MISSOURI – O’Reilly Auto Enterprises, LLC succeeded to the interests of Grand Auto, Inc., and O’Reilly was named as a defendant in several asbestos-related personal injury actions as a result. Industrial Indemnity had issued two insurance policies covering such claims to Grand Auto, and U.S. Fire had succeeded to Industrial Indemnity’s interests. As a result prior to 2012, U.S. Fire provided defense and indemnity to O’Reilly in the personal injury actions pursuant to the Industrial Indemnity policies.
In 2012, the insurer incorrectly determined that the policies were exhausted. The insurer failed to take into account an endorsement that increased the policy limits. Thereafter, for five years, the insurer refused to defend or indemnify O’Reilly in the ongoing lawsuits. O’Reilly filed a coverage lawsuit alleging breach of contract and vexatious refusal to pay under Missouri law. The parties eventually reached a partial settlement in which the insurer paid certain amounts related to defense and indemnity for the lawsuits during the years it had refused to pay, and O’Reilly released its claims under one of the policies but not the other.
The coverage litigation went on regarding the other policy. The insurer filed a motion for summary judgment asking the court to dismiss O’Reilly’s claims under the remaining policy as moot because the amounts paid under the settlement represented all of O’Reilly’s damages. The court denied the insurer’s motion based on an affidavit submitted by O’Reilly detailing additional damages and because O’Reilly could still be entitled to nominal damages. Moreover, O’Reilly could pursue interest on the amounts the insurer had refused to pay for five years, and O’Reilly could pursue punitive damages for vexatious refusal to pay.
Read the case decision here.