Justia Insurance Law Opinion Summaries

The Eastern Municipal Water District (EMWD) hired general contractor S.J. and Burkhardt, Inc. (SJB) for a public works construction project in 2006. Safeco Insurance Company (Safeco) executed performance and payment bonds for the project. Plaintiff Golden State Boring & Pipe Jacking, Inc. (GSB) was a subcontractor for the project, completing its work by September 2006, but it did not receive payment. In March 2008, SJB sent a voluntary default letter to Safeco. In July 2008, GSB sued SJB, EMWD, and Safeco for the unpaid amounts under the contract, separately seeking payment from Safeco under its payment bond. EMWD filed a cross-complaint to interplead retained sums. Safeco made a motion for summary judgment on the cause of action for payment under the bond on the ground that GSB’s claim was untimely. The trial court granted the motion, finding that there had been three cessations of labor that triggered GSB’s duty to file a stop notice in order to secure payment under Safeco's payment bond. At a subsequent court trial on the contract claims, GSB was awarded judgment against SJB, and Safeco was awarded judgment on the interpleader action. GSB appealed the summary judgment ruling, arguing: (1) the trial court erroneously overruled its objections to evidentiary matters presented in support of Safeco’s summary judgment; and (2) the court erred in finding the action was untimely. Finding no reversible error, the Court of Appeal affirmed. View "Golden State v. Eastern Municipal Water Dist." on Justia Law

Continental issued claims-made liability policies to the architectural firm responsible for designing and overseeing the construction of a building for the DASNY. In this declaratory judgment action, the insurer appealed from the district court's ruling on summary judgment that the two design flaws in the same structure were not "related." The court concluded that the 2002 Demand Letter could not be fairly read to concern the Ice Control Issue; and, focuses entirely on the Steel Girt Tolerance Issue, it could not be fairly read as an omnibus claim concerning all architectural defects in the Baruch College building; the court agreed with the district court that the Steel Girt Tolerance Issue and the Ice Control Issue arose from two unrelated wrongful acts; and, therefore, the court affirmed the district court's declaration that the two issues were unrelated. However, the court concluded that the district court abused its discretion by awarding prejudgment interest from the date of the settlement agreement itself. Accordingly, the court vacated the award and remanded for further proceedings. View "Dormitory Authority v. Continental Casualty Co." on Justia Law

This case arose from a contract between Roanoke Healthcare Authority (doing business as Randolph Medical Center) and Batson-Cook Company, a general contractor, to renovate the medical center, located in Roanoke. Batson-Cook received written notice from Roanoke Healthcare that work on the renovation project had been suspended. Batson-Cook notified one of its subcontractors, Hardy, of the suspension and stated that "[t]he contract has been suspended by [Roanoke Healthcare] through no fault of Batson-Cook ... or its subcontractors. [Roanoke Healthcare] is currently out of funding and has subsequently closed the facility while seeking a buyer." Liberty Mutual, the project's insurer, alleged in its answer that Roanoke Healthcare failed to pay Batson-Cook $241,940.51 for work performed pursuant to the contract. Batson-Cook sent Hardy a change order the change order deducted from the subcontract the $147,000 in equipment and materials another subcontractor Hardy hired, Johnson Controls, Inc. (JCI), had furnished for the renovation project and for which it has not received payment. JCI notified Liberty Mutual, Roanoke Healthcare, Batson-Cook, and Hardy by certified letters of its claim on a payment bond. The letters identified Batson-Cook as the general contractor and Hardy as the debtor. Liberty Mutual denied the claim. JCI sued Liberty Mutual, alleging JCI was entitled to payment on the payment bond Liberty Mutual had issued to Batson-Cook. Upon review, the Supreme Court concluded JCI was a proper claimant on the payment bond. Therefore, the circuit court erred in entering a summary judgment in favor of Liberty Mutual and denying JCI's summary judgment motion. View "Johnson Controls, Inc. v. Liberty Mutual Insurance Company " on Justia Law

Northern, operated by VanDuinen, was a general contractor on public construction projects, legally required to obtain surety bonds. Hanover was Northern’s bonding agent and required Northern to enter into an Indemnity Agreement, which VanDuinen signed in his individual capacity and as Northern’s President. The Midway Airport Project was financed by the FAA and managed by Parsons. In 2008 Northern won the bid and began subcontracting. in 2009 subcontractors complained that Northern failed to pay them in accordance with the bonds and contracts. Work was halted, resulting in a separate complaint, by Parsons, for failure to complete the Project as required. The FAA opted to retain possession of remaining contract funds, $127,086.00, pending resolution of the disputes and completion of the work. Hanover received claims from subcontractors McDaniel ($127,452.78) and Rex Electric ($78,495.00) and a claim for performance from Parsons. Hanover demanded collateral under the Agreement. Northern refused to post collateral or to indemnify Hanover. In 2009 McDaniel filed for bankruptcy; the bankruptcy trustee sued Hanover seeking payment for work performed. In 2012, Hanover paid the trustee $127,452.78 to resolve both McDaniels’s and Rex Electric’s claims. Hanover resolved Parson’s claim by stepping in as general contractor and arranging for completion of the Project. Parsons paid Hanover the $127,086.00 of contract funds the FAA had withheld. Hanover sued Northern and VanDuinen. The district court granted summary judgment in Hanover’s favor. The Seventh Circuit affirmed. The Agreement is unambiguous. Northern breached it, and Hanover is entitled to contractual damages. View "Hanover Ins. Co. v. Northern Bldg. Co." on Justia Law

The general contractor of a Wisconsin construction project, hired Harsco to supply scaffolding. Krien, injured in a fall when a plank on a scaffold on which he was standing, broke, sued Harsco. The parties settled his claim for $900,000. Harsco filed a third‐party complaint against the contractor, seeking indemnification plus interest and attorneys’ fees. The district judge granted the contractor summary judgment. The Seventh Circuit reversed and remanded after examining the complex provisions of the contract between the two. The plank may or may have been supplied by Harsco and may or may not have been defective, as claimed by Krien, who could not sue Riley in tort, because against his employer his only remedy for a work‐related accident was a claim for workers’ compensation, but there has never been judicial resolution of these questions, because Krien’s suit was settled before there was any judgment. Indemnification, however, is a form of insurance, and could apply even if the party seeking indemnification was negligent. Riley’s duty to indemnify Harsco extends to legal expenses incurred by Harsco in defending against Krien’s suit and in litigating this suit. View "Krien v. Harsco Corp." on Justia Law

VP & PK purchased an insurance policy from Lexington Insurance Company for work on a construction site. Kila Kila, one of VP & PK’s subcontractors, purchased an insurance policy from Nautilus Insurance Company. Both policies contained an “other insurance” provision and included duties to defend and indemnify. When VP & PK and Kila Kila were sued for damages resulting from the construction, Nautilus funded the defense of both Kila Kila and VP & PK. Lexington satisfied the judgment against VP & PK but did not contribute to the defense costs. Nautilus filed a complaint seeking (1) a declaration that Lexington owed VP & PK a duty to defend, which it breached; and (2) equitable contribution from Lexington for defense costs. The U.S. district court granted summary judgment for Lexington, holding that Lexington’s policy was in excess to Nautilus’s policy, and therefore, Lexington’s duty to defend was not triggered. The Hawaii Supreme Court accepted certified questions from the court of appeals and held, inter alia, that (1) an “other insurance” clause purporting to release an otherwise primary insurer of the duty to defend if the insurer becomes excess as to liability is enforceable, but only as between two or more insurers seeking to allocate or recover defense costs; and (2) an otherwise primary insurer who becomes an excess insurer by operation of an “other insurance” clause has a duty to defend as soon as a claim is tendered to it and there is the mere possibility that coverage of that claim exists under its policy. View "Nautilus Ins. Co. v. Lexington Ins. Co." on Justia Law

ICI Homes, Inc. (ICI) had a general liability insurance policy with General Fidelity Insurance Company. In 2007, Katherine Ferrin, the owner of a residence constructed by ICI, was injured while using stairs installed by Custom Cutting, Inc. Ferrin filed suit against ICI. ICI, in turn, sought indemnification from Custom Cutting. The parties agreed to a $1.6 million settlement of Ferrin’s claim. ICI accepted $1 million from Custom Cutting’s insurer to settle its indemnification claim, which it paid to Ferrin. ICI and General Fidelity then claimed the other was responsible for paying Ferrin the remaining $600,000. Both parties paid $300,000 to Ferrin to settle Ferrin’s claim. ICI then filed suit against General Fidelity seeking return of the $300,000 ICI paid above the $1 million indemnification payment. General Fidelity counterclaimed seeking return of the $300,000 it had paid to Ferrin. The district court entered judgment for General Fidelity. The court of appeals certified two questions to the Supreme Court for resolution. The Supreme Court answered (1) the General Fidelity policy allowed ICI to apply indemnification payments received from Custom Cutting’s insurer towards satisfaction of its $1 million self-insured retention; and (2) the transfer of rights provision in the policy did not abrogate the made whole doctrine. View "Intervest Constr. of Jax, Inc. v Gen. Fidelity Ins. Co." on Justia Law

Ewing Construction Company entered into a contract with a school district to serve as general contractor on a project. The school district later filed suit against Ewing for faulty construction. Ewing tendered defense of the underlying suit to Amerisure Insurance Company, Ewing's insurer under a commercial package policy that included commercial general liability coverage. Amerisure denied coverage, and Ewing filed suit in federal district court seeking a declaration that Amerisure breached its duty to defend and indemnify Ewing for damages awarded in the underlying suit. The district court granted summary judgment for Amerisure, concluding that the policy’s contractual liability exclusion applied to exclude coverage because Ewing assumed liability for its own construction work pursuant to the contract such that it would be liable for damages arising out of its defective work. On appeal, the court of appeals certified questions to the Texas Supreme Court, which answered that “a general contractor that enters into a contract in which it agrees to perform its construction work in a good and workmanlike manner, without more specific provisions enlarging this obligation, does not ‘assume liability’ for damages arising out of the contractor’s defective work so as to trigger the contractual liability exclusion.” View "Ewing Constr. Co., Inc. v. Amerisure Ins. Co." on Justia Law

A subcontractor on a public project filed suit against the general contractor and an insurance company that provided a payment bond seeking to recover money owed under the subcontract after the general contractor defaulted. The subcontractor asserted a payment-bond claim against the insurance company and breach of contract, unjust enrichment, and other claims against the general contractor. The insurance company filed a motion for summary judgment on the payment-bond claim because the subcontractor mailed its pre-suit notice of claim to the general contractor listed on the subcontract rather than the address listed on the payment bond. The district court denied the motion and granted judgment against the insurance company. The court of appeals reversed. The Supreme Court affirmed, holding (1) pursuant to Minn. Stat. 574.31(2)(a), a claimant must serve notice on the contractor at its address as stated in the bond as a prerequisite to filing suit; and (2) the subcontractor in this case did not comply with the statutory notice requirements. View "Safety Signs, LLC v. Niles-Wiese Constr. Co., Inc." on Justia Law

Owners Insurance Company appealed a circuit court judgment declaring Owners was obligated to pay an arbitration award entered against Jim Carr Homebuilder, LLC ("JCH"), under the terms of a commercial general-liability insurance policy Owners had issued. Owners initiated a declaratory-judgment action against JCH seeking a declaration that it was not obligated to indemnify JCH for any judgment entered against JCH arising from a dispute that a house JCH constructed was poorly built. After the homeowners prevailed in their action against JCH, the trial court in the declaratory-judgment action entered a summary judgment holding that Owners was required to pay pursuant to the terms of the Owners policy. Upon review, the Supreme Court found that because JCH's faulty workmanship was not an "occurrence," the trial court's judgment was in error, and it was hereby reversed. View "Owners Insurance Company v. Jim Carr Homebuilder, LLC et al. " on Justia Law