Insurance Law

Dist. Ct. did not err in granting defendant-employer's motion for summary judgment in instant interpleader action filed by insurance company to determine ownership of life insurance proceeds on $1 million policy taken out by employer in name of key employee, after finding that employer was entitled to said proceeds as named beneficiary of said policy. While employer had intended to allow policy to lapse, record showed that liquidator of employer had unsuccessfully attempted to submit forms to insurance company to transfer ownership of policy to key employee, who in turn attempted to name his girlfriend as beneficiary of policy shortly before key employee committed suicide. Ct. rejected defendant-girlfriend's argument that she was entitled to reformation of policy to reflect actual name of employer so as to effectuate liquidator's failed attempt to transfer ownership of policy to key employee where it was unclear whether, upon any reformation, insurance company would have actually made said transfer. Moreover, Ct. rejected girlfriend's alternative argument that she was third-party beneficiary of insurance contract between employer and insurance company.

Dist. Ct. erred in granting defendant-insurance company's motion for summary judgment in action by plaintiff-insured alleging that defendant breached its implied contractual duty of good faith when defendant, while representing plaintiff in underlying personal injury action pursuant to terms of insurance policy, failed to timely alert plaintiff about possibility that damages in underlying lawsuit might exceed $1 million policy limits, which in turn precluded plaintiff from giving timely notice of underlying lawsuit to its excess insurance carrier under circumstances where underlying lawsuit eventually resulted in $2 million judgment. Defendant was presented with conflict of interest once it became aware of reason to believe that plaintiff's liability might result in judgment in excess of policy limit, and duty of good faith required that defendant inform plaintiff of said conflict so that plaintiff could exercise option to either hire new attorney at defendant's expense to take over defense in underlying action or to timely inform excess insurer for purpose of triggering protection of excess policy.

Dist. Ct. did not err in dismissing plaintiff's action alleging breach of contract, consumer fraud and common-law fraud arising out of allegation that defendant-insurance company systematically omitted necessary repairs from its collision-damage estimates in violation of its promise to restore plaintiff-policyholder's vehicle to its pre-loss condition. As to plaintiff's breach of contract claim, record showed that plaintiff had given away his damaged vehicle prior to filing instant lawsuit, and hence plaintiff could not succeed on said claim under Avery, 835 NE2d 801, because defendant would be unable to examine plaintiff's his vehicle. Moreover, Dist. Ct. could properly dismiss plaintiff's fraud claims since plaintiff alleged nothing more than garden-variety breach of contract claim.

Dist. Ct. erred in granting defendant-insurance company’s motion for summary judgment in action by plaintiff-insured/general contractor seeking declaration that defendant-primary insurer’s CGL policy covered costs associated with faulty work performed by subcontractors. While Dist. Ct. believed that damages done to homes arising out of faulty subcontractor work was not property damage caused by occurrence within meaning of applicable insurance policy, issue must be re-evaluated in light of recent Ind. Supreme Ct. decision in Sheehan, 935 NE2d 160, where court found coverage under similar circumstances. Moreover, Dist. Ct. erred in finding as to defendant-issuer of umbrella policy, that plaintiff was required to show that primary insurer had paid entire CGL limit on underlying policy before umbrella coverage was triggered.