G.M. Battery & Boat Company v. L.K.N. Corp.

G.M. Battery & Boat Company (GMB) (plaintiff) owned a commercial building, which GMB leased to L.K.N. Corp. (LKN) (defendant). The lease granted LKN a lease-purchase option for the building. In addition, the lease required LKN to procure all-hazard insurance for the building, with $75,000 in coverage payable to GMB. LKN purchased insurance from St. Paul Fire and Marine Insurance Co. (St. Paul) (defendant). However, the St. Paul insurance contract was not payable to GMB. Instead, the St. Paul contract was payable to LKN for building loss and was payable to a bank for loss of the building contents. After a fire destroyed the building, St. Paul accepted liability to cover the loss of the building contents but denied coverage for the building itself. In denying coverage for the building, St. Paul contended that LKN lacked an insurable interest in the building. GMB sued LKN and St. Paul for $75,000, although GMB had purchased building coverage from another insurance company, and that company had paid GMB $75,000 on the loss. LKN filed a crossclaim against St. Paul. One or more parties sought summary judgment. On GMB’s claim against LKN, the trial court granted summary judgment in favor of GMB upon finding that LKN had breached the insurance requirement in the lease. On LKN’s claim against St. Paul, the trial court granted summary judgment in favor of LKN upon finding that LKN had an insurable interest in the building. St. Paul appealed. An intermediate appellate court reversed the trial court’s summary judgment on the insurable-interest issue and found that St. Paul was not liable to cover the building loss. LKN appealed.