In the case of Church on Rock North vs. Church Mutual Insurance Company, Church on Rock North (“North Church”) is suing its insurance company Church Mutual Insurance Company (“CMIC”) for breach of contract because CMIC did not completely pay for damages that were covered under the insurance policy. The church was struck by lightning during a storm, causing damage to its building. At first, the parties were able to agree on the costs for some, but not all of the damages. The North Church brought this case regarding the amount that was in dispute. When CMIC learned of the lawsuit, it started its appraisal process in an attempt to reach an equitable solution and avoid litigation. During the appraisal process, CMIC had the case dismissed without prejudice so they could have more time to work out a solution, while North Church still retained the ability to renew the charges.
After the appraisal was completed, CMIC paid what they believed was a reasonable
price for the remaining damage, based on the findings of the appraisal.
After the payment was made, North Church reopened the lawsuit because
it felt that it still was not fairly compensated. CMIC then filed a motion
for summary judgment. This motion tells the court there is no question
of fact and therefore the case can be immediately decided based on the
information already supplied to the court and applicable law. If the person
that brings the motion loses, the case is not over, instead it continues
later, as a regular trial. CMIC’s claim is that because of the appraisal,
North Church can no longer sue for breach of contract.
Winning Summary Judgement
According to the court, there are three facts that CMIC must prove in
order to win this summary judgment case. Whether the facts are proven
is based on a combination of: local case decisions, local laws and regulations
and the contract at the base of the suit. First, CMIC must show that there
was a binding and enforceable appraisal award. CMIC was unable to prove
this element primarily to wording within its own contract. The court noted
various sections of the contract that stated that an appraisal agreement
was not a settlement and that the person insured, in this case North Church,
still retains the right to sue after an appraisal. Second, CMIC must show
that they paid the award in a timely manner. Both sides disagreed as to
whether payment was fully made at the time of trial. CMIC lost this claim
because more evidence was needed to make a decision. And finally, CMIC
must show that North Church accepted payment of the award, knowing that
it would mean that it could no longer sue. CMIC only had evidence that
North Church received the appraisal payment. According to a previous breach
of contract case, receipt of payment is not enough; there must be evidence
of acceptance in order to stop a lawsuit. The court also felt that the
language of the insurance policy made it unclear that accepting the appraisal
restricted the ability to sue later. Since CMIC did not prove any of the
necessary elements, it lost its summary judgment and the case will continue
with its next step.
Litigation is complicated, costly and time consuming. Before bringing a
breach of contractsuit, you should know all aspects of the contract. You must be sure of
each party’s responsibilities before you can claim that someone
did not perform properly. Contracts can be long and complicated, having
an attorney to help review can help you find and understand details of
the contract that could become important factors in deciding on how to
ultimately handle the case. If you have any contract questions, consider
calling our
Long Island business lawyer for assistance.
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