Justia U.S. 8th Circuit Court of Appeals Opinion Summaries

After disputes arose between a general contractor and two of its subcontractors, an arbitrator awarded the subcontractors money for the labor and material they had provided the general contractor along with associated costs, attorneys' fees, interest, and other sums. The general contractor declared bankruptcy before paying up, and the surety company that issued a bond guaranteeing the subcontractors would be paid tendered amounts representing only the part of the awards that compensated for labor and material (and some interest). But the subcontractors (or in one case, the subcontractor's assignee) wanted the whole of the awards and sued in federal court to get it.   The district court sided with the surety and granted it summary judgment. The Eighth Circuit reversed and remanded the district court’s decision granting summary judgment to the surety. The court held that the bond at issue obligates the surety to pay not only for labor and material but also for other related items to which Plaintiffs’ subcontracts entitle them (or their assignees). The court explained that the bond provided that if the subcontractors were not paid in full, which is the case here, they were entitled to sums "justly due," which included costs, attorneys' fees and interest. View "Owners Insurance Company v. Fidelity & Deposit Company" on Justia Law

Rock Dental Arkansas PLLC and Rock Dental Missouri LLC (Rock Dental) operate dental clinics in Arkansas and Missouri. After Rock Dental’s insurer, Cincinnati Insurance Company (Cincinnati), denied coverage for Rock Dental’s claims for losses related to the COVID-19 pandemic, Rock Dental sued for breach of contract. The district court granted Cincinnati’s motion to dismiss for failure to state a claim.   The Eighth Circuit affirmed. The court explained that Rock Dental has failed to plausibly allege that COVID-19 physically damaged its properties or that removal of any virus from its properties was required. Further, Rock Dental has not shown that it is entitled to coverage under the Civil Authority Coverage. The court explained that coverage requires allegations of physical loss of or damage to properties other than Rock Dental’s clinics. Rock Dental’s complaint contains no such allegations. View "Rock Dental Arkansas PLLC v. Cincinnati Insurance Company" on Justia Law

Plaintiffs appealed the district court’s grant of summary judgment in favor of Safeco Insurance Company of Illinois (“Safeco”). The case involved a dispute over the applicability of an “other structure” exclusion in a homeowner’s policy when the building sustaining damage was “used in whole or in part for business.”   At issue is a loss caused by the failure of an in-floor radiant heat system in a pole barn that was occasionally used for business purposes. The Eighth Circuit affirmed the district court’s summary judgment ruling in favor of Defendants. The court concluded that the business use exclusion for other structures precludes coverage for the loss, there is no evidence of bad faith on the part of Safeco, and Safeco had no duty to advise Plaintiffs about coverage.   The court explained that Plaintiffs’ arguments seeking to engraft an additional requirement on the business use exclusion—that the structure be used for “actual business activity”— or that the limited coverage for business property located on the premises somehow changes or modifies the plain language of the business use exclusion are unavailing. Because the policy language is unambiguous and the exclusion is neither obscure nor unexpected, the reasonable expectations doctrine is inapplicable. Thus, Safeco did not breach the contract when it denied coverage.Further, the court held that there is no other evidence of bad faith in the investigation of this claim. Finally, there is no evidence in the record to support a claim that Plaintiff either relied on the agent to provide appropriate coverage or needed protection from any specific threat. View "Joseph Wobig v. Safeco Ins Co of Illinois" on Justia Law

Ila Reid appealed a district court’s summary judgment dismissal of her breach of contract claim against Primerica Life Insurance Company (“Primerica”). Reid brought her claim after Primerica filed an interpleader action to resolve competing claims to her late husband Garvin Reid’s life insurance beneficiary proceeds. She contended Primerica acted unfairly in multiple ways to create the controversy and thus the district court should not have permitted Primerica to use interpleader as a shield against her breach of contract claim. Finding no reversible error, the Eighth Circuit Court of Appeals affirmed the district court’s summary judgment order in favor of Primerica. View "Primerica Life Insurance Co. v. Reid" on Justia Law

Torgerson Properties, Inc. ("TPI") develops and operates hotels, restaurants, and conference centers in Minnesota and Florida. It was covered by an all-risk property insurance policy issued by Continental Casualty Co. from May 1, 2019, through May 1, 2020. the policy’s Business Interruption and Civil Authority/Ingress-Egress provisions. The Business Interruption clause “covers against loss resulting from necessary interruption of business caused by direct physical loss of or damage to covered property.”   TPI filed a claim under the policy for lost business income during the COVID pandemic. After Continental denied the claim, TPI sued for breach of contract. Continental moved to dismiss for failure to state a claim. The district court granted Continental’s motion, and TPI appealed. The Eighth Circuit affirmed, holding that the district court was correct to dismiss TPI’s breach of contract action for failure to state a claim.   The court reasoned that insurance provisions covering “direct physical loss of or damage to property” are not triggered unless “there [is] some physicality to the loss or damage of property.” Oral Surgeons, P.C. v. Cincinnati Ins. Co., 2 F.4th 1141 (8th Cir. 2021) (relying on Minnesota law).  TPI tried to distinguish this case from Oral Surgeons by alleging that the virus was actually present on its property. However, TPI failed to show that causal link. The contamination did not cause TPI’s business interruption; the shutdown orders did. TPI would have been subject to the exact same restrictions even if its premises weren’t contaminated. And the cause of TPI’s business interruption—governmental orders alone—is not a direct physical loss. View "Torgerson Properties, Inc. v. Continental Casualty Company" on Justia Law

Plaintiffs, a group of restaurants, filed claims through their respective insurance policies seeking coverage for losses and expenses related to the COVID-19 pandemic. Insurers denied Plaintiffs' claims and, upon Plaintiff's filing suit, the district court granted the insurance companies' motion for summary judgment.On appeal to the Eighth Circuit, the court held that under either Kansas or Missouri law, Plaintiffs' claims fail. Under both states' laws, there is a "physical loss or damage" which requires some form of "physical alteration" to the insured's property. Here, Plaintiffs did not prove that the presence of COVID-19 resulted in any physical alteration to their property. The court also rejected Plaintiffs' argument that their claims were covered under the "Limited Extension for Food-Borne Illness," finding that this claim also required a showing that there was a "direct physical loss of or damage to property," which Plaintiffs did not allege. View "Planet Sub Holdings, Inc. v. State Auto Property & Casualty" on Justia Law

SUNZ Insurance Company (“SUNZ”) appealed from the denial of its motion to dismiss or, in the alternative, to compel arbitration of the crossclaims filed in a complex insurance dispute. SUNZ argued the district court lacked subject matter jurisdiction over the crossclaims between non-diverse parties in the underlying interpleader action and otherwise erred by denying arbitration.   The Eighth Circuit reversed and remanded the district court’s denial of Defendant’s motion to compel arbitration of the crossclaims. The court explained arbitration agreements are generally favored under federal law. Further, a court may not rule on the potential merits of the underlying claim that is assigned by contract to an arbitrator, even if it appears to be frivolous.Here, the Program Agreement sets forth the terms and conditions of the Policy and contains the disputed statements pertaining to collateral, costs, and fees. The Policy cannot be read without the Program Agreement, which explicitly controls the administration of the Policy and only becomes binding and enforceable after its execution. While the other party’s crossclaim alleges that SUNZ breached the Policy, it is the Program Agreement that drives the question of liability. And, under the Program Agreement, both parties agreed to submit to arbitration any disagreement regarding its terms. This is a challenge to the contract’s validity that, under Buckeye, shall be considered by an arbitrator, not a court. Thus, the district court erred when it denied SUNZ’s alternative motion to compel arbitration. View "SUNZ Insurance Company v. Butler American Holdings Inc." on Justia Law

MNDKK, LLC’s insurer, Great Lakes Insurance, sent subrogation demands through an assignee to Dingmann Brothers Construction (“Dingmann”) due to alleged dust-related property damage. Grinnell Mutual Reinsurance Company (“Grinnell”), Dingmann’s insurer, commenced a declaratory-judgment action to determine coverage under the insurance policy issued to Dingmann. The district court granted Grinnell’s motion for summary judgment, holding that two policy exclusions unambiguously apply due to the presence of silica in the dust and that coverage is foreclosed. Defendants argued that the two exclusions do not apply, meaning Grinnell is responsible for covering the cost of the property damage caused by the dust.   The Eighth Circuit affirmed the district court’s ruling and held that there is no genuine dispute of material fact about whether the dust contained silica. Further, Defendants argued that the cleanup provision does not apply because the damage was due to silica or silica-related dust itself, not its effects. Defendants claimed that there is a misplaced comma between “effects of” and “silica.” The court held that the comma before “silica” indicates that the phrase “the effects of” belongs with the phrase immediately preceding it, rather than with “‘silica’ or ‘silica-related dust.’” So, the last verb phrase in the series is “or in any way responding to or assessing the effects of,” and the comma separates the series from the noun phrase that is its direct object. Finally, the court held overlapping provisions can exist in an insurance policy and that both the cleanup and property-damage provisions apply. View "Grinnell Mutual Reinsurance Co v. Great Lakes Insurance SE" on Justia Law

Plaintiff, a locomotive engineer, sued Kansas City Southern Railway Company (“KCSR”) for negligence after he sustained injuries in a railcar collision. The district court granted summary judgment to KCSR. Plaintiff argued that section 287.280.1, the civil-action provision, authorizes his civil action because KCSR failed to carry workers’ compensation insurance. KCSR responded that it is not liable because Plaintiff “was insured by his immediate . . . employer,” triggering the exemption from liability for statutory employers in section 287.040.3. According to Plaintiff, however, section 287.040.3 exempts KCSR from workers’ compensation liability only, not liability from civil actions.   The Eighth Circuit affirmed the district court’s grant of summary judgment in favor of KCSR. The court held that because Plaintiff was insured by his immediate employer, KCSR is not liable and is entitled to judgment as a matter of law. The court reasoned that Missouri’s workers’ compensation statute, Mo. Rev. Stat. Section 287.120.1, imposes liability on employers for workplace injuries. However, nowhere in section 287.040 does the text differentiate between workers’ compensation liability and civil liability. Accordingly, the court interpreted “liable as in this section provided” to mean “liable as an employer”; that is, liable as a statutory employer. Thus, KCSR’s potential liability, therefore, is liability “as in [section 287.040] provided,” so it enjoys the immunity from suit. View "Nathan Blanton v. KC Southern Railway Co." on Justia Law

A patron of RAJJ Entertainment successfully sued RAJJ and its owner, for negligence after being injured in the bar’s parking lot. Defendants’ insurance company, Great Lakes Insurance, sued for a declaration stating that it was not required to indemnify RAJJ and the owner for the damages award because the insurance policy excluded from coverage injuries that arose from physical altercations. The district court granted summary judgment to Great Lakes.The Eighth Circuit affirmed the district court’s summary judgment ruling in favor of Plaintiff. The court held that the clear language of the policy controls. The court reasoned that insurance companies are not required to indemnify the insured for injuries that are excluded by a policy. Generally, where a plaintiff’s negligence claim arises out of an assault or battery, the assault or battery exclusion bars coverage of the insured’s negligence claim.   Defendants claim that the exclusion does not apply because the underlying lawsuit “arose out of” their negligence—not any assault, battery, or physical altercation. The court reasoned that the policy language concerns how the bodily injury arose, not how the lawsuit arose. The concurrent-proximate-cause rule does not apply because RAJJ and the owner’s negligence is not a “covered cause.” Furthermore, even if RAJJ and the owner’s negligence were covered, that would not require Great Lakes to indemnify them because their negligence was not “truly independent and distinct” from the assault, battery, or physical altercation. View "Great Lakes Insurance SE v. Ray A. Perrin" on Justia Law