Justia Insurance Law Opinion Summaries

John and Judith Valloze and Nationwide Mutual Insurance Company; State Farm Mutual Auto Insurance Company; Freightliner Custom Chassis Corporation; Freightliner, Allison Transmission, Inc. ("Allison Transmission"); and Cummins Atlantic, LLC, separately petitioned the Supreme Court for writs of mandamus to direct the Franklin Circuit Court to dismiss the declaratory-judgment actions filed against them by Tiffin Motor Homes, Inc. Tiffin manufactured and sold custom-made motor homes. In its complaint in the Valloze action, Tiffin alleged that the Vallozes, who reside in Florida, purchased a Tiffin "Allegro Red" motor home that was manufactured by Tiffin in Red Bay, Florida. In 2011, the Vallozes' motor home caught fire somewhere in South Carolina and was declared a total loss. Nationwide insured the motor home, and it paid the Vallozes for their loss. Tiffin subsequently filed a complaint against the Vallozes, Nationwide, Freightliner, Allison Transmission, and Cummins in Alabama, describing Allison Transmission and Cummins as manufacturers of component parts for Tiffin that Tiffin alleged were the source of the fire. The Vallozes, Nationwide, Allison Transmission, Freightliner and Cummins filed motions to dismiss which were ultimately denied. The trial court did not provide reasons for its rulings. All parties appealed. In the Katnich action, Tiffin alleged that Karen Katnich purchased a Tiffin "Phaeton" motor home in Virginia, and somewhere in North Carolina, the motor home caught fire and suffered a total loss. Tiffin sued State Farm, Custom Automated Services, Inc., Waterway, Inc., Maxzone Auto Parts Corporation and Freightliner, alleging each manufactured parts for Tiffin that were the source of the fire. In both cases, Tiffin asserted that a real, present justiciable controversy existed between the parties as to the cause and origins of the motor home fires. Again the trial court denied motions to dismiss, and provided no reasons for its ruling. After its review, the Alabama Supreme Court concluded with the conclusion of the overwhelming majority of other jurisdictions that declaratory-judgment actions were not intended to be a vehicle for potential tort defendants to obtain a declaration of nonliability. Because a bona fide justiciable controversy did not exist either action, the Court concluded that the trial court erred in denying the petitioners' motions to dismiss Tiffin's complaints. View "Tiffin Motor Homes, Inc. v. Valloze " on Justia Law

State Farm Fire and Casualty Company appealed an adverse judgment entered on a jury verdict in in favor of homeowner and policyholder Shawn Brechbill on his claim of "abnormal" bad-faith failure to investigate an insurance claim. "A bad-faith-refusal-to-investigate claim cannot survive where the trial court has expressly found as a matter of law that the insurer had a reasonably legitimate or arguable reason for refusing to pay the claim at the time the claim was denied. Because State Farm repeatedly reviewed and reevaluated its own investigative facts as well as those provided by Brechbill, it is not liable for a tortious failure to investigate." The Supreme Court reversed the trial court's judgment and remanded the case for further proceedings. View "State Farm Fire and Casualty Company v. Brechbill " on Justia Law

Owners Insurance Company appealed a circuit court judgment declaring Owners was obligated to pay an arbitration award entered against Jim Carr Homebuilder, LLC ("JCH"), under the terms of a commercial general-liability insurance policy Owners had issued. Owners initiated a declaratory-judgment action against JCH seeking a declaration that it was not obligated to indemnify JCH for any judgment entered against JCH arising from a dispute that a house JCH constructed was poorly built. After the homeowners prevailed in their action against JCH, the trial court in the declaratory-judgment action entered a summary judgment holding that Owners was required to pay pursuant to the terms of the Owners policy. Upon review, the Supreme Court found that because JCH's faulty workmanship was not an "occurrence," the trial court's judgment was in error, and it was hereby reversed. View "Owners Insurance Company v. Jim Carr Homebuilder, LLC et al. " on Justia Law

Plaintiff Fernando Rodriguez-Flores appealed the dismissal of his claims of retaliatory discharge and fraud brought against his former employer, U.S. Coatings, Inc. He worked as a painter. He stated that he suffered on the job injuries from paint-fume inhalation and other maladies. He sued the employer for workmans' compensation benefits, asserting retaliatory discharge and fraud based on his physical complaints and subsequent treatment. The trial court dismissed his complaint. Finding that the trial court did not err with regard to dismissing Plaintiff's fraud claim, the Supreme Court affirmed to that regard. However, the Court concluded the trial court erred with regard to the retaliatory-discharge claim. The case was remanded for further proceedings. View "Rodriguez-Flores v. U.S. Coatings, Inc. " on Justia Law

Plaintiff Stanford Isbell sued M&J Materials, Inc. seeking workmans' compensation benefits. He also sought compensatory and punitive damages based on his claim of a retaliatory discharge. M&J denied liability, specifically averring that Plaintiff's employment was terminated for violating a workplace prohibition of carrying firearms. The parties settled their differences with regards to the workmans' compensation claims, leaving the retaliatory discharge to be heard by the trial court. The jury found in Plaintiff's favor, but the Court of Appeals reversed. Upon review of the matter, the Supreme Court concluded the appellate court erred in its analysis of the facts in record and the applicable law. Accordingly, the appellate court's judgment was reversed and the case remanded for further proceedings. View "M & J Materials, Inc. v. Isbell" on Justia Law

Southern Natural Gas Company (Sonat) sued Certain Underwriters at Lloyd's London and Certain London Marketing Insurance Companies (Phase III), alleging breach of numerous umbrella and excess liability policies. Sonat contended the insurance companies failed to pay certain environmental-remediation costs. The trial court granted summary judgment in favor of the insurers based on prior trials in Phases I and II of the case; Sonat appealed, and the insurers cross-appealed Phase III's outcome. Finding no abuse of the trial court's discretion, the Supreme Court affirmed. View "Certain Underwriters at Lloyd's, London v. Southern Natural Gas Company " on Justia Law

Shane Traylor Cabinetmaker, L.L.C. ("STC"), and Michael Shane Traylor sued American Resources Insurance Company, Inc., alleging breach of contract and bad faith, based on American Resources' refusal to defend or to indemnify STC and Traylor on counterclaims filed against them by Robert Barbee and R.L. Barbee Builders, Inc. in a separate action. The circuit court entered a summary judgment in favor of American Resources, and STC and Traylor appealed. Finding no error, the Supreme Court affirmed. View "Shane Traylor Cabinetmaker, L.L.C. v. American Resources Insurance Company, Inc. " on Justia Law

Brooks Insurance Agency, Sidney Brooks (its agent), and Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company (collectively "Nationwide") petitioned the Supreme Court for a writ of mandamus to direct the Jefferson Circuit Court to vacate its order denying their motion to dismiss an action filed by Guster Law Firm, LLC, and Guster Properties, LLP (collectively "Guster"), against them. Guster made a claim for a fire loss under commercial property policies issued to it by Nationwide. In April 2011, Nationwide filed a declaratory-judgment action requesting that the federal court determine the rights and obligations under the insurance policies it had issued to Guster. Guster answered and asserted compulsory counterclaims against Nationwide, including bad-faith failure to pay an insurance claim and breach of contract, among others. Months later, Guster filed a lawsuit in the Jefferson Circuit Court alleging against the agency, Brooks, and Nationwide: negligent/wanton failure to provide insurance coverage; misrepresentation; suppression and concealment; and negligent/wanton failure to train. The agency, Brooks, and Nationwide moved to dismiss the state court action on the ground that the action violated the state abatement statute and the compulsory-counterclaim rule. The trial court summarily denied the motion to dismiss. The agency, Brooks, and Nationwide then petitioned the Supreme Court for mandamus relief. Upon review, the Supreme Court affirmed in part, reversed in part, and issued the writ. Although the causes of action in the federal court and the state court arose out of the same transaction or occurrence and were thus related, Guster's claims against the agency and Brooks were not compulsory counterclaims in the federal declaratory-judgment action because the agency and Brooks were not "opposing part[ies]" in the federal action. Accordingly, the Alabama abatement statute mandated that the claims against Nationwide in Guster's complaint filed in state court be dismissed. The Court concluded that the agency and Brooks did not show a clear legal right to the dismissal of Guster's claims against them in the state-court action. However, Nationwide did show a clear legal right to the dismissal of Guster's claims against it in the state-court action, therefore the trial court erred in denying the motion to dismiss as to Nationwide. View "Guster Law Firm, LLC v. Brooks Insurance Agency" on Justia Law

Nationwide Mutual Fire Insurance Company and State Farm Mutual Automobile Insurance Company filed a declaratory-judgment action in the federal district court seeking, among other things, a determination of the status of a settlement agreement they had reached with D.V.G., a minor, resolving her claims for coverage stemming from injuries she received in an automobile accident, following her death in a subsequent unrelated automobile accident. The federal district court ultimately concluded that the issue presented involved a question of Alabama law for which there was no clear controlling precedent, and it certified the following question to the Alabama Supreme Court: "Under Alabama law, is an insurance company bound to a settlement agreement negotiated on behalf of an injured minor, if that minor dies before the scheduling of a pro ami hearing which was intended by both sides to obtain approval of the settlement?" The Court answered in the affirmative: "an insurance company is bound to a settlement agreement negotiated on behalf of an injured minor, even if that minor dies before the scheduling of the court hearing that all parties agreed was necessary to obtain approval of the settlement agreement. In accordance with the parties' understanding, such a hearing is still required, and the minor's death does not render that hearing impossible." View "Nationwide Mutual Insurance Company v. Wood" on Justia Law

The Alabama Insurance Guaranty Association ("AIGA") filed an action against Mercy Medical Association, and Catholic Health East, Inc. ("CHE"), seeking to recover money it had paid on behalf of Mercy Medical and CHE on workers' compensation claims filed by employees of Mercy Medical as well as a judgment declaring its right to reimbursement of statutory benefits to be paid on the employees' claims in the future. AIGA, Mercy Medical, and CHE each moved for a summary judgment. The trial court entered a summary judgment in favor of Mercy Medical and CHE, determining: (1) that the 2000 AIGA Act applied because it was in effect at the time of the insolvency of Reliance National Insurance Company (CHE's workers' compensation insurer), and at the time the workers' compensation judgment was entered against Mercy Medical; (2) that the 2009 AIGA Act did not apply retroactively because the 2009 amendments to the AIGA Act substantively changed the law; and (3) that under the 2000 AIGA Act, Mercy Medical's net worth did not exceed $25,000,000, so AIGA could not recover any amounts it had paid on behalf of Mercy Medical. AIGA appealed. Upon review, the Supreme Court concluded that the applicable law governing the vesting of AIGA's right to reimbursement of claims paid was the law in effect on the date of the insurer's insolvency. Further, the Court also concluded that the addition of the net-worth definitions in the 2009 AIGA Act were substantive and did not apply retroactively in this case. Finally, the Court concluded that AIGA was not entitled to reimbursement from Mercy Medical or CHE because, under the 2000 AIGA Act, Mercy Medical's net worth did not exceed $25,000,000 and the payments were not made on behalf of CHE. Accordingly, the Court affirmed the trial court's judgment in favor of Mercy Medical and CHE. View "Alabama Insurance Guaranty Association v. Mercy Medical Association" on Justia Law