Justia Contracts Opinion Summaries

In 1999, four employees of a Domino Sugar refinery sued parent company Tate & Lyle North America Sugars, Inc. (T&L) for damages from noise exposure during their employment with T&L between 1947 and 1994. Continental Casualty Insurance Company insured T&L with eight general liability policies. Each of the policies contained exclusions for bodily injury to employees arising out of the course and scope of their employees. In one of the eight policies, the exclusion was deleted by a special endorsement effective in 1975. After T&L notified Continental of the lawsuit, Continental retained defense counsel to defend T&L. In 2001, 125 new plaintiffs were added to the suit, and the complaint was amended to allege noise exposure from 1947 to 2001. At some point, trial was continued to allow for settlement. In 2003, without Continental's consent, T&L settled with 1 of 15 "flights" of plaintiffs for $35,000 per plaintiff. After that settlement, Continental was notified. One month later, Continental withdrew from the defense, disclaiming its liability based on a mistaken belief that all of its policies contained the exclusions for injuries to employees. In the subsequent years following the first settlement, additional plaintiffs were added. In 2004, the trial court granted partial summary judgment to T&L, finding that Continental had waived its right to rely on its policy exclusion defenses for "first flight" plaintiffs. The issue before the Supreme Court centered on Continental's exclusions and its disclaiming liability for subsequent plaintiffs. Upon careful consideration of the trial court record, the Court held that an insurer's breach of the duty to defend does not result in a waiver of all coverage defenses when the insured seeks indemnity under the policy. In this case, Continental had disclaimed coverage at the time more plaintiffs were added to the lawsuit, and did not provide a defense to those claims. Therefore, waiver principles did not apply. Continental was only liable to T&L in indemnity on a pro rata basis for the exposures that took place during the coverage period. The Court remanded the case for a determination of whether twelve remaining plaintiff-flights met the settlement criteria.

In 1995, Charles and Charlene Ebinger contracted with Venus Construction Corporation to build a home. The couple moved into their new residence in 1997. In 2003, the Ebingers filed suit against Venus alleging defects in the home's foundation. Venus sought indemnification from one of its subcontractors. At issue in this case is whether the construction company's third-party demand against its subcontractor was time-barred by state law that established a peremptive period for actions against residential building contractors. The peremptive period was established originally at ten years, but subsequent amendments shortened its duration. A 1999 amendment reduced the period to seven years; a 2003 amendment reduced it to five years. Upon consideration of the trial record and the applicable legal authority, the Supreme Court found that the latest version of the statute applied in this case (2003). Consequently, the court held that the construction company's right to indemnity from its subcontractor was extinguished and its third party demand was perempted.