Justia Insurance Law Opinion Summaries

A commercial real estate lender provided a loan to a hotel operator to purchase a resort in Ohio, secured by a mortgage. The borrower, obligated to secure insurance on the property, worked with an insurance broker to obtain coverage. However, after policy cancellations and changes, the lender’s interest as a mortgagee was not fully protected under the final insurance policy. The borrower defaulted, and the lender sued for breach of contract, fraud, and related claims, ultimately settling by accepting a deed in lieu of foreclosure, which was considered full payment of the borrower’s debt. The settlement also included an additional payment obligation secured by a consent judgment.Following the settlement, the lender brought suit in the United States District Court for the Northern District of Ohio against the insurance broker, the insurance provider, and an underwriter, seeking damages for not properly securing its mortgagee interest. The claims included breach of contract, negligence, and misrepresentation. The district court granted summary judgment in favor of all defendants, finding that the lender’s mortgagee interest had been extinguished by the settlement and deed in lieu of foreclosure, thereby eliminating any insurable interest required to support its claims.On appeal, the United States Court of Appeals for the Sixth Circuit reviewed the district court’s decision de novo, applying Ohio law. The appellate court held that a mortgagee’s insurable interest is tied to the existence of the underlying debt; once the debt is satisfied or released, the mortgagee’s interest and right to insurance proceeds are extinguished. The court found that the settlement agreement and acceptance of the deed in lieu of foreclosure satisfied the debt and ended the lender’s insurable interest. The appellate court affirmed the district court’s summary judgment for the defendants. View "Sinmier, LLC v. Everest Indemnity Ins. Co." on Justia Law

In 2019, a county initiated a project involving the drilling of new foundations for guy wires attached to a communications tower. The county hired a general contractor, which then subcontracted drilling work to another company. An employee of the subcontractor, while working near the site, carried a steel cable into contact with an overhead high voltage power line owned by an electric cooperative, resulting in his electrocution and subsequent death. The power line was not part of the communications tower and the contractors were not working on it.The estate of the deceased employee sued the electric cooperative, the general contractor, and the subcontractor in the Circuit Court of Accomack County, alleging negligence under Virginia’s Overhead High Voltage Line Safety Act (OHVLSA) for failing to implement safety measures near the power line. The circuit court dismissed the subcontractor based on the exclusivity provision of the Virginia Worker’s Compensation Act. The general contractor settled with the estate, and the electric cooperative also settled before a verdict was reached. Subsequently, the electric cooperative’s insurer, as subrogee, filed a federal suit seeking indemnification from the contractors under the OHVLSA. The United States District Court for the Eastern District of Virginia dismissed the claim, holding that the work performed fell within an exemption in the OHVLSA.On appeal, the United States Court of Appeals for the Fourth Circuit certified two questions of Virginia law to the Supreme Court of Virginia. The Supreme Court of Virginia held that the exemption in Virginia Code § 59.1-413 applies to the contractors’ work on the communications tower, thereby excluding them from the OHVLSA’s requirements. As a result, the court found the second certified question—concerning indemnification requirements—to be moot. View "A&N Electric Cooperative v. Dietzel Enterprises" on Justia Law

A group of current and former policyholders brought a lawsuit in federal court against their automobile insurance companies, alleging that the insurers’ rate-setting practices violated Massachusetts law. The insurers, who serve present and former U.S. military members, determine eligibility for insurance with each affiliate based on the policyholders’ highest military pay grade. The plaintiffs claimed that, by using “income” and “occupation” in this way, the insurers violated state regulations prohibiting such criteria in setting insurance rates. The plaintiffs sought declaratory and injunctive relief, as well as restitution for alleged overcharges.The United States District Court for the District of Massachusetts denied the insurers’ motion to dismiss under Rule 12(b)(6). The court then certified for interlocutory appeal the question of whether the filed rate doctrine bars the relief that the plaintiffs seek. The district court reasoned that some of the requested remedies might not be barred by the doctrine and clarified that the controlling question raised several distinct sub-questions about the application of the doctrine under Massachusetts and federal law. The parties did not seek administrative review of the insurance rates in question, and the Massachusetts Attorney General did not intervene in the administrative or judicial proceedings.The United States Court of Appeals for the First Circuit reviewed the case. The court held that Massachusetts law, not the federal filed rate doctrine, governs whether private parties can bring suit under Chapter 93A for alleged violations involving insurance rates approved by the state Commissioner of Insurance. The First Circuit found that there is no controlling precedent under Massachusetts law and certified two questions to the Massachusetts Supreme Judicial Court regarding whether such private suits are authorized and whether the answer differs by the type of relief sought. The First Circuit retained jurisdiction pending the SJC’s response. View "Wright v. United Services Automobile Association" on Justia Law

A marine-equipment dealership purchased insurance policies through its agent, who obtained those policies from a wholesale insurance broker. The dealership alleged it paid its insurance agent a sum significantly greater than the premiums that were ultimately forwarded to the broker and that, after canceling the policies, the agent failed to return the excess amount. The broker refunded a portion of the unearned premiums to the agent, but the dealership maintained that it was also owed the larger sum it paid in excess, as those funds had not been properly applied or returned.The dealership filed suit in the Baldwin Circuit Court against the insurance agent, alleging negligence, wantonness, recklessness, and/or fraud for mishandling and wrongfully retaining premium payments. The insurance agent, in response, moved to interplead the smaller, refunded amount from the broker into court in exchange for its dismissal from the case. The circuit court granted the agent’s motions to interplead those funds, awarded attorney’s fees to the agent from that amount, and dismissed the agent from the action. The dealership’s motion for reconsideration was denied, and subsequently, the dealership and the wholesale broker petitioned for relief.The Supreme Court of Alabama reviewed the petition for a writ of mandamus. It held that interpleader was not proper in this situation because the funds at issue were not exposed to double or multiple liability, and the claims against the agent included independent allegations of liability beyond the interpleaded sum. The court determined that the trial court erred in dismissing the agent from the lawsuit based solely on the interpleader. The Supreme Court of Alabama granted the petition and issued the writ, directing the circuit court to vacate its order. View "In re: Gulf Shores Power Sports, Inc. v. McCarron Insurance Group, Inc." on Justia Law

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