Justia Insurance Law Opinion Summaries

First Solar Electric LLC was constructing a solar power plant in Georgia when five heavy rain events damaged the project. First Solar held a builders risk insurance policy with Zurich American Insurance Company, which covered both water and flood damage but applied different deductibles: $100,000 for water damage and $2.5 million for flood damage. Zurich initially determined the damage was water-related and issued three advance payments to First Solar, applying the lower deductible and not reserving rights to later change its determination. Subsequently, Zurich reversed its coverage decision, classified the events as floods, and asserted that the higher deductible applied, concluding First Solar’s losses did not exceed the deductible and closing the claim.The United States District Court for the Middle District of Georgia reviewed the dispute. It granted partial summary judgment to both parties, finding that, absent waiver, the flood deductible applied, but Zurich had waived its right to enforce the flood deductible for all events by its conduct. The court also ruled that the policy’s suit-against-the-company provision did not bar First Solar’s suit as untimely. The case proceeded to a jury trial solely on damages, after which the court denied Zurich’s motion to strike a damages witness and entered final judgment in favor of First Solar.On appeal, the United States Court of Appeals for the Eleventh Circuit held that: (1) Georgia law permits an insurer to waive a deductible provision that limits payment, but not coverage; (2) Zurich waived the flood deductible for the first three rain events by its unconditional payments and conduct, but a genuine factual dispute remains as to waiver for the last two events; (3) the suit-against-the-company provision is not a suit-limitation bar; (4) the district court did not abuse its discretion in denying sanctions; and (5) absent waiver, the flood deductible applies. The judgment was affirmed in part, vacated in part, and remanded for further proceedings. View "Zurich American Insurance Co. v. First Solar Electric LLC" on Justia Law

A homeowner held an insurance policy with an insurer from April 2019 to April 2020. After experiencing water damage, she filed a claim in May 2019. The insurer paid part of the claim, but the homeowner disputed the amount and requested additional payment based on independent repair bids. On July 1, 2021, a new Florida statute went into effect requiring claimants to provide presuit notice to the state Department of Financial Services before suing an insurer over a property policy. In August 2021, the homeowner filed suit against her insurer over the 2019 claim without providing this notice.The trial court, a Florida circuit court, dismissed her complaint without prejudice, holding that the presuit notice requirement applied retroactively to her claim, even though her policy was issued before the statute’s effective date. On appeal, the Sixth District Court of Appeal reversed, finding no clear legislative intent for retroactive application of the statute. The appellate court concluded that the statute’s language about applying to “all suits” did not provide a clear command for retroactivity and rejected contrary reasoning from the Fourth District Court of Appeal in Cole v. Universal Property & Casualty Insurance Co.The Supreme Court of Florida reviewed the case to resolve a conflict among the district courts of appeal. The Court held that the presuit notice requirement in section 627.70152, Florida Statutes, does not apply retroactively to insurance policies issued before the statute’s effective date. The Court found no clear legislative intent for retroactive application in the statutory text, and it concluded that the statute significantly altered substantive rights and obligations. The Supreme Court affirmed the Sixth District’s decision and disapproved the Fourth District’s contrary holding. View "Universal Property & Casualty Insurance Company v. Hughes" on Justia Law

After a car accident in Kentucky, an injured party’s insurer paid $10,000 in basic reparation benefits (PIP/BRB) for his medical expenses. Before the injured party’s bodily injury claims against the at-fault driver were resolved, his insurer demanded—and received—a $9,000 subrogation payment from the at-fault driver’s liability insurer. Later, the injured party settled his personal injury claim with the at-fault driver for the remaining $41,000 of the liability policy limits and signed a release. He then sued his own insurer, seeking repayment of the $9,000, arguing that the subrogation payment was premature under Kentucky’s Motor Vehicle Reparations Act because he had not been fully compensated (“made whole”).In the Ohio Circuit Court, the insurer moved to dismiss for failure to state a claim. The trial court ultimately dismissed the action, reasoning that any claim for repayment should be against the at-fault driver’s insurer, not the injured party’s own insurer, as there was no statutory or contractual obligation requiring the BRB carrier to reimburse the injured party. The court rejected arguments based on unjust enrichment and bad faith.The Kentucky Court of Appeals reversed and remanded, holding that the injured party could pursue repayment from his own insurer for the premature subrogation, possibly under the implied covenant of good faith and fair dealing, and suggested KRS 446.070 might provide a remedy.The Supreme Court of Kentucky reversed the Court of Appeals. It held that Kentucky law does not impose a duty on the BRB (PIP) carrier to ensure the injured party is made whole before accepting subrogation, and any risk of premature payment falls on the liability carrier, not the BRB carrier. The Court also held that KRS 446.070 and unjust enrichment do not support a cause of action for repayment against the BRB carrier, nor do claims of bad faith. The judgment of the trial court was reinstated. View "ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY V. JARNIGAN" on Justia Law

A contractor, TL Veterans Construction, Inc., was hired by the California Military Department (CMD) to renovate buildings at a military base, including asbestos abatement work. TL Veterans had previously obtained insurance policies from Scottsdale Insurance Company based on applications that materially misrepresented the size and nature of its projects, including falsely denying involvement with asbestos. During the renovation, TL Veterans caused a fire that destroyed one of the buildings. Both TL Veterans and CMD, as an additional insured, sought coverage under the insurance policies, but Scottsdale discovered the misrepresentations and rescinded the policies.The Superior Court of Orange County granted summary judgment for Scottsdale, declaring that the insurance policies had been properly rescinded and were void from inception. CMD had cross-claimed for promissory estoppel and declaratory relief, but after the court’s summary judgment ruling, dismissed its remaining claims. CMD appealed, arguing that Scottsdale had waived its rescission right by failing to investigate a prior claim that might have revealed the misrepresentations, and that CMD’s reliance on the policies should prevent rescission.The California Court of Appeal, Fourth Appellate District, Division Three, affirmed the trial court’s judgment. The appellate court held that Scottsdale did not waive its right to rescind because the prior claim did not reveal the asbestos misrepresentation, which was an independent and material basis for rescission. The court also held that California Insurance Code section 650 permits an insurer to rescind a policy based on material misrepresentations at any time before a lawsuit to enforce the policy is filed, and this right is not lost even if a third party (here, CMD as an additional insured) relied economically on the policy. The judgment in favor of Scottsdale was affirmed. View "Scottsdale Ins. Co. v. California Military Dept." on Justia Law

A pharmacy, operated by a licensed pharmacist, improperly compounded a prescription medication for a patient after a technician mistakenly entered a formula with the wrong dosage. The patient consumed the medication, suffered severe poisoning, required intensive medical treatment, and subsequently filed suit against the pharmacy and the pharmacist. She alleged negligence, wantonness, product liability, breach of the Alabama Extended Manufacturer’s Liability Doctrine, breach of implied warranty of merchantability, and failure to warn. The pharmacy’s liability insurer, Nationwide, declined coverage, citing a professional-services exclusion in its policy. The pharmacy had previously been covered by a different insurer, Zurich, whose policy did not exclude such claims.After the patient obtained a substantial judgment against the pharmacy, a separate action was brought to determine whether the Nationwide policy covered the claim and whether the insurance agents who procured the policy for the pharmacy had been negligent or wanton in failing to secure proper coverage. The Tuscaloosa Circuit Court entered summary judgment for Nationwide, finding the professional-services exclusion applied, and for the insurance agents, concluding the pharmacy was contributorily negligent for not reading its policy.The Supreme Court of Alabama reviewed the case. It held that the professional-services exclusion in the Nationwide policy unambiguously barred coverage for all claims, including product-liability claims, arising from the compounding of medication, which is a professional service under Alabama law. The Supreme Court also held that the pharmacy was contributorily negligent as a matter of law for failing to read its insurance policy, which expressly excluded the type of coverage in question, thereby precluding any claim for negligent failure to procure insurance. The summary judgments in favor of Nationwide and the agency defendants were affirmed. View "OMS Pharmacy, Inc. v. Nationwide Property and Casualty Insurance Company" on Justia Law

A licensed psychologist faced disciplinary action after being convicted in 2018 of insurance fraud related to a workers’ compensation claim. The Board of Psychology issued an accusation in 2019 based on the conviction and also alleged dishonesty in her 2007 license application for failing to disclose a 1984 conviction. Following a two-day evidentiary hearing in 2020, the Board found cause to discipline her solely for the insurance fraud conviction, dismissed the charge related to the 1984 conviction, and placed her on probation for five years with various conditions, holding the probation in abeyance during periods when she was not practicing in California.After moving out of state and returning, the psychologist petitioned the Board in 2023 for early termination of her probation. The Board held an evidentiary hearing in 2024, found she failed to provide clear and convincing evidence of rehabilitation—citing her lack of insight and responsibility for the insurance fraud conviction—and denied the petition. The Board noted her probation had been tolled due to her absence and non-practice. She then sought judicial review of both the 2021 probation decision and the 2024 denial of early termination in the Superior Court of Sacramento County.The Superior Court denied her petition, finding the challenge to the 2021 decision untimely and concluding the 2024 denial was supported by substantial evidence. On appeal, the California Court of Appeal, Third Appellate District, affirmed the trial court’s judgment. The Court held that the trial court properly applied the substantial evidence test to review the Board’s denial of early termination, as this was analogous to review of an agency’s decision on reinstatement rather than discipline. The Court found the Board did not abuse its discretion and rejected arguments regarding procedural unfairness and relevance of the 1984 conviction. The judgment was affirmed. View "Bombardini v. Board of Psychology" on Justia Law

A couple began constructing a residential barndominium and lived in an RV on their property in Sandpoint, Idaho. After a heavy snowstorm caused the collapse of the partially constructed dwelling and damaged utility connections to their RV, they made claims under their State Farm homeowner’s insurance policy for structural losses, personal property damage, demolition and outbuilding losses, additional living expenses (ALE), and alleged unreasonable delays. State Farm paid over $120,000 but denied further claims, citing lack of required documentation and inventories.The couple filed suit in the District Court of the First Judicial District, Bonner County, alleging breach of contract, bad faith, and negligent adjustment. State Farm moved for partial summary judgment, arguing the plaintiffs failed to substantiate their losses and did not incur ALE as defined under the policy. The district court struck several exhibits as inadmissible hearsay, including a letter from a medical expert and a timeline of events, and granted summary judgment to State Farm. The court concluded that the plaintiffs had not complied with policy conditions, failed to substantiate their claimed losses, and that their claims were fairly debatable.On appeal, the Supreme Court of the State of Idaho reviewed evidentiary rulings for abuse of discretion and the grant of summary judgment de novo. The Court affirmed the district court’s exclusion of evidence as inadmissible hearsay and lack of personal knowledge. It held that the plaintiffs did not establish entitlement to ALE, failed to substantiate structural and personal property losses, and provided insufficient evidence of bad faith or negligent adjustment. The judgment of the district court was affirmed, with State Farm awarded costs on appeal. View "Espinosa v. State Farm" on Justia Law

The plaintiff, owner of a business, purchased a commercial automobile insurance policy for her company and paid an additional premium for an endorsement that extended underinsured motorist (UIM) coverage to herself and listed family members when occupying vehicles not owned by the company. She was injured in a car accident while driving her personally owned vehicle, recovered policy limits from her own insurer and the other driver’s insurer, but her damages were not fully covered. She then sought UIM benefits under her company’s policy, which were denied by the insurer because she was driving her own car.The Superior Court of the State of Delaware granted summary judgment in favor of the insurer. The court reasoned that the plaintiff was not entitled to UIM coverage under the endorsement because she was not driving a company-owned vehicle for business purposes. It further held that the Delaware Supreme Court’s ruling in Frank v. Horizon Assurance Co.—which invalidated certain vehicle-based UIM exclusions—did not apply since the named insured on the policy was the company, not the plaintiff. The plaintiff appealed the decision.The Supreme Court of the State of Delaware reviewed the Superior Court’s grant of summary judgment de novo. It found the endorsement unambiguously excluded UIM coverage when the individual named on the schedule occupied a vehicle owned by that individual or a family member. However, the court held that this vehicle-based exclusion was unenforceable under Delaware law, specifically under the precedent set by Frank v. Horizon Assurance Co., which established that UIM coverage is personal to the insured and not vehicle-specific. Consequently, the Supreme Court reversed the Superior Court’s judgment and remanded the case for further proceedings. View "Natalie Ayers v. Travelers Casualty Insurance Company" on Justia Law

Two individuals formed a limited liability company to purchase a jet, with one contributing funds that he had embezzled from a client. The company secured an aircraft insurance policy from an insurer, which later renewed the policy without investigating the source of funds used for the purchase. Eventually, the United States government seized the jet in connection with criminal charges against the member who committed the embezzlement. The other member had no knowledge of the crime.After the seizure, the company filed a claim with the insurer, seeking compensation under the policy for the loss. The insurer denied coverage and rescinded the policy, citing concealment of the material fact that embezzled funds were used to purchase the aircraft. The company sued for breach of contract and breach of the implied covenant of good faith and fair dealing. Following trial in the Superior Court of Santa Barbara County, the trial court denied the insurer’s motion for judgment based on concealment, and the jury found in favor of the company, awarding substantial damages, including punitive damages.The Court of Appeal of the State of California, Second Appellate District, Division Six, reviewed the case. Applying a de novo standard, the court held that an applicant for insurance has an affirmative duty to disclose material facts, even if the insurer does not specifically inquire about them. The court determined that the use of embezzled funds was a material fact, and the manager’s knowledge of the embezzlement was imputed to the company. Therefore, the insurer was entitled to rescind the policy. The judgment in favor of the company was reversed, and the company’s cross-appeal was dismissed. View "Passport 420, LLC v. Starr Indemnity & Liability Co." on Justia Law

Homeowners jointly owning a residence in Sherman Oaks purchased a comprehensive, all-risk homeowners insurance policy from an insurer. In 2019, construction on a neighboring upslope property paused before completion of a retaining wall. During a subsequent rainstorm, runoff was diverted by the incomplete wall, causing water, mud, and debris to damage the insured property, rendering it uninhabitable. The homeowners filed a claim with their insurer, which initially denied coverage based on an earth movement exclusion, then reopened the claim after the homeowners contested the denial. Although insurer representatives allegedly told the homeowners the loss was covered, the insurer ultimately denied the claim, citing multiple policy exclusions including inadequate construction, weather, and acts or decisions exclusions.The homeowners sued the insurer in the Superior Court of Los Angeles County for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional infliction of emotional distress (IIED), and fraud based on the denial of their claim and representations made during the investigation. The insurer moved for summary judgment, arguing that policy exclusions precluded coverage as a matter of law and that the evidence did not support the fraud claim. The trial court concluded that the loss was subject to one or more policy exclusions, that estoppel could not create coverage where it did not exist, and that no triable issues remained as to the other causes of action. The court granted summary judgment in favor of the insurer.On appeal, the California Court of Appeal, Second Appellate District, Division One, affirmed the trial court’s judgment. The court held that all possible efficient proximate causes of the homeowners’ loss triggered exclusions in the policy, that estoppel could not create coverage, and that the evidence did not support the fraud or bad faith claims in the absence of coverage. View "Linsao v. First American Property & Casualty Ins. Co." on Justia Law