Justia Insurance Law Opinion Summaries

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A mortgage conveys an interest in real property as security. Lenders often require borrowers to maintain hazard insurance that protects the property. If the borrower fails to maintain adequate coverage, the lender may buy the insurance and force the borrower to cover the cost (force-placed coverage). States generally require insurers to file their rates with an administrative agency and may not charge rates other than the filed rates. The filed-rate is unassailable in judicial proceedings even if the insurance company defrauded an administrative agency to obtain approval of the rate. Borrowers alleged that their lender, Nationstar, colluded with an insurance company, Great American, and an insurance agent, Willis. Great American allegedly inflated the filed rate filed so it and Willis could return a portion of the profits to Nationstar to induce Nationstar’s continued business. The borrowers paid the filed rate but claimed that the practice violated their mortgages, New Jersey law concerning unjust enrichment, the implied covenant of good faith and fair dealing, and tortious interference with business relationships; the New Jersey Consumer Fraud Act; the Truth in Lending Act, 15 U.S.C. 1601–1665; and RICO, 18 U.S.C. 1961–1968. The Third Circuit affirmed the dismissal of the suit. Once an insurance rate is filed with the appropriate regulatory body, courts have no ability to effectively reduce it by awarding damages for alleged overcharges: the filed-rate doctrine prevents courts from deciding whether the rate is unreasonable or fraudulently inflated. View "Leo v. Nationstar Mortgage LLC of Delaware" on Justia Law

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The Supreme Court affirmed the determination of the trial court that the collapse provisions of Insured's homeowners insurance policy unambiguously foreclosed coverage under the circumstances of this case, holding that the trial court did not err. Insured brought this action against Insurer claiming that Insurer breached the homeowners insurance policy it issued by denying coverage for cracks in the basement walls of Insured's home under the collapse provisions of the policy. The trial court granted summary judgment for Insurer because the policy defined "collapse" as "an abrupt falling down or caving in" of the home and because Insured's remained standing and was in no imminent danger of falling down. On appeal, Insured argued that the definition of "collapse" in Beach v. Middlesex Mutual Assurance Co., 532 A.2d 1297 (Conn. 1987), applied. The Supreme Court affirmed, holding that, even if this Court agreed that the definition of collapse contained in the policy was ambiguous and that, therefore, Beach's substantial impairment standard applied to Insured's claim, Insured's claim of coverage would fail even under that standard. View "Jemiola v. Hartford Casualty Insurance Co." on Justia Law

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The Supreme Court answered certified questions concerning the application of Connecticut insurance law in this action to recover damages for, among other things, breach of an insurance contract, concluding that the definition of "collapse" in Beach v. Middlesex Mutual Assurance co., 532 A.2d 1297 (Conn. 1987), applied in this case. In Beach, the Supreme Court held that the term "collapse," when not defined in a homeowners insurance policy, is "sufficiently ambiguous to include coverage for any substantial impairment of the structural integrity" of the insureds' home. At issue before the Supreme Court was whether the Beach standard also required a showing that the building was in imminent danger of falling down or caving in. The Supreme Court concluded that it does, holding that the "substantial impairment of structural integrity" standard requires a showing that the building is in imminent danger of falling down or caving in, or in other words, in imminent danger of an actual collapse. View "Vera v. Liberty Mutual Fire Insurance Co." on Justia Law

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The Supreme Court reformulated a certified question concerning the application of Connecticut insurance law in this action to recover damages for, among other things, breach of an insurance contract, concluding that the definition of "collapse" in Beach v. Middlesex Mutual Assurance Co., 532 A.2d 1297 (Conn. 1987), applied in this case. At issue before the Supreme Court was the definition of the term "collapse" in a homeowners insurance policy, when otherwise undefined, as set forth in Beach v. Middlesex Mutual Assurance Co., 532 A.2d 1297 (Conn. 1987), as "any substantial impairment of the structural integrity" of the insureds' home. The United States District Court for the District of Connecticut certified questions to the Supreme Court regarding whether Beach's definition of collapse applied in this case. Insureds sued Insurer, claiming that their homeowners insurance policy covered the cracking and tumbling of their concrete basement walls. The Supreme Court held (1) the Beach standard applied to Insureds' policy; (2) the "substantial impairment of structural integrity" standard requires proof that the home is in imminent danger of falling down; and (3) the term "foundation" unambiguously encompasses the basement walls of Insureds' home. View "Karas v. Liberty Insurance Corp." on Justia Law

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The Supreme Court reversed the order of the district court granting summary judgment in favor of Farmers Insurance Exchange on Plaintiff's claim for underinsured motorist (UIM) benefits, holding that Plaintiff's UIM claim was not barred by either the doctrine of issue preclusion or claim preclusion. Plaintiff sued Darrell King alleging damages resulting from injuries he sustained when King rear-ended him. King was insured by Progressive Northwestern Insurance Company, and Plaintiff was insured by Farmers. When Farmers refused to pay Plaintiff anything under his UIM coverage Plaintiff filed a lawsuit against Farmers to recover his UIM benefits. Plaintiff's lawsuit against King subsequently went to trial, and the jury awarded Plaintiff $10,000 in damages. Before the district court entered judgment, the parties settled for $50,000 - the policy limits of King's liability coverage with Progressive. Thereafter, Farmers moved for summary judgment on Plaintiff's UIM coverage claim, arguing that because Plaintiff had settled with King, his UIM claim was barred by issue preclusion and claim preclusion. The district court granted summary judgment for Farmers. The Supreme Court reversed, holding that a contract claim for UIM benefits is wholly distinct and separate from the underlying third-party tort claim, and therefore, Plaintiff's complaint was barred by neither issue preclusion nor claim preclusion. View "Reisbeck v. Farmers Insurance Exchange" on Justia Law

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Eghtesad’s pro se complaint claimed that he leased property to Martinez; State Farm issued Martinez a fire and liability insurance policy; Eghtesad was named on the policy as an additional insured; Eghtesad sought coverage for property damage; and State Farm told Eghtesad he was covered only for claims of slander. Eghtesad did not file an opposition to State Farm’s demurrer but asked for 60 days to try to settle and get counsel. The court continued the hearing. On the day his opposition was due, Eghtesad sought a further continuance of 90 days, informing the court that he had been involved in an auto accident. He attached a note from his doctor. The court granted Eghtesad “one final continuance” and set the hearing out for two additional weeks. Three days before the new hearing date, without having filed a response to the demurrer, Eghtesad sought another continuance, again providing a doctor’s note. The court did not grant a further continuance and sustained the demurrer without leave to amend. The court of appeal reversed, finding that Eghtesad should have been given an opportunity to amend his complaint. For an original complaint, regardless of whether the plaintiff has requested leave to amend, a trial court’s denial of leave to amend constitutes an abuse of discretion unless the complaint “shows on its face that it is incapable of amendment.” View "Eghtesad v. State Farm General Insurance Co." on Justia Law

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Kevin Crook appealed summary judgment entered in favor of Allstate Indemnity Company ("Allstate Indemnity"), Allstate Insurance Company ("Allstate Insurance"), and The Barker Agency (hereinafter collectively referred to as "the defendants"). Crook owns lake-front property in Tuscaloosa County. The property consists of a house, a bathhouse, a garage, a deck, and a boat dock. In 2006, Crook, through The Barker Agency, obtained property insurance on the house and other structures from Allstate Indemnity. Allstate Indemnity issued a policy to Crook ("the policy") and provided uninterrupted insurance coverage of Crook's house from 2006 through 2015. On February 12, 2015, Allstate Indemnity conducted an inspection of the property for underwriting purposes. After the inspection, on February 23, 2015, The Barker Agency sent Crook a letter with the results, finding no "issues that impact [Crook's] current coverage, and you do not need to do anything further. ...our inspection... focused only on identifying certain types of hazards or conditions that might impact your future insurance coverage. It may not have identified some other hazards of conditions on your property." In April 2015, a storm damaged the deck and the boat dock. Ultimately, Crook sued defendants for breach of contract, bad-faith failure to pay a claim, negligent/wanton procurement of insurance, and estoppel, all relating to the policy's coverage of the storm damage. After review, the Alabama Supreme Court found no reversible error in the grant of summary judgment in favor of defendants and affirmed. View "Crook v. Allstate Indemnity Company, et al." on Justia Law

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Over 25,000 life insurance policyholders filed a class action, alleging that State Farm impermissibly included non-listed factors in calculating Cost of Insurance (COI) fees assessed on life insurance policies. After the jury returned a $34 million verdict in the class's favor, State Farm and the named plaintiff appealed. The Eighth Circuit affirmed the judgment with respect to State Farm's appeal, holding that the phrase "based on" in the COI provision is at least ambiguous and thus must be construed against State Farm. Therefore, the district court did not err in construing the policy language in this manner and granting summary judgment to plaintiff on issues of liability. The court also held that the district court did not err in granting summary judgment to plaintiff on State Farm's affirmative defense of limitations. Furthermore, the court held that the district court did not err in certifying the class or in denying State Farm's motion to decertify the class. The court also held that the district court did not err in denying State Farm's motion for judgment as a matter of law based on the alleged insufficiency of the damages models as evidence of damages suffered by class members. Finally, the court rejected State Farm's claims of evidentiary errors, and challenges to the judgment in favor of the named plaintiff. However, the court reversed and remanded with respect to the named plaintiff's cross appeal, holding that the district court erroneously denied plaintiff's motion for an award of prejudgment interest because the damages model does not include prejudgment interest for the entire time up until judgment. View "Vogt v. State Farm Life Insurance Co." on Justia Law

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In this dispute over the amount that air ambulance providers may recover from workers' compensation insurers, the Supreme Court held that Texas law requiring that private insurance companies reimburse the fair and reasonable medical expenses of injured workers is not preempted by a federal law deregulating aviation and that federal law does not require Texas to mandate reimbursement of more than a fair and reasonable amount for air ambulance services. PHI Air Medical, LLC, an air ambulance provider, argued that the federal Airline Deregulation Act (ADA) preempted the Texas Workers' Compensation Act's (TWCA) fee schedules and reimbursement standards. An administrative law judge held that PHI was entitled to reimbursement under the TWCA's standards. On judicial review, the trial court declared that the ADA did not preempt the TWCA's reimbursement provisions. The court of appeals reversed. The Supreme Court reversed, holding (1) because the price of PHI's service to injured workers is not significantly affected by a reasonableness standard for third-party reimbursement of those services, the ADA does not preempt that standard; and (2) the ADA does not require that Texas compel private insurers to reimburse the full charges billed for those services. View "Texas Mutual Insurance Co. v. PHI Air Medical, LLC" on Justia Law

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VIM opened its Elkhart wood recycling facility around 2000. By 2009 1,025 neighbors filed a class-action lawsuit, describing VIM’s site as littered with massive, unbounded outdoor waste piles and alleging that VIM processed old, dry wood outside, which violated environmental regulations; constituted an eyesore; attracted mosquitos, termites, and rodents; posed a fire hazard; and emitted dust and other pollution. Many neighbors alleged health problems. In the meantime, VIM acquired general commercial liability policies, running from 2004-2008, that obligated Westfield to pay up to $2 million of any judgments against VIM for “property damage” or “bodily injury.” Each policy required VIM “as soon as practicable” to notify Westfield of any occurrence or offense that “may result in” a claim. Upon the filing of a claim, the policies required that VIM to provide written notice. There were three separate lawsuits over the course of 10 years. VIM sometimes successfully fended off the claims but sometimes did nothing, resulting in a $50.56 million default judgment. In a garnishment action, the Seventh Circuit affirmed summary judgment for Westfield. The neighbors cannot credibly claim that VIM was unaware of the injuries before 2004 or that they would not reasonably have expected them to continue through 2008, so the notice requirements applied. Westfield only found out about the case from its own lawyer in 2010, while it was on appeal. View "Greene v. Westfield Insurance Co." on Justia Law