Justia Insurance Law Opinion Summaries

Flameproof, a distributor of fire retardant and treated lumber (FRT lumber), maintained liability insurance through Lexington, covering liability for "property damage” that is “caused by an occurrence that takes place in the coverage territory.” “Occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” “Property damage” is “physical injury to tangible property, including all resulting loss of that property,” or loss of use of property that is not physically injured. Three lawsuits arose from Flameproof’s sale of lumber to Minnesota-based contractors. The contracts called for FRT lumber meeting the requirements of the International Building Code (IBC). The complaints alleged that Flameproof “unilaterally” decided to deliver its in-house FlameTech brand lumber, which purportedly was not IBC-compliant. After the material was installed, the owners discovered that the lumber was not IBC-certified. Flameproof “admitted” that it had shipped FlameTech lumber rather than the FRT lumber advertised on its website and ordered. The FlameTech lumber was removed and replaced, damaging the surrounding materials. The lawsuits alleged negligent misrepresentation, fraudulent misrepresentation, deceptive business practices, false advertising, consumer fraud, breach of warranties, and breach of contract. Lexington sought a ruling that it owed no duty to defend Flameproof. The Seventh Circuit affirmed summary judgment for Lexington. The underlying complaints do not allege an “occurrence”—or accident—as required to trigger Lexington’s duty to defend under the policy. View "Lexington Insurance Co. v. Chicago Flameproof & Wood Specialties Corp." on Justia Law

Guerline Felix’s vehicle collided with Brian Richards’ vehicle in New Jersey. Richards was insured under a New Jersey automobile insurance policy issued by AAA Mid-Atlantic Insurance Company (AAA). The policy provided bodily injury (BI) liability coverage, as well as uninsured and underinsured motorist (UM/UIM) coverage. Felix was insured by the Government Employee Insurance Company (GEICO) under a policy written in Florida. That policy provided up to $10,000 in property liability and personal injury protection (PIP) benefits, but it did not provide any BI liability. Felix sued Richards for personal injuries, and, in a separate action, Richards sued Felix and AAA for personal injuries. AAA then filed a third-party complaint against GEICO, claiming that GEICO’s policy was automatically deemed to include $15,000/$30,000 in BI coverage and that payment would eliminate the claim for UM/UIM coverage by AAA. The motion court determined that the New Jersey "deemer" statute applied to GEICO’s policy, rejecting the argument that the statute created a carve-out for BI coverage based upon the basic policy, as well as GEICO’s constitutional challenge. The Appellate Division affirmed, and the New Jersey Supreme Court granted the petition for certification filed by GEICO. The Supreme Court concluded after review that the deemer statute did not incorporate by reference the basic policy’s BI level for insurers, like GEICO, to which the second sentence of N.J.S.A. 17:28-1.4 applied. From the perspective of the insurers’ obligation, the required compulsory insurance liability limits remained $15,000/$30,000. As to the equal protection claim, New Jersey insureds were the ones who had a choice to purchase less than the presumptive minimum BI amount. The obligation of in-state insurers to offer and provide that minimum was the same as the obligation imposed under the deemer statute’s second sentence on authorized insurers writing an out-of-state policy. "The equal protection claim therefore falls flat," and the Appellate Division's judgment was affirmed. View "Felix v. Richards" on Justia Law

RW Trucking pumped fracking water from frac tanks at oil-well sites and hauled it away for disposal. Jason Metz worked as a driver for RW Trucking. When his trailer reached capacity, Metz turned off the pump and disengaged the hose. According to Metz, he then left a ticket in the truck of another well-site worker, David Garza. Metz testified that as he began walking back to his truck’s cab from its passenger side, and about sixty feet from the frac tanks, he flicked his lighter to light a cigarette. This ignited fumes and caused a flash fire that injured Garza (as well as Metz and another nearby RW Trucking employee). In this appeal and cross-appeal, the issue presented for the Tenth Circuit's review was which of two insurers’ insurance policies covered bodily injuries. Carolina Casualty Insurance Company and Burlington Insurance Company had earlier issued policies to RW Trucking. By design, the two policies dovetailed each other’s coverage. Each insurer contended that the other was solely liable to indemnify the insureds, RW Trucking and Metz, for damages arising from Garza’s bodily injuries suffered in the fire. After Burlington and Carolina jointly settled Garza’s claims, with each reserving its rights against the other, Carolina filed this declaratory-judgment action, contending that it had no duty to defend or indemnify RW Trucking or Metz, and seeking reimbursement of its paid portion of Garza’s settlement. On cross motions for summary judgment, the district court ruled: (1) that Carolina owed a duty to defend but not a duty to indemnify; (2) Burlington owed a duty to indemnify (and so implicitly, also a duty to defend); (3) that Carolina paid its share of the settlement as a volunteer, disabling itself from recovering its portion of the settlement payment from Burlington; and (4) that Carolina owed Burlington for half the total defense costs. After review, the Tenth Circuit reversed the district court as to the duty-to-defend and voluntary-payment issues, and affirmed on the duty-to-indemnify issue. The Court remanded with the instruction that the district court vacate its judgment granting Burlington reimbursement of half its defense costs. View "Carolina Casualty Ins. Co. v. Burlington Ins. Co." on Justia Law

In this insurance dispute, the Supreme Court reversed the orders and judgment of the circuit court in favor of Edna Lyle Lovelace, holding that the circuit court erred in determining that Shelter Mutual Insurance Company's policy language excluding coverage for an intentional act, as applied to an innocent co-insured, is void against public policy. Shelter Mutual determined that Lovelace's husband, Frank Williams, caused the fire that destroyed Lovelace's home and its contents. Williams did by suicide inside the home and left a suicide note before the fire started. Shelter Mutual denied coverage to Lovelace in accordance with an exclusion precluding coverage for an intentional act. Lovelace brought this action, arguing that the policy language allowing Shelter Mutual to deny a claim by an innocent insured because of actions taken by another insured was void as against public policy. The circuit court ruled that the exclusion was void as against public policy and entered judgment against Shelter Mutual. The Supreme Court reversed, holding that the intentional-act exclusion as applied to an innocent co-insured was not void as against public policy. View "Shelter Mutual Insurance Co. v. Lovelace" on Justia Law

In an earlier appeal, the Tenth Circuit Court of Appeals ruled that Wyoming’s anti-indemnity statute would not defeat possible insurance coverage to an additional insured. In this second appeal and cross-appeal, the issue presented for the Court's review centered on whether the district court correctly ruled that additional-insured coverage existed under the applicable insurance policies; whether the district court entered judgment for the additional insured in an amount greater than the policy limits; and whether the district court correctly ruled that the additional insured was not entitled to prejudgment interest and attorneys’ fees. Ultra Resources, Inc. held a lease for a Wyoming well site. In January 2007, Ultra contracted with Upstream International, LLC under a Master Service Agreement to manage the well site. The Ultra-Upstream contract required Upstream to obtain insurance policies with a stated minimum amount of coverage for Ultra and Ultra’s contractors and subcontractors. To do so, Upstream obtained two policies from Lexington Insurance Company - a General Liability Policy (“General Policy”) and a Commercial Umbrella Policy (“Umbrella Policy”). Lexington issued and delivered the two policies in Texas. Ultra contracted with Precision Drilling (“Precision”) to operate a drilling rig at the well site. Precision maintained a separate insurance policy with Lloyd’s of London (“Lloyd’s”), covering Precision for primary and excess liability. Upstream employed Darrell Jent as a contract management of some Ultra well sites. Jent assumed that Precision employees had already attached and tightened all A-leg bolts on a rig platform. In fact, Precision employees had loosened the A-leg bolts (which attach the A-legs to the derrick) and had not properly secured these bolts. After supervising the pin removal, Jent had just left the rig floor and reached “the top step leading down from the rig floor” when the derrick fell because of the “defectively bolted ‘A- legs’ attaching the derrick to the rig floor.” Jent was seriously injured after being thrown from the steps, and sued Precision for negligence. Precision demanded that Ultra defend and indemnify it as required by the Ultra-Precision drilling contract. Ultra, in turn, demanded that Upstream defend Precision under the insurance policies required by the Ultra-Upstream Contract. The Tenth Circuit concluded the district court ruled correctly on each issue presented, so it affirmed. View "Lexington Insurance Company v. Precision Drilling Company" on Justia Law

The Supreme Court reversed the order of the district court denying as untimely Defendant's motion for substitution of judge, holding that the substitution motion was timely because federal law halts any proceedings in the state court once a notice of removal is filed unless and until the case is remanded. Plaintiffs sued Defendant in the Seventh Judicial District Court based on Defendant's denial of an insurance claim. After a summons was issued and served upon Defendant, Defendant filed a notice of removal to the United States District Court for the District of Montana on the basis of diversity of citizenship. The federal district court granted Plaintiffs' motion for remand to state court after determining that the parties lacked complete diversity. Ninety-five days after it was served Defendant filed a motion for substitution of judge. The trial court ruled the motion was untimely. The Supreme Court reversed, holding that because Defendant filed its motion for substitution the same day the state court clerk received notice that the federal court had ordered remand and returned the original state court documents, the motion was timely. View "Sage Financial Properties, LLC v. Fireman's Fund Insurance Co." on Justia Law

In this insurance dispute, the First Circuit directed entry of summary judgment for Zurich American Insurance Company, holding that Zurich's decision to deny the insured's claim was supported by substantial evidence. Denise Arruda filed a claim for death benefits following the death of her husband, Joseph Arruda, in a car accident. Zurich denied the claim, concluding that Joseph's death was not within the coverage clause of the policy because the death was not independent of all other causes and that it was caused or contributed to by his pre-existing health conditions. Denise brought this action under 29 U.S.C. 1132(a)(1)(B) alleging that Zurich violated ERISA by denying the insurance benefits. The district court entered summary judgment in favor of Denise, concluding that substantial evidence did not support Zurich's decision. The First Circuit reversed, holding that Zurich's conclusion that Joseph's death was caused or contributed to by pre-existing medical conditions was not arbitrary or capricious and was supported by substantial evidence. View "Arruda v. Zurich American Insurance Co." on Justia Law

This dispute arose from a 2013 oil well blowout on the HERCULES 265 drilling rig in the Gulf of Mexico. After the rig's charterer filed suit raising products liability claims against a refurbisher of the rig's blowout-prevention components, counterclaims and third-party claims ensued. The district court subsequently granted a series of summary judgments, based both on contractual indemnity and also on the merits of the liability claims. The Fifth Circuit affirmed the district court's grant of summary judgment as to Hercules' duty to defend, hold harmless, and indemnify Axon; reversed the district court's grant of summary judgment as to Walter's duty to directly indemnify Axon; reversed the district court's grant of summary judgment as to Walter's duty to indemnify Hercules for Axon's claims; vacated the district court's order excluding Bellemare's testimony; vacated the district court's orders excluding the expert reports of Sones, Bourgoyne, Williams, Rusnak, Bellemare, and Adair, as well as the orders excluding the affidavits of Sones and Bourgoyne; reversed the district court's grant of summary judgment as to the causation and "unreasonably dangerous condition" prongs of the Louisiana Products Liability Act; vacated the district court's final judgment and fee orders; and remanded for further proceedings. View "Certain Underwriters at Lloyd's v. Axon Pressure Products Inc." on Justia Law

At issue in this case before the Vermont Supreme Court was the meaning of “date of loss” for the purpose of an insurance policy’s condition that any action be commenced within one year after the “date of loss.” The trial court concluded that the insurance provision requiring that an action be brought “within one year after the date of loss” was ambiguous and had to be interpreted against insurer to mean that the one-year period began to run when insurer breached its obligations (i.e., at the time homeowner received final, allegedly insufficient, payment from insurer). The court accordingly denied insurer summary judgment and granted partial summary judgment to homeowner. After its review, the Supreme Court concluded the provision was unambiguous in requiring suit to be brought within one year of the date of the occurrence giving rise to coverage and reversed the partial summary judgment for homeowner. View "Brillman v. New England Guaranty Insurance Company, Inc." on Justia Law

In May 2015, the Chickasaw County School District entered into a contract with Sullivan Enterprises, Inc., for window restoration work on the Houlka Attendance Center. In July 2015, during construction, a fire began that completely consumed the attendance center. Liberty Mutual, the school district’s insurer, paid the school district $4.3 million for the damage to the building. Liberty Mutual then filed a subrogation suit against Sullivan Enterprises, Fowlkes Plumbing, LLC, and Quality Heat & Air, Inc. The United States District Court for the Northern District of Mississippi found that the waiver of subrogation did not apply to damages to the “non-Work” property, thus Liberty Mutual could proceed in litigation as to “non-Work” property damages. The United States Court of Appeals for the Fifth Circuit allowed an interlocutory appeal and certified a question to the Mississippi Supreme Court regarding whether the subrogation waiver applied to “non-Work” property. The Supreme Court determined that based on the plain meaning of the contract language, the waiver of subrogation applied to both work and non-work property. View "Liberty Mutual Fire Insurance Co. v. Fowlkes Plumbing, L.L.C." on Justia Law