Novae issued Cunningham an insurance policy. While insured by Novae, Cunningham entered into an agreement with AP to provide claims-handling services. In 2004 AP sued Cunningham in Texas state court, alleging misrepresentation and negligently-handled claims, resulting in unwarranted or underpriced policy renewals. While that litigation was ongoing, AP filed for bankruptcy. Novae then denied Cunningham’s request for coverage and remained largely uninvolved in the state litigation because the policy did not obligate it to defend. In 2012 Cunningham and AP’s bankruptcy trustee entered into a settlement, including a stipulation to the entry of a $5.12 million judgment against Cunningham; an assignment to AP of Cunningham’s purported right to recover against Novae; and a covenant not to execute on the judgment against Cunningham. The settlement stated that Illinois law would govern its interpretation. The Texas court entered judgment in accordance with the settlement. APs bankruptcy trustee then sued Novae in Illinois, asserting the assigned rights. The Seventh Circuit affirmed summary judgment for Novae. In Texas “assignments of choses in action that tend to increase and distort litigation” violate public policy and are invalid. The type of settlement at issue is collusive and distorts the adversarial process. View "Hendricks v. Novae Corporate Underwriting, Ltd." on Justia Law

Novae issued Cunningham an insurance policy. While insured by Novae, Cunningham entered into an agreement with AP to provide claims-handling services. In 2004 AP sued Cunningham in Texas state court, alleging misrepresentation and negligently-handled claims, resulting in unwarranted or underpriced policy renewals. While that litigation was ongoing, AP filed for bankruptcy. Novae then denied Cunningham’s request for coverage and remained largely uninvolved in the state litigation because the policy did not obligate it to defend. In 2012 Cunningham and AP’s bankruptcy trustee entered into a settlement, including a stipulation to the entry of a $5.12 million judgment against Cunningham; an assignment to AP of Cunningham’s purported right to recover against Novae; and a covenant not to execute on the judgment against Cunningham. The settlement stated that Illinois law would govern its interpretation. The Texas court entered judgment in accordance with the settlement. APs bankruptcy trustee then sued Novae in Illinois, asserting the assigned rights. The Seventh Circuit affirmed summary judgment for Novae. In Texas “assignments of choses in action that tend to increase and distort litigation” violate public policy and are invalid. The type of settlement at issue is collusive and distorts the adversarial process. View "Hendricks v. Novae Corporate Underwriting, Ltd." on Justia Law

Plaintiff filed suit against defendants, alleging claims of breach of fiduciary duty, breach of contract, and negligence. The Eighth Circuit affirmed the district court's motion to dismiss the breach of contract and negligence claims because plaintiff failed to plead sufficient facts to state a plausible claim for breach of contract or negligence. In this case, the language of the policy was unambiguous in describing what the parties intended their contract to be—the policy itself and the written application for the policy. Because the loan forms plaintiff relied on to support the breach of contract claim were not part of the insurance policy, the claim failed. Likewise, the negligence claim failed because it relied on the loan forms being part of the insurance contract. View "Torti v. John Hancock Life Insurance Co." on Justia Law

A tree fell on Kaitlyn and Joshua. Kaitlyn died. She was pregnant. Doctors delivered the baby, but he died an hour later. Joshua survived with serious injuries. A state jury found the Somerset Housing Authority liable and awarded $3,736,278. The Authority belonged to the Kentucky Housing Authorities Self-Insurance Fund, which provided a policy with Evanston. Evanston sought a declaratory judgment limiting its liability under the Fund’s policy to $1 million. Meanwhile, through mediation of the state court case, Evanston agreed to pay the “policy limits” in return for an agreement to dismiss the state court action and release the Authority from further liability. Evanston claimed that $1 million was the coverage cap; the defendants claimed it was $2 to $4 million. The district court determined that there was complete diversity and ruled for Evanston on the merits. The Sixth Circuit affirmed. The district court properly aligned the parties given their respective interests in the primary dispute at the time of filing, so that diversity jurisdiction was not destroyed. The policy obligates Evanston to provide a maximum of $1 million of coverage per “occurrence,” with an aggregate limit of $2 million for more than one occurrence. The contract defines “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” When one tree falls at one time, that is one occurrence and one accident. View "Evanston Insurance Co. v. Housing Authority of Somerset" on Justia Law

After a jury found that Charter Oak was liable for breach of contract and deceit for its handling of plaintiff's underinsured motorist (UIM) claim, the district court partly granted judgment as a matter of law and approved some of the compensatory damages, as well as all of the punitive damages. The Eighth Circuit affirmed, holding that the independent duty rule did not bar plaintiff's deceit claim; there was sufficient evidence to support the jury's verdict that there was deceit and the deceit harmed plaintiff; the evidence supported the jury's finding that Charter Oak's breach of contract prevented plaintiff from submitting her UIM claim sooner and award of interest on UIM monies from the delay; the district court did not err by failing to conform plaintiff's pleadings, and properly nullified the award for mental and emotional harm; the district court properly applied South Dakota law and applied a 15% interest rate on the $900,000 payment of the UIM claim; and the evidence supported the award of punitive damages and the award was not excessive. View "Dziadek v. The Charter Oak Fire Ins." on Justia Law

After plaintiff was injured in a car accident while driving a loaner vehicle from Billion, she filed suit against Billion's insurer, Travelers, for coverage under the commercial insurance policy. The Eighth Circuit affirmed the district court's dismissal of the suit for failure to state a claim. Although plaintiff did not allege facts showing that her tort or punitive damages or attorneys fees would exceed $75,000, it was not legally impossible that she could recover at least that amount. Therefore, the district court had jurisdiction over the suit. The court held that, reading the endorsement together with the declarations page, the district court properly found the policy did not cover auto medical payments; because plaintiff was not insured under the auto medical coverage provision of the policy, the district court properly dismissed her remaining claims; and the district court did not abuse its discretion in denying her motions to reconsider or amend. View "Peterson v. The Travelers Indemnity Co." on Justia Law

Defendant-appellant Christopher Klick was seriously injured after suffering carbon monoxide poisoning while aboard a friend’s fishing boat. An exhaust pipe had broken off at the spot where it connected with the engine. As a result, the engine had been expelling carbon monoxide gas into the engine compartment rather than through the exhaust pipe and out behind the boat. When the engine compartment hatch from within the wheelhouse was opened, carbon monoxide flowed up into the wheelhouse. Klick quickly lost consciousness and fell into the engine compartment. He awoke there several hours later, severely burned from lying on the engine. He also suffered brain damage from the carbon monoxide. The gas killed the boat’s two other occupants, but Klick survived. Klick sued the boat dealer in state court. The dealer had an insurance policy from Travelers Property Casualty Company of America that required Travelers to pay for liabilities resulting from bodily injury. The policy, however, had a pollution exclusion providing that the policy did not cover liability for injuries arising out of the release, dispersal, or migration of certain pollutants. Travelers sued in federal court, seeking a declaration that the policy did not cover liability for Klick’s injuries. The district court granted summary judgment for Travelers. We conclude that the pollution exclusion applies, and we therefore affirm. View "Travelers Property Casualty v. Klick" on Justia Law

In December 2009, defendant Randell Blake was convicted of filing a false insurance claim in connection with a 2007 fire at his house. Subsequent to his criminal convictions, the trial court ordered defendant to pay restitution to his insurer, Safeco Insurance Company of America (Safeco). Defendant appealed the trial court’s restitution order, arguing the order should be vacated because a general release, signed by Safeco in a related civil case, relieved him of any duty to pay it restitution. He also argued the order should be vacated because the trial court failed to make findings regarding his ability to pay restitution. The Vermont Supreme Court found that restitution and civil damages originated within separate systems, were not substitutes for each other; a civil court’s award of damages to a plaintiff did not discharge the criminal court’s duty or authority to consider and order restitution. Therefore, a civil settlement or release cannot entirely preclude a criminal restitution order because: (1) the statutory obligation to impose restitution when necessary leaves no room for private parties to preclude a court from ordering it; (2) a release does not address the underlying purposes of restitution; and (3) the victim has no standing and is not a party in the restitution proceeding, and may seek a separate remedy in an action for civil damages. Here, defendant initiated a civil suit against Safeco for payment he claimed it owed him relating to the house fire and Safeco counterclaimed. The exchange of releases extinguished these competing civil claims. The release Safeco signed did not, however, preclude an order of restitution in the related criminal proceeding. The Supreme Court therefore affirmed the trial court’s determination on this matter; but reversed because the trial court by not considering his ability to pay. View "Vermont v. Blake" on Justia Law

The Fourth Circuit held that the district court correctly denied Applied Underwriters' motion to compel arbitration in a suit alleging that Applied Underwriters engaged in the business of insurance in Virginia without complying with Virginia insurance and workers' compensation laws. However, the court held that the district court reversibly erred in applying the doctrine of judicial estoppel to hold that the agreement between Applied Underwriters and plaintiff constituted an insurance contract for purposes of Virginia law. Therefore, the court affirmed in part, reversed in part, and remanded for further proceedings. View "Minnieland Private Day School v. Applied Underwriters Captive Risk Assurance Co." on Justia Law

McShane filed suit against Gotham for failing to pay its insurance claim related to the alleged improper installation of a fire protection and suppression system by one of McShane's subcontractors, Mallory. The Eighth Circuit affirmed the district court's grant of Gotham's motion to dismiss for failure to state a claim. The court held that McShane's statutory claims were properly dismissed because neither rests upon a private right of action; McShane failed to state a claim for which relief can be granted with regard to its breach of contract theories where McShane failed to allege a legal obligation to pay any judgment covered under the terms of the policy; and McShane failed to state a claim upon which relief could be granted based upon waiver or estoppel. View "McShane Construction Co. v. Gotham Insurance Co." on Justia Law