Insurance Law Hawaii

Court Upholds Appraisers' Use of "Increased Cost of Construction" Provision

    The court granted the insurer's motion for summary judgment agreeing that the "increased Cost of Construction" provision limited the amount the appraisers could award. Bigfoot Co-Op A, Inc. v. Nationwide Mut. Ins. Co., Case No. 3:24-cv-00022-SMR-WPK (S.D Iowa April 21, 2025).

    A hailstorm damaged five apartment buildings owned by insured Bigfoot Co-Op A, Inc. (Bigfoot) Nationwide insured the property. When the parties could not agree on the amount payable for the loss, they invoked the policy's appraisal provision. 

    The appraisers first issued an initial award valuing the replacement cost at $478,116.42 and actual cash value at $430,043.66. This determination noted that the "decking condition" would be "determined/verified later" pending confirmation from local authorities about applicable building code requirements. 

    After receiving documentation confirming the city had adopted the 2021 International Building Code, which mandated specific standards for roof sheathing, the appraisers issued their final award. The Final Appraisal Award divided the loss into two components: (1) Buildings/Appraisal Estimate: $455,137.49 (replacement cost)/$447,943.08 (Actual Cash Value); and (2) Code per Appraisal Estimate: $189,380.02 (both replacement cost and actual cash value).

    Nationwide paid Bigfoot $505,137.49, representing the full "Buildings" component ($455,137.49) plus $50,000 for the "Code" component. The $50,000 figure reflected $10,000 for each of the five damaged buildings, which Nationwide contended was the maximum allowable under the policy's Increased Cost of Construction provision.

    Bigfoot filed suit against Nationwide alleging breach of the policy by failing to pay the full $189,380.02 "Code" component of the Final Appraisal Award. Bigfoot also asserted a claim for first-party bad faith. Nationwide moved for summary judgment on both claims.

    The court first considered whether Nationwide properly applied the policy's Increased Cost of Construction (ICC) provision to limit its liability for the "Code" component of the Final Appraisal Award to $50,000. The provision provided:

If a damaged building is covered under a blanket Limit of Insurance which applies to more than one building or item of property, then the most we will pay under this Additional Coverage, for that damaged building, is the lesser of $10,000 or 5% times the value of the damaged building as of the time of loss times the applicable Coinsurance percentage.

This language unambiguously limited Nationwide's liability for increased costs incurred to comply with building code requirements to $10,000 per building. Because the life apartment buildings at issue were covered under a blanket limit of insurance, the maximum recovery for code compliance costs was $50,000. 

    The $189,380.02 "Code" component of the Final Appraisal Award fell within the scope of the ICC provision. The application of the ICC provision to the "Code" component of the Final Appraisal Award presented no genuine dispute of material fact. The policy unambiguously limited coverage for increased costs of construction to $10,000 per building. The Final Appraisal Award specifically identified these code-related costs in a separate "Code" component totaling $189,380.02. Nationwide properly applied the policy's limitation and paid the maximum allowable amount of $50,000 for this component, in addition to fully satisfying its obligation for the $455,137.49 "Buildings" component. Bigfoot had not demonstrated any basis for disregarding the policy's clear limitation or invalidating the structure of the Final Appraisal Award. Accordingly, Nationwide was entitled to judgment as a matter of law on the breach of contract claim.

    The bad faith claim also failed. The court's determination that Nationwide correctly applied the policy's ICC provision to limit its liability for code-related costs necessarily defeated Bigfoot's bad faith claim. Nationwide's interpretation and application of the policy was not merely reasonable - it was correct. 

 

Colorado Supreme Court Finds Economic Loss Rule Applies to Allegations of Willful and Wanton Conduct

    The Colorado Supreme Court determined that no exception to the economic loss rule existed for allegations of willful and wanton conduct. Mid-Century Ins. Co. v. HIVE Construction, Inc., 2025 Colo. LEXIS 273 (Colo. April 21, 2025).

    HIVE Construction, Inc. served as the general contractor for the construction of Masterpiece Kitchen, a restaurant. HIVE warranted, among other things, that "the Work will conform to the requirements of the Contract Documents."  The architectural plans and design for the restaurant called for the construction of a wall separating the kitchen and dining area. The documents specified that two layers of drywall, which would increase the wall's fire resistance, were to be installed on the kitchen side of the wall. HIVE, however, installed one layer of drywall and one layer of plywood on the kitchen side. HIVE did to submit a change order asking permission to deviate from the plans and design in that way.

    Installing the plywood on the kitchen side of the wall placed combustible material much closer to a heat source (the broiler in the kitchen) than the plans and design had prescribed. A fire eventually started within the wall, causing damage to the restaurant, forcing the restaurant to close.

    Mid-Century, Masterpiece Kitchen's property insurer, made payments to Masterpiece Kitchen for damages caused by the fire. Mid-Century, as Masterpiece Kitchen's subrogee, sued HIVE and the project's architect, asserting single claims for negligence against each of them. One week before trial, Mid-Century sought leave to amend its complaint to assert a breach of contract claim. In the proposed amended complaint, Mid-Century alleged that HIVE had breached its duty under the contract and project-related documents to perform its work as a general contractor safely and competently when it installed combustible plywood in the kitchen wall. The motion for leave to amend was denied.

    A jury trial commenced, and after Mid-Century presented its case, HIVE moved for a directed verdict, arguing that the economic loss rule barred Mid-Century's negligence claim. The trial court denied HIVE's motion for a direct verdict after concluding that the economic loss rule did not apply to allegations of willful and wanton conduct. The jury returned a special verdict, finding that HIVE's conduct was willful and wanton and caused Mid-Century's damages. Judgement was entered in Mid-Century's favor.

    HIVE appealed, arguing that the trial court erred in denying its directed verdict motion on the ground that the economic loss rule did not apply to willful and wanton conduct. The court of appeals agreed with HIVE and reversed. Mid-Century then petitioned the Colorado Supreme Court for a writ of certiorari. The court granted the petition.

    The court noted that under the economic loss rule, a party suffering only economic loss from the breach of an express or implied contractual duty may not assert a tort claim for such a breach absent an independent duty of care under tort law. Whether the economic loss rule applied depended not on the nature of the damages - physical or economic- but rather on the source of the duty allegedly breached - the contract or some other source. The court concluded that willful and wanton conduct was not excepted from the economic loss rule. 

    The court then applied three factors in determining the source of the duty at issue and, in turn, whether the economic loss rule applied. The factors were whether (1) the relief sought in negligence was the same as the contractual relief; (2) there existed a recognized common law duty of care in negligence; and (3) the negligence duty and contractual duty differed in any way.

    Here, the parties did not dispute that the relief that Mid-Century sought by way of its negligence claims (i.e., damages to the restaurant caused by the fire) was the same relief that it could have sought by way of a contract claim. Second, Mid-Century alleged in its complaint a duty of care in negligence "to perform its work as general contractor . . . in a safe, careful, competent, and workmanlike manner" and that HIVE had breached this duty when it deviated from the plans and design and installed combustible plywood in the wall.

    Third, notwithstanding the possible existence of this duty of care in negligence, such a duty did not differ in any way from HIVE's duty under the contract, in which HIVE warranted that "the Work will conform to the requirements of the Contract Documents" and specified that "substitutions not properly approved and authorized" did not conform to the requirements. 

    The parties therefore memorialized in their contract the same duty that Mid-Century contended HIVE breached by deviating from the plans and design. Thus, the alleged tort duty was not independent of the duty set forth in the parties' contract. Accordingly, the economic loss rule required Mid-Century to pursue its claim in contract, rather than tort. The fact that Mid-Century alleged that HIVE had engaged in willful and wanton conduct did not alter this conclusion.

    Therefore, the economic loss rule did not except allegations of willful and wanton conduct from its reach. The rule barred Mid-Century's negligence claim. The judgment of the court of appeals was affirmed. 

    

 

 

Contractor Entitled to Defense in Suit Filed by Performance Bond Carrier

    Interpreting Kentucky law, the Sixth Circuit determined that the contractor who failed to complete a project was entitled to a defense in an action brought by its performance bond carrier. Phoenix Ins. Co., et al. v. Wehr Constructors, Inc., 2025 U.S, App. LEXIS 9258 (6th Cir. April 18, 2025). 

    Wehr entered into a contract with St. Claire Medical Center to construct a Medical Services Pavilion as an addition to the main hospital facility. A standard form issued by the American Institute of Architects, AIA document form A101-1997, was used. (Construction Agreement). Section 14.2 of the form contained a termination clause that allowed St. Claire to terminate the contract if Wehr committed a "substantial breach," provided that the architect on the project certified that sufficient cause existed (the Termination Clause). If the Termination  Clause was invoked, Wehr would not be entitled to the remaining unpaid balance of the contract and St. Claire could seek damages from Wehr if the cost of completing the project exceeded the unpaid balance. 

    Wehr secured a performance bond for the project from Travelers Surety. The bond obligated Travelers Surety to complete the project if Wehr failed. to satisfactorily perform under the Construction Agreement. Under Kentucky law, Travelers Surety could recover from Wehr any amount that Travelers Surety paid to satisfy Wehr's liability or debts on the project. 

    Problems arose. St. Claire claimed Wehr missed deadlines, neglected to complete required inspections, and failed to properly supervise the subcontractors on the project. This resulted in defects to the building's facade, air and moisture barrier, floor tiling, and fire-stopping mechanism. Mold conditions were present in the entire facility. 

    St. Claire requested that the project architect certify that Wehr had substantially breached the Construction Agreement. The architect agreed Wehr was guilty of a substantial breach of the Construction Agreement. The architect also determined that St. Claire was entitled to withhold the remaining $2.2 million balance of the contract and that, between the likely damages and unpaid liens on the project, "this could be a $10+ million problem." St. Claire then terminated the Construction Agreement. 

    Wehr requested coverage from insurers issuing three policies: (1) a general-commercial liability policy from Phoenix Insurance Company; (2) a professional liability policy from St. Paul Surplus Lines Insurance Company; and (3) an "umbrella" excess policy from Travelers Property Casualty Company of America (Travelers Property). 

    St. Ciaire sued Travelers Surety to enforce obligations under Wehr's performance bond. St. Claire did not name Wehr as a defendant and did not seek any relief from Wehr.

    Travelers Surety moved for permissive joinder of Wehr to join Wehr as a party because Travelers Surety's obligation to perform under the bond was strictly dependent on whether Wehr breached the Construction Agreement. The district court granted the motion. 

    The insurers filed a declaratory judgment action requesting that the district court decide the parties' rights and obligations under the three insurance policies.  Wehr filed a motion for partial summary judgment that Phoenix and St. Paul had a duty to defend Wehr in the St. Claire suit. The district court denied the motion . It held that Phoenix's duty to defend Wehr applied only to suites seeking damages directly against Wehr, meaning that the policy was not triggered by St. Claire's litigation. Although Wehr did not seek summary judgment against Traveler's Property, the district court decided Travelers Property also did not have a duty to defend Wehr. The parties stipulated that the insurers had neither a duty to defend nor a duty to indemnify Wehr. The stipulation preserved Wehr's right to appeal the district court's order. Wehr appealed. 

    On appeal, the Sixth Circuit noted that St. Claire asserted claims against Travelers Surety for property damages arising from Wehr's faulty construction. Under Kentucky law faulty construction did not constitute an "occurrence" if the poor workmanship was not an accident. Wehr argued that St, Claire's complaint fell into two categories: (1) Wehr's faulty workmanship on the addition that it contracted to build, and (2) consequential damages caused by that faulty workmanship to preexisting portions of the main hospital facility that were not involved in the project. St. Claire alleged there was "water condensation/mold damage to the preexisting hospital facilities that were not the subject of the work being performed." 

    Kentucky cases did not address whether there was no coverage for damages to building owned by the same property owner but separate from the construction project. This created an ambiguity meaning that the damages to the preexisting building alleged in St. Claire's lawsuit were the type of damages that might be covered by Phoenix's policy. 

    Nevertheless, Phoenix argued that its duty to defend was not triggered because the lawsuit that alleged the damages did not assert claims directly against Wehr.  To comport with Wehr's reasonable expectations of coverage, the policy had to be interpreted to include a defense of suits alleging breaches by Wehr and in which Wehr was a party. Travelers Surety could recover from Wehr a judgment entered against Travelers Surety in the St. Claire litigation. The only opportunity that Phoenix had to meaningfully defend Wehr in this dispute was during the St. Claire litigation, even though no claims were directly asserted against Wehr. For these reasons, Phoenix had a duty to to defend Wehr in the St. Claire lawsuit once Wehr was joined as a party. 

    St. Paul's duty to defend, however, was not triggered because Wehr did not agree in the Construction Agreement to perform as the construction manager. The St. Paul policy covered losses if the named insured had agreed in a written contract to perform in the capacity of a construction manager. 

    Therefore, the court affirmed the district court's ruling regarding St. Paul, but reversed its decision regarding Phoenix. The district court's decision regarding Travelers Property was remanded for further proceedings on whether Travelers Property had a duty to defend.

 

Summary Judgment Issued to Insurer After Shooting Death Reversed

    The Eleventh Circuit reversed the district court's grant of summary judgment to the insurer in a case involving coverage for a shooting death. Kinsale Ins. Co. v. Pride of St. Lucie Lodge 1189, Inc., 2025 U.S. App, LEXIS 9346 (11th Cir. April 18, 2025)

    The Lodge was operating as a club and bar while hosting a weekend social event. The Lodge was staffed by a bartender and a couple of security volunteers. A previous fight had occurred on he Lodge's property just two months before the fight at issue.

    Around 1:00 a.m., two groups of female patrons at the Lodge became involved in a fight on the dance floor and were removed from the Lodge out separate exits. Both groups ended up in the Lodge's parking lot and the fight continued. Tanya Oliver was shot in the forehead ten to fifteen minutes after the groups were turned out of the Lodge,. She died from her injuries the following year.

    Oliver's Estate sued the Lodge on a theory of negligent security. At trail a jury found the Lodge liable for Oliver's injuries and awarded damages exceeding $3.348 million.

    Kinsale insured the Lodge. The policy had a sublimit of $50,000 for any claims arising out of assault and battery. The Kinsale adjuster became aware of the background of the incident and the serious injuries suffered by Oliver, including her eventual death. Kinsale offered its $50,000 assault and battery sublimit, but it was rejected by the Estate. 

    Kinsale filed its coverage action in federal district court seeking a declaratory judgment that the policy's $50,000 assault and battery sublimit applied. The Estate and the Lodge counter-claimed for bad faith, arguing that Kinsale breached its duty of good faith by failing to make a settlement offer within the policy limits before the Estate's claim was filed. Kinsale moved for summary judgment on the bad faith counterclaim. The district court granted summary judgment to Kinsale on the ground that "no reasonable jury could conclude that Kinsale acted in bad faith in handling the Lodge's claim."

    The Eleventh Circuit disagreed. There was no question that the Lodge had a duty to protect its patrons. This included an obligation to take reasonable steps to protect its patrons from foreseeable disorderly conduct by third persons which might endanger the safety of patrons. The bar's duty of care was particularly salient where the bar ejected the feuding parties at the same time into the same general place. 

    A jury could reasonably find that liability was clear. The Lodge had held meetings regarding concerns that the volunteer security guards were standing by when fights occurred. The security guards had led one group out the front door and another group out the back door, knowing that the best practice was not to let two conflicting groups out simultaneously. Neither of the security guards intervened in the second fight in the parking lot, and the fight continued until the warring groups broke apart on their own. 

    Kinsale knew from the outset that the injuries were catastrophic. Oliver was shot in the forehead. Kinsale knew the damages greatly exceeded the comparatively small $50,000 assault and batter sublimit.

    All told, a jury could reasonably find that Kinsale acted in bad faith in failing to tender its policy limit prior to the Estate filing suit. The district court erred in taking the case away from a jury, holding that as a matter of law, a jury could not find that Kinsale acted in bad faith. 

Consumer Fraud Claim against Insured is Not an "Occurrence"

    The Iowa Supreme Court determined that a consumer fraud claim against a contractor was not an "occurrence" and was not covered under the CGL policy. Dostart v. Columbia Ins. Group, 2025 Iowa Sup. LEXIS 48 (April 18, 2025).

    Tyler Custom Homes entered into a construction contract with the Dostarts to construct a custom-built, single-family residence, with construction to be substantially completed on or before June 11, 2018. On September 17, 2019, the Dostarts filed suit against Tyler Custom Homes for failure to compete construction. The Dostarts asserted, among other things, consumer fraud under the Iowa Code. Tyler Custom Homes' insurer, Columbia Insurance Group, defended under a reservation of rights.

    The jury rejected the Dostarts' breach of contract and warranty claims, but it returned a verdict in their favor on their consumer fraud claims and for exemplary damages. Columbia informed Tyler Custom Homes that the jury's verdict was not covered under the CGL policy. Accordingly, Columbia refused to indemnify the judgment. The Distarts were unable to collect their judgment directly from Tyler Custom Homes, and sued Columbia.

    Columbia moved for summary judgment, arguing that the policy did not provide coverage for several reasons: (1) consumer fraud was not accidental and thus not a covered "occurrence," (2) the consumer fraud did not cause "property damage," (3) consumer fraud fell within the CGL policy's intentional acts exclusion, and (4) the CGL policy expressly excluded punitive damages. 

    The Dostarts conceded that the policy did not cover punitive damages, but otherwise opposed Columbia's summary judgment. The trial court ruled that Columbia was entitled to summary judgment on the punitive damages claim but that genuine issues of material fact existed to the Dostarts' remaining claims. The court of appeals affirmed.

    The Iowa Supreme Court noted that the verdict form awarded the Dostart's damages for the cost to complete construction of the home and the consequential damages associated with being unable to move in as expected in the form of temporary living expenses. These were damages for the costs of what Tyler Custom Homes promised to do, but did not, and the consequential costs associated with Tyler Custom Homes' failure to timely complete the home as promised. 

    The Supreme Court had previously held that where the damages sought were limited to the very property upon which the contractor performed work, they are not damages to property contemplated by the policy. Here, damages to complete construction of the very property Tyler Custom Homes was hired to construct was not "physical injury to tangible property" contemplated by Columbia's policy. 

    Therefore, the trial court and court of appeals erred in denying Columbia's motion for summary judgment.

    

Oregon Supreme Court Finds Recovery for an "Accident" Depends On Whether There is Tort Liability

    The Oregon Supreme Court wrestled with the meaning of "occurrence" in a liability policy, determining that recovery for an "accident" depended on whether there was a basis in fact for imposing tort liability. Twigg v. Admiral Ins. Co., 2025 Ore. LEXIS 242 (Ore. April 17, 2025). 

    Plaintiffs hired the insured, Rainier Pacific Development LLC, a general contractor, to build a home on a hillside lot. Once construction was substantially complete and plaintiffs had taken possession, they notified Rainier of various construction defects. This included the garage floor being sloped and cracked in the middle area and sloped inward, toward the house, raising the risk of water damage to the house. Rainier failed to timely fix the problem and plaintiffs initiated arbitration proceedings.

    Plaintifs and Rainier settled their dispute through a "Repair Agreement" in which they established specific performance standards for completing specified repairs. Rainier hired a subcontractor to install a lightweight concrete overlay, known as the "Ardex", which was to be laid over the previously installed garage floor. The subcontractor completed its installation of the Ardex, but, before Rainier had completed any other work under the Repair Agreement, plaintiffs reinitiated arbitration. 

    Plaintiffs contended that the installation of the Ardex was flawed. Due to Rainier's failure to property install the Ardex and to complete the other agreed upon work, plaintiffs had to hire another contractor to perform work to meet the standards of the Repair Agreement. 

    The arbitrator found that the installation of the Ardex was "defective and contrary to one or more of the manufacturer's directives." Therefore, the arbitrator found that Rainier had breached the Repair Agreement. 

    A trial court entered judgment against Rainier in the amount of the arbitrator's award. Plaintiffs were unable to collect on the judgment from Rainier, so they sued Rainier's insurer, Admiral Insurance Company. Admiral answered that because the arbitrator had awarded damages based solely on Rainier's breach of the Repair Agreement, the CGL policy did not provide coverage. The trial court granted Admiral's motion for summary judgment because the damage to plaintiffs garage had not been caused by an "occurrence." The Court of Appeals affirmed.

    On appeal to the Supreme Court, the dispute turned on what qualified as an "accident" under the policy. Plaintiffs could not recover for the damage to the garage floor unless Rainier's liability for the damage arose from an "accident.

    Looking to dictionary definitions, there was support for plaintiff's argument that "accident" encompassed unintended property damage caused by mistakes a contractor made while fulfilling its contractual obligations. But there was also support for Admiral's view that "accident" as used in the CGL policy contemplated actionable fault, and not merely inadvertence. Thus, both interpretations were plausible and the court could not, on that basis alone, chose one interpretation over the other.

    Case law supported Rainier's view that, if the underlying record could support a tort claim, then it did not matter whether the underlying claim was in fact prosecuted in tort, contract, or both. If the terms of a policy remained ambiguous after a review of the parties' proposed interpretations of the terms and conditions of the policy, the ambiguous terms were to be construed against the insurer, who drafted the policy. 

    Therefore, to establish the property damage alleged was caused by an "accident" within the meaning of the CGL policy, plaintiffs were not required to formally allege a tort claim or obtain an award in tort. Rather, plaintiffs were required to establish that there was a basis in fact for imposing tort liability on Rainier, even though the same facts may have established Rainier's liability in contract. 

    There was evidence in the record that the Ardex's manufacture provided specific instructions for its installation that Rainier's subcontractor failed to follow. Cracks and voids emerged in plaintiffs' garage floor that were consistent with those warned of in the manufacturer's instructions, and plaintiffs incurred damages as a result. Collectively, the evidence was sufficient to raise a genuine issue of fact as to whether Rainier's subcontractor, by failing to follow the manufacturer's installation instructions, unreasonably created a foreseeable risk of harm to plaintiffs and that they had incurred damages as a result. 

    A facfinder could find that the garage floor had been negligently installed and that plaintiffs incurred damages associated with a result. The evidence was sufficient to preclude summary judgment on the ground that plaintiffs had failed to demonstrate that their damages were the result of an accident, i.e., that there was a basis in tort to recover those damages. 

    The decisions of the Court of Appeals and of the trial court were reversed. 

Fifth Circuit Affirms District Court's Grant of Summary Judgment to Insurer on Property Loss Claim

    The Fifth Circuit affirmed the district court's grant of summary judgment to the insurer despite the insured's claim it was not adequately compensated for its loss. In the Matter of New York Inn, Inc., 2025 U.S. App. LEXIS 7887 (5th Cir. April 3, 2025). 

    Viva Inn Motel submitted a claim to its insurer, Associated Industries Insurance Company, for water damage from a burst pipe occurring on February 17, 2021. New York Inn, a corporate affiliate of Viva, was an additional insured on the policy. An adjuster investigated for Associated and recommended that Associated pay Viva  $153,961.57, representing the actual cash value (ACV) amount of the loss. An adjuster for Viva and New York Inn (Motel Owners) provided an estimate for replacement cost value (RCV) of repairs for $175,256.42. 

    Associated sent a payment to Viva for $153,961.57 and requested documentation to support the payment for RCV. Viva requested an advance payment for Viva's business interruption loss. Associated responded that it would consider the payment but requested Viva's profit and loss statements for the prior three months to calculate the payment. The Motel submitted a profit and loss statement for October 20, 2020, through December 20, 2024. Based on this document, Associated estimated the business interruption loss from February 17, 2021, to May 31, 2021, as $74,295. This estimate was used to calculate the payment owed to Viva and a check was issued for $26,349.82. An advance payment of $10,000 for content loss was also issued, but Associated noted that Viva had not submitted any inventory of damaged contents. 

    Viva hired Decagon Development Company, Inc. to renovate the Motel. Decagon sent three invoices to Viva, totaling $682,244. Associated hired a consultant to inspect the Motel and provide an estimate of repairs. The cost of repairs were estimated at $236,188.84. After deducting the prior payment of $153,961.57 for ACV, Associated paid Viva another $81,227.27. 

    In December 2022, the Motel reopened. 

    In May 2021, New York Inn filed for bankruptcy. It filed a complaint, joined by Viva, in the bankruptcy proceeding against Associated for underpaying New York Inn's claim. Associated filed a motion to dismiss, which the bankruptcy court granted. On appeal to the district court, summary judgment was granted to Associated.

    Motel Owners appealed. Motel Owners alleged Associated failed to pay the full amount owed for (1) repairs to the Motel; (2) contents in the Motel; and (3) interruption to the business caused by damage from the storm. 

    The court determined that Motel sought an additional $435,305.77 for building repair. Viva failed to differentiate between costs of building repairs attributable to risks covered by the policy (i.e., the water damage from the storm) and costs attributable to risks not covered by the policy (i.e., the mold damage due to the delay in remediating the water damage). The invoices submitted by Motel Owners did not differentiate between covered and non-covered repairs. The insured had the burden to separate the damage attributable to the risk covered by the policy versus damage caused by non-covered risks. Therefore, Motel Owners' evidence did not create a genuine dispute of material fact as to whether Associated breached the policy by underpaying for building repair. 

    Regarding contents loss, Associated paid $10,000, but Viva never submitted the required documentation for additional coverage. Motel Owners had the burden to prove they suffered a loss and that the loss was covered by the policy. Accordingly, Motel Owners' evidence did not create a genuine dispute of material fact as to whether Associated breached the policy by underpaying for contents. 

    Associated paid Viva $26,349.82 for business interruption between February 17, 2021, to May 31, 2021. Motel Owners argued that they were entitled to at least an additional $73,650.19 to compensate them for the entire duration of the Motel's restoration from February 2021 to December 2022, when the Motel reopened. Motel Owner's argument was based solely on what it felt was reasonable or feasible, rather than on the text of the policy, which did not define the duration of time for business interruption based on what was reasonable or feasible. Because Motel Owners failed to adequately brief their argument that the bankruptcy court and the district court erred in granting Associated's summary judgment as to coverage for business interruption, they abandoned that argument. 

    Therefore, the district court's grant of Associated's motion for summary judgment was affirmed. 

Boat Owner Survives Insurer's Motion to Dismiss

    The court rejected the insurer's motion to dismiss after the the insured's vessel sank during a hurricane. Knight v. Market Am. Ins. Co., 2025 U.S. Dist. LEXIS 71973 April 16, 2025). 

    Hurricane Ian sank a yacht owned by the Knight Living Trust. The Trust insured the yacht under a policy with Markel. The policy contained a haul out provision stating,

If a windstorm warning is issued for the location where the insured yacht is located, the insured yacht shall be on land. If a location is shown below, the insured yacht shall be inland at the specific location as described. 

ASHORE ON THE UNITED STATES MAINLAND, AND WITHIN THE LISTED NAVIGATIONAL LIMITS.

    Before Hurricane Ian struck, windstorm warnings were issued. The yacht was moored at the marina. Efforts to have the vessel hauled out of the marina were unsuccessful. The marina stated it was unable to haul out the vessel. Other marinas also refused the request the haul out the vessel. The Trust asserted that despite its best efforts, no method or means reasonably existed to haul out the vessel and place it on land. Hurricane Ian came ashore and the vessel sank.

    A claim we filed, but Markel denied the claim because of non-compliance with the haul out provision.

    The Trust sued for a declaration that the policy provided covert for the loss. The Trust relied upon a Florida statute providing that a breach by the insured of a provision of an insurance policy did not void the policy unless the breach or violation increased the hazard by any means within the control of the insured. The Trust argued that the failure to haul out the vessel did not increase the risk of loss by any means within the control of the insured, thereby precluding Markel from denying the claim. 

    The Trust's second theory was that the haul out provision violated the public policy of Florida which prohibited requiring vessel owners to contractually or otherwise be obligated to remove their vessels from their marina slips upon the issuance of la windstorm warning. 

    Market moved to dismiss for failure to state a claim.

    The court noted that an insured could prevail under the Florida statute if the insurer could not prove the cause of loss was within the control of the insured. The Trust stated a plausible cause of action pursuant to the Florida statute.

    Regarding the Trust's second argument, it had to prove the existence of a public policy. The Trust had shown that in some contexts Florida had stated through a statute a public policy similar to the one it asserted here. This was sufficient to establish a plausible claim which allowed the Trust to proceed with its obligation to establish such a public policy in the context of marine insurance policies.

    Therefore, the motion to dismiss was denied. 

Cross-Motions for Summary Judgment Denied in Collapse Claim

    The court denied cross-motions from the insured and the insurer after the insured's dwelling suffered a collapse of the ceiling. Simons v. Fed. Ins. Co., 2025 U.S. Dist. LEXIS 75839 (C.D. Cal. March 4, 2025). 

    Gary Simons bought a second home located in Park City, Utah (Utah Property) that was an architectural master piece sitting on 4.5 acres of land. He purchased a policy from Chubb. A renewal of the policy for the third year of coverage provided $18,595,000 in coverage for the dwelling and $4,978,500 in content coverage.

    On August 7, 2022, the ceiling suddenly and unexpectedly collapsed, causing substantial damage and rendering the Utah Property unhabitable. A claim was submitted to Chubb. Chubb's inspection reported collapse damage to the kitchen and great room ceiling and water damage throughout the home. The inspector concluded that the cause of the kitchen ceiling collapse was defective construction. The Chubb policy excluded any loss caused by faulty construction or maintenance. Chubb paid a total of $3,367,084.44 for the claim.

    Simons hired a public adjustor. The public adjuster estimated that the restoration of the property, which included debris removal and restoration costs, would be just over $4.7 million. A demand for dwelling coverage was made for $4.7 million. Chubb approved payment for restoration of $2.7 million. 

    For contents coverage, Simons sought $699,939.00 for damaged and destroyed contents. Chubb paid $25,000 for business property and $105,336.48 for personal property. Chubb refused to pay additional funds based on its determination that the contents were "business property," which it claimed limited Simons'coverage to $25,000. 

    Chubb also paid $308,700 for fair rental value based on the amount that Simons had earned from the rental income in the 12 months prior to the ceiling collapse. Finally, Chubb paid $176,519.75 for extra living expenses for the two months use of another dwelling.

    Simons sued for breach of contract and bad faith. Both parties filed for summary judgment.

    Regarding dwelling coverage, the court concluded that there was a genuine dispute of material fact as to whether the faulty construction was the proximate cause of the incident. Experts from the two sides disagreed on whether faulty construction was a cause of loss, creating an issue of fact. 

    The court agreed with Chubb that Simons' contents coverage claim was subject to the $25,000 business property sublimit. The determination of contents coverage, however, was reserved for the jury. 

    For fair rental value coverage, Simons contended that Chubb only paid for a 12-month period of loss, but the time of restoration exceeded 12 months and therefore he was entitled to more benefits. The court agreed that Simons was displaced for more than na a 12-month period and was arguably entitled more benefits for loss of rental income. But Simons had not proffered an exact number to which he should be entitled. Therefore, this claim was more appropriate for the jury to decide.

    For extra living expenses, the policy did not limit the incurred living expenses to be related to Park City, nor did it limit expenses to the time Simons spent in Park City. The court, however, could not make a determination as a matter of law as to whether Simons' expenses were reasonable and necessary to maintain his "standard of living," which was for the jury to decide.

    Therefore the court denied the cross-motions for summary judgment as to breach of contract The cross-motions were also denied on the bad faith claim. A jury could decide that Chubb acted inappropriately in handling Simons' extra living expense claims based on Chubb's interpretation of the policy.

Insured's COVID-19 Claim Survives Motion for Judgment on the Pleadings Based on Loss of Attraction Endorsement

    Faced with a motion for judgment on the pleadings filed by several of its insurers, the insured was successful in arguing that the Loss of Attraction endorsement in one insurer's policy allowed the insured to pursue losses suffered by its businesses due to COVID-19. BBX Capital Corp. v. Scottsdale Ins. Co., et al., 2025 Mo. App. LEXIS 212 (Mo. Ct. App. April 1, 2025).

    The insured, BBX Capital Corporation, had 284 business properties located throughout the United States, including in Missouri. BBX's business properties included vacation resorts and timeshare properties, and retail stores selling chocolate and other confectionery products

    BBX purchased "all-risk" property insurance polices from several insurance companies for primary or excess coverage. Each policy was constructed around a master form, consisting of fifty=two pages of common provisions and twelve endorsements (Master Policy). Each insurer then separately added declarations pages and endorsements modifying the provisions of the Master Policy to create their own individual policies. 

    BBX sought to receive coverage under the policies for COVID-19 pandemic-related losses. After timely notice, the insurers either denied BBX's claim or sent reservation of rights letters. BBX fiied suit alleging direct physical loss due to the presence of SARS-CoV-2 and shut-down orders.

    The insurers moved for judgment on the pleadings in a joint motion seeking dismissal of the complaint. The trial court granted the insurers' motion and BBX appealed.

    The appellate court affirmed with one exception: the Loss of Attraction Endorsement did not require physical loss or damage to property. The endorsement provided,

This policy is extended to cover the actual loss sustained and Extra Expense incurred by the insured resulting from cancellation of or inability to accept bookings for accommodation and/or cessation or diminution of trade due to a loss of potential customers, as a direct result of;

. . . 

2) Infectious, communicable or contagious disease.

. . . 

4) closing of whole or part of the premises of the insured by order of a Public Authority consequent upon the existence or threat of hazardous conditions . . .

    The court focused on the Loss of Attraction Endorsement found in Interstate Fire & Casualty Company's policy. The Interstate policy also included a Communicable Disease Exclusion. However, the Communicable Disease Exclusion was not properly referred to in its Declarations Page. Therefore, the exclusion was superseded by the terms and conditions of the Master Policy and did not apply to bar coverage for BBX's alleged losses under the Loss of Attraction Endorsement. Consequently, the trial court erred in holding BBX's claimed losses were unambiguously excused under Interstate's Communicable Disease Exclusion. 

    The judgment of the trial court was reversed and remanded for further proceedings as to BBX's claims for Loss of Attraction coverage under Interstate's Policy.