Justia Insurance Law Opinion Summaries

Jennings Plant Services, LLC, and its members, Spencer and Tarin Jennings, filed a lawsuit against Ellerbrock-Norris Agency, Inc., and Elliot Bassett, alleging that Ellerbrock-Norris failed to provide competent insurance advice. Specifically, Jennings claimed that Ellerbrock-Norris advised them not to add a company-owned vehicle, a Ford F-150, to their commercial insurance policies, which led to a lack of coverage when the vehicle was involved in a fatal collision. This resulted in a significant judgment against Jennings in a federal wrongful death case brought by Kacey Kimbrough, the special administrator of the estate of Shawn Thomas Kimbrough.In the U.S. District Court for the District of Nebraska, Kimbrough obtained a judgment of $5,436,266.87 against Jennings Plant Services. As part of a partial settlement, Jennings assigned Kimbrough a right to 85% of any proceeds from their state lawsuit against Ellerbrock-Norris. Kimbrough then sought to intervene in the state lawsuit under Neb. Rev. Stat. § 25-328, claiming an interest in the litigation due to her assigned right to a portion of the proceeds.The District Court for Washington County denied Kimbrough's motion to intervene, finding that she had no direct cause of action against either Jennings or Ellerbrock-Norris and no legal interest in the subject matter of the underlying litigation. The court determined that Kimbrough's interest was indirect and insufficient to warrant intervention under § 25-328.The Nebraska Supreme Court affirmed the district court's decision, holding that Kimbrough's alleged interest in the proceeds of the lawsuit was too attenuated to constitute a direct and legal interest in the litigation. The court concluded that Kimbrough, as a mere creditor with an indirect interest, did not meet the statutory requirements for intervention. View "Jennings Plant Services, LLC v. Ellerbrock-Norris Agency" on Justia Law

Hurricane Katrina destroyed Paul and Sylvia Minor’s home in 2005. The Minors had a homeowner’s insurance policy with United Services Automobile Association (USAA) that covered wind damage but excluded storm surge or flood damage. USAA issued payments for wind damage but not for storm surge or flood damage, leading to a dispute. The Minors claimed a total loss due to wind and demanded policy limits. In 2013, a jury awarded the Minors $1,547,293.37 in compensatory damages.The Minor Estate appealed a pretrial order granting partial summary judgment to USAA on the Minors’ bad faith claim. The Mississippi Court of Appeals reversed the trial court’s decision, finding a genuine issue of material fact regarding USAA’s denial and delay of payment. The case was remanded for further proceedings on the bad faith claim. On remand, a jury awarded the Minors $10,000,000 in punitive damages and $457,858.89 in extra-contractual damages (attorneys’ fees). USAA appealed, and the Minor Estate cross-appealed the denial of its post-trial motion for additional attorneys’ fees.The Supreme Court of Mississippi reviewed the case and found no reversible error, affirming the jury’s award of $10,457,858.89 in damages. The court also reversed and rendered attorneys’ fees on behalf of the Estate in the amount of $4,500,000, plus post-judgment interest. The court held that the trial judge did not err in submitting the issue of punitive damages to the jury and that the $10 million punitive damages award was not unconstitutionally disproportionate. The court also found no error in the jury’s award of extra-contractual damages and no errors warranting a new trial. View "United Services Automobile Association v. Estate of Minor" on Justia Law

In 2015, Zongwei Shen, owner of a massage spa, purchased a commercial insurance policy from Continental Casualty Company, which included an exclusion for abuse or molestation. In 2019, Toiah Gordon, Morganne Mersadie Root, and Karina Carrero sued Shen and his wife, alleging Shen sexually assaulted them during massage sessions. After Continental declined to provide a defense, Shen and Xin stipulated to liability, resulting in a $6.8 million judgment against them. Shen and Xin assigned their rights against Continental to the plaintiffs in exchange for a covenant not to execute the judgment. The plaintiffs then sued Continental for breach of contract and related claims.The Superior Court of Los Angeles County granted Continental's motion for summary judgment, finding that the abuse or molestation exclusion in the insurance policy applied. The court concluded that Shen had care and control of Gordon during the massage, thus the exclusion applied to her injury. The court also found that the claims against Xin for negligent training fell within the exclusion, as negligent training is a form of negligent hiring, retention, or supervision.The California Court of Appeal, Second Appellate District, affirmed the trial court's decision. The appellate court held that the abuse or molestation exclusion applied to Shen's actions because Gordon was under Shen's care and control during the massage. The court also held that the exclusion applied to the claims against Xin, as negligent training is encompassed within negligent employment and supervision. Consequently, Continental had no duty to defend Shen and Xin, and the summary judgment in favor of Continental was affirmed. View "Gordon v. Continental Casualty Co." on Justia Law

Erin Hughes, the plaintiff, obtained two homeowner’s insurance policies for her property in Malibu. One policy, through the California FAIR Plan Association (FAIR Plan), covered fire loss, while the other, issued by Farmers Insurance Exchange (Farmers), did not. After a fire caused significant damage to her property, Hughes filed a lawsuit against Farmers, alleging it was vicariously liable for the negligence of its agent, Maritza Hartnett, who assisted her in obtaining the FAIR Plan policy, resulting in underinsurance for fire loss.The Superior Court of Los Angeles County granted Farmers’ motion for summary judgment, concluding that Hartnett was not acting within the scope of her agency with Farmers when she assisted Hughes in obtaining the FAIR Plan policy. The court also denied Hughes’s motion for leave to amend her complaint.The Court of Appeal of the State of California, Second Appellate District, reviewed the case. The court affirmed the lower court’s decision, holding that Hartnett was not acting as Farmers’ actual or ostensible agent when she helped Hughes obtain the FAIR Plan policy. The court found that Hartnett was acting as an independent broker for the FAIR Plan policy and not on behalf of Farmers. Additionally, the court determined that Hughes failed to present evidence that could establish a triable issue regarding Farmers’ vicarious liability for Hartnett’s actions.The court also upheld the trial court’s denial of Hughes’s motion for leave to amend her complaint, noting that Hughes offered no explanation for the delay in filing the motion and that allowing the amendment would have prejudiced Farmers and Hartnett. The judgment in favor of Farmers was affirmed, and Farmers was entitled to recover its costs on appeal. View "Hughes v. Farmers Insurance Exchange" on Justia Law

Following heavy snowfall in Pine Bluff, Arkansas, the roofs of several chicken houses at ten poultry farms collapsed. Norfolk & Dedham Mutual Fire Insurance Company, which insured the farms, sued Rogers Manufacturing Corporation, the manufacturer of the roof trusses used in the chicken houses, claiming strict product liability, negligence, and breach of warranties. Rogers moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), arguing that Norfolk’s claims were barred by the Arkansas statute of repose.The United States District Court for the Eastern District of Arkansas agreed with Rogers and dismissed the complaint. Norfolk appealed the dismissal, arguing that the statute of repose did not apply to Rogers because the roof trusses were standardized goods, not custom-designed for the farms.The United States Court of Appeals for the Eighth Circuit reviewed the district court’s dismissal de novo, accepting the allegations in the complaint as true and drawing all reasonable inferences in Norfolk’s favor. The court found that Norfolk’s complaint plausibly supported an inference that the roof trusses were standardized goods, which would not be covered by the Arkansas statute of repose. The court emphasized that at this early stage, the complaint should not be dismissed if it allows for a reasonable inference of liability.The Eighth Circuit reversed the district court’s dismissal of the complaint and remanded the case for further proceedings, noting that the facts and legal arguments could be further developed as the case progresses. View "Norfolk & Dedham Mutual Fire Insurance Company v. Rogers Manufacturing Corporation" on Justia Law

Patricia Nicholson filed a garnishment action after her husband was killed in an accident involving Ava Mercer, who was insured by Key Insurance Company. Key provided Mercer with an attorney but did not actively defend her. Nicholson attempted to settle for the policy limit, but Key delayed. Nicholson then filed a wrongful death suit, and Key offered to settle for the policy limit, which Nicholson rejected. Instead, Nicholson and Mercer agreed that Mercer would assign her rights to sue Key for bad faith to Nicholson, and Nicholson would not execute any judgment against Mercer. Mercer waived her right to a jury trial and did not present a defense. Nicholson won a $3 million verdict.The Leavenworth District Court ruled against Key on the merits, finding that Key acted in bad faith and ordered garnishment for the $3 million judgment. Key did not argue that garnishment was statutorily unavailable due to the assignment of rights at the district court level. On appeal, Key raised the issue of subject-matter jurisdiction for the first time, arguing that garnishment was impossible following an assignment of rights, thus the district court lacked jurisdiction.The Kansas Supreme Court reviewed the case and affirmed the lower courts' decisions. The court clarified that subject-matter jurisdiction is the constitutional power of courts to decide disputes and does not disappear due to a flawed claim. The court held that the district court had jurisdiction to hear Nicholson's garnishment action on the merits. The court emphasized that Key's statutory arguments should have been presented as a motion to dismiss at the district court level and could not be raised for the first time on appeal under the guise of a jurisdictional argument. The judgment of the Court of Appeals and the district court was affirmed. View "Nicholson v. Mercer" on Justia Law

Plaintiff's multi-unit apartment building in Staten Island was damaged by fire on August 4, 2014. At the time, she had an insurance policy with Tower Insurance Company of New York, which required any legal action to be brought within two years of the damage and stipulated that replacement costs would only be paid if repairs were made as soon as reasonably possible. Restoration was completed in July 2020, and her claim was denied on September 1, 2020. Plaintiff filed a lawsuit on August 4, 2020, seeking full replacement value and coverage for lost business income, alleging that Tower/AmTrust's bad faith conduct delayed the restoration process.The Supreme Court granted the Tower/AmTrust defendants' motion to dismiss the complaint, citing the policy's two-year suit limitation provision. The court found that the plaintiff failed to demonstrate that she attempted to repair the property within the two-year period or took any action to protect her rights as the limitation period expired. The Appellate Division affirmed the dismissal, holding that the plaintiff did not allege that she reasonably attempted to repair the property within the two-year period but was unable to do so. Consequently, the claims against the broker defendants were also dismissed as the plaintiff's failure to recover was due to her own actions.The New York Court of Appeals affirmed the Appellate Division's order. The court held that the plaintiff did not raise an issue as to whether the suit limitation provision was unreasonable under the circumstances. The plaintiff's allegations were deemed conclusory and lacked specific details about the extent of the damage or efforts to complete repairs within the two-year period. The court concluded that the Tower/AmTrust defendants' motion to dismiss was properly granted, and the claims against the broker defendants were also correctly dismissed. View "Farage v Associated Insurance Management Corp." on Justia Law

National Casualty Company and Nationwide Mutual Insurance Company entered into reinsurance agreements with Continental Insurance Company, which included arbitration clauses. A billing dispute arose, leading Continental to demand arbitration. National Casualty and Nationwide filed a lawsuit in federal court, claiming that prior arbitral awards resolved the billing dispute and precluded new arbitration. They appealed the district court's order compelling arbitration under the Federal Arbitration Act.The United States District Court for the Northern District of Illinois granted Continental's motion to compel arbitration and dismissed the action. National Casualty and Nationwide argued that the prior arbitral awards precluded the new arbitration proceeding, but the district court ruled that the arbitration clauses required the dispute to be arbitrated.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court affirmed the district court's decision, holding that the preclusive effect of prior arbitral awards is an issue for the arbitrator to decide, not the federal court. The court relied on its precedent, which aligns with Supreme Court rulings, stating that procedural questions arising from an arbitrable dispute are for the arbitrator to resolve. The court also rejected Continental's motion to vacate the district court's dismissal order and stay the action pending arbitration, as it was not properly before the court and lacked merit. The court concluded that the district court correctly compelled arbitration and dismissed the case. View "National Casualty Co. v. Continental Insurance Co." on Justia Law

A driver, Safet Miftari, was injured in an accident caused by an uninsured motorist while driving his taxi. He filed a claim for coverage under a policy he had for a different vehicle, which was denied by his insurer, Umialik Insurance Co., because the policy excluded uninsured and underinsured motorist (UIM) coverage for vehicles not insured under the same policy. Miftari then sued the uninsured motorist, who defaulted, and a jury awarded Miftari $1 million in noneconomic damages. Subsequently, Miftari sued Umialik to enforce the judgment.The Superior Court of Alaska, Fourth Judicial District, granted Miftari’s motion for partial summary judgment, holding that Umialik was bound by the prior judgment under the doctrine of res judicata. The court also denied Umialik’s motion to prevent Miftari from pursuing economic damages. In a separate order, the court held that the insurance policy’s exclusion of UIM coverage for injuries sustained in any of the policyholder’s vehicles insured under a separate policy was not authorized by Alaska law.The Supreme Court of the State of Alaska reviewed the case. It held that Alaska law does not authorize excluding UIM coverage for a vehicle not insured under the same insurance policy under which UIM coverage is sought. The court also concluded that res judicata prohibits the parties from relitigating noneconomic damages and litigating economic damages against the insurer. The court affirmed the superior court’s orders on summary judgment, binding Umialik to the jury’s damages verdict and precluding Miftari from seeking economic damages. View "Umialik Insurance Co. v. Miftari" on Justia Law

The case involves a billing dispute between a group of emergency room physicians (plaintiff) and an insurance company (defendant). The dispute centers on the interpretation of Connecticut’s surprise billing law, which aims to protect insured individuals from high medical bills when they receive emergency care from out-of-network providers. The plaintiff contends that the law requires the defendant to fully reimburse them for emergency services and then collect any applicable cost-sharing amounts (deductibles, copayments) from the insured. The defendant argues that it can deduct the insured’s cost-sharing amounts from the reimbursement it pays to the plaintiff.The United States District Court for the District of Connecticut dismissed the plaintiff’s stand-alone claims under the surprise billing law, concluding that the law does not create a private right of action. The court then certified three questions to the Connecticut Supreme Court: (1) whether a CUTPA claim can be maintained for conduct that violates the surprise billing law but not CUIPA, (2) whether the surprise billing law requires insurers to fully reimburse providers and then collect cost-sharing amounts from insureds, and (3) whether the defendant’s practice of deducting cost-sharing amounts from reimbursements violates the surprise billing law.The Connecticut Supreme Court held that Connecticut law does not recognize a cause of action under CUTPA for conduct that violates the surprise billing law but is not identified as an unfair insurance practice under CUIPA. The court also held that the surprise billing law does not require insurers to fully reimburse providers and then collect cost-sharing amounts from insureds. Instead, insurers can deduct the insured’s cost-sharing amounts from the reimbursement paid to the provider. Finally, the court concluded that the defendant’s practice of deducting cost-sharing amounts from reimbursements does not violate the surprise billing law. View "NEMS, PLLC v. Harvard Pilgrim Health Care of Connecticut, Inc." on Justia Law