Insurance Law

Dist. Ct. did not err in granting defendants’ motion for summary judgment in plaintiff-insurance company’s action seeking declaration that its policy did not cover allegations made in two state-court actions against its insured-title insurance company that concerned insured’s misuse of escrow funds when facilitating real estate “flip” transactions. Record showed that plaintiff had initially refused to defend both state-court actions, which then required that insured defend itself, where plaintiff asserted that two exclusions precluded coverage where allegations against insured pertained to either fraud or failure to pay escrow funds. However, plaintiff had duty to defend both state-court actions, since most allegations in one state-court action had no obvious relationship to fraud claim, especially with respect to breach of contract claim that could have arisen from mere negligent conduct. Moreover, second state-court lawsuit that concerned alleged co-mingling of money belonging in escrow fund could have occurred through innocent mistake. Fact that some allegations in state-court complaints concerned fraudulent conduct did not excuse plaintiff from defending either action. Moreover, Plaintiff’s breach of duty to defend estopped plaintiff from asserting any policy exclusion in insured’s indemnity claim.

Ct. of Appeals granted motion by plaintiff for attorney fees she incurred in her successful lawsuit under ERISA, in which plaintiff sought $92,000 in proceeds from accidental death and dismembership policy issued by defendant. Attorney fees are permitted under 29 USC section 1132(a)(1), where, as here, plaintiff achieved complete success on merits of her lawsuit, and plaintiff otherwise satisfied four out of five factors for awarding attorney fees under Raybourne, 700 F.3d 1076. Ct. further noted that fees were especially appropriate where defendant had denied plaintiff’s claim without medical evidence to support its denial.

Dist. Ct. did not err in granting defendant-insurance company’s motion for summary judgment in plaintiff-insurance company’s action seeking declaration that defendant’s professional liability errors and omissions policy issued to insured covered some claims in underlying lawsuit alleging that insured conducted pattern of harassment, intimidation and interference with property rights of insured’s neighbors. Underlying lawsuit alleged that insured had commercially farmed her own property in violation of restrictive covenants, polluted adjoining lake, interfered with neighbors’ easement rights, posted offensive signs and stalked neighbors, and defendant’s policy that provided coverage for acts arising out of any professional services insured had provided to others as real estate broker did not cover any alleged acts of insured in her role as neighbor in underlying lawsuit. Moreover, plaintiffs in underlying lawsuit failed to allege that insured had breached any professional obligation as real estate broker.

Dist. Ct. did not err in granting defendants-insurance companies’ motion for summary judgment in plaintiff-insured’s action seeking declaration that one or both of defendant’s insurance policies covered plaintiff’s over $5 million loss arising out of theft by one of its vice-presidents. One policy covered theft by plaintiff’s “employee,” but vice-president responsible for said theft did not meet policy’s definition of “employee,” since, although plaintiff and third-party company had contract calling for plaintiff’s right to use vice-president’s labor, record showed that third-party company was mere alter-ego of vice-president. As such, third-party company was not “labor-leasing firm” that was required under terms of policy for vice-president to be deemed “employee.” Moreover, terms of other policy specifically excluded losses incurred by plaintiff’s “authorized representative” or anyone else to whom plaintiff had entrusted its property, and record showed that actions of vice-president fell within this exclusion, where vice-president pocketed proceeds of company property to which vice-president had been placed in charge.

Dist. Ct. did not err in granting plaintiff-insurance company’s motion for summary judgment in action seeking declaration that plaintiff’s standard commercial general liability policy did not cover losses incurred by insured in settlement of underlying lawsuit where insured was sued for breach of warranty of habitability arising out of work performed by insured when installing windows that resulted in condominium association incurring extensive water damages to parts of condominium building and to unit owners’ personal property. Applicable measure of damages for breach of implied warranty of habitability in instant case was cost of repairing defectively installed windows, and provisions in relevant policy excluded coverage for costs associated with repairing or replacing insured’s defective work. As such, where language in settlement agreement linked proceeds of settlement to costs associated with insured’s defective work, plaintiff had no duty to indemnify insured based on language in settlement.