Justia Insurance Law Opinion Summaries

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Brown’s company, TME, owned the House of Blues recording studio in Memphis and leased a studio to Falls. Hanover issued separate insurance policies to TME and Falls. Intruders vandalized and burgled the studio, and committed arson. Hanover made advance payments to TME and Falls, then discovered that Brown had submitted false receipts and had been the target of several similar arson incidents. Hanover sued Brown, TME, and Falls, seeking recovery of the prepaid funds and a declaratory judgment. A jury returned a verdict against Brown but found that Falls was entitled to recover the full insurance coverage. Hanover unsuccessfully moved to overturn that verdict because TME was named as an additional insured on Falls’s policy and his policy voided coverage if “you or any other insured” misrepresented a material fact. Meanwhile, Falls sought monetary damages and declaratory relief against Brown and TME in Tennessee state court.Hanover filed an interpleader complaint against Brown, TME, and Falls in federal court, requesting that the court find the insurance award void under Tennessee public policy or, alternatively, determine to whom Hanover should pay the award. The district court enjoined Falls’s state court action, citing the Anti-Injunction Act, 28 U.S.C. 2283, The Sixth Circuit reversed. The Act allows an injunction only for necessity, not simply for efficiency. Because the district court proceedings were not in rem, an injunction was not “necessary” to aid the district court’s jurisdiction. View "Hanover American Insurance Co. v. Tattooed Millionaire Entertainment, LLC" on Justia Law

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Torgerson Properties, Inc. ("TPI") develops and operates hotels, restaurants, and conference centers in Minnesota and Florida. It was covered by an all-risk property insurance policy issued by Continental Casualty Co. from May 1, 2019, through May 1, 2020. the policy’s Business Interruption and Civil Authority/Ingress-Egress provisions. The Business Interruption clause “covers against loss resulting from necessary interruption of business caused by direct physical loss of or damage to covered property.”   TPI filed a claim under the policy for lost business income during the COVID pandemic. After Continental denied the claim, TPI sued for breach of contract. Continental moved to dismiss for failure to state a claim. The district court granted Continental’s motion, and TPI appealed. The Eighth Circuit affirmed, holding that the district court was correct to dismiss TPI’s breach of contract action for failure to state a claim.   The court reasoned that insurance provisions covering “direct physical loss of or damage to property” are not triggered unless “there [is] some physicality to the loss or damage of property.” Oral Surgeons, P.C. v. Cincinnati Ins. Co., 2 F.4th 1141 (8th Cir. 2021) (relying on Minnesota law).  TPI tried to distinguish this case from Oral Surgeons by alleging that the virus was actually present on its property. However, TPI failed to show that causal link. The contamination did not cause TPI’s business interruption; the shutdown orders did. TPI would have been subject to the exact same restrictions even if its premises weren’t contaminated. And the cause of TPI’s business interruption—governmental orders alone—is not a direct physical loss. View "Torgerson Properties, Inc. v. Continental Casualty Company" on Justia Law

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Plaintiff suffered serious injuries in an automobile accident and won over $12 million in a suit against the other driver. To recover the judgment, Plaintiff sued that driver’s insurance company on the theory that it acted in bad faith toward its insureds. The jury returned a verdict in the insurer’s favor, but Plaintiff argued that the district court abused its discretion by failing to give his proposed jury instruction.   The Eleventh Circuit reversed the district court’s ruling explaining that the district court’s instruction omitted the state law relevant to this theory of liability. The court explained that the district court instructed the jury on bad faith resulting from the failure to settle a claim. But Florida law provides—and Plaintiff argued at trial—that bad faith is also present when an insurance company fails to advise an insured about settlement offers and likely litigation outcomes. Further, Plaintiff’s proposed jury instruction correctly stated the legal basis for his failure-to-advise theory of liability, and the district court’s failure to give that instruction to the jury caused him prejudice. View "Dustin C. Brink v. Direct General Insurance Company" on Justia Law

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Plaintiffs-homeowners Dylan O’Malley-Joyce and Eileen Nash appealed a superior court order granting the summary judgment motion filed by defendant Travelers Home and Marine Insurance Company (the insurer), on their claims for damages and declaratory relief. The insured residence was damaged by two leaks — one in November 2017 and the other in early January 2018. The homeowners filed claims under the policy as to both leaks. Thereafter, the parties disagreed about the cost and scope of repairs. In November 2018, the insurer sought to settle the parties’ dispute by providing a contractor “who [was] willing and able to complete the work” and by “paying up to the replacement cost figures on the [contractor’s] estimates less the deductibles for each of the claims.” The policy’s appraisal provision provided, in pertinent part, that if the parties “fail to agree on the amount of loss, either may demand an appraisal of the loss.” Because the parties were unable to reach an agreement, the insurer demanded that they participate in the appraisal process set forth in the homeowners’ policy. In November 2019, the homeowners brought a two-claim complaint against the insurer. In one claim, the homeowners sought a declaratory judgment, and in the other, they sought damages for “breach of contract, bad faith, statutory violations.” Because, on appeal, the homeowners did not contest the grant of summary judgment on either their claim for declaratory judgment or their claim that the insurer violated certain statutes, the New Hampshire Supreme Court focused solely on their claims for breach of contract and breach of the implied covenant of good faith and fair dealing. Because the homeowners filed neither an objection to the insurer’s summary judgment motion nor a motion to reconsider the trial court’s order, the Supreme Court determined they failed to preserve their appellate arguments for review. Nonetheless, the Court reviewed their arguments for plain error, and finding no plain error, the Court affirmed. View "O'Malley-Joyce v. Travelers Home & Marine Insurance Co." on Justia Law

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The Supreme Court reversed the order of the circuit court disqualifying Stephen Goldman from further participation as the counsel of The Travelers Indemnity Company in a suit filed by the Board of Trustees of the University of Arkansas, holding that the circuit court abused its discretion.The Board, acting on behalf of the University of Arkansas for Arkansas System, brought this complaint against Travelers for breach of contract, declaratory judgment, and bad faith, alleging that it was entitled to benefits under its all-risk commercial insurance policy for damages it suffered during the coronavirus pandemic. After the circuit court entered its ruling disqualifying Goldman, a nonresident attorney, from further representing Travelers in this case Goldman and Travelers (together, Appellants) appealed, arguing that the circuit court erred by revoking Goldman's motion for admission pro hac vice. The Supreme Court agreed and reversed in part, holding that the circuit court's revocation of Goldman's pro hac vice status without prior notice or a reasonable opportunity to be heard violated due process requirements. View "Travelers Indemnity Co. v. Board of trustees of University of Ark." on Justia Law

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Appellant Marie Yammine, as former wife and primary beneficiary of a two million dollar life insurance policy issued by Respondent ReliaStar Life Insurance Company to her former husband, Dr. Jean Bernard, appealed a declaratory judgment finding the contingent beneficiary, Appellee Roland Ghoussoub, was entitled to the policy's death benefit. Dr. Bernard died after the trial court granted the parties' divorce but prior to final judgment on all issues. The trial court declared Yammine and Bernard were divorced and that 15 O.S.2011 § 178(A) operated to revoke her beneficiary designation to the death benefits. Whether Oklahoma's revocation-upon-divorce statute, 15 O.S.2011 § 178(A), applied when one party dies after the granting of the divorce but prior to final judgment on all issues, was a matter of first impression for the Oklahoma Supreme Court. The Court concluded Section 178(A) required a final judgment on all issues, and that the trial court erred by interpreting 15 O.S.2011 § 178(A) to revoke Yammine's beneficiary designation in Bernard's life insurance policy based on an order granting divorce when the final judgment on all issues remained pending at husband's death. The trial court's declaratory judgment was reversed, and this case was remanded for further proceedings. View "Ghoussoub v. Yammine" on Justia Law

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St. Paul Fire and Marine Insurance Company (St. Paul Fire & Marine) and multiple other appellants (collectively, the St. Paul Insurers or sometimes St. Paul) appealed a California trial court’s order staying their declaratory judgment insurance coverage action. The trial court issued the stay in recognition of a "bellwether case of national importance" that was ongoing in West Virginia (WV coverage action), which, like this, arose from the opioid prescription abuse and addiction crisis. The WV coverage action commenced in March 2017, nearly four years before plaintiffs filed their complaint here. At the time the trial court issued its stay, proceedings had progressed significantly in West Virginia. The trial court found that in this action and in the WV coverage action “some of the same insurance policies are at issue in both cases, and the West Virginia court will be interpreting at least one of St. Paul’s policies to determine whether they cover opioid litigation, an answer that presumably will be the same whether the underlying litigation is in West Virginia or some other state.” St. Paul challenged the trial court’s stay order, arguing it constituted an abuse of discretion. The California Court of Appeal concluded St. Paul failed to meet its burden to demonstrate an abuse of discretion, and affirmed the order. View "St. Paul Fire & Marine Ins. Co. v. AmerisourceBergen Corp." on Justia Law

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AFM ran 52 mattress stores in Indiana and Illinois. Motorists insured AFM with a policy covering loss of Business Income, Extra Expense, and loss due to actions of a Civil Authority. An exclusion applicable to all coverage stated: We will not pay for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease. During the COVID-19 pandemic, the governors of Illinois and Indiana ordered the closure of businesses. AFM was forced to cease business activities at all of its stores. AFM submitted a claim for coverage. Motorists denied it.AFM sought a declaratory judgment in Illinois state court. The judge dismissed the case with prejudice, based on the Virus Exclusion, rejecting a claim of “regulatory estoppel.” AFM claimed that Motorists misrepresented the Virus Exclusion to the Illinois Department of Insurance so that the regulators would approve it. The Seventh Circuit affirmed. Illinois does not recognize regulatory estoppel. The Virus Exclusion unambiguously precludes “civil authority” coverage. View "AFM Mattress Company, LLC v. Motorists Commercial Mutual Insurance Co." on Justia Law

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BDC lent $800,000 to a company owned by the Suggs, who personally guaranteed the loan and secured it with a $200,000 mortgage on their Shaker Heights home. Bank of America and MidFirst Bank held more senior mortgages on the home. The Suggs’ home suffered serious water damage from a burst pipe in 2014. State Farm insured the home for up to $352,130. State Farm denied their claim on the ground that the Suggs had failed to heat their home at a temperature required by their policy.The Suggs sued State Farm in an Ohio state court and sued all three lenders with mortgages on their home, explaining that these lenders “have an interest in the policy proceeds” because the policy entitled them to payment even if State Farm had a valid defense against the Suggs. BDC did not appear. After the case settled, the state court found that BDC had no right to the proceeds. BDC did not seek relief in the state court but filed a federal suit alleging that State Farm, its lawyers, and the Suggs’ lawyers colluded to defraud it. The district court dismissed the suit under Ohio’s claim-preclusion law. The SIxth Circuit affirmed. BDC cannot meet the demanding test required to attack the state court’s judgment in this collateral fashion. View "Business Development Corporation of South Carolina v. Rutter & Russin, LLC" on Justia Law

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The Supreme Court affirmed the judgment of the trial court granting summary judgment for Illinois Casualty Company in this declaratory judgment action, holding that a liquor liability exclusion in the relevant policy absolved Illinois Casualty of a duty to defend or indemnify its insured under its general business owners' policy.Illinois Casualty insured Big Daddy's Show Club. Third-parties filed a lawsuit against Big Daddy's and related entities (collectively, Parks defendants) claiming that Big Daddy's violated Indiana's Dram Shop Act, Ind. Code 7.1-5-10-15.5. Illinois Casualty field a separate declaratory judgment action seeking a declaration that it did not owe a duty to defend or indemnify the Parks defendants in the underlying lawsuit. The trial court granted summary judgment for Illinois Casualty. The Supreme Court affirmed, holding that Illinois Casualty did not owe a duty to defend or indemnify the Parks defendants under the relevant policies. View "Parks v. Illinois Casualty Co." on Justia Law