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Businesses alleging financial loss against insurer lose before 7th Circuit

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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.

 

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  1. First comment on this thread is a fitting final comment on this thread, as that the MCBA never answered Duncan's fine question, and now even Eric Holder agrees that the MCBA was in material error as to the facts: "I don't get it" from Duncan December 1, 2014 5:10 PM "The Grand Jury met for 25 days and heard 70 hours of testimony according to this article and they made a decision that no crime occurred. On what basis does the MCBA conclude that their decision was "unjust"? What special knowledge or evidence does the MCBA have that the Grand Jury hearing this matter was unaware of? The system that we as lawyers are sworn to uphold made a decision that there was insufficient proof that officer committed a crime. How can any of us say we know better what was right than the jury that actually heard all of the the evidence in this case."

  2. wow is this a bunch of bs! i know the facts!

  3. MCBA .... time for a new release about your entire membership (or is it just the alter ego) being "saddened and disappointed" in the failure to lynch a police officer protecting himself in the line of duty. But this time against Eric Holder and the Federal Bureau of Investigation: "WASHINGTON — Justice Department lawyers will recommend that no civil rights charges be brought against the police officer who fatally shot an unarmed teenager in Ferguson, Mo., after an F.B.I. investigation found no evidence to support charges, law enforcement officials said Wednesday." http://www.nytimes.com/2015/01/22/us/justice-department-ferguson-civil-rights-darren-wilson.html?ref=us&_r=0

  4. Dr wail asfour lives 3 hours from the hospital,where if he gets an emergency at least he needs three hours,while even if he is on call he should be in a location where it gives him max 10 minutes to be beside the patient,they get paid double on their on call days ,where look how they handle it,so if the death of the patient occurs on weekend and these doctors still repeat same pattern such issue should be raised,they should be closer to the patient.on other hand if all the death occured on the absence of the Dr and the nurses handle it,the nurses should get trained how to function appearntly they not that good,if the Dr lives 3 hours far from the hospital on his call days he should sleep in the hospital

  5. It's a capital offense...one for you Latin scholars..

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