Cengage Advantage Books: Law for Business 18th Edition by John Ashcroft ,Janet Ashcroft

Exercise 18

High Mountain, LLC managed condominium units owned by John and Diane Mullin. It would collect and deposit rental income and send the Mullins the net rental income after High Mountain's fees and expenses were deducted. The Mullins sued High Mountain for failure to forward $32,989.36 in rental income and obtained a judgment, but High Mountain declared bankruptcy. Travelers Indemnity Company of Connecticut insured High Mountain, so the Mullins sued Travelers for the amount of the judgment. Travelers argued that it was not obligated to pay the default judgment because the policy covered only money High Mountain was legally obligated to pay because of property damage to which the policy applied. The policy defined "property damage" as loss of use of tangible property that is not physically injured. Did the Mullins suffer a loss of use of tangible property that was not physically injured when High Mountain did not forward the rental payments to them?