Justia Insurance Law Opinion Summaries

Appellants Bunn Builders, Inc. (Bunn) hired Appellees Richard Womack and Roy Turner (Womack & Turner) to paint the ground floor office of the Bunn Building in Arkadelphia. On August 19, 2004, a fire was reported at the building. The building sustained major structural damage as a result of the fire. Bunn insured the building through Employers Mutual Casualty Company (EMC). Within a few days, EMC hired investigators to find the cause and origin of the fire. The investigators asked Womack & Turner's liability insurance carrier Farm Bureau Mutual Insurance Company of Arkansas, Inc. (Farm Bureau) to preserve certain items for testing. In particular, they requested to test a halogen work lamp that the painters used on the Bunn job. EMC later sent a letter to Farm Bureau stating that EMC believed that the electrical components from the "electrical tools" used on the job were eliminated as a possible cause for igniting the fire. Testimony at trial by Womack & Turner revealed that EMC believed that the halogen lamp had been eliminated as a possible cause. However, EMC's investigators submitted reports identifying the lamp as the possible source of ignition. These reports were not sent to Farm Bureau. Farm Bureau wanted to do its own independent testing and asked EMC for the tools. EMC admitted that it had destroyed the items once its investigation was complete. Bunn and EMC sued Womack & Turner for negligence, alleging that the halogen lamp started the fire. In their response, Womack & Turner raised the issue of "spoliation," arguing that Bunn and EMC had a duty to preserve the evidence if they intended to sue for negligence. A trial was held, and the jury was given an instruction on "spoliation." The jury returned a verdict in favor of Womack & Turner. On appeal to the Supreme Court, Bunn and EMC argued that it was an abuse of discretion for the trial court to instruct the jury on spoliation. The Supreme Court found that the trial court did not abuse its discretion, and affirmed the decision in favor of Womack & Turner.

Duane Peterson, Mid Am Group, LLC, and Mid Am Group Realty (collectively âMid Amâ), Village Homes at Harwood Groves, LLC (Village Homes), and First International Bank and Trust (First International) all had a stake in the insurance proceeds from a 2007 hail storm that damaged their respective properties. The trial court granted summary judgment to Village Homesâ Homeownersâ Association that represented ten property owners of the Village Homes community impacted by the storm. Mid Am developed and built the insured properties, but Mid Am had only sold ten of fifty units. When the hail storm hit, Mid Am submitted a proof of loss with its insurance company for the residences it still owned. First American was in the process of foreclosing on those unsold Mid Am properties. The insurance check was sent to Mid Am, but First American sued to get possession of the proceeds, and the individual owners were permitted to intervene. The court took control of the proceeds, and held that neither Mid Am nor First International were entitled to them. The court ruled that Mid Am, as fiduciary to the ten owners, should distribute the proceeds among them. Mid Am appealed, arguing that the ownersâ association did not have standing to intervene in the suit for the proceeds. The Supreme Court concluded that the ownersâ association had standing to intervene, and that it was not an error of the trial court to allow the owners to make their claim for the proceeds. The Court affirmed the grant of summary judgment.