Justia Contracts Opinion Summaries

In 2002, in Texas, Dr. Phillips performed a laparoscopic hysterectomy on Bramlett, a 36-year-old mother. While hospitalized, Bramlett suffered internal bleeding and died. Her family filed a wrongful death lawsuit against the hospital and Dr. Phillips, who held a $200,000 professional liability insurance policy with MedPro. He notified MedPro of the lawsuit. In 2003, the hospital settled with the Bramletts for approximately $2.3 million. The Bramletts wrote to Dr. Phillips’s attorney, Davidson, with a $200,000 Stowers demand; under Texas law, if an insurer rejects a plaintiff's demand that is within the insured’s policy limit and that a reasonably prudent insurer would accept, the insurer will later be liable for any amount awarded over the policy limit. MedPro twice refused to settle. The family won a $14 million verdict. The Supreme Court of Texas capped Dr. Phillips’s liability. The family sued MedPro, which settled. MedPro was insured by AISLIC, which declined to cover MedPro’s settlement. The district court granted AISLIC summary judgment, concluding that coverage was excluded because MedPro should have foreseen the family’s claim. An exclusion precluded coverage for “any claim arising out of any Wrongful Act” which occurred prior to June 30, 2005, if before that date MedPro “knew or could have reasonably foreseen that such Wrongful Act could lead to a claim.” The Seventh Circuit reversed in part, finding genuine issues of material fact regarding whether MedPro’s failure to settle was a Wrongful Act and whether MedPro could have foreseen a "claim" before the malpractice trial. View "Medical Protective Co. of Fort Wayne, Indiana v. American International Specialty Lines Insurance Co." on Justia Law

The Second Circuit affirmed the district court's summary judgment dismissal of all claims in the Second Amended Complaint against defendants in an action stemming from construction projects with the U.S. Army Corps of Engineers. The court held that MES's claims failed to articulate any support for its accusations that Safeco breached its contractual obligations or engaged in bad faith or tortious conduct. The court noted that the claim that Safeco acted inappropriately by attending the cure meetings was particularly frivolous. In this case, MES failed to identify any good faith basis, in law or on the basis of the agreements at issue, for its assertion that Safeco had no right to take steps to meet its obligations under the surety bonds. The court sua sponte awarded Safeco double costs. View "M.E.S., Inc. v. Safeco Insurance Co. of America" on Justia Law

Plaintiffs hold participating life-insurance policies from State Farm and Country Life that guarantee policyholders annual dividends from their insurers’ surpluses. The insurers decide the dividend amounts. Dissatisfied with their dividends, Plaintiffs filed nearly identical class-action complaints claiming that the dividend provisions in their policies violate the Illinois Insurance Code by failing to include a provision mandated by the Code. Plaintiffs concede that their annual dividends satisfied the terms of their respective policies. In consolidated appeals, the Seventh Circuit affirmed the dismissal of the claims. Illinois requires only that life-insurance policies of this type contain a provision for policyholders to participate in their insurers’ surpluses. The policies at issue here contain the required provision and are in compliance, despite allowing insurers discretion to set dividend amounts. View "Anderson v. Country Life Insurance Co." on Justia Law

MCI held a business owners insurance policy with an “Employment-Related Practices Liability Endorsement” from Society Insurance. When DirecTV sued MCI under 47 U.S.C. 521 for publicly displaying its programming in MCI’s two restaurants without paying the commercial subscription rate, Society denied MCI’s claim. MCI sued Society; the Seventh Circuit affirmed summary judgment for Society. The Endorsement requires Society to cover MCI for “damages resulting from a ‘wrongful act’ to which [the Policy] applies” and defines “wrongful act” to include, “[l]ibel, slander, invasion of privacy, defamation or humiliation.” There is no reasonable interpretation of the DirecTV complaint that could arguably fall within the category of libel, slander or defamation. That complaint alleged that MCI damaged DirecTV’s goodwill by showing its programming without paying the correct subscription fee; there are no allegations that MCI made any false, defamatory statement about DirecTV. DirecTV’s actions did not include allegations that MCI made any kind of statement at all. View "Martinsville Corral, Inc. v. Society Insurance" on Justia Law

The Supreme Court answered a certified question submitted by the United States District Court for the District of Nevada by holding that, under Nevada law, an insurer’s liability where it breaches its contractual duty to defend is not capped at the policy limits plus any costs incurred by the insured in mounting a defense. Instead, an insurer may be liable for any consequential damages caused by its breach. Further, good faith determinations are irrelevant for determining damages upon a breach of the duty to defend.Respondents filed suit against Appellant-insurer for breach of contract and other causes of action. The federal court concluded that Appellant did not act in bad faith but did breach its duty to defend. The federal court subsequently entered an order staying the proceedings until resolution of the certified question by the Supreme Court. The Supreme Court answered as set forth above, holding that an insured may recover any damages consequential to the insurer’s breach of its duty to defend, and therefore, an insurer’s liability for breach of that duty is not capped at the policy limits, even if the insurer did not act in bad faith. View "Century Surety Co. v. Andrew" on Justia Law

The Supreme Court reversed the decision of the Court of Appeals upholding the circuit court’s approval of Ray Thomas’s future periodic payments to DRB Capital, LLC in exchange for an immediate lump sum payment at a discounted rate after Thomas settled a workers’ compensation claim against his employer and its workers’ compensation insurer, holding that the underlying contracts’ anti-assignment clauses are enforceable and that the Kentucky Structured Settlement Protection Act (KSSPA) does not apply to workers’ compensation settlements.Less than six months after settling his claim, Thomas received the circuit court’s transfer approval. The circuit court approved the transfer pursuant to the KSSPA. The court of appeals upheld the circuit court’s approval. The Supreme Court reversed, holding that explicit anti-assignability clauses in the underlying contracts and statutory language limiting the KSSPA to tort settlements required reversal in this case. View "American General Life Insurance Co. v. DRB Capital, LLC" on Justia Law

The Supreme Court remanded this matter to the circuit court with directions to reinstate a default judgment granted to Bingham Greenebaum Doll, LLP and J. Richard Kiefer (collectively, Bingham) against Meredith Lawrence on its counterclaim to enforce a promissory note made by Lawrence in partial payment of attorney’s fees owed by Lawrence to Bingham, holding that the trial court erred in setting aside the default judgment and that the Court of Appeals erred in affirming that order.Specifically, the Court held that because Bingham’s counterclaim was a compulsory counterclaim to Lawrence’s action against Bingham for professional negligence and because the complaint called into question the validity of the promissory note at issue, Bingham’s counterclaim was justiciable even though it was filed three an a half months prior to the promissory note’s due date. View "Bingham Greenebaum Doll, LLP v. Lawrence" on Justia Law

The Supreme Court reversed the decision of the Court of Appeals applying provisions of the Kentucky Fairness in Construction Act (KFCA) to void an entire dispute resolution process contained in the parties’ sewer construction contract, reinstated the summary judgment entered in the trial court, and affirmed the Court of Appeals on all remaining issues.Plaintiff hired Defendant for its sewer project for approximately $2.3 million. The contract contained a provision detailing the process for dispute resolution (Article 13). When Defendant did not substantially complete the project by the scheduled deadline, Plaintiff brought this action. The Court of Appeals deemed the whole of Article 13 void and unenforceable. The Supreme Court held (1) the trial court correctly granted summary judgment in favor of Plaintiff on Defendant’s claim for extra work, and the court of appeals erred in applying certain portions of the KFCA to render null and void the entirety of Article 13; (2) the trial court correctly handled Plaintiff’s liquidated damages claim; and (3) the trial court did not err in denying Plaintiff’s motions for directed verdict and judgment notwithstanding the verdict on one of Plaintiff’s breach of contract claims. View "Louisville & Jefferson County Metropolitan Sewer District v. T&C Contracting, Inc." on Justia Law

The Supreme Court affirmed the circuit court’s decision granting summary judgment in favor of Protective Life Insurance Company on Plaintiff’s complaint alleging breach of contract and bad faith, holding that there were no genuine issues of material fact indicating that Protective breached its contract with Plaintiff.Specifically, the Court held (1) Plaintiff’s claim that Protective breached the implied contractual duty of good faith and fair dealing was reviewable; (2) the circuit court did not err when it determined that Protective did not breach the implied contractual duty of good faith and fair dealing; and (3) the circuit court did not err in ruling that Protective did not commit bad faith in handling Plaintiff’s claims. View "Zochert v. Protective Life Insurance Co." on Justia Law

The Supreme Court affirmed the decision of the circuit court denying Appellants’ motion to intervene in a partnership dissolution action, holding that Appellants failed to meet the tripartite test necessary for intervention as a matter of right under S.D. Codified Laws 15-6-24(a)(2).Appellants entered into a farm lease/cash rent agreement with Berbos Farms General Partnership. Appellants sued Berbos Farms to recover unpaid cash rent under the lease for the years 2015. During discovery, Appellants learned that Joe and Lisa Berbos, partners in Berbos Farms, had filed a separate action to dissolve Berbos Farms. Seeking to preserve their right to payment of the 2015 cash rent in the event Berbos Farms was dissolved, Appellants move to intervene in the partnership dissolution action. The circuit court denied the motion. The Supreme Court affirmed, holding that because Appellants failed to show that the claim for unpaid cash rent might be impaired by the disposition of the partnership dissolution lawsuit, the circuit court correctly denied the motion to intervene under section 15-6-24(a)(2). View "Berbos v. Berbos" on Justia Law