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Insurance Payments to General Contractors

January 22, 2021

Insurance Payments to General Contractors

Case:   Affordable Construction Serv. v. Auto-Owners Ins. Co.

Facts:   In this federal diversity case, Construction Company seeks the recovery of money from Insurance Company allegedly due under a purported construction contract between Construction Company and an HOA. The HOA had property insured by Insurance Company, who hired Construction Company for repairs. Construction Company alleges that Insurance Company never paid it for the repairs, and apparently paid the funds to the HOA directly instead.

Certified Question of Law:   The federal district court submitted a certified question of law asking the Tennessee Supreme Court to determine (1) whether Tenn. Code Ann. § 56-7-111 provides a private right of action, (2) whether a contract between the general contractor and the insured is required to obligate the insurance company to name the general contractor as a payee, and (3) if such a contract is required, whether the contract must be uncompleted at the time the check is written.

Review Granted:   January 13, 2021.

Prediction: Ben and David determined to post this case given that review was granted, but decline to call this one in the absence of an intermediate court decision.