ST. LOUIS – American Family Mutual Insurance Co. S.I. was granted summary judgment in a breach of contract lawsuit.
District Judge Henry E. Autrey granted an order favoring American Family on April 17. The insurer was engaged in a counterclaim with Mid-American Grain Distributors LLC, Lehenbauer Farms Inc. and John Ayer.
The legal battle was rooted in Mid-American’s case against Lehenbauer, which was filed in July 2016. Mid-American asserted that Lehenbauer wrongfully terminated their agreement for the design and construction of a grain storage and distribution facility while the latter brought a counterclaim against the former over allegations of design and construction defects.
The ruling lists American Family as a provider of a business key policy to Mid-American, which included commercial general liability coverage (CGL). At issue of American Family’s motion is whether the defendants’ claims met the policy’s definition of an “occurrence.”
“American Family’s motion for summary judgment is limited solely to the dispositive issue of whether the counterclaims allege an ‘occurrence’ under the applicable American Family insurance policy,” according to the order.
Autrey ruled that a breach of contractual duty “does not constitute an accident.”
“Mid-American’s performance of the parties’ agreement was within its control and management,” wrote Autrey. “The failure to perform—i.e. the design and construction defects—does not constitute an undesigned or unforeseen event.”
Citing View Home Owners Ass’n v. Burlington Ins. Co., the judge further explained that no occurrence existed because “Mid-American had control over the property during its construction of the grain facility.”
“Because the ability to resolve said deficiencies was within Mid-American’s control, Mid-American’s failure to address them is not an undesigned or unexpected event,” stated Autrey. “Therefore, there was no ‘accident.’ Since there was no 'accident,' there was no ‘occurrence’ under the CGL policy.”
Autrey added that “the cause of Lehenbauer’s loss was Mid-American’s failure to construct the grain facility to the specifications of the oral contract.”
“Mid-American constructed a grain facility with a multitude of design and construction issues, which Mid-American had the control to remedy,” according to the order.