Background

• SunTrust Mortgage sues for breach of contract; United Guaranty Residential Insurance Company of NC counters with Count IV seeking a declaration that SunTrust must pay renewal premiums after the Maximum Cumulative Liability (MCL) is reached.
• The central issue is the effect of Master Policy Section 3.4, titled Renewal Premium, and its interaction with renewal plans in the Flow Plans (2004 and 2005) governing premium structure.
• Section 3.3 requires an Initial Premium; Section 3.4 requires renewal premiums for the life of the loan, subject to enumerated exceptions not implicated here.
• The 2004 Flow Plan and 2005 Flow Plan state the term of cover as life of the loan and that insurance coverage exists until the loan is paid in full or the term expires; ST elected annual renewal premiums rather than a lump sum.
• ST argues 3.4 is ambiguous or merely addresses renewal when coverage remains available; UG argues 3.4 is clear and unambiguous that renewal premiums continue notwithstanding the MCL.
• The court ultimately holds that Section 3.4 unambiguously obligates ST to pay renewal premiums for the life of the insured loans even after MCL is reached, and grants UG’s renewed summary judgment motion.

Issues

Key Cases Cited

• Government Employees Ins. Co. v. Moore, 266 Va. 155 (2003) (ambiguity in insurance contracts resolved in insured's favor)
• National Housing Bldg. Corp. v. Acordia of Va. Ins. Agency, 267 Va. 247 (2004) (policy terms construed for written intent and statutory alignment)
• Craig v. Dye, 526 S.E.2d 9 (2000) (plain, ordinary sense applied to unambiguous terms)
• Am. Realty Trust v. Chase Manhattan Bank, 281 S.E.2d 825 (1981) (interpretation of written contracts—every word to operate)
• S. L. Nusbaum & Co. v. Nusbaum, 316 S.E.2d 736 (1984) (duty to construe policy as a whole; ambiguity doctrine)
• St. Paul Fire & Marine Ins. v. Nusbaum & Co., 316 S.E.2d 734 (1984) (insurance policy interpretation against drafting party)
• Ayres v. Harleysville Mut. Cas. Co., 2 S.E.2d 303 (1939) (ambiguity resolved in favor of coverage when doubt exists)
• Fidelity & Cas. Co. v. Chambers, 24 S.E. 896 (1896) (ambiguous contract language interpreted against drafter)
• United States Mut. Accident Assn. v. Newman, 3 S.E. 805 (1887) (foundational contract interpretation principles in insurance)
• Wilson v. Holyfield, 313 S.E.2d 396 (1984) (policy interpretation under Virginia law)
• Spence-Parker v. Md. Ins. Group, 937 F. Supp. 551 (E.D. Va. 1996) (contextual ambiguity in insurance policy interpretation)
• St. Paul Fire & Marine Ins. v. Nusbaum & Co., 227 Va. 407 (1984) (cancellation provisions and continuity of coverage terms)