Charlotte Erdmann, a massage therapist insured by Allied Professionals Insurance Company (APIC), was sued by a patient, Kristin Schantzen, and her husband, Jay, for injuries sustained during a massage session. Erdmann's employer, Valley Chiropractic Clinic, was insured by NCMIC Insurance Company (NCMIC). APIC and Erdmann requested NCMIC to cover the claims, but NCMIC refused and instead filed a declaratory judgment action seeking a declaration that it was not obligated to defend or indemnify Erdmann. The Schantzens settled with Erdmann and Valley, with NCMIC agreeing to pay $250,000 of the settlement, leaving the dispute over who would pay Erdmann’s $1.6 million settlement.The United States District Court for the District of Minnesota denied APIC's motion to compel arbitration based on a clause in APIC’s policy with Erdmann. APIC argued that NCMIC should be compelled to arbitrate under the theory of direct-benefits estoppel. The district court concluded that Minnesota law did not support APIC's position, as NCMIC did not seek direct benefits from the APIC-Erdmann policy and was not a third-party beneficiary.The United States Court of Appeals for the Eighth Circuit reviewed the case de novo. The court predicted that the Minnesota Supreme Court would adopt a limited version of direct-benefits estoppel, only allowing a nonsignatory to be compelled to arbitrate if they directly benefited from the contract containing the arbitration clause. The court found that NCMIC did not directly benefit from the APIC-Erdmann policy and thus could not be compelled to arbitrate. Consequently, the Eighth Circuit affirmed the district court's decision, holding that APIC could not compel NCMIC to arbitrate its claims under Minnesota law. View "NCMIC Insurance Company v. Allied Professionals Ins. Co." on Justia Law

In this case, Allied Professionals Insurance Company (APIC) sought to compel arbitration in a dispute with NCMIC Insurance Company (NCMIC). The dispute arose after a patient sued Charlotte Erdmann, a massage therapist insured by APIC, for injuries sustained during a massage. Erdmann's employer, Valley Chiropractic Clinic, was insured by NCMIC. NCMIC declined to defend or indemnify Erdmann and instead filed a declaratory judgment action seeking a declaration that it was not obligated to cover Erdmann or, alternatively, that its coverage was secondary to APIC's. The patient settled with Erdmann and Valley, leaving the question of whether NCMIC or APIC was responsible for Erdmann's $1.6 million settlement.The United States District Court for the District of Minnesota denied APIC's motion to compel arbitration. The court concluded that Minnesota law did not support APIC's argument for direct-benefits estoppel, which would have allowed APIC to compel NCMIC to arbitrate based on a clause in APIC's policy with Erdmann. The district court found that NCMIC did not seek or obtain direct benefits from the APIC-Erdmann policy and thus could not be compelled to arbitrate under the doctrine of direct-benefits estoppel.The United States Court of Appeals for the Eighth Circuit affirmed the district court's decision. The appellate court held that Minnesota law would likely adopt a limited version of direct-benefits estoppel, which only applies when a nonsignatory directly benefits from the contract containing the arbitration clause. The court found that NCMIC did not directly benefit from the APIC-Erdmann policy and therefore could not be compelled to arbitrate. The court also noted that neither the Eighth Circuit nor the Minnesota Supreme Court had applied direct-benefits estoppel in a similar fact pattern, where a signatory sought to compel a nonsignatory to arbitrate. Thus, the judgment of the district court was affirmed. View "United States v. Osorio" on Justia Law

Martin Brauner transmitted HPV to M.O. through sexual activity in Brauner’s GEICO-insured automobile. M.O. threatened to sue Brauner for negligence and demanded $1,000,000 from GEICO, which denied the claim and sought a federal court declaration that the policy did not cover M.O.’s injuries. Brauner and M.O. settled the threatened lawsuit, agreeing that M.O. would collect only from GEICO if an arbitrator found Brauner negligent. The arbitrator awarded M.O. $5,200,000, which M.O. sought to confirm in Missouri state court. The Supreme Court of Missouri vacated the confirmation and remanded the case to allow GEICO to intervene.The United States District Court for the District of Kansas initially handled the case but transferred it to the United States District Court for the Western District of Missouri due to lack of personal jurisdiction over M.O. The district court granted GEICO’s motion for summary judgment, ruling that the policy required bodily injury to arise out of the use of the automobile, and that sexual activity in an automobile did not constitute “use” under Kansas insurance law. Brauner and M.O. appealed.The United States Court of Appeals for the Eighth Circuit reviewed the grant of summary judgment de novo. The court affirmed the district court’s decision, holding that the insurance policy unambiguously required bodily injury to arise out of the ownership, maintenance, or use of the automobile. The court found that sexual activity in an automobile did not meet this requirement, as the automobile was merely the situs of the injury and not causally connected to the negligent act. Therefore, M.O.’s injuries were not covered under the policy. View "GEICO General Insurance Co. v. M.O." on Justia Law

Constantin, an accounting firm, performed an audit for Schratter Foods Incorporated, a food services company. The audit allegedly went wrong, leading to liability. Constantin had a professional services insurance policy from Chubb Insurance Company of New Jersey, which covered services directed toward expertise in banking finance, accounting, risk and systems analysis, design and implementation, asset recovery, and strategy planning for financial institutions. Constantin assigned its rights under the policy to ECB USA, Inc., Atlantic Ventures Corp., and G.I.E. C2B (collectively, the ECB parties).The ECB parties sued Chubb in the United States District Court for the Southern District of Florida, seeking to enforce Constantin’s assigned contractual rights, alleging a breach of contract based on Chubb’s duty to defend or indemnify in the earlier lawsuit. The district court granted summary judgment to Chubb, ruling that the insurance policy did not cover the audit because it was not performed for a financial institution. The court also granted reformation of the 2017–18 contract to include Constantin as a named insured.The United States Court of Appeals for the Eleventh Circuit reviewed the case. The court held that the phrase “for financial institutions” in the insurance policy modified all the terms in the list, including “accounting.” The court applied the series-qualifier canon of interpretation, which suggests that a postpositive modifier like “for financial institutions” modifies all the terms in a list of parallel items. The court found that the surrounding language of the policy supported this interpretation. The court rejected ECB’s arguments based on the last-antecedent canon and contra proferentem, concluding that the policy unambiguously required the services to be for financial institutions. Therefore, the court affirmed the district court’s grant of summary judgment to Chubb. View "ECB USA, Inc. v. Chubb Insurance Company of New Jersey" on Justia Law

Daniel Graff purchased a life insurance policy from Brighthouse Life Insurance Company for his father, with Graff as the beneficiary. Over the years, Graff paid more in premiums than the policy's death benefit. He sued Brighthouse, claiming the policy violated Minnesota's Readability of Insurance Policies Act (RIPA) and the implied covenant of good faith and fair dealing, and also sought recovery for unjust enrichment. Brighthouse removed the case to federal court, which dismissed Graff's claims for failing to state a claim.The United States District Court for the District of Minnesota dismissed Graff's complaint with prejudice. The court found that the RIPA did not provide a private cause of action, the implied-covenant claim was untimely, and Graff could not recover under unjust enrichment because a valid contract governed the parties' relationship.The United States Court of Appeals for the Eighth Circuit reviewed the case and affirmed the district court's dismissal. The appellate court held that the RIPA does not create a private cause of action, as enforcement authority is vested exclusively in the Minnesota Commissioner of Commerce. The court also determined that Graff's implied-covenant claim could not proceed because it was based on a statute that does not provide a private remedy. Lastly, the court upheld the dismissal of the unjust enrichment claim, noting that equitable remedies are unavailable when a valid contract governs the parties' rights, and Brighthouse was entitled to the premiums under the policy. View "Daniel Graff v. Brighthouse Life Ins. Co." on Justia Law

A joint state and federal criminal investigation, "Operation Back Cracker," uncovered a scheme where Minnesota healthcare providers, primarily chiropractors, recruited car accident victims and fraudulently billed auto insurers for their treatment. In related civil settlements, some providers agreed not to bill certain insurance companies, including Illinois Farmers Insurance Company, for any treatment provided to their insureds. Plaintiffs, representing a class of insured individuals, sued Farmers, alleging that these no-bill agreements violated the Minnesota No-Fault Automobile Insurance Act.The United States District Court for the District of Minnesota granted summary judgment to the plaintiffs' injunctive class, enjoining Farmers from entering into or enforcing the no-bill agreements. The court found that these agreements effectively provided managed care services and set preestablished limitations on medical expense benefits, both of which are prohibited under the No-Fault Act. Farmers appealed the decision.The United States Court of Appeals for the Eighth Circuit reviewed the case and vacated the injunction. The court held that the no-bill agreements did not constitute managed care services as defined by the No-Fault Act because they excluded, rather than used, the providers under contract with Farmers. Additionally, the court found that the agreements did not place preestablished limitations on medical expense benefits since they did not limit reimbursement for reasonable expenses incurred by insureds. The court concluded that an insurer does not violate the No-Fault Act by enforcing a no-bill agreement against a provider, as long as it does not refuse to reimburse an insured who has incurred a qualifying expense. The case was remanded for further proceedings consistent with this opinion. View "Taqueria El Primo LLC v. IL Farmers Insurance Co." on Justia Law

In this case, the plaintiff, Shandor S. Badaruddin, was sanctioned by the Nineteenth Judicial District Court, Lincoln County, for his conduct as defense counsel in a criminal trial involving his client, Kip Hartman, who faced multiple felony charges related to securities and insurance fraud. The trial was conducted under strict time constraints due to the COVID-19 pandemic, and the court allocated equal time for both the prosecution and defense. Badaruddin was accused of mismanaging his allotted time, leading to a mistrial declaration by the District Court.The District Court found that Badaruddin had deliberately delayed the trial, which led to the mistrial. Consequently, the court imposed monetary sanctions amounting to $51,923.61 against Badaruddin for the costs associated with the trial. Badaruddin appealed the sanctions, arguing that he was not given adequate notice of the court's concerns and that his actions were not deliberate but rather a result of the challenging circumstances.The Supreme Court of the State of Montana reviewed the case and noted that the U.S. District Court had previously ruled that the mistrial declaration was erroneous. The U.S. District Court found that Badaruddin's actions did not constitute deliberate delay and that his efforts to manage the trial time were competent. The U.S. District Court's ruling was affirmed by the U.S. Court of Appeals for the Ninth Circuit, which held that Hartman could not be retried due to double jeopardy protections.Given the federal court's findings, the Supreme Court of Montana concluded that there was no basis for the sanctions under § 37-61-421, MCA, as there was no multiplication of proceedings. The court reversed the District Court's sanction order, determining that the costs incurred were not "excess costs" as defined by the statute. View "Badaruddin v. 19th Judicial District" on Justia Law

Kelsey Weyer applied for long-term disability benefits under a policy issued by Reliance Standard Life Insurance Company through her employer. Weyer suffers from multiple medical conditions, including chronic fatigue syndrome, Lyme disease, migraines, neurocognitive disorder, and others. The policy defines "Totally Disabled" differently for the first twenty-four months and thereafter. Initially, it means being unable to perform the duties of one's regular occupation, and after twenty-four months, it means being unable to perform any occupation. Reliance Standard initially approved Weyer’s claim and paid benefits for twenty-four months but later terminated them, arguing she could perform sedentary jobs and that her anxiety and depression contributed to her disability.The United States District Court for the District of Minnesota reviewed the case and ruled in favor of Weyer. The court found that the evidence did not support Reliance Standard’s claim that Weyer’s mental health issues contributed to her inability to work. It also held that Weyer was totally disabled under the policy’s "Any Occupation" standard, based on evidence from Weyer’s physicians and independent reviews.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court affirmed the district court’s decision, finding no clear error in its determination that Weyer was totally disabled and that her physical conditions alone rendered her unable to work. The appellate court also agreed that the mental health disorders did not contribute to her total disability under the policy’s terms. The court applied a "but-for" causation standard, concluding that Weyer’s physical conditions independently caused her total disability, thus the mental health limitation clause did not apply. The court affirmed the district court’s judgment in favor of Weyer. View "Weyer v. Reliance Standard Life Insurance Company" on Justia Law

In this case, a private insurance company, TIG Insurance Company, sought to enforce two judgments against the Republic of Argentina. The dispute centers on whether Argentina, as the successor to a state-owned Argentine company, Caja Nacional de Ahorro y Seguro, is liable under reinsurance contracts that Caja entered into with TIG in 1979. TIG alleged that Caja failed to pay as promised under these contracts, leading to arbitral awards and subsequent judgments in TIG's favor.The United States District Court for the District of Columbia initially ruled in favor of Argentina, finding that Argentina's property was immune from execution under the Foreign Sovereign Immunities Act (FSIA) because it was not used for commercial activity at the time the writ would issue. The court also held that the Illinois district court lacked jurisdiction over Argentina for the 2018 judgment and that TIG needed to amend the 2001 judgment in Illinois to name Argentina before seeking enforcement in D.C. TIG appealed these decisions.The United States Court of Appeals for the District of Columbia Circuit reviewed the case and concluded that two FSIA exceptions—the arbitration and waiver exceptions—might apply. The court held that an agreement could be "made by" a sovereign if it legally binds that sovereign to arbitrate, even if the sovereign was not an original signatory. The court also found that implied waiver does not require evidence of subjective intent but can be based on objective actions, such as agreeing to arbitration or a choice-of-law clause. The court vacated the district court's decisions and remanded for further analysis and factfinding on these issues.The appellate court affirmed the denial of TIG's request for jurisdictional discovery and precluded TIG from advancing an alter ego theory or arguing that Argentina failed to raise its immunity in a responsive pleading. The case was remanded for further proceedings consistent with the appellate court's instructions. View "TIG Insurance Company v. Republic of Argentina" on Justia Law

The plaintiffs, EB Holdings II, Inc. and QXH II, Inc., sought coverage from their insurers for legal fees and expenses incurred in defending against a lawsuit alleging fraudulent inducement in the purchase of notes backed by their long-term debt. The insurers denied coverage, claiming the plaintiffs made material misrepresentations in their insurance renewal application by failing to disclose significant long-term debt.The United States District Court for the District of Nevada granted summary judgment in favor of the insurers, concluding that Nevada law governed the affirmative defense of material misrepresentation. The court found that the plaintiffs had indeed made a material misrepresentation by not disclosing their long-term debt, thus barring coverage under the insurance policies.The United States Court of Appeals for the Ninth Circuit reviewed the case and reversed the district court's decision. The appellate court held that the district court erred in its choice-of-law analysis. The Ninth Circuit determined that Texas law, not Nevada law, should govern the affirmative defense of material misrepresentation. The court reasoned that the substantial relationship test set forth in the Restatement (Second) of Conflict of Laws § 188 pointed to Texas law, given that the underwriting process largely occurred through agents based in Texas and the plaintiffs were headquartered there.Applying Texas law, the Ninth Circuit found that there were material disputes of fact regarding the elements of the affirmative defense, including the plaintiffs' intent to deceive and whether the insurers provided timely notice of their refusal to be bound by the policy. Consequently, the court reversed the summary judgment and remanded the case to the district court for further proceedings. View "EB HOLDINGS II, INC. V. ILLINOIS NATIONAL INSURANCE COMPANY" on Justia Law