Brownstone Homes Condo. Assn. v. Brownstone Forest Hts.

A condominium homeowners association sued a contractor for negligence. The contractor’s insurer refused to defend the contractor against the action, and the contractor and the homeowners association thereafter entered into a settlement that included a stipulated judgment against the contractor, a covenant by the homeowners association not to execute that judgment, and an assignment to the homeowners association of the contractor’s claims against its insurer. When the homeowners association then initiated a garnishment action against the insurer, however, the trial court dismissed the action on the ground that, under “Stubblefield v. St. Paul Fire & Marine,” (517 P2d 262 (1973)), the covenant not to execute had released the contractor from any obligation to pay the homeowners association and, in the process, necessarily released the insurer too. The homeowners association appealed, arguing that “Stubblefield” either was distinguishable on its facts or had been superseded by statute. In the alternative, it argued that Stubblefield should have been overruled. The Court of Appeals affirmed. After its review, the Supreme Court concluded that, although Stubblefield was not distinguishable and had not been superseded by statute, it was wrongly decided. The Court reversed and remanded for further proceedings. View "Brownstone Homes Condo. Assn. v. Brownstone Forest Hts." on Justia Law