Justia Insurance Law Opinion Summaries

This case arose from a contract between the school district and DJH to perform heating, ventilation, and air condition work. The contract required DJH to obtain a performance bond which DJH secured from Nova, a compensated surety. At issue was whether Nova was discharged from it surety obligation to the school district on the bases that the school district allegedly violated New York's Lien Law 70[1] by improperly diverting construction contract payments constituting trust fund assets to a non-beneficiary and breached the terms of the parties' performance bond. The court held that under the facts, Nova had not demonstrated that discharge of its surety obligation was warranted. The court also considered whether the school district was entitled to attorneys' fees expended in the prosecution of the litigation and concluded that the request for attorneys' fees was properly denied.

This declaratory judgment action was brought by Secura, an insurer for Horizon, a subcontractor on a troubled construction project. Horizon's two other insurers, State Auto and Federated later joined. Their dispute with Weitz arose out of a construction project in which Weitz was the general contractor for Metropolitan. After Weitz and Metropolitan brought breach of contract claims against each other, both filed third party complaints against Horizon for defective plumbing. Horizon's insurers defended and settled all claims against it and reimbursed Weitz for its defense of claims against Horizon. Weitz then contended that since it was an "additional insured" on Horizon's policies, the insurers should pay for attorney fees and costs it incurred in defending against Metropolitan's entire counterclaim. The insurers filed this action seeking a final judgment that they not be required to pay the attorney fees and costs. Applying Missouri law, the court rejected Weitz's argument that Metropolitan's counterclaim asserted potentially covered losses under the policies. Therefore, the court affirmed summary judgment in favor of the insurers because Metropolitan's counterclaim did not state an "occurrence" giving rise to a possibility of coverage under the policies.

Appellant, an LLC, purchased an "all-risks" insurance policy for an office building it owned from Insurer. The building was significantly damaged after a general contractor Appellant had hired to renovate the building removed the waterproof membrane on the roof and the building was exposed to substantial rainfall. Insurer denied coverage, concluding that the damage did not result from a covered cause of loss. Appellant sued Insurer, alleging that Insurer breached the insurance policy and denied coverage in bad faith. The district court granted summary judgment in favor of Insurer, concluding that the policy unambiguously excluded from coverage for the damage sustained to the building. The Supreme Court affirmed, holding that the damages sustained by the building were excluded from coverage based on the policy's rain limitation and the contractor's faulty workmanship in repairing the roof. In addition, although the doctrine of efficient proximate cause did not provide relief under the facts of this case, the Court adopted the doctrine of efficient proximate cause in Nevada.

Danny O'Neall was injured while working for Sadler Line Construction, a subcontractor of Alliance Construction. Sadler had commercial general liability (CGL) coverage with Federated Service Inusrance Company. In the underlying personal injury action, O'Neall sued Alliance and Sadler for negligence. In the instant action, Federated filed a declaratory judgment action against Alliance, alleging that it had no duty to defend or indemnify Alliance against O'Neall's personal injury action. The district court granted summary judgment for Federated. The Supreme Court reversed, holding (1) the parties, by requiring Sadler to name Alliance as an additional insured on its CGL policy, intended that Sadler would insure against loss caused by Alliance's negligence; and (2) Sadler's additional insured endorsement, which provided coverage for liability arising out of Sadler's operations, was broad enough to include coverage for Alliance's negligence even if Sadler was not negligent. Remanded.

The issue before the Tenth Circuit in this case centered on whether property damage caused by a subcontractor's faulty workmanship is an "ocurrence" for purposes of a commercial general liability (CGL) insurance policy. The issue arose from the appeals of Plaintiffs-Appellants Greystone Construction, Inc., The Branan Company, and American Family Mutual Insurance Company (American) who all appealed the district court’s grant of summary judgment in favor of Defendant National Fire & Marine Insurance Company (National). Greystone was the general contractor that employed multiple subcontractors to build a house in Colorado. As is common along Colorado’s front range, the house was built on soils containing expansive clays. Over time, soil expansion caused the foundation to shift, resulting in extensive damage to the home’s living areas. The homeowners sued Greystone for damages, alleging defective construction by the subcontractors who installed the foundation. Greystone was insured under CGL policies provided by two insurers. American provided policies for 2001 to 2003, and National provided policies for 2003 to 2006. The American and National policy periods did not overlap. Greystone tendered a claim to American and then National. National denied it owed Greystone any defense. In district court, the builders and American sought to recover a portion of their defense costs from National. Upon review, the Tenth Circuit concluded that damage arising from a poor workmanship may fall under a CGL policy’s initial grant of coverage, even though recovery may still be precluded by a business-risk exclusion or another provision of the policy. The case was remanded to the district court for further proceedings.

Employers Mutual Casualty Company (Employers Mutual) appealed a circuit court's denial of its motion to intervene in a pending case. Holman Building Company was sued by multiple homeowners who claimed their homes were poorly built from inferior building materials with poor quality workmanship. In 2010, Employers Mutual moved to intervene in the action, asserting that it had issued Holman commercial general-liability and umbrella policies that covered some if not all of the allegations made by the homeowners. Upon review, the Supreme Court held that the trial court did not abuse its discretion in denying Employers Mutual's permissive intervention: "given the complexity of this case, the trial court was clearly within ints discretion to deny Employers Mutual's request to intervene for the purpose of obtaining a bifurcated trial of insurance-coverage issues or a special verdict or a general verdict accompanied by answers to interrogatories ... this case provides a prime example of the need for discretion in a trial court's ruling on an insurer's motion for permissive intervention." Accordingly, the Court affirmed the trial court's decision to deny the insurance company's intervention.

Defendant contractor entered into a contract to replace a roof. When the newly installed roof developed leaks, Defendant hired an independent contractor to make repairs. While performing the work, the independent contractor caused a fire, resulting in a large insurance claim by the homeowners. As subrogor to the homeowners' rights and claims arising out of the fire, Plaintiff insurance company sued Defendant in tort and contract. The trial court granted Defendant's motion for summary judgment on all claims, finding that because Defendant had subcontracted the work, he could not be liable. The court of appeals reversed. The Supreme Court affirmed, holding that Defendant had an implied non-delegable duty to install the roof in a careful, skillful, diligent, and workmanlike manner. Remanded.

Town & Country Property, L.L.C., and Town & Country Ford, L.L.C. (T&C), sued Amerisure Insurance Company and Amerisure Mutual Insurance Company (Amerisure) and its insured, Jones-Williams Construction Company, Inc., alleging that Amerisure was obligated to pay a $650,100 judgment entered in favor of T&C and against Jones-Williams in a separate action pursuant to a commercial general-liability insurance policy Amerisure had issued Jones-Williams. The trial court entered a summary judgment in favor of Amerisure, and T&C appealed. Specifically, the trial court held that Amerisure was not required to indemnify Jones-Williams because there had been no occurrence invoking coverage under the policy. Upon review, the Supreme Court affirmed the trial court's judgment to the extent the awarded damages represented the costs of repairing or replacing faulty work covered under the liability policy. The Court remanded the case to the trial court so that it could consider arguments from the parties to determine if any of the damages awarded represented compensation for damaged property.

Ronald Bacon was injured while working at a construction site. Bacon sued the general contractor, the general contractor's commercial liability insurer, the subcontractor, and the parent company of the subcontractor. Bacon settled with the insurer, which together with the general contractor's separate liability insurer, made payments to Bacon pursuant to the settlement agreement. After Bacon settled with the subcontractor's parent company, the general contractor's two insurers filed a breach of contract action because Bacon received the proceeds of his second settlement but refused to make payment to the insurers under the terms of the first settlement agreement. The district court granted summary judgment for the insurers, finding Bacon, his lawyer, and the lawyer's law firm liable in the amount of $437,500. The Supreme Court reversed the district court's finding that lawyer and law firm were personally liable on the contract, holding that an attorney and/or law firm is not liable on a contract negotiated on behalf of a client when the contract provides that both the client and the attorney "agree to and will pay" a certain sum of money and the attorney signs the contract under the legend "Agreed to in Form & Substance". The Court otherwise affirmed.

An employee of the general contractor on a construction site was allegedly injured by the negligent act of the employee of a subcontractor who carried no workers' compensation insurance. Plaintiff, the injured party, brought a common-law action against Defendants, the uninsured subcontractor and its employee, the alleged tortfeasor. The Defendants filed a plea in bar, asserting that the Virginia Workers' Compensation Act was Plaintiff's sole remedy. The circuit court held that Defendants' failure to carry workers' compensation insurance deprived them of the protections afforded by the Act because they were not participants in the statutory workers' compensation system. The court denied the plea in bar, permitting the action to go forward, but certified the case for an interlocutory appeal. The Supreme Court reversed the judgment appealed from and entered final judgment dismissing the case, holding that the circuit court erred in denying Defendants' plea in bar because Defendants were entitled to the exclusivity protection provided by the Act notwithstanding their lack of workers' compensation insurance.