KEY CONCEPTS

• Breach of covenant of good faith and fair dealing, aka bad faith
• Efficient proximate cause
• Genuine dispute doctrine

WHAT IS THIS CASE ABOUT?

• Defendants denied plaintiff’s claim for damages to its apartment complex caused by a ruptured underground water main.
• Experts hired by plaintiff and defendants provided conflicting reports on the cause of the damage.
• Plaintiff sued for bad faith, breach of contract, etc.
• Defendants argued: “genuine dispute doctrine” provided a complete defense to a finding of bad faith. Denial was based on expert opinions that the damage was caused by long-term settlement and earth movement, which was not a covered loss.
• Plaintiff appeals judgment following summary adjudication of plaintiff’s claim for breach of the covenant of good faith and fair dealing in favor of defendants.
• Ruling: there is no material dispute whether defendants denied the claim in good faith based on an expert report concluding the damage was not caused by the broken water main, and affirm the judgment.  

Admiral is obligated to defend and indemnify the plaintiff in Vachon v Northside Tower Realty, LLC.

Issues/Concepts: additional insured

• Northside sued, pursuant to a CGL policy issued by Admiral to nonparty Scorcia and Diana Associates, Inc.
• Northside demonstrated that it qualified for additional insured status under the policy Admiral issued to Scorcia. 
• “‘When determining whether a third party is an additional insured a court must ascertain the intention of the parties to the policy, as determined from within the four corners of the policy itself’”
• The additional insured endorsement extended coverage to any person or organization Scorcia had agreed by written contract to name as an additional insured.
• A written contract between Northside and Scorcia provided that “[p]rior to the commencement of any of the Work, [Scorcia] shall purchase and maintain, at its own expense, the following insurances as will protect it and [Northside]” and lists CGL insurance as one of the types of insurance that Scorcia must procure and maintain.  
• The natural and intended meaning of the phrase “as will protect it and [Northside]” is that Scorcia and Northside were both intended to enjoy the coverage specified in the contract. 
• The intent and meaning of the phrase “as will protect it and [Northside]” becomes clear when juxtaposed with the language of another provision of the contract that references “Additional Insureds” under the policy.  If Northside and Scorcia did not intend to confer additional insured status on Northside, the provision referencing “Additional Insureds” would be rendered meaningless or superfluous.  A court should not read an agreement so as to render any term, phrase, or provision meaningless or superfluous.