ILNews

Businesses alleging financial loss against insurer lose before 7th Circuit

Back to TopCommentsE-mailPrintBookmark and Share

The 7th Circuit Court of Appeals ruled against a group of businesses that sued an insurance company claiming its failure to adequately pay G&S Metal Consultants Inc. following an explosion at the GSMC Georgia plant led to the plaintiffs suffering financial losses.

G&S Metal Trading, G&S Holdings, Aluminum Sizing, and owner operators of G&S Metal Consultants R. Scott Galley II and Cynthia Galley sued Continental Casualty Co., the insurer of GSMC. Pursuant to its policy, Continental made some payouts to GSMC after the explosion, but GSMC claimed those payments were inadequate. It since has filed for bankruptcy, which has affected the businesses of the parties in this case. G&S Metal Trading, G&S Holdings and Aluminum Sizing are affiliated with GSMC and are additional named insureds under the policy that covered the Georgia plant.

The lawsuit filed in South Bend alleges seven counts against Continental: breach of contract, promissory estoppel, bad faith claims handling, negligent claims handling, tortious interference with contract, negligent infliction of emotional distress and breach of fiduciary duties. The crux of the complaint was that as a result of the failure to receive timely and adequate payments, GSMC experienced financial difficulties and the plaintiffs were adversely affected by the ensuing loss of business with GSMC.

U.S. District Judge Jon DeGuilio dismissed the lawsuit for failure to state a claim or that the plaintiffs lacked standing. The 7th Circuit found the plaintiffs couldn’t succeed on their claim that the wrong standard was applied to the motion to dismiss. The federal pleading standard as set forth in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), applies.

In G&S Holdings LLC, et al. v. Continental Casualty Company, 11-1813, the federal appellate court affirmed DeGuilio’s dismissal of the breach of contract, promissory estoppel, bad faith claims handling, negligent claims handling, and breach of fiduciary duties claims pursuant to Federal Rule of Civil Procedure 12(b)(1). DeGuilio ruled that the plaintiffs weren’t the real parties in interest because they did not seek recovery for an injury they suffered directly. The 7th Circuit also upheld DeGuilio’s rejection of the plaintiffs’ contention that they had standing as third-party beneficiaries of the policy.

The Circuit Court also found that Vectren Energy Marketing & Service Inc. v. Executive Risk Specialty Ins. Co., 875 N.E.2d 774 (Ind. App. 2007), applies.

“Even though the loss was a predictable result of the failure to fulfill the obligations of the policy, due to the interdependent relationship between the plaintiffs and GSMC, the claim against the insurer must be brought by the party to whom the duty is owed, which was GSMC,” Judge Ilana Diamond Rovner wrote.

 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Just an aside, but regardless of the outcome, I 'm proud of Judge William Hughes. He was the original magistrate on the Home place issue. He ruled for Home Place, and was primaried by Brainard for it. Their tool Poindexter failed to unseat Hughes, who won support for his honesty and courage throughout the county, and he was reelected Judge of Hamilton County's Superior Court. You can still stand for something and survive. Thanks, Judge Hughes!

  2. CCHP's real accomplishment is the 2015 law signed by Gov Pence that basically outlaws any annexation that is forced where a 65% majority of landowners in the affected area disagree. Regardless of whether HP wins or loses, the citizens of Indiana will not have another fiasco like this. The law Gov Pence signed is a direct result of this malgovernance.

  3. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  4. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  5. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

ADVERTISEMENT