Rock “N” Roll’s Insurer Had No Duty to Defend Breach of Contract Claims, West Virginia Court Decides

A federal district court in West Virginia has ruled that a commercial general liability (“CGL”) insurance company had no obligation to defend its insured against claims for breach of contract.

The Case

Rock “N” Roll Coal Company, Inc., was sued for allegedly failing to make certain royalty payments under a lease. Rock “N” Roll filed a counterclaim against the lessor alleging conspiracy, slander of title, public disclosure of private facts, negligence, and breach of a lease agreement.

The lessor responded with its own counterclaim alleging that Rock “N” Roll was contractually obligated to name the lessor as an additional insured in its insurance policies and to indemnify and defend the lessor for claims arising out of Rock “N” Roll’s coal mining operations.

The state court dismissed the lessor’s complaint with prejudice, leaving only the Rock “N” Roll counterclaim and the lessor’s counterclaim for breach of contract.

Rock “N” Roll’s CGL carrier asked a court to declare that the lessor’s claims of breach of contract were not covered by its policies because they were not “accidents” and, therefore, not “occurrences” as defined by its policies.

The insurer moved for summary judgment.

The District Court’s Decision

The district court granted the motion.

In its decision, the district court ruled that the policy language was “clear and unambiguous” and did not require the insurer to defend or indemnify Rock “N” Roll for the lessor’s claims.

The lessor’s claims for breach of contract did not fall within the meaning of an insured “occurrence,” the district court decided.

The district court concluded that because the lessor’s counterclaim unambiguously alleged only breach of contract, no coverage was available to Rock “N” Roll under its insurance policies for those claims.

The case is American Mining Ins. Co., Inc. v. Rock “N” Roll Coal Co., Inc., No. 16-3626 (S.D.W. Va. Apr. 25, 2017).