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10th Circuit Finds Insurance Co. Has Duty to Defend

The Tenth Circuit held that Universal Underwriters Insurance Company (parent company, Zurich), the insurer of a car dealership, had a duty to defend he dealership when it was sued. Automax Hyundai South, was sued by two of its customers who alleged that Automax had fraudulently represented the condition of the car they sold and that they had inflated the income of one of the customers to ensure loan approval, among many other claims.

The customers won the cases in state court, and the district court did not think that Zurich had any duty to defend Automax in this underlying lawsuit. The Tenth Circuit disagreed, and sided instead with Automax.

We'll never know if the Toones' claims were valid. Well, we have a pretty good idea, actually, thanks to the court's dicta on the matter, but we can't help but wonder if they would've had a chance to adduce additional evidence that would've supported their claims had they made it to discovery. Instead, their case becomes another reminder as to the importance of proper pleading and paperwork.

The Toones' mortgage, like many others in this historic recession, went into foreclosure. It was passed around between banks, like children playing "hot potato." They attempted to save their home through a "Home Affordable Modification Program Loan Trial Period (HAMP) Agreement and by suing every bank and lawyer that ever came into contact with the mortgage. The lawsuit was eventually transferred to federal court and dismissed via 12(b)(6).

Settlement Agreement Is a Contract, Even Before It's Signed

Bennie Walters sued his former employer, Walmart, for employment discrimination. Walmart apparently reached an agreement with Walters during a settlement conference -- which is suprising since Walmart is kind of famous for its aggressive litigation strategy -- but Walters later refused to sign the written agreement.

The district court granted Walmart's motion to enforce the agreement, and denied Walters' motion for reconsideration. The Tenth Circuit Court of Appeals affirmed that decision.

Sola Salon Didn't Breach Lease By Assigning Rights

It's not often that we come across a Tenth Circuit Court of Appeals case that is largely dedicated to the elements of a contract instead of precedent. Today's case, Sola Salon Studios v. Heller, is a rare exception.

Sola Salon owns salon studios throughout the country, but its operational structure is rather unusual. Sola does not employ beauticians or stylists, and instead contracts with those kinds of professionals to use space that Sola leases from someone else, and allows the professionals to operate their own independent salon studios.

The Tenth Circuit paraphrased Sola's motto as "the stylists are in business for themselves, but not by themselves."

Tenth Circuit Talks About the Ghosts of Escape Clauses Past

We typically try to give you the highs and lows out of the Tenth Circuit Court of Appeals to lighten the load on your required reading list. Today, we’re recommending that you actually read at least a few pages of this escape clause insurance dispute because it is clear that Judge Neil Gorsuch had fun writing it.

Insurance disputes? Fun? How is that possible?

Maybe because it’s because the litigants are arguing over who should pay when a haunted house worker falls down an elevator shaft. (So ironic, it’s scary.)

Court Finds Offer and Acceptance in Email

Get ready for a flashback to first-year Contracts, with a modern twist.

The Tenth Circuit Court of Appeals ruled recently that a bank and a hospital had formed an enforceable contract regarding the sale of medical equipment in an offer-and-acceptance-based breach of contract dispute.

Southern Ute Tribe Wins HHS Self-Determination Contract Appeal

The Tenth Circuit Court of Appeals ordered the Department of Health and Human Services (HHS) this week to enter into a self-determination contract with the Southern Ute Indian Tribe in New Mexico for the operation of a tribe health center.

The Indian Self-Determination and Education Assistance Act (ISDA) directs the Secretary of HHS, upon request of an Indian tribe, to enter into a contract by which the tribe assumes direct operation of HHS’s federal Indian health care programs for the tribe’s members. Congress provided for these self-determination contracts in an effort to encourage self-government and enhance the progress of Native American people and their communities.

US Airways, Inc. v. O'Donnell, No. 09-2271

Action to Enjoin New Mexico From Regulating Alcohol on Flights

In US Airways, Inc. v. O'Donnell, No. 09-2271, an action in seeking to enjoin defendant New Mexico state officials from regulating, pursuant to the New Mexico Liquor Control Act (NMLCA), the alcoholic beverage service that airlines provided to passengers on flights, the court reversed summary judgment for defendants where New Mexico's regulatory scheme was impliedly preempted as it fell within the field of aviation safety that Congress intended federal law to occupy exclusively, but the Twenty-First Amendment required a balancing of New Mexico's core powers and the federal interests underlying the Federal Aviation Act.

Action Regarding Denial of Medical Insurance Coverage, and Criminal Matter

In Izzo v. Wiley, No. 10-1195, a habeas petition challenging the decision of the Bureau of Prisons (BOP) denying petitioner's eligibility for the Elderly Offender Home Detention Pilot Program, the court affirmed the denial of the petition where the phrase "term of imprisonment to which the offender was sentenced" in 42 U.S.C. section 17541 unambiguously referred to the term imposed by the sentencing court, without any consideration of good time credit.

Denial of ERISA Benefits Reversed, and Contract and Tort Actions

In Murphy v. Deloitte & Touche Grp. Ins. Plan, No. 09-2028, an action concerning defendant's denial of disability benefits under an ERISA plan, the court vacated summary judgment for defendant where 1) the court's case law prohibited courts from considering materials outside the administrative record where the extra-record materials sought to be introduced related to a claimant's eligibility for benefits; and 2) neither a claimant nor an administrator should be allowed to use discovery to engage in unnecessarily broad discovery that slows the efficient resolution of an ERISA claim.