Justia Insurance Law Opinion Summaries

A plaintiff, seeking to secure retirement funds, sold an apartment complex in 2017 and was introduced to Ronald Hill, who represented himself as a financial advisor but was only licensed as an insurance producer. Hill persuaded the plaintiff to invest the sale proceeds in a product offered by Future Income Payments, LLC (FIP), and also to purchase an Indexed Universal Life (IUL) insurance policy, initially from Minnesota Life and later from Pacific Life. Hill proposed that the proceeds from the FIP investment would fund the premiums for the Pacific Life IUL policy. FIP was subsequently exposed as a Ponzi scheme, resulting in the plaintiff’s loss of the investment and inability to pay the insurance premiums.The plaintiff and other parties filed suit in the District Court of the Third Judicial District, Canyon County, Idaho, asserting claims including negligence against Hill and Pacific Life. By trial, only Hill and Pacific Life remained as defendants, with the plaintiff as the sole remaining claimant. The trial proceeded on a common law negligence claim. The jury found both Hill and Pacific Life negligent, determined Hill was acting as Pacific Life’s agent, and apportioned 60% of fault to Pacific Life and 40% to Hill. The district court entered judgments against Pacific Life, including joint and several liability with Hill for a portion of damages. Pacific Life appealed, challenging the district court’s denial of motions for directed verdict.The Supreme Court of the State of Idaho reviewed the appeal and held that, under Idaho law, Pacific Life owed no duty to protect the plaintiff from pure economic loss absent an applicable exception to the economic loss rule. The Court further found insufficient evidence to establish Hill acted as Pacific Life’s agent when marketing the FIP investment. The Court vacated the judgments against Pacific Life and remanded with instructions to enter judgment in favor of Pacific Life. View "Shelstad v. Pacific Life Insurance" on Justia Law

After a motor vehicle accident in October 2020, Maryann Thomas sought uninsured/underinsured motorist coverage from Liberty Mutual Insurance Company. She filed a lawsuit in March 2021. Liberty’s legal representation changed several times, with attorney transitions and withdrawals occurring between law firms in 2021 and 2022. Thomas sent requests for admission to Liberty’s previous counsel in June 2022, but Liberty’s new attorneys were not notified nor served with these requests. Thomas’s counsel did not follow up or inform the new attorneys about the requests, and Liberty did not respond.Thomas later moved for summary judgment, arguing that Liberty’s failure to respond meant the requests were deemed admitted under Oklahoma law, establishing liability for coverage. Liberty’s new counsel asserted they had no knowledge of the requests until Thomas moved for summary judgment a year later, asked the court to allow withdrawal of the admissions, and opposed summary judgment. The District Court of Oklahoma County granted summary judgment to Thomas based on deemed admissions, finding liability, and denied Liberty’s motion for summary judgment. The district court certified its order for immediate appeal.The Supreme Court of the State of Oklahoma reviewed the certified interlocutory order. It held that the district court abused its discretion by refusing to allow Liberty to withdraw the admissions. The Supreme Court found that permitting withdrawal would serve the presentation of the merits and that Thomas was not prejudiced, especially given the early stage of litigation and notice of disputed coverage. The Court reversed the district court’s order granting summary judgment to Thomas and remanded with instructions to allow Liberty to withdraw the admissions. View "THOMAS & GOZA v. LIBERTY MUTUAL INSURANCE CO." on Justia Law

A television production company maintained insurance coverage for its shows, including one chronicling the struggles of obese individuals to lose weight. In 2011, the insurer added an exclusion to the general liability portion of the policy, barring coverage for “any/all reality shows.” The company did not object to this exclusion. Years later, several participants or their families sued the production company for injuries allegedly arising from the show’s filming. The insurer refused to defend or indemnify the company, citing the “reality show” exclusion.The insurer brought a declaratory judgment action in the United States District Court for the Southern District of Texas, seeking confirmation that it had no duty to defend or indemnify. The production company counterclaimed for breach of contract, fraudulent inducement, and violations of Texas consumer protection statutes. The district court granted summary judgment to the insurer, finding that the exclusion unambiguously barred coverage for bodily injuries arising from reality shows like the one at issue. At a subsequent bench trial, the district court rejected the company’s fraud and statutory claims, finding no misrepresentation by the insurer and concluding the company could not have justifiably relied on any representation given its knowledge of the exclusion and the show’s nature.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed. The Fifth Circuit held that the company forfeited its argument about the ambiguity of "reality show" by not raising it in the district court and, in fact, previously represented the show as a “reality show.” The appellate court also found no clear error in the district court’s factual findings rejecting the fraud and consumer protection claims, noting substantial evidence of the company’s understanding of the exclusion. The district court’s judgment was affirmed in full. View "Megalomedia v. Philadelphia Indemnity" on Justia Law

A seven-year-old child named J.T. died after being physically restrained by care workers at a behavioral care center in Kentucky. The restraint, described as a “kneeling cradle,” was performed by employees of the center’s management company, Seven Counties Services, Inc. Following J.T.’s death, his estate filed a wrongful death lawsuit against the care center, Seven Counties, and other parties. Seven Counties sought defense and indemnity from its insurers, Mental Health Risk Retention Group (MHRRG) and Scottsdale Insurance Company, under its insurance policies, but both insurers denied coverage, citing exclusions for “professional services.”After the underlying wrongful death suit was filed, Hanover Insurance Group, which insured Uspiritus (the center’s operator), agreed to defend Uspiritus but declined coverage for Seven Counties, arguing that Seven Counties was not named as an additional insured after a written agreement expired. MHRRG and Scottsdale continued to deny coverage for Seven Counties, asserting that the restraint was a professional service excluded from coverage. The insurers then filed a declaratory judgment action in the United States District Court for the Western District of Kentucky. The district court granted summary judgment for Seven Counties as to the duty to defend but granted summary judgment for the insurers as to the duty to indemnify, finding the restraint was a professional service and thus excluded from indemnification.On appeal, the United States Court of Appeals for the Sixth Circuit reviewed the district court’s decision de novo. The Sixth Circuit affirmed the district court’s ruling, holding that the act of restraining J.T. constituted a professional service under Kentucky law, given the specialized training, required judgment, and regulatory oversight involved. Thus, the professional services exclusion in the insurance policy applied, and the insurers had no duty to indemnify Seven Counties for liability arising from the underlying wrongful death action. View "Scottsdale Ins. Co. v. Seven Cntys. Servs., Inc." on Justia Law

Eric Stupak, a pass-holder at a Wisconsin resort, was injured after using the resort’s tube slides during the summer of 2022. The slides were closed at the time, but the resort had not posted the “Ride Closed” sign or removed the tubes; instead, the protective bumpers on the slides were deflated. After playing disc golf, Stupak and two friends asked the manager if they could use the slides. The manager responded ambiguously, saying, “I’m not going to say anything.” The group proceeded to use the slides, and Stupak fell off, sustaining serious injuries.The United States District Court for the Western District of Wisconsin reviewed Stupak’s suit against the resort and its insurer. The district judge determined, as a matter of law, that Stupak had been a trespasser on the slides, which meant the resort could only be liable if it engaged in “willful, wanton, or reckless conduct.” The judge found insufficient evidence of recklessness and granted summary judgment for the defendants, without addressing other issues raised in the parties’ motions.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s grant of summary judgment de novo, applying Wisconsin substantive law. The appellate court agreed that Stupak was a trespasser, as he lacked express or implied permission to use the closed slides. However, the Seventh Circuit found that a reasonable jury could determine the resort’s actions were reckless, given the ambiguous response by the manager and the unsafe condition of the slides. The court vacated the district court’s summary judgment and remanded the case for further proceedings, allowing the district court to address additional arguments regarding assumption of risk and proximate cause. View "Stupak v Mont du Lac Snowsports, LLC" on Justia Law

A jury found that the defendant was negligent and awarded the plaintiff over $18.5 million in damages, which, after adding costs and interest, resulted in a judgment of more than $20 million. To stay enforcement of this judgment pending appeal, the defendant was required to post a bond under California law. The defendant, despite having about $1.75 million in assets, asserted that he could not obtain a bond in the statutorily required amount, which was over $30 million, and requested the trial court to waive or reduce the bond to the limit of his insurance policy ($1.25 million).The Superior Court of Sacramento County considered the defendant’s financial declaration and a supplemental declaration detailing the costs and collateral requirements for various bond levels from a bond broker. After evaluating these submissions and hearing arguments, the trial court found the defendant qualified for relief under Code of Civil Procedure section 995.240 and ordered him to post a reduced bond of $1.25 million. The plaintiff then filed a petition for writ of mandate or prohibition, challenging the trial court’s interpretation of “indigent” within the statute and the sufficiency of the evidence supporting the bond reduction.The Court of Appeal of the State of California, Third Appellate District, reviewed the trial court’s decision for abuse of discretion. The appellate court held that “indigent” under section 995.240 is not limited to those in extreme poverty but includes any person unable to obtain sufficient sureties, considering access to the judicial process. The trial court retains discretion to weigh all relevant factors, including the nature of the obligation and the potential harm to the beneficiary. The appellate court also found no evidentiary error in the trial court’s consideration of the defendant’s declarations. Accordingly, the petition was denied, and the trial court’s order was affirmed. View "Guzman v. Super. Ct." on Justia Law

A hailstorm caused damage to the roofs of nine condominium units owned by a homeowners’ association in Minnesota. The damage was mainly to roof-valley metals, which required the replacement of surrounding shingles. The association and its insurer, State Farm, agreed that repairs were necessary, but disagreed on whether available replacement shingles met the policy requirement of being of “like kind and quality.” This determination would affect whether State Farm needed to pay for full roof replacement or just repairs to the damaged sections.To resolve the dispute, the association invoked the insurance policy’s appraisal provision. A three-member panel was formed, consisting of appraisers selected by each party and an umpire. The panel inspected the site and evaluated the replacement shingles. By a two-to-one vote, it awarded $52,482.81 as the total replacement cost, rejecting a more expensive full reroofing. The panel’s answers to clarification questions about the appearance of the shingles caused confusion, but further clarification revealed that all the replacement shingles were the same, with differences in appearance attributed to factors like shading or fading.The United States District Court for the District of Minnesota reviewed the appraisal award, sought clarification from the panel, and ultimately granted summary judgment in favor of State Farm, confirming the award. On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the grant of summary judgment de novo. The court held that, under Minnesota law, appraisal awards are given every presumption of validity and are binding unless ambiguous. The panel’s award was clear and not ambiguous, and the panel had settled the dispute over whether the replacement shingles were of “like kind and quality.” The Eighth Circuit affirmed the district court’s judgment, confirming the appraisal award and rejecting further review of the adequacy of the amount. View "Jamestown Villas v. State Farm" on Justia Law

A dentist applied for benefits under his individual disability insurance policy after suffering impairments to his hip and back. While his claim was under review, he received payments from his insurer for over a year. During that period, he earned income through part-time teaching and performing duties for two professional dental associations. After discovering this income, the insurer terminated his benefits, determining that his continued work qualified as a “gainful occupation” and thus he did not satisfy the policy’s requirement for “total disability.”The dentist subsequently filed suit in the United States District Court for the Northern District of Illinois, Eastern Division, alleging breach of contract and seeking statutory penalties for bad faith under the Illinois Insurance Code. Both parties moved for summary judgment. The district court granted summary judgment in favor of the insurer, finding that the policy’s language was unambiguous and that the dentist was, as a matter of law, engaged in a gainful occupation based on the undisputed facts.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s ruling de novo. The appellate court held that the policy unambiguously required the claimant to show not only inability to perform his prior occupation but also that he was not engaged in any other gainful occupation. The court concluded that “gainful occupation” was not ambiguous and that the dentist’s nonclinical work, which generated substantial income, disqualified him from benefits. The court also rejected the contention that “gainful occupation” should be defined as earning at least 60% of pre-disability income, finding no support for that standard in the policy language. The Seventh Circuit affirmed the district court’s judgment for the insurer. View "Caraba v Paul Revere Life Insurance Co." on Justia Law

Transportation Consultants, Inc. owned property in Louisiana insured under a surplus lines commercial property policy issued by a group of domestic and foreign insurers. The policy contained an arbitration clause and a provision stating it should be construed as separate contracts between the insured and each underwriter. Following Hurricane Ida, a dispute arose regarding coverage, prompting Transportation Consultants to file suit against all insurers in Louisiana state court.The insurers removed the case to the United States District Court for the Eastern District of Louisiana, relying on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards to assert federal jurisdiction. The district court initially granted the insurers' motion to compel arbitration and stayed the litigation. After the Louisiana Supreme Court decided Police Jury of Calcasieu Parish v. Indian Harbor Insurance Co., the plaintiff moved for reconsideration. The district court then reversed its earlier decision as to the domestic insurers, finding that Louisiana law prohibits arbitration clauses in insurance contracts between Louisiana parties, and lifted the stay as to the domestic insurers. The order compelling arbitration and staying litigation against the foreign insurers remained.On appeal, the United States Court of Appeals for the Fifth Circuit held that, following its precedent in Town of Vinton v. Indian Harbor Insurance Co. and Crescent City Surgical Operating Co. v. Interstate Fire & Casualty Co., the arbitration clauses in contracts with the domestic insurers are unenforceable under Louisiana law and equitable estoppel cannot be used to compel arbitration. The court affirmed the district court’s denial of arbitration as to the domestic insurers but vacated the lifting of the stay. The case was remanded for the district court to reconsider, in light of updated precedent and additional briefing, whether litigation against the domestic insurers should be stayed pending completion of arbitration with the foreign insurers. View "Transportation Conslt v. Certain Undwr" on Justia Law

Sonia Breslow purchased a $250,000 watch from Jacob & Company, which was shipped from New York to the Iron Horse Golf Club in Montana. The Club repackaged the shipment and sent it via Federal Express (FedEx) “priority overnight” to a UPS store in Arizona. The shipping label did not declare a value for the package. Video evidence showed that after FedEx took possession, the yellow bag containing two boxes was no longer secured by a zip tie, and at the Scottsdale facility, an employee removed one box from the bag. Ultimately, FedEx delivered the bag to the UPS store, but the watch was missing. Sonia filed an insurance claim, and Pennsylvania Insurance paid the Breslows the purchase price, then sued FedEx as their subrogee.Pennsylvania Insurance initially brought claims for negligence, conversion, unjust enrichment, breach of contract, and civil theft in Nebraska state court. FedEx removed the case to the United States District Court for the District of Nebraska. The district court ruled that the Airline Deregulation Act preempted the claims for negligence, unjust enrichment, and civil theft, dismissed the conversion claim for lack of evidence, and found breach of contract but limited FedEx’s liability under the shipping contract to $100. The case proceeded to a bench trial, where the court found the breach and upheld the liability limit, entering judgment for Pennsylvania Insurance in the amount of $100.The United States Court of Appeals for the Eighth Circuit reviewed the case and affirmed the district court’s rulings. The court held that the Airline Deregulation Act preempts state-law claims relating to FedEx’s package handling and transportation services. It found no error in the district court’s dismissal of the conversion claim and upheld the liability limit of $100, concluding that the Club had adequate notice and opportunity to purchase greater coverage. The court also affirmed that Pennsylvania Insurance had standing as subrogee and that FedEx breached the contract. View "Pennsylvania Insurance Co. v. Federal Express Corp." on Justia Law