OneBeacon v. Travelers

From wikilawschool.org. Wiki Law School does not provide legal advice. For educational purposes only.
OneBeacon v. Travelers
Court 1st Circuit
Citation 465 F.3d 38
Date decided October 6, 2006

Facts

  • Leasing Associates, Inc. and LAI Trust = "LAI" = vehicle leasing agency
  • OneBeacon America Insurance Co. = "OneBeacon" = insurance company for LAI vehicles = this company was acquired by Intact Financial in 2017 = plaintiff
  • Capform, Inc. = "Capform" = a business that leased LAI's vehicles
  • LAI required all lesseees to insure all leased vehicles:
    • either through OneBeacon or
    • through another insurance company
  • Capform obtained vehicle liability insurance policy from Travelers
  • Travelers Indemnity Company of Illinois = "Travelers" = defendant
  • A Capform driver struck & injured a pedestrian.
  • Travelers defended Capform's accident & settled the claim for $5,000,000 (5 million).
  • Travelers learned that there was a OneBeacon insurance policy on LAI vehicles. So, Travelers demanded that OneBeacon contribute $1 million (20%) to the settlement of the vehicle accident.
  • OneBeacon refused to cough up anything to Travelers.

Procedural History

  1. OneBeacon filed a diversity action against Travelers in a federal district court.
  2. OneBeacon asked the court to declare that Capform wasn't covered under OneBeacon's policy.
  3. Alternatively, OneBeacon asked the court for reformation of the contract with LAI to definitively exclude LAI lessees.
  4. OneBeacon lost.

Issues

May a written contract be reformed if it doesn't reflect the true intent of both parties?

Holding

Yes. A written contract may be reformed if it doesn't reflect the true intentions of the parties.

Judge Lipez: In this case, the Capform leasing contract specified that if the lessee didn't secure insurance through OneBeacon, then neither OneBeacon nor LAI intended the OneBeacon policy to cover the lessee.

Judgment

Reversed. Entry of summary judgment in favor of OneBeacon is ordered

Reasons

Judge Lipez: Under Massachusetts Law, a written contract may be reformed if the true intentions of the contract signatories aren't reflected in the contract as a result of a mutual mistake.

Resources