Beckwith Machinery Co. v. Travelers Indemnity Co.

Beckwith Machinery Company (Beckwith) (plaintiff) sold Caterpillar Tractor Company (Caterpillar) tractors to Trumbull Corporation (Trumbull). These tractors broke down, therefore stalling the progress of a Trumbull construction project. Trumbull notified Beckwith that the Caterpillar tractors were defective and that they had caused Trumbull to incur damages. Beckwith had a comprehensive general-liability policy with Travelers Indemnity Company (Travelers) (defendant). Under this policy, Travelers was to defend Beckwith in any property-damage lawsuits. Prior to Trumbull’s filing of its claim against Beckwith, Beckwith notified Travelers that Trumbull might file a claim. On April 15, 1977, Trumbull sued Beckwith and Caterpillar for the damages it incurred due to the defective Caterpillar tractors. Trumbull sought actual and punitive damages. Travelers assumed the defense of this case. On June 8, 1977, Travelers notified Beckwith that it would not defend the punitive-damages claims. Beckwith retained Thorp, Reed and Armstrong to defend the punitive-damages claims. On April 10, 1978, a Travelers employee noted that Beckwith, as a joint tortfeaser, could be liable for 50 percent of Trumbull’s claim. The employee also noted that Travelers might be estopped from withdrawing its defense of Beckwith. On May 19, 1978, 13 months after Trumbull sued Beckwith, Travelers denied coverage to Beckwith and withdrew its defense. Shortly thereafter, Travelers offered to resume its defense of the Trumbull case without providing coverage if Beckwith would waive claims of prejudice against Travelers. Beckwith hired Thorp, Reed, and Armstrong to defend it in the Trumbull action. The lawsuit between Trumbull and Beckwith settled for $100,000. Beckwith sued Travelers, alleging breach of contract. Beckwith and Travelers each moved for summary judgment.