Justia Insurance Law Opinion Summaries
Luigi’s Inc. v. United Fire & Casualty Co.
The Supreme Court reversed the district court's judgment denying Insurer's motion for directed verdict on this action concerning Insurer's alleged delay in paying a claim, holding that the district court erred in denying the motion for directed verdict on Insured's breach of contract and bad faith causes of action.A fire broke out in Insured's kitchen that resulted in a total loss of the building and its contents. Insured invoked its right to the appraisal process. The appraisers signed an appraisal letter establishing the loss amount at $502,000. Insurer paid the amount in full. Eight months later, Insured sued Insurer for breach of contract and bad faith based on Insured's failure to pay the $550,000 building coverage limit and for its actions during the appraisal hearing. The jury returned a verdict in favor of Insured and awarded $48,000 in damages. The Supreme Court reversed, holding (1) Insured's invocation of the appraisal process and Insurer's timely payment of the appraisal award required dismissal of the claims as a matter of law; and (2) Insured failed to prove bad faith for any actions taken after the appraisal hearing. View "Luigi's Inc. v. United Fire & Casualty Co." on Justia Law
Wilkerson v. American Family Insurance Co.
After a car accident, Wilkerson filed a claim with her insurer, American Family. Her policy will pay for “loss of or damage to your insured car and its equipment, less the deductible[.]” A“Limits of Liability” section adds that American Family will pay no more than the lesser of “the actual cash value of the stolen or damaged property” or “the amount necessary to repair or replace the property.” American Family concluded that the cost to “repair or replace” her Impala exceeded its pre-accident “actual cash value,” and contracted with AudaExplore to calculate that value. AudaExplore estimated the Impala’s market value based on its location, mileage, condition, and the recent advertised prices of 2010 Impalas in the area ($8,218-$10,033). AudaExplore valued Wilkerson’s car at $9,979. American Family subtracted Wilkerson’s deductible and paid her $9,479.Wilkerson brought suit under the Class Action Fairness Act, 28 U.S.C. 1332(d), arguing that “actual cash value” includes sales taxes and fees that a party typically must incur when buying a replacement car (whether or not a party actually incurs those expenses in a given case). She sought $673.58 for the taxes and $19.50 for fees Ohio charges to transfer a car’s title and registration. The Sixth Circuit affirmed the dismissal of her complaint. American Family’s policy indicates that “actual cash value” is best read to refer to market value, not replacement costs less depreciation. View "Wilkerson v. American Family Insurance Co." on Justia Law
Williams v. Foremost Ins. Co. et al.
Plaintiff filed suit against two defendants: a property owner and her alleged liability insurer. The insurer was served with the petition, but plaintiff withheld service on the property owner. The insurer filed an answer on its own behalf within three years of suit being filed, but no action was taken in the suit by any party relative to the property owner within that three years. The Louisiana Supreme Court granted this writ application to determine whether plaintiff’s action against the property owner was abandoned pursuant to La. C.C.P. art. 561(A)(1). The court of appeal found the filing of an answer by the insurer within the three-year abandonment period was effective to interrupt the abandonment period as to the property owner. The Supreme Court held the filing of the insurer’s answer did not serve to interrupt the abandonment period as to the property owner; therefore the appellate court was reversed because plaintiff’s original action against the property owner was abandoned by operation of law. However, the Court found plaintiff’s underlying claims against the property owner, that were subsequently reasserted by amended petition, were not necessarily prescribed due to the potential interruption of prescription resulting from the pending suit against an alleged solidary obligor. Because a determination regarding prescription could not be made based on the existing record, the court of appeal’s ruling on the property owner’s exception of prescription was affirmed, and the matter remanded to the district court for an evidentiary hearing on that exception. View "Williams v. Foremost Ins. Co. et al." on Justia Law
Nationwide Insurance Company of America v. Knight
Kristina Knight agreed to an endorsement to her Nationwide automobile insurance policy providing the coverage in the policy would not apply to her husband. During the policy period, Danny Knight was tragically killed in a motorcycle accident. Knight, as personal representative of Danny's estate, recovered $25,000 in UIM coverage under Danny's motorcycle insurance policy with Progressive Casualty Insurance Company and $25,000 in UIM coverage under a policy with ACCC Insurance Company insuring a different vehicle Danny owned. Knight made a claim with Nationwide to recover an additional $25,000 in UIM coverage under her insurance policy. Nationwide denied the claim and filed this lawsuit asking the trial court to declare Nationwide did not have to pay the $25,000 because Danny was excluded from all coverages under the policy. On appeal, Knight claimed the endorsement excluding coverage for her husband violated public policy and Nationwide could not enforce it. The South Carolina Supreme Court found the exclusion was clear and unambiguous and was not in violation of any statute. Therefore, the Court held the exclusion was enforceable. View "Nationwide Insurance Company of America v. Knight" on Justia Law
Butler v. The Travelers Home
The United States District Court for the District of South Carolina certified a question to the South Carolina Supreme Court on whether a homeowner's insurance policy that did not define the term "actual cash value," an insurer could depreciate the cost of labor in determining the "actual cash value" of a covered loss when the estimated cost to repair or replace the damaged property includes both materials and embedded labor components. This issue arose in two cases in which the homes of Miriam Butler and Joseph Stewart were damaged in separate fires. Butler and Stewart each purchased a homeowner's insurance policy from one of the defendants, both of whom were subsidiaries of The Travelers Companies, Inc. Butler and Stewart elected not to immediately repair or replace their damaged property. Each thus elected not to receive replacement cost but instead to receive a cash payment for the ACV of the damaged property. The certified question addressed whether Travelers properly calculated the ACV payments Travelers offered to Butler and Stewart to settle their property damage claims. The Supreme Court responded affirmatively: “the fact the labor cost is embedded makes it impractical, if not impossible, to include depreciation for materials and not for labor to determine ACV of the damaged property. Rather, the value of the damaged property is reasonably calculated as a unit. Therefore, we answer the certified question "yes," because it makes no sense for an insurer to include depreciation for materials and not for embedded labor.” View "Butler v. The Travelers Home" on Justia Law
Verto Medical Solutions, LLC v. Allied World Specialty Insurance Co.
The Eighth Circuit reversed and remanded the district court's grant of the insurer's motion to dismiss, concluding that the policy is ambiguous as to whether the directors-and-officers-liability policy required an insurer to indemnify and defend a company and its chief executive officer against claims brought by investors. Therefore, the district court erred in finding that the policy unambiguously excluded coverage.In this case, the policy is reasonably open to at least two different constructions: the first is that Endorsement 11 deleted and replaced original D with new D, and then Endorsement 13 replaced new D with nothing. Another is the one adopted by the district court, which is that Endorsements 11 and 13 together replaced original D with new D. The court explained that, with one reasonable construction potentially covering contractual-liability claims and the other excluding them, the policy is ambiguous. Applying Missouri law, the court construed the ambiguity against the insurer. View "Verto Medical Solutions, LLC v. Allied World Specialty Insurance Co." on Justia Law
Episcopal Church in South Carolina v. Church Insurance Company of Vermont
In 2012, Bishop Lawrence sought to disaffiliate his South Carolina-based diocese from the Episcopal “Mother Church”. Some parishes followed suit. The Mother Church purported to remove Lawrence and selected a new bishop. The Disassociated Diocese and Parishes sued the Mother Church to clarify their property rights in diocesan. The Mother Church filed counterclaims and separately filed trademark and false-advertising claims. Both cases are ongoing.The Church Insurance Company, wholly owned by the Church Pension Fund, is a freestanding nonprofit affiliated with the Mother Church. Captive insurance companies may only cover the risks of their parent companies and related entities. Before the schism, the Company issued a Diocesan Program Master Policy, listing as “named insured” the Episcopal diocese and listing 56 participant parishes, including the now-Disassociated Parishes, in its declarations. Each parish has a separate, individualized insurance policy and paid premiums directly to the Company. The policies provide liability coverage for injuries arising out of “infringement of copyright, title, slogan, trademark, or trade name” and include a broad duty to defend. The Company has reimbursed the Disassociated Parishes’ defense costs in connection with both lawsuits.The Associated Diocese sued the Company, alleging breach of contract, bad faith, breach of fiduciary duty, and aiding and abetting breach of fiduciary duty. The Fourth Circuit affirmed the dismissal of that suit for lack of standing. The Company has not strayed beyond its limitations as a captive insurer or breached its obligations under the policies, so there is no injury traceable to such conduct. View "Episcopal Church in South Carolina v. Church Insurance Company of Vermont" on Justia Law
In re USAA General Indemnity Co.
In this insurance dispute, the Supreme Court denied a writ of mandamus compelling the trial court to render judgment in favor of Insurer on the jury's verdict, holding that the trial court did not abuse its discretion in declining to render judgment on the verdict.Insured sought underinsured motorist (UIM) benefits from Insurer. Insurer in this case declined to participate in a jury trial to establish the at-fault motorist's liability and demanded a separate trial on its liability under the UIM policy. Before trial on the UIM claim, the court commenced a jury trial on Insured's negligence claim against the at-fault motorist. The parties settled and the claim was dismissed without rendition of judgment on the jury's verdict. Insurer then argued that a separate trial on the UIM claim was no longer necessary because of the jury's findings and the settlement payment. The trial court denied Insurer's motion for judgment based on the jury verdict from the negligence trial. Insurer sought mandamus relief. The Supreme Court denied relief, holding (1) collateral estoppel did not bind Insured to a verdict that was not reduced to judgment; and (2) Insurer's post-dismissal consent to be bound by the negligence suit's outcome did not make the negligence verdict enforceable against Insured in the contract suit. View "In re USAA General Indemnity Co." on Justia Law
In re Allstate Indemnity Co.
The Supreme Court conditionally granted a petition for a writ of mandamus directing the trial court to vacate its order granting a motion to strike a counteraffidavit served under Tex. Civ. Prac. & Rem. Code 18.001 and precluding the offering party from contesting the reasonableness of the subject medical expenses at trial, holding that the trial court abused its discretion.In granting the motion to strike, the trial court concluded that the counteraffidavit failed to comply with the requirements of section 18.001. The court then prohibited the offering party from testifying regarding the reasonableness and necessity of the medical bills. Petitioner petitioned the Supreme Court for a writ of mandamus. The Supreme Court conditionally granted relief, holding that the trial court erred by striking the counteraffidavit and by granting relief that found no legal basis in section 18.001 for the purported failure to comply with the statute. View "In re Allstate Indemnity Co." on Justia Law
Travelers Property Casualty Company of America v. Ocean Reef Charters LLC
The district court held on summary judgment that, under Eleventh Circuit precedent, federal maritime law requires strict compliance with captain and crew warranties in a marine insurance policy. The district court concluded that, because Ocean Reef breached those warranties, there was no coverage for the loss of its yacht under a policy issued by Travelers.The Eleventh Circuit applied Wilburn Boat Co. v. Firearm’s Fund Ins. Co., 348 U.S. 310, 316 (1955), and concluded that there does not exist entrenched federal maritime rules governing captain or crew warranties in this case. Therefore, Florida law applies to determine the effect of Ocean Reef's breaches. The court reversed and remanded for further proceedings. View "Travelers Property Casualty Company of America v. Ocean Reef Charters LLC" on Justia Law