Justia Contracts Opinion Summaries

Arch Specialty Insurance Company appealed the grant of summary judgment in favor of Amerisure Mutual Insurance Company. In 2006, Amerisure issued a Texas Commercial Package Policy to Admiral Glass & Mirror Co. The policy afforded coverage in excess of any coverage afforded by a controlled insurance program policy. Arch issued an Owner Controlled Insurance Program (“OCIP”) policy to Endeavor Highrise, LP and its contractors and subcontractors for bodily injury and property damage arising out of construction of the Endeavor Highrise. Admiral was a subcontractor insured under the OCIP policy. Endeavor sued Admiral and others for faulty work. Amerisure tendered the lawsuit to Arch as the primary insurer. Prior to Arch accepting the defense, Amerisure incurred $23,879.27 in defense fees. In April 2012, Arch withdrew from defense of the Endeavor lawsuit asserting that attorneys’ fees, defense costs, and settlements of $2,000,000.00 from defending Admiral and other subcontractor defendants exhausted policy limits. Amerisure took over the defense and incurred additional fees and costs of $114,957.14 before settling the claims against Admiral. In total, Arch paid a settlement of $1,555,000.00 and defense costs of $159,543.15 under the general coverage limit of the OCIP, and paid settlements totaling $1,472,032.61 and defense costs of $527,967.36 under the products-completed operations coverage of the OCIP policy. Amerisure sued Arch in Texas state court for breach of contract, contending that Arch wrongfully refused to defend and indemnify Admiral. Amerisure argued on appeal that the term “expenses” in the Supplementary Payments provision did not include attorneys’ fees and other costs of defense. It also argued that, even if “expenses” includes defense costs, the effect of the statement “All other terms and conditions of this Policy remain unchanged” read together with the language that the duty to defend expires when “we have used up the [policy limits] in the payment of judgments or settlements” means that the policy limits are eroded only by payment of “judgments or settlements,” not defense costs. For its part, Arch argued that “expenses” included defense costs and that the endorsement controlled over any contrary language such that it converts this policy into an eroding policy. The Fifth Circuit agreed with Arch, concluding that the endorsement transformed the policy into an “eroding limits” policy. The Court affirmed the district court’s judgment regarding the duty to indemnify, reversed the district court’s judgment regarding the duty to defend, and rendered judgment for Arch. View "Amerisure Mutual Ins. Co. v. Arch Specialty Ins. Co." on Justia Law

Blackstone International, Ltd. was insured by Insurers for commercial general liability insurance. The policy included coverage for personal advertising injury liability. Blackstone was sued for breach of contract, among other causes of action, after disputes arose regarding a joint business venture to market and sell lighting products. Blackstone requested coverage and litigation defense under the personal and advertising injury provisions of the policy. Insurers filed a complaint for declaratory judgment seeking a judgment that they had no duty to defend the claims because the complaint did not allege that Blackstone had engaged in advertising, that the plaintiff had suffered an advertising injury, or that there was any causal connection between the plaintiff’s claimed damages and any advertising conducted by Blackstone. The circuit court entered summary judgment for Insurers. The intermediate appellate court reversed. The Court of Appeals reversed, holding that Insurer had no duty to defend Blackstone where Blackstone did not show an advertising injury suffered by the plaintiff. View "Md. Cas. Co. v. Blackwell Int'l Ltd." on Justia Law

Piedmont Office Realty Trust, Inc. purchased two insurance policies: a primary policy issued by Liberty Surplus Insurance Company and an excess coverage policy issued by XL Specialty Insurance Company ("XL"). The excess policy provided that XL will only pay for a "loss" which Piedmont became "legally obligated to pay as a result of a securities claim." The policy also contains a "consent to settle" clause. In addition, the policy contains a "no action" clause which read: "No action shall be taken against the insurer unless, as a condition precedent thereto, there shall have been full compliance with all of the terms of this policy, and the amount of the insureds’ obligation to pay shall have been finally determined either by judgment against the insureds after actual trial, or by written agreement of the insureds, the claimant and the insurer." Piedmont was named as a defendant in a federal securities class action suit in which the plaintiffs sought damages exceeding $150 million. Relatively early in the litigation, Piedmont moved for summary judgment. The district court denied Piedmont’s motion. Thereafter, following years of discovery and litigation, Piedmont renewed its summary judgment motion. The district court granted the renewed motion and dismissed the class action suit. Plaintiffs appealed. While the plaintiffs’ appeal was pending, plaintiffs and Piedmont agreed to mediate plaintiffs’ claim. By that time, Piedmont had already exhausted its coverage limit under its primary policy and another $4 million of its excess policy simply by defending itself. Anticipating a settlement with plaintiffs, Piedmont sought XL’s consent to settle the claim for the remaining $6 million under the excess policy. XL agreed to contribute $1 million towards the settlement, but no more. Without further notice to XL and without obtaining XL’s consent, Piedmont agreed to settle the underlying lawsuit with plaintiffs for $4.9 million. The district court approved the settlement and Piedmont demanded XL provide coverage for the full settlement amount. XL refused. Piedmont filed suit against XL for breach of contract and bad faith failure to settle. XL moved to dismiss the complaint; the district court granted XL’s motion; and Piedmont appealed. The 11th Circuit certified three questions to the Georgia Supreme Court: (1) Under the facts of this case, was Piedmont "legally obligated to pay" the $4.9 million settlement amount, for purposes of qualifying for insurance coverage under the Excess Policy?; (2) In a case like this one, when an insurance contract contains a "consent-to-settle" clause that provides expressly that the insurer's consent "shall not be unreasonably withheld," can a court determine, as a matter of law, that an insured who seeks (but fails) to obtain the insurer's consent before settling is flatly barred from bringing suit for breach of contract or for bad-faith failure to settle?; and (3) In this case, under Georgia law, was Piedmont's complaint dismissed properly? The Georgia Supreme Court responded: absent XL’s consent to the settlement, under the terms of the policy, Piedmont could not sue XL for bad faith refusal to settle the underlying lawsuit in the absence of a judgment against Piedmont after an actual trial. It follows that the district court did not err in dismissing Piedmont’s complaint. View "Piedmont Realty Office Trust v. XL Specialty Insurance Co." on Justia Law

Robert Lang and his construction business (collectively, “Lang”) contracted to sell Dan Ryan Builders, Inc. (“Dan Ryan”) all the lots in a housing development Lang was planning to build. When cracks appeared in the basement slab and foundation walls of a partially constructed house on one of the lots Dan Ryan had purchased, the parties amended their agreement. After further problems developed in the construction of the homes, Dan Ryan filed this lawsuit against Lang seeking monetary damages for breach of contract. After a bench trial, the district court entered judgment in favor of Dan Ryan and ordered Lang to pay Dan Ryan limited damages on the contract claim. Dan Ryan appealed, seeking additional damages. The Fourth Circuit affirmed, holding that the district court did not err in its award of damages. View "Dan Ryan Builders, Inc. v. Crystal Ridge Dev., Inc." on Justia Law

The owner of Mamilove, LLC, and its officers, sisters Michele and Lorraine Reymond sought rescission of a franchise agreement and damages for claims related to their negotiations for, and ultimate purchase of, a daycare franchise. The named defendants were the franchisor, Legacy Academy, Inc., and its officers, Frank and Melissa Turner (collectively “Legacy”). Ten years after they signed the franchise agreement at the heart of this dispute, the Reymonds alleged Legacy fraudulently induced them to sign the agreement by providing false information about the historical earnings of existing Legacy Academy franchisees. They sought to rescind the franchise agreement and recover damages for claims based on alleged fraud, negligent misrepresentation and violation of the Georgia Racketeer Influences and Corrupt Organizations Act (RICO). After a jury trial, the trial court denied Legacy's motion for a directed verdict as to all of the Reymonds' claims. The jury found in the Reymonds' favor, and awarded $750,000 in damages plus attorney fees. Legacy appealed, raising various challenges, including a challenge to the trial court's ruling on its motion for directed verdict. Upon review, the Supreme Court concluded the trial court erred in denying Legacy's motion for a directed verdict as to fraud, negligent misrepresentation and a violation of the RICO statute. The Court reversed the Court of Appeals who affirmed the trial court with regard to these claims, and remanded the case for further proceedings. View "Legacy Academy, Inc. v. Mamilove, LLC" on Justia Law

Chad Johnson and Stewart Minnick entered into an agreement whereby Johnson would purchase farmland he had been renting from Minnick and Minnick’s sister after Minnick’s death. The purchase price of the farmland was to be funded by an insurance policy owned by Johnson on Minnick’s life. After Minnick died, the insurer paid the policy proceeds to Johnson. Johnson tendered the the proceeds of the policy to the personal representative of Minnick’s estate, but the personal representative refused to convey the farmland. Johnson brought this action for specific performance and other relief. The district court concluded that the purchase agreement was unenforceable. The Supreme Court affirmed but under different reasoning from that of the district court, holding (1) the purchase agreement was not specifically enforceable as a matter of law because Johnson lacked an insurable interest in Minnick’s life; and (2) Johnson’s claim for damages was time barred. View "Johnson v. Nelson" on Justia Law

Paul R. Steinfurth and Paul C. Steinfurth (collectively, "the guarantors") appealed the denial of their postjudgment motion requesting that a judgment entered against them and in favor of Ski Lodge Apartments, LLC, be amended insofar as the judgment held that the guarantors had waived their personal exemptions under 6-10-123, Ala. Code 1975. On or about February 13, 2009, Styles Manager, LLC purchased from Vintage Pointe Apartments, LLC an interest in an apartment complex located in Montgomery. As part of this transaction, Styles Manager executed a promissory note promising to pay Vintage Pointe $800,000. Paul C. signed the promissory note in his official capacity as "manager" of Styles Manager. As security for the performance of the payment of the promissory note, the guarantors, in their individual capacities, executed a "guaranty of payment and performance" of the promissory note. Styles Manager defaulted on the promissory note in 2011. Pursuant to the note, the entire principal amount and all accrued interest was then due on February 13, 2011. Neither Styles Manager nor the guarantors cured the default. Accordingly, on September 27, 2012, Ski Lodge sued the guarantors, alleging breach of the guaranty agreement, in order to collect the outstanding debt on the promissory note. Ski Lodge requested $804,333.36, together with additional accrued interest, in damages. In its complaint, Ski Lodge did not expressly allege that the guarantors had waived their right to a personal exemption. However, Ski Lodge did attach to its complaint copies of the loan documents, which included the promissory note and the guaranty agreement, and stated that each was "incorporated herein by reference." The guarantors filed an answer and counterclaims against Ski Lodge alleging misrepresentation and suppression. The guarantors moved to dismiss Ski Lodge's suit against them, then filed a Rule 59(e), Ala. R. Civ. P., motion to alter, amend, or vacate the circuit court's judgment insofar as the circuit court held that the "judgment is entered pursuant to Alabama law with a waiver of exemptions, according to the terms expressed in the [p]romissory [n]ote and [the] [g]uaranty [agreement] which are the subject matter of this action, as the same were incorporated and adopted into the complaint." The guarantors argued that "waiver was not properly [pleaded]" and that the guaranty agreement did "not provide for waiver of exemptions by" the guarantors. The circuit court ultimately denied the guarantors' postjudgment motion, leading to this appeal to the Alabama Supreme Court. After review, the Supreme Court concluded the circuit court's holding that the guarantors waived their personal exemptions was in error. Accordingly, the Court reversed the circuit court's judgment and remanded the matter for further proceedings. View "Steinfurth v. Ski Lodge Apartments, LLC" on Justia Law

The County of Orange, California (County) filed a breach of contract action in federal district court against Tata American International Corporation after Tata America did not perform its obligations under the contract to the County’s satisfaction. The complaint included a jury trial demand. Tata America moved to strike the County’s jury demand, arguing that the County waived its right to a jury trial by signing the contract, which contained a jury trial waiver. The district court granted Tata America’s motion to strike, concluding (1) federal law, rather than California law, governed the question of whether the County waived its right to a jury trial in federal court; and (2) the County knowingly and voluntarily waived its right to a jury trial. The Ninth Circuit granted the County’s petition for writ of mandamus, holding (1) the federalism principle announced in Erie R. Co. v. Tompkins requires federal courts sitting in diversity to import state law governing jury trial waivers where, as here, state law is more protective than federal law of the jury trial right; and (2) under California law, the parties’ contractual jury trial waiver was unenforceable, and therefore, the district court erroneously deprived the County of a jury trial when it granted Tata America’s motion to strike. View "County of Orange v. U.S. Dist. Court for Cent. Dist. of Cal." on Justia Law

This dispute arose from a contract signed by the parties in 2006, the Wireless Patent License Agreement, which provided for arbitration as the mechanism to resolve any claims arising under that Agreement. LG Electronics, Inc. sought a declaration in the Court of Chancery that InterDigital Communications, Inc., InterDigital Technology Corporation, and IPR Licensing Inc. that InterDigital had breached a nondisclosure agreement between the parties by disclosing confidential information during a pending arbitration proceeding. The Court of Chancery granted InterDigital's motion to dismiss, holding that all of LG's claims were properly before the arbitral tribunal, and deferred to the "first-filed proceeding" based on the factors established by the Delaware Supreme Court in "McWane Cast Iron Pipe Corp. v. McDowell-Wellman Engineering Co." After review, the Supreme Court agreed that the McWane doctrine applied in this case, and that it supported dismissing LG's claims. View "LG Electronics, Inc. v. InterDigital Communications, Inc." on Justia Law

Plaintiffs-appellants Earl and Marina Rideau entered into an agreement with condominium developer, Inmobiliaria BGJB de Mexico, S. de R.L. de C.V. (BGJB; not a party to this appeal), to purchase a unit to be constructed in Mexico. The Rideaus deposited funds toward the purchase price with an escrow company, defendant-respondent Stewart Title of California. In the "Sale Escrow Instructions," Stewart Title agreed to receive funds from the Rideaus, to be released at the seller's direction to a fund control company, as specified in the Instructions. The project failed and the Rideaus lost their deposit. In the Rideaus' prior appeal, the Court of Appeal reversed a defense judgment on the basis that the trial court erred in denying their contract claim that Stewart Title had breached the Instructions, when it released their $239,700 deposited funds to entities other than the one specified in the Instructions. On remand, the trial court entered judgment in their favor. This appeal arose from the trial court's denial of the Rideaus' motion for an award of contractual attorney fees and costs, based upon "hold harmless" language found in section IV of the Instructions, "Release of Funds," regarding defense of claims arising from the Instructions. The Rideaus argued a portion of that language should be interpreted as a reciprocal attorney fees clause, and not as an item of recovery specified in an indemnity agreement. After review, the Court of Appeal concluded that the trial court correctly denied the motion and affirmed the order and judgment. View "Rideau v. Stewart Title of California" on Justia Law