Avenue Bank v. Guarantee Insurance Company

Appellee Avenue Bank (“the Bank”) filed suit against the Appellant Guarantee Insurance Company (“GIC”), alleging breach of contract with respect to a “Funds Held Agreement” entered into between the parties. Pursuant to the parties' agreement, the Bank agreed to disburse proceeds of a letter of credit to GIC. In turn, GIC agreed to hold the funds in a separate “Funds Held Account” and disburse the funds to pay unpaid premiums and certain claims that might become payable pursuant to policies of workers' compensation insurance. The agreement further provided that upon the resolution of all workers' compensation claims filed within the applicable statute of limitations period, GIC would, upon request of the Bank, return to the Bank any funds remaining in the Funds Held Account. Following the resolution of all claims filed within the limitations period, the Bank demanded the repayment of the remaining balance. GIC failed to comply with this demand. In its answer, GIC alleged that it was unable to perform in light of a Delaware court order concerning the liquidation of a third-party, Ullico Casualty Company (“Ullico”). It contended that the terms of the Delaware order barred disbursement of the funds at issue. The Bank ultimately moved for judgment on the pleadings by asserting that the undisputed facts showed that it was entitled to relief. The trial court granted the motion and concluded that the facts admitted by GIC's answer established the Bank's right to recover on its breach of contract claim. In doing so, the trial court rejected GIC's arguments that Ullico's liquidation and/or the Delaware court order had any effect on its performance. We affirm.