We have previously discussed here, here, here, and here the validity of assigning liability policies to corporate successors without securing the insurer's consent as required by the policy. Coverage issues arise when the successor seeks benefits under the policy assigned to it by the predecessor.  Although the validity of the assignment was not at issue in Ohio Cas. Ins. Co. v. Granja Planalto, No. 08-405-P-H, 2009 U.S. Dist. LEXIS 19925 (D. Maine March 11, 2009), the magistrate recommended that the assignee be bound by the policy's obligations in receiving "any and all rights" under the policy.

    Avian Farms, the insured, was a primary breeder of poultry.  It was insured by Ohio Casualty under a commercial umbrella policy.  Granja Planalto purchased poultry from Avian, but the stock allegedly sustained an avian leukose virus.  Granja Planalto sued Avian in 2001 and eventually took an assignment of Avian's rights under the policy

    In 2003, Granja Planalto first provided Ohio Casualty with notice of its claims in the 2001 action.  Granja Planalto, as Avian's assignee, participated in settlement discussions with Avian's other insurers in 2003 and 2004 and eventually settled with the other insurers, but never notified Ohio Casualty.  Granja Planalto entered a settlement stipulation with Avian, agreeing to an entry of default.  An uncontested damage hearing was conducted, resulting in an award of $13,200,000.  Ohio Casualty was not informed of these developments, either.

    Ohio Casualty sued, seeking a judgment that Granja Planalto, as the assignee of Avian, breached conditions of the umbrella policy because it was obligated to inform Ohio Casualty before executing the settlement agreements and before the damages hearing.  The opinion does not discuss an anti-assignment provision, so we assume there was no requirement in the umbrella policy for the insurer's prior consent to an assignment. 

    Granja Planalto moved to dismiss, contending Avian assigned only the rights relating to Granja Planalto's claim against it, and not the insurance contract or any obligations Avian might have had under the contract.  According, Granja Planalto argued it could not have breach any conditions of the policy.  The magistrate disagreed.  The assignment language between the parties assigned to Granja Planalto "any and all rights" of Avian "under any contract of insurance relating in any way to the claims asserted by Planalto against Avian."  Under section 328 of the Restatement (Second) of Contracts, this was an assignment of all of an insured's rights, including obligations under the policy.  Therefore, the magistrate recommended the motion to dismiss be denied.