Justia Insurance Law Opinion Summaries

After enduring physical and sexual abuse while in the care of James and Susan McLaurie as a young child, the plaintiff obtained a $150 million judgment against both individuals in Missouri state court. Seeking to collect on this judgment, the plaintiff subsequently filed a new action in state court against the McLauries and their homeowner’s insurer, Liberty Mutual, asserting equitable garnishment claims against all three and additional claims, including bad faith and breach of contract, against Liberty Mutual.Liberty Mutual removed the action to the United States District Court for the Eastern District of Missouri, invoking diversity jurisdiction. At the time of removal, James McLaurie had not yet been served but later entered an appearance. The plaintiff moved to remand, arguing a lack of complete diversity, and James McLaurie joined this motion, expressly refusing to consent to removal. The district court disagreed that diversity was lacking but found that the absence of consent from all defendants rendered removal procedurally defective under the requirement of unanimity in 28 U.S.C. § 1446(b)(2)(A). The court granted remand on this procedural ground.On appeal, the United States Court of Appeals for the Eighth Circuit examined whether it had jurisdiction to review the district court’s remand order. The appellate court held that, under 28 U.S.C. § 1447(d), remand orders based on procedural defects—such as a lack of unanimity among defendants—are not reviewable, so long as the district court’s basis was at least “colorably” procedural. The court determined that the district court’s characterization of its order as resting on a procedural defect was colorable. Accordingly, the Eighth Circuit dismissed the appeal for lack of jurisdiction. View "G.T. v. Liberty Mutual Fire Insurance Company" on Justia Law

A group of unmarried automobile insurance policyholders challenged a California Department of Insurance regulation that allows private auto insurers to use marital status as a factor in setting rates, so long as there is a substantial relationship between marital status and risk of loss. Their argument was that after legislative amendments in 2005 and 2008, the regulation conflicted with the Unruh Civil Rights Act—which was amended to prohibit businesses from discriminating based on marital status—and the Rosenthal Auto Insurance Nondiscrimination Law (RAIN law), which similarly restricted insurers from using protected characteristics for rate-setting.The Superior Court of Alameda County denied the petition for a writ of mandate, concluding that a limiting clause in the Unruh Civil Rights Act—stating it confers no right or privilege “conditioned or limited by law”—meant the preexisting marital status regulation, which specifically addressed insurance rating factors, was not overridden by the later amendments to the Act. The court found that the regulation could be harmonized with the Act and that Proposition 103, which authorized the regulation, anticipated that the Unruh Act might be amended but included the limiting language to avoid conflict.The Court of Appeal of the State of California, First Appellate District, Division Three, affirmed the lower court’s decision. It held that the regulation does not conflict with the Unruh Civil Rights Act or the RAIN law. The court found that the Act’s limiting provision requires deference to the specific insurance regulation on marital status, which has the force of law and was validly adopted under Proposition 103. It also determined that legislative history of the RAIN law showed no intent to strip the Insurance Commissioner of authority over rating factors. The judgment denying the writ of mandate was affirmed. View "Ison v. Lara" on Justia Law

Golden Corral, a buffet restaurant chain, held a commercial property insurance policy issued by Illinois Union Insurance Company, covering losses from physical damage to its property. When state and local governments, including North Carolina, mandated closure of indoor dining facilities in response to the COVID-19 pandemic, Golden Corral suspended its restaurant operations, resulting in significant lost revenue and reduced income from franchisees. Golden Corral submitted a claim to Illinois Union for coverage of these losses, which Illinois Union denied.After the denial, Golden Corral filed suit in North Carolina state court, seeking a declaration that its pandemic-related losses were covered under the policy. The case was removed to the United States District Court for the Eastern District of North Carolina, where Golden Corral amended its complaint to add claims for breach of contract and breach of the implied covenant of good faith and fair dealing. Illinois Union moved for judgment on the pleadings, arguing that COVID-19 did not cause physical loss or damage as required for coverage. The district court granted the motion and dismissed the case with prejudice, a decision affirmed by the United States Court of Appeals for the Fourth Circuit.Over three years later, Golden Corral sought relief from final judgment under Federal Rule of Civil Procedure 60(b)(6), citing a subsequent North Carolina Supreme Court decision in North State Deli v. Cincinnati Insurance Co. that found similar losses covered. The United States Court of Appeals for the Fourth Circuit reviewed the district court’s denial of the Rule 60(b)(6) motion for abuse of discretion. The court held that a change in state decisional law alone does not constitute "extraordinary circumstances" warranting relief under Rule 60(b)(6), especially when the later case involved different parties, policies, and injuries. The Fourth Circuit affirmed the district court’s decision to deny relief. View "Golden Corral Corp. v. Illinois Union Insurance Co." on Justia Law

A neurosurgeon who co-owned a medical practice and several unrelated businesses purchased disability insurance policies through insurance brokers employed by a financial group. The brokers allegedly advised him he would receive maximum benefits if disabled, without disclosing that his other business interests could reduce his benefits. After being diagnosed with a vision condition that prevented him from performing neurosurgery, the plaintiff claimed maximum benefits but received only partial payments because of his unrelated business interests. He filed a complaint asserting, among other claims, that the brokers violated the New Jersey Consumer Fraud Act (CFA) by failing to obtain sufficient disability insurance.The Superior Court, Law Division, granted the brokers’ motion to dismiss the CFA count, relying on Plemmons v. Blue Chip Insurance Services, Inc., which held insurance brokers are exempt from the CFA as “semi-professionals.” The trial court noted but did not resolve the tension between Plemmons and Shaw v. Shand, which narrowly construed the CFA's “learned professional” exception. The Appellate Division affirmed the dismissal. The Supreme Court of New Jersey granted leave to appeal the CFA count.The Supreme Court of New Jersey held that insurance brokers, producers, and agents are not exempt from liability under the CFA, neither as “semi-professionals” nor under the “learned professional” exception. The Court found no support for a “semi-professional” exemption in the CFA’s text and determined that licensing or regulation alone does not justify exemption. The Court reversed the Appellate Division’s judgment, vacated the CFA count’s dismissal, and remanded for further proceedings, also inviting legislative clarification on professional exemptions under the CFA. View "Lowe v. Audet" on Justia Law

A lightning strike in October 2019 caused a destructive fire at a large mansion in southern Illinois owned by Wesley Gibson. Gibson had acquired the property nearly 30 years earlier as a family vacation home and, over time, extensively renovated it and filled it with valuable furniture, antiques, and artwork. Eventually, he transformed the mansion and surrounding properties into a commercial lodging and events venue, hosting weddings, corporate retreats, and other gatherings. Gibson’s family continued to use the mansion for about 70 nights per year, but the property’s primary use became commercial, as evidenced by tax filings and significant rental income.Following the fire, Gibson filed a claim with Chubb National Insurance Company under his homeowner’s policy, which provided $8.75 million for the dwelling and $3.5 million for its contents. Chubb paid the dwelling coverage in full but limited payment for the contents to $25,000, citing a business property exclusion in the policy that capped coverage for property used in business at that amount. Gibson sued Chubb in the United States District Court for the Northern District of Illinois for breach of contract and violations of Illinois insurance and consumer-fraud statutes. On cross-motions for summary judgment, the district judge found that the majority of the contents were used for business purposes and subject to the $25,000 limit, granting partial summary judgment to Chubb. The judge allowed Gibson’s claim to proceed only for certain items kept in areas not accessible to guests. After settling remaining issues, final judgment was entered.The United States Court of Appeals for the Seventh Circuit affirmed. The court held that under the terms of the policy and Illinois law, Chubb properly classified most of the mansion’s contents as business property and was only obligated to pay the $25,000 sublimit. The court also affirmed summary judgment for Chubb on the statutory claims. View "Gibson v Chubb National Insurance Company" on Justia Law

A married couple insured their vehicles under a Maryland automobile insurance policy with liability limits of $300,000 per person and $300,000 per occurrence. During an accident, the wife negligently drove one of the insured vehicles, resulting in the death of her husband, who was a passenger. Their four adult children, who did not reside in the household, filed wrongful death claims against their mother under Maryland’s wrongful death statute, seeking damages from the insurer.After the children made their claims, the insurance company invoked the policy’s household exclusion provision. That exclusion limited coverage for “bodily injury to any insured, or to any relative of an insured residing in his household” to the statutory minimum of $30,000. The insurer argued that the children’s claims, though brought under the wrongful death statute, were based on the “bodily injury” (death) of an insured and thus subject to the exclusion’s limit.The Circuit Court for Montgomery County granted declaratory judgment in favor of the insurance company, holding that the children’s claims were derivative of their father’s bodily injury, and that coverage was properly limited by the household exclusion. The Appellate Court of Maryland affirmed, relying on the plain language of the policy and prior Maryland case law, including Costello v. Nationwide Mutual Insurance Co., Daley v. United Services Automobile Ass’n, and Valliere v. Allstate Insurance Co., concluding that the household exclusion applied to the adult children’s claims.The Supreme Court of Maryland affirmed the judgment of the Appellate Court. It held that, under the unambiguous language of the policy, the household exclusion applies to limit the insurer’s liability for damages claimed by non-resident adult children under the wrongful death statute when the claim is based on the death of an insured. The Court concluded that the policy’s use of “bodily injury” as the triggering event controls, and the household exclusion limits recovery to $30,000. View "Murphy v. Gov't Employees Insurance Co." on Justia Law

A roofing contractor was sued in Illinois state court by the estates of two individuals who died when a building façade collapsed. The estates alleged that the contractor had negligently performed repairs on the building after it was damaged by a windstorm in August 2020. The repairs were completed by December 2020, and the fatal collapse occurred in April 2022. The contractor sought defense and indemnification from its commercial general liability insurer under a policy that began on February 8, 2022. The insurance policy included a “Prior Work Exclusion” that barred coverage for claims arising from work completed before the policy’s inception date.The insurer filed suit in the United States District Court for the Northern District of Illinois seeking a declaratory judgment that it had no duty to defend or indemnify the contractor in the underlying state lawsuit. The contractor counterclaimed for breach of contract and argued that the exclusion rendered coverage illusory. Both parties moved for judgment on the pleadings. The district court granted judgment to the insurer, holding that the exclusion applied because the work at issue was completed before the policy period and that the exclusion did not render the coverage illusory, as some coverage for completed operations remained.On appeal, the United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. The court held that, under Illinois law, the Prior Work Exclusion clearly barred coverage for claims arising from work completed prior to February 8, 2022. The court further held that the exclusion did not make completed-operations coverage illusory because the policy still provided coverage for work completed during the policy period. The judgment in favor of the insurer was affirmed. View "Nautilus Insurance Company v Bee Quality Inc." on Justia Law

The case concerns an Alabama resident who was injured by an uninsured motorist while riding his motorcycle. At the time, he held two separate insurance policies: a standard auto insurance policy from GEICO covering his motorcycle, and a specialty policy from Essentia Insurance Company covering his antique truck. The GEICO policy provided uninsured motorist coverage as required by Alabama law, and the insured collected $25,000 under it. Essentia’s policy, which covered only the antique vehicle, excluded uninsured motorist coverage for accidents involving vehicles other than the covered antique truck. The policy also required the insured to maintain a separate insurance policy that satisfied Alabama’s minimum coverage requirements.After Essentia denied his claim for uninsured motorist coverage, the insured brought suit in the United States District Court for the Middle District of Alabama. Essentia moved for summary judgment, arguing that its specialty policy’s coverage exclusion was valid because the insured had other coverage meeting Alabama’s requirements. The district court denied Essentia’s motion in part, holding Essentia liable for uninsured motorist benefits, but limited the liability to the statutory minimum of $25,000, and entered judgment accordingly. Essentia appealed.The United States Court of Appeals for the Eleventh Circuit reviewed the district court’s summary judgment de novo and reversed. The Eleventh Circuit held that Alabama law permits insurers to fulfill mandatory coverage requirements through multiple policies, and that Essentia’s exclusion is enforceable so long as the insured has other coverage meeting statutory requirements. The court remanded the case for further proceedings consistent with its opinion. View "Clayton v. Essentia Insurance Company" on Justia Law

A commercial truck driver was injured in an accident while operating a tractor-trailer in Missouri. The tractor was registered in Michigan and titled to a limited liability company (LLC) solely owned by the plaintiff, while the trailer was owned by a different LLC. Under a lease agreement, the plaintiff’s LLC leased the tractor to the other LLC, and the plaintiff exclusively operated the tractor. Insurance coverage for the tractor was provided by a policy that excluded personal protection insurance (PIP) when the vehicle was used to transport cargo, and the other LLC’s insurance did not cover PIP for the tractor. The plaintiff, who lived with his parents in Michigan, was not a named insured on his father’s auto policy, nor was the tractor listed as a covered vehicle.After the accident, the plaintiff sued several insurers, arguing that one of them should provide PIP benefits under Michigan’s no-fault act. The Wayne Circuit Court denied summary disposition to one insurer and dismissed others from the case. On appeal, the Michigan Court of Appeals affirmed, finding insufficient evidence to classify the plaintiff as the tractor’s owner or registrant. It ruled that the plaintiff’s claim for PIP benefits was not barred and that his father’s insurer was the highest priority insurer.The Michigan Supreme Court, in reviewing the case, held that the plaintiff was an “owner” of the tractor under MCL 500.3101(3)(l)(i) because he had the right to use the vehicle in a manner consistent with ownership for more than 30 days. The Court found that his exclusive, regular use and control of the tractor, as the sole member and agent of the LLC, satisfied the statutory definition of ownership. Because he failed to maintain the required insurance, the plaintiff was excluded from recovering PIP benefits under MCL 500.3113. The Supreme Court reversed the Court of Appeals and remanded the case to the trial court. View "Abdulla v. Progressive Southeastern Insurance Company" on Justia Law

James Ropicky and Rebecca Leichtfuss discovered significant water damage in their home after a storm in 2018. They held a homeowner’s insurance policy with Cincinnati Insurance Company, which they believed should cover the loss. Cincinnati investigated and determined that rainwater had entered the home over the years through a construction defect—a gap present since the house was built. The insurer also found that this persistent water intrusion allowed fungi to grow, contributing to the damage. Citing policy exclusions for construction defects and fungi, Cincinnati made partial payments to Ropicky, including the policy’s limit for fungi coverage, but denied the full claim.The Waukesha County Circuit Court granted Cincinnati's motion for summary judgment, concluding the insurer had fulfilled its policy obligations. However, the Wisconsin Court of Appeals reversed, finding that factual disputes remained regarding the cause of the damage and the interpretation of policy provisions, including the construction defect exclusion and the fungi exclusion. The appellate court also provided its own reading of the policy language, leading to further debate about the correct interpretation.The Supreme Court of Wisconsin reviewed the case to clarify how the insurance policy should be interpreted and whether summary judgment was appropriate. The court held that, under the policy, losses caused by rainwater constitute an ensuing loss and are therefore covered despite the construction defect exclusion. It further ruled that the fungi additional coverage provision is an exception to the fungi exclusion, not a separate grant of coverage. The court concluded that genuine disputes of material fact exist regarding the existence and extent of construction defects and fungi damage, precluding summary judgment. The court affirmed the appellate decision reversing summary judgment and remanded the case for further proceedings, including reinstatement of the bad faith claim. View "Cincinnati Insurance Company v. Ropicky" on Justia Law