated, along with its claims against other insurers, in federal and state courts in Pennsylvania, the Delaware Superior Court and in certain later-filed cases in West Virginia. North River requested that the Delaware Court of Chancery permanently enjoin MSA from prosecuting the later-filed claims in West Virginia and from assigning to any tort claimants the right to recover under any insurance policy issued by North River to MSA. During the course of this appeal, North River narrowed its focus to the assignment issue. Finding no reversible error in the Court of Chancery's denial, the Delaware Supreme Court affirmed that decision.View "The North River Insurance Co. v. Mine Safety Appliances Co." on Justia Law

RNT appealed the trial court's grant of summary judgment on its claim for breach of insurance contract against RNT, arguing that the trial court erroneously determined that the claim failed in light of the terms of RNT's policy. The court concluded that summary judgment on RNT's claim for breach of insurance contract was properly granted on the basis of the undisputed facts; condition 10(b) of the policy, which terminates an insurer's liability when the loan is paid off or the related mortgage is released; and exclusion 3(a) of the policy, which precludes coverage for defects, liens, encumbrances, adverse claims or other matters created, suffered, assumed, or agreed to by RNT. Accordingly, the court affirmed the judgment.View "RNT Holdings v. United Gen. Title Ins." on Justia Law

This case concerned a dispute between an insurance carrier (Plaintiff) and its insured (Defendant) regarding Plaintiff’s obligation to pay underinsured motorist benefits. An arbitration panel concluded that the issue of whether the relevant policy provisions provided coverage for the claim should be resolved under the choice of law rules governing claims sounding in tort, rather than claims sounding in insurance and contract, and therefore, that New Jersey law rather than Connecticut law governed Defendant’s claim for uninsured motorist benefits under the policy. The trial court vacated the arbitration award, and the Appellate Court affirmed. The Supreme Court affirmed, holding that the Appellate Court, in its opinion adopting the decision of the trial court, properly applied sections 6(2), 188 and 193 of the Restatement (Second), contract choice of law, to determine that Connecticut law governed the claim.View "Gen. Accident Ins. Co. v. Mortara" on Justia Law

In 2010, Idaho Power entered into two Firm Energy Sales Agreements, one with New Energy Two, LLC, and the other with New Energy Three, LLC, under which Idaho Power agreed to purchase electricity from them that was to be generated by the use of biogas. The agreement with New Energy Two stated that the project would be operational on October 1, 2012, and the agreement with New Energy Three stated that the project would be operational on December 1, 2012. Both contracts were submitted for approval to the Idaho Public Utilities Commission, and were both approved on July 1, 2010. Each of the agreements contained a force majeure clause. By written notice, New Energy Two and New Energy Three informed Idaho Power that they were claiming the occurrence of a force majeure event, which was ongoing proceedings before the Public Utilities Commission. New Energy asserted that until those proceedings were finally resolved "the entire circumstance of continued viability of all renewable energy projects in Idaho is undecided"and that as a consequence "renewable energy project lenders are unwilling to lend in Idaho pending the outcome of these proceedings."Idaho Power filed petitions with the Commission against New Energy Two and New Energy Three seeking declaratory judgments that no force majeure event, as that term was defined in the agreements, had occurred and that Idaho Power could terminate both agreements for the failure of the projects to be operational by the specified dates. New Energy filed a motion to dismiss both petitions on the ground that the Commission lacked subject matter jurisdiction to interpret or enforce contracts. After briefing from both parties, the Commission denied New Energy's motion to dismiss. The Commission's order was an interlocutory order that is not appealable as a matter of right. New Energy filed a motion with the Supreme Court requesting a permissive appeal pursuant to Idaho Appellate Rule 12, and the Court granted the motion. New Energy then appealed. Finding no reversible error, the Supreme Court affirmed the Commission's order.View "Idaho Power v. New Energy Two" on Justia Law

An Insurer issued a life insurance policy to an Insured. After the Insured died, the Insurer refused to pay the death benefit to Plaintiff, the Insured’s widow, and rescinded the life insurance policy based on its discovery that the Insured had failed to disclose that he had undergone certain medical procedures. Plaintiff sued the Insurer and the medical records contractor from whom the Insurer requested the Insured’s medical records. The district court granted summary judgment to Defendants, concluding (1) the Insured’s failure to disclose the medical procedures made his statements willfully false or intentionally misleading as a matter of law; and (2) a patient does not have a cause of action under Minn. Stat. 144.298(2) for withholding a medical record that the patient authorized to be released. The Supreme Court affirmed in part, reversed in part, and remanded, holding (1) rescission of a life insurance policy requires proof of the insured’s subjective intent to deceive, and there was a genuine issue of material fact regarding the intent of the Insured in this case; and (2) a patient does not have a private right of action under section 144.298(2) when a person releases fewer medical records than authorized by a patient’s consent.View "Larson v. Northwestern Mut. Life Ins. Co." on Justia Law

Headwaters Resources, Inc. carried commercial liability insurance issued by two insurance companies: Illinois Union Insurance Company and ACE American Insurance Company. Headwaters sought reimbursement for its litigation costs arising from a case brought by landowners in Virginia, alleging that Headwaters had caused personal injury and property damage during the construction of a nearby golf course. The complaint alleged that fly ash used in the construction process caused air and water pollution that devalued their homes and created health risks to the homeowners. The insurance companies told Headwaters that defense costs related to Headwaters’ pollution were outside the scope of the coverage and denied the claim. Headwaters sued, and the district court eventually granted summary judgment in favor of the insurance companies, finding that the pollution exclusions in the insurance policies precluded coverage. Jurisdictions that have addressed the scope of a "total pollution exclusion" were either: (1) courts that applied the pollution exclusions as written because they find them clear and unmistakable; or (2) courts that narrowed the exclusions to "traditional environmental pollution," because they found the terms of the exclusion to be ambiguous due to their broad applicability. The Utah Supreme Court had not yet weighed in on this debate, and the federal district court did not pick a side on its behalf. Instead, the district court found that certain of the at-issue pollution exclusions unambiguously applied to bar coverage and that the remaining pollution exclusions, although possibly ambiguous, still applied because the complaints unquestionably alleged traditional environmental pollution. As a result, the complaints triggered the pollution exclusions in all of the policies, and the district court granted summary judgment in favor of the insurance companies. Upon review, the Tenth Circuit found that each of the pollution exclusions was unambiguous, and affirmed the district court’s grant of summary judgment.View "Headwaters Resources v. Illinois Union Insurance Co." on Justia Law

Neumann Homes was the developer of two Antioch subdivisions. The Village entered into infrastructure agreements with Neumann to make public improvements in the subdivisions; Neumann provided four substantially identical surety bonds issued by Fidelity, totaling $18,128,827. The bonds did not contain specific “payment bond” language. A payment bond generally provides that if the contractor does not pay its subcontractors and material suppliers, the surety will pay them. In contrast, a “completion bond” or “performance bond” provides that if the contractor does not complete a project, the surety will pay for its completion. Lake County Grading (plaintiff) and Neumann entered into agreements for plaintiff to provide labor and materials for the improvements. Plaintiff completed the work, but was not paid in full. Neumann defaulted on its contract with the Village and declared bankruptcy. Plaintiff served Neumann and the Village with notices of a lien claim and ultimately filed suit, alleging breach of contract because the surety bonds did not contain language guaranteeing payment to subcontractors compliant with the first paragraph of section 1 of the Bond Act, 30 ILCS 550/1, and that it became a third-party beneficiary of the contracts between the Village and Neumann because the Act’s requirements are read into every public works contract for the benefit of subcontractors. The circuit court entered summary judgment on those counts. The appellate court affirmed. The Illinois Supreme Court reversed, holding that the bonds were sufficient and did not violate the Act, so that the Village did not breach any contractual obligation.View "Lake Cnty. Grading Co. v. Vill. of Antioch" on Justia Law

Plaintiff sued its Insurer, alleging breach of contract and seeking declaratory relief, after the Insurer refused to defend or indemnify Plaintiff in connection with an environmental dispute. A superior court allowed Plaintiff’s motion for partial summary judgment on the Insurer’s duty to defend. Plaintiff then amended its complaint to assert a claim under Mass. Gen. Laws ch. 93A, 11 arising out of the Insurer’s duty to defend. Thereafter, Plaintiff subsequently accepted reimbursement from the Insurer for its expenses in litigating and resolving the environmental matter. Insurer then sought summary judgment on the chapter 93A claim, arguing that its reimbursement of Plaintiff’s expenses precluded a finding that Plaintiff had suffered a loss of money or property, as required to establish a violation of chapter 93A section 11. The trial court denied summary judgment on the chapter 93A claim. The Supreme Judicial Court affirmed, holding (1) chapter 93A does not require a showing of uncompensated loss or a prior judgment establishing the amount of damages as a prerequisite to recovery; and (2) therefore, neither Plaintiff’s acceptance of full reimbursement of its expenses nor the absence of a judgment establishing contract damages precluded Plaintiff from pursuing a claim under chapter 93A.View "Auto Flat Car Crushers, Inc. v. Hanover Ins. Co." on Justia Law

Plaintiff was employed as a massage therapist with HMWC when he was accused in an underlying action for sexually assaulting a client during a massage. In this case, plaintiff filed suit against Continental, HMWC's comprehensive general liability (CGL) insurer, alleging that Continental had a duty to defend and indemnify him in the underlying action. The court affirmed the trial court's conclusion that defendant was not entitled to a defense under the Continental policy where the intentional sexual assault alleged in the underlying action cannot not properly be characterized as within the scope of plaintiff's employment or having occurred while performing duties related to the conduct of HMWC's business. The trial court did not err in sustaining the demurrer without leave to amend.View "Baek v. Continental Casualty Co." on Justia Law