Justia Insurance Law Opinion Summaries

Nilfisk, Inc. leased a large warehouse building in Springdale, Arkansas from Fort Worth Partners, LLC under an industrial lease that required Nilfisk to maintain property insurance covering the full replacement cost of the building, excluding certain foundation and below-grade structures. In March 2022, a tornado destroyed the building, and Nilfisk’s insurance coverage at the time was significantly less than the full replacement cost required by the lease. Fort Worth Partners sued Nilfisk and its parent company for breach of contract, seeking damages equal to the full replacement cost that would have been covered by adequate insurance.The United States District Court for the Western District of Arkansas reviewed cross-motions for summary judgment. It denied Nilfisk’s motion and granted Fort Worth Partners’ motion in part, finding Nilfisk had breached its insurance obligation under the lease. The court held a bench trial to determine damages, considering expert testimony from both parties. It awarded Fort Worth Partners damages for the building’s replacement cost, excluding foundation damages per the lease, and also awarded attorney’s fees and costs, with reductions for limited success and prevailing local rates. Nilfisk appealed the denial of summary judgment and the damages award, while Fort Worth Partners cross-appealed aspects of the damages and fee awards.The United States Court of Appeals for the Eighth Circuit affirmed the district court’s grant of partial summary judgment for Fort Worth Partners and its denial of Nilfisk’s summary judgment motion. The appellate court held that Fort Worth Partners’ claim was timely, as each deficient insurance policy constituted a separate breach with its own limitations period. The court also affirmed the district court’s interpretation of the lease excluding all foundation damages and upheld the reduction in attorney’s fees. However, it reversed and remanded the damages award for unrebutted costs, instructing the district court to make specific factual findings supporting that portion of the award. View "Fort Worth Partners, LLC v. Nilfisk, Inc." on Justia Law

A construction worker employed by a subcontractor was injured when a scaffold collapsed at a Manhattan worksite. The worker sued the property owner and general contractor in New York Supreme Court, alleging negligence and violations of state labor laws. The owner’s insurer, Liberty Insurance Corporation, sought a declaration in federal court that the subcontractor’s insurer, Hudson Excess Insurance Company, was obligated to defend and indemnify the owner as an additional insured under the subcontractor’s commercial general liability policy. The subcontract between the general contractor and the subcontractor required the latter to provide insurance coverage for the owner and general contractor.In the New York Supreme Court, summary judgment was granted to the injured worker on some claims, while other claims remained pending. The court denied summary judgment to the owner on its contractual indemnification claim against the subcontractor, finding factual questions about the scope of the subcontractor’s work. Later, after the federal district court’s decision, the state court dismissed all third-party claims against the subcontractor, finding the indemnity provision in the subcontract invalid due to lack of a meeting of the minds.The United States Court of Appeals for the Second Circuit reviewed the case. It affirmed the district court’s finding, after a bench trial on stipulated facts, that the subcontractor’s actions proximately caused the worker’s injuries and that Hudson owed a duty to indemnify the owner under the policy. The Second Circuit held that the later state court decision did not alter this result. However, the Second Circuit reversed the district court’s award of attorney’s fees to Liberty, holding that Hudson was entitled to a statutory safe harbor under New York Insurance Law, and thus was not required to pay Liberty’s attorney’s fees for the federal action. View "Liberty Insurance Corp. v. Hudson Excess Insurance Co." on Justia Law

In this case, a construction financer, Mortgages Ltd. (ML), collapsed, leading to numerous mechanics' liens on unfinished projects. ML had loaned $165 million to Tempe Land Company (TLC) for a condominium project, securing the loan with a deed of trust and purchasing a title insurance policy from Fidelity National Title Insurance Company. Contractors began recording mechanics' liens against the property, and ML entered involuntary bankruptcy. The Loan LLCs, created to hold ML's assets, foreclosed on the property but did not extinguish the liens. Universal and VRCP provided loans to ML Manager and the Loan LLCs, securing their loans with deeds of trust and obtaining title insurance policies from Commonwealth Land Title Insurance Co.The trial court granted summary judgment to Commonwealth on CMLC's breach of contract claim, finding that the loans were fully repaid, thus precluding coverage under the policy. The case proceeded to trial on CMLC's bad faith claim, where the jury awarded $5 million in damages. Both parties appealed. The court of appeals vacated the trial court's summary judgment on the breach of contract claim, directing the trial court to enter summary judgment for CMLC, and affirmed the denial of Commonwealth's motion for judgment as a matter of law on the bad faith claim.The Supreme Court of Arizona reviewed the case and held that Commonwealth could contest coverage based on policy provisions limiting liability to the unpaid indebtedness. The court found that the loans were fully repaid, thus no covered loss occurred. The court also held that the diminution in lien value did not constitute actual pecuniary damage to support a bad faith claim. Additionally, the court ruled that the collateral source rule did not preclude evidence of loan repayments. The court vacated the court of appeals' opinion, affirmed the trial court's summary judgment for Commonwealth on the breach of contract claim, and remanded to enter summary judgment for Commonwealth on the bad faith claim. View "CENTERPOINT v COMMONWEALTH" on Justia Law

Plaintiff purchased a rural property in Santa Cruz County, which was accessed via a private road crossing his neighbor's property. A dispute arose when the neighbor claimed an easement over the road, leading to increased traffic due to marijuana cultivation. The neighbor filed two lawsuits asserting an easement, both of which were dismissed without prejudice. Plaintiff then sued to quiet title, and the neighbor cross-complained, asserting an easement based on a 1971 deed. The trial court ruled in favor of the neighbor, finding an express easement, a decision affirmed on appeal.Plaintiff funded his defense using retirement savings after Chicago Title Insurance Company, his title insurer, denied his tender for defense, citing policy exclusions. Plaintiff sued Chicago Title for breach of contract and bad faith. The trial court found Chicago Title had a duty to defend from the initial tender but rejected Plaintiff's bad faith claim and request for punitive damages. The court awarded damages for the diminution in property value but denied damages for periods outside the litigation.On appeal, the California Court of Appeal, Sixth Appellate District, found that Chicago Title acted in bad faith by failing to defend Plaintiff despite the potential for coverage indicated by the 1971 deed. The court reversed the trial court's judgment on the bad faith claim and remanded for a determination of damages resulting from the breach of the implied covenant of good faith and fair dealing. The court affirmed the trial court's denial of punitive damages and its award of prejudgment interest on the additional diminution in value. The case was remanded for further proceedings consistent with the appellate court's findings. View "Bartel v. Chicago Title Insurance Co." on Justia Law

In 2005, Island Pointe, LLC contracted Complete Building Corporation (CBC) to construct a condominium project, Palmetto Pointe at Peas Island. CBC subcontracted Tri-County Roofing (TCR) for roofing and related work. In 2014-2015, Palmetto discovered construction defects and sued CBC, TCR, and others for negligence and breach of warranty. Palmetto received $6,800,000 in settlements, including $1,000,000 from CBC's insurer for a covenant-not-to-execute and $1,975,000 from four other defendants.The trial began in May 2019, and the jury found CBC and TCR liable for $6,500,000 in actual damages and $500,000 each in punitive damages. The trial court apportioned 5% liability to two other defendants, making CBC and TCR jointly and severally liable for the remaining 90% of actual damages. TCR sought setoff for the $1,000,000 payment and the settlements from the four other defendants. The trial court denied TCR's motion for setoff, except for partial amounts conceded by Palmetto.The South Carolina Supreme Court reviewed the case. It reversed the court of appeals' decision, holding that TCR is entitled to set off the full $1,000,000 paid by CBC's insurer. The court affirmed the lower court's decision regarding the settlements from Novus, Atlantic, H and A, and Cohen's, agreeing that the trial court reasonably allocated the settlement amounts. The case was remanded to the trial court for the calculation of the judgment against TCR. View "Palmetto Pointe v. Tri-County Roofing" on Justia Law

HIVE Construction, Inc. served as the general contractor for the construction of Masterpiece Kitchen, a restaurant. The contract required HIVE to follow specific architectural plans, including installing two layers of drywall on a wall separating the kitchen and dining area. Instead, HIVE installed one layer of drywall and one layer of combustible plywood without approval. A fire started within the wall, causing significant damage and forcing the restaurant to close. Mid-Century Insurance Company, as the property insurer and subrogee of Masterpiece Kitchen, paid for the damages and then sued HIVE for negligence, alleging willful and wanton conduct.The district court initially allowed Mid-Century to amend its complaint to include a breach of contract claim but later reversed this decision, requiring Mid-Century to proceed with the negligence claim. At trial, the jury found HIVE's conduct to be willful and wanton, awarding damages to Mid-Century. HIVE appealed, arguing that the economic loss rule barred the negligence claim. The Colorado Court of Appeals agreed, reversing the district court's decision and instructing a verdict in HIVE's favor.The Supreme Court of Colorado reviewed the case and concluded that the economic loss rule does not provide an exception for willful and wanton conduct. The court held that the rule barred Mid-Century's negligence claim because the duty HIVE allegedly breached was not independent of its contractual obligations. Consequently, the court affirmed the judgment of the Colorado Court of Appeals, upholding the application of the economic loss rule to bar the negligence claim. View "Mid-Century Ins. Co. v. HIVE Construction" on Justia Law

Wehr Constructors, Inc. (Wehr) entered into a contract with St. Claire Medical Center (St. Claire) to build an addition to the hospital. Wehr's performance was allegedly deficient, leading to significant construction defects. St. Claire terminated the contract and sought damages from Wehr's performance-bond carrier, Travelers Casualty and Surety Company (Travelers Surety). Travelers Surety then involved Wehr in the litigation. Wehr sought defense coverage from its insurers: Phoenix Insurance Company (Phoenix), St. Paul Surplus Lines Insurance Company (St. Paul), and Travelers Property Casualty Company of America (Travelers Property).The United States District Court for the Eastern District of Kentucky ruled that none of Wehr’s insurers had a duty to defend Wehr in the lawsuit initiated by St. Claire. The court held that Phoenix’s duty to defend was not triggered because St. Claire did not assert claims directly against Wehr. It also found that St. Paul had no duty to defend because Wehr did not specifically agree to perform as a construction manager, a requirement under the St. Paul policy. Although Wehr did not seek summary judgment against Travelers Property, the court noted that Travelers Property also had no duty to defend for the same reasons as Phoenix.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court affirmed the district court’s decision regarding St. Paul, agreeing that Wehr did not specifically agree to serve as a construction manager. However, it reversed the decision regarding Phoenix, holding that Phoenix had a duty to defend Wehr because the damages alleged by St. Claire potentially fell within the policy coverage, and Wehr was a party to the suit. The court vacated the decision regarding Travelers Property and remanded for further proceedings to determine whether Travelers Property had a duty to defend, given the ambiguity in the district court’s ruling and the stipulation by the parties. View "Phoenix Insurance Co. v. Wehr Constructors, Inc." on Justia Law

In this case, the plaintiffs, Weston and Carrie Twigg, hired Rainier Pacific Development LLC to build a home. After taking possession, they discovered various construction defects, including issues with the garage floor. Rainier Pacific agreed to make repairs, but failed to meet deadlines, leading to arbitration. The parties settled through a "Repair Agreement," but Rainier Pacific's subsequent repairs were also defective, prompting the Twiggs to reinitiate arbitration. The arbitrator found Rainier Pacific's work defective and awarded the Twiggs $150,000 for the garage floor repairs.The Multnomah County Circuit Court granted summary judgment to Admiral Insurance Company, Rainier Pacific's insurer, concluding that the damages did not arise from an "accident" as required by the commercial general liability (CGL) policy. The court relied on the precedent set by Oak Crest Construction Co. v. Austin Mutual Insurance Co., which held that damages solely from a breach of contract do not qualify as an "accident."The Oregon Court of Appeals affirmed the trial court's decision, agreeing that the damages arose solely from a breach of contract and not from an "accident" as defined by the CGL policy. The court emphasized that the Twiggs had not contended that Rainier Pacific's liability arose from a separate duty of care, i.e., a tort.The Oregon Supreme Court reversed the Court of Appeals and the trial court's decisions. The Supreme Court held that whether an insurance claim seeks recovery for an "accident" does not depend on the plaintiff's pleading decisions but on whether there is a factual basis for imposing tort liability. The court found that there were material factual disputes regarding whether Rainier Pacific's defective work constituted an "accident" under the CGL policy. Therefore, the case was remanded to the circuit court for further proceedings. View "Twigg v. Admiral Ins. Co." on Justia Law

Plaintiffs, E&I Global Energy Services, Inc. and E&C Global, LLC, sued Liberty Mutual Insurance Company for breach of contract and tort claims related to a construction project. The United States, through the Western Area Power Administration (WAPA), contracted with Isolux to build a substation, and Liberty issued performance and payment bonds for Isolux. After Isolux was terminated, Liberty hired E&C as the completion contractor, but E&I performed the work. Plaintiffs claimed Liberty failed to pay for the work completed.The United States District Court for the District of South Dakota granted summary judgment for Liberty on the unjust enrichment claim and ruled in Liberty's favor on all other claims after a bench trial. The court denied Plaintiffs' untimely request for a jury trial, excluded an expert witness report filed after the deadline, found no evidence of an assignment of rights between E&C and E&I, and ruled against Plaintiffs on their fraud, deceit, and negligent misrepresentation claims.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court held that the district court did not abuse its discretion in denying the jury trial request, as Plaintiffs failed to timely file the motion and did not justify the delay. The exclusion of the expert report was also upheld, as the district court properly applied the relevant factors and found the late report was neither substantially justified nor harmless. The court affirmed the district court's finding that there was no valid assignment of rights from E&C to E&I, meaning Liberty's promise to pay was to E&C, not E&I. The court also upheld the findings that Liberty did not have the intent to deceive or induce reliance, and that Bruce did not reasonably rely on Mattingly's statements. Finally, the court declined to address the unjust enrichment claim as Plaintiffs did not raise the argument below. The Eighth Circuit affirmed the district court's rulings in their entirety. View "E&I Global Energy Services v. Liberty Mutual Insurance Co." on Justia Law

Roger and Therese Hutchinson purchased rural property in Madison County, Montana, in 2016, which included an easement for access via a private road. They obtained a title insurance policy from Old Republic National Title Insurance Company. Disputes arose with Nugget Creek Ranch, the owner of the adjoining property, over the use and control of gates on the easement. In 2020, the Hutchinsons sued Nugget Creek, which counterclaimed for declaratory judgment, trespass, nuisance, negligence, slander, defamation, vexatious litigation, and reverse adverse possession. The reverse adverse possession claim was dismissed by the court.The Hutchinsons requested Old Republic to defend them against Nugget Creek's counterclaims, but Old Republic denied coverage, citing policy exclusions for disputes arising from the easement and for actions taken by the insured after the policy date. The Hutchinsons filed a lawsuit against Old Republic for breach of contract and unfair claim settlement practices. The District Court granted summary judgment in favor of Old Republic, finding no duty to defend because the policy excluded coverage for disputes related to the easement and for actions occurring after the policy date.The Supreme Court of the State of Montana reviewed the case and affirmed the District Court's decision. The court held that Old Republic had no duty to defend the Hutchinsons because the policy explicitly excluded coverage for disputes arising from the easement and for actions taken by the insured after the policy date. The court also noted that the policy did not cover tort claims or actions that occurred after the policy's effective date. Thus, the court concluded that Old Republic unequivocally demonstrated a lack of coverage under the policy. View "Hutchinson v. Old Republic" on Justia Law