Justia Insurance Law Opinion SummariesArticles Posted in Arkansas Supreme Court
Tomey v. Southern Farm Bureau Casualty Insurance Co.
The Supreme Court expanded the exception to the parental-immunity doctrine when the minor brings a direct-action suit against an insurance carrier for uninsured-motorist coverage to cover direct-action claims when underinsured benefits are at issue.A minor brought a direct-action suit against an insurance carrier for underinsured-motorist coverage. The insurer maintained that the minor could not recover under Arkansas's parental-immunity doctrine and denied the minor's claim against her mother's policy. The minor then filed a direct-action lawsuit against the insurer. The United States District Court for the Eastern District of Arkansas certified a question of law regarding the exception to the parental-immunity doctrine. The Supreme Court answered that the State of Arkansas recognizes an exception to the parental-immunity doctrine when the source of recovery is uninsured-motorist benefits under a motor-vehicle liability policy. View "Tomey v. Southern Farm Bureau Casualty Insurance Co." on Justia Law
Shelter Mutual Insurance Co. v. Lovelace
In this insurance dispute, the Supreme Court reversed the orders and judgment of the circuit court in favor of Edna Lyle Lovelace, holding that the circuit court erred in determining that Shelter Mutual Insurance Company's policy language excluding coverage for an intentional act, as applied to an innocent co-insured, is void against public policy.Shelter Mutual determined that Lovelace's husband, Frank Williams, caused the fire that destroyed Lovelace's home and its contents. Williams did by suicide inside the home and left a suicide note before the fire started. Shelter Mutual denied coverage to Lovelace in accordance with an exclusion precluding coverage for an intentional act. Lovelace brought this action, arguing that the policy language allowing Shelter Mutual to deny a claim by an innocent insured because of actions taken by another insured was void as against public policy. The circuit court ruled that the exclusion was void as against public policy and entered judgment against Shelter Mutual. The Supreme Court reversed, holding that the intentional-act exclusion as applied to an innocent co-insured was not void as against public policy. View "Shelter Mutual Insurance Co. v. Lovelace" on Justia Law
Crockett v. Shelter Mutual Insurance Co.
The Supreme Court affirmed the order of the circuit court granted summary judgment in favor of Shelter Mutual Insurance Company on Plaintiffs' claim arising from medical expenses they incurred following an automobile accident, holding that the trial court did not err in granting summary judgment.On appeal, Plaintiffs argued that the language in the relevant insurance policy was ambiguous or, in the alternative, the policy language was against public policy and should be declared void. The Supreme Court affirmed, holding (1) the applicable policy language was not ambiguous, and the policy was not against the public policy of the State of Arkansas; and (2) Plaintiffs' argument that the trial court erred in denying their motion in limine was moot. View "Crockett v. Shelter Mutual Insurance Co." on Justia Law
Columbia Ins. Group v. Cenark Project Mgmt. Servs., Inc.
Columbia Insurance Group, Inc. and Columbia Mutual Insurance Co. (collectively, Columbia) filed a complaint for declaratory judgment to determine Columbia’s obligations under the Commercial General Liability Insurance Policy (CGL policy) issued to its insureds, Arkansas Infrastructure, Inc. and David Barron (collectively, AII). Specifically, Columbia sought a declaration that it had no duty to defend or indemnify AII with respect to claims brought against AII in state court by Homeowners. A federal district court concluded that Columbia had an obligation to defend AII in the underlying suit. The district court then certified two questions of law to the Supreme Court, asking (1) whether faulty workmanship resulting in property damage to the work or work product of a third party constitutes an “occurrence," and (2) if so, and an action is brought in contract for property damage to the work or work product of a third party, whether any exclusion in the policy bars coverage for this property damage. The Supreme Court (1) reaffirmed the Court’s previous position that a CGL policy does not extend basic coverage for a claim of breach of contract; and (2) held that because there is no coverage under the policy in this case, the certified questions are moot. View "Columbia Ins. Group v. Cenark Project Mgmt. Servs., Inc." on Justia Law
Shelter Mutual Ins. Co. v. Goodner
Appellees’ property was insured under a Mobile Homeowners Insurance Policy issued by Appellant. The policy provided that, in the event of a covered loss, Appellant would pay Appellees the “actual cash value” of the damaged parts of the covered property. The policy defined “actual cash value” to mean “total restoration cost less depreciation.” After Appellees’ property incurred a loss covered by the policy, Appellant made a payment to Appellees representing the estimated cash value with a deduction for depreciation. The deduction for depreciation included depreciation of materials and labor. Appellees filed a petition for declaratory judgment seeking a declaration that Appellant violated the law and public policy by depreciating labor costs in calculating the actual cash value of the covered loss. The circuit court granted Appellees’ motion for summary judgment, concluding that depreciation of labor in the calculation of actual cash value under any policy that pays actual cash value is against the public policy of the state. The Supreme Court affirmed, holding that the practice of depreciating labor in calculating the actual cash value of a covered loss under an indemnity insurance policy violates Arkansas law. View "Shelter Mutual Ins. Co. v. Goodner" on Justia Law
Kolbek v. Truck Ins. Exch.
Truck Insurance Exchange (TIE) issued an apartment-owners insurance policy to appellant Jeanne Estates Apartments (JEA) that became effective in 1998. In 2006, Farmers Insurance Exchange (FIE) renewed the policy and continued to provide coverage. In 2008 and 2010, JEA became involved in three underlying lawsuits, which involved several appellants. JEA submitted claims for coverage to TIE/FIE in regard to those cases. TIE/FIE filed a complaint requesting that the circuit court declare that they owed no coverage to any person for any of the alleged misconduct which formed the basis of the claims in the underlying lawsuits and that they had no duty to provide a defense to any person or entity who was a defendant in the underlying lawsuits. The circuit court granted summary judgment in favor of TIE/FIE. The Supreme Court affirmed, holding that the apartment-liability contract issued by TIE/FIE did not provide an insured coverage for the type of harm alleged by the plaintiffs in the underlying suit. View "Kolbek v. Truck Ins. Exch." on Justia Law
Nationwide Mut. Ins. Co. v. Citizensbank & Trust Co.
Nationwide Mutual Fire Insurance Company issued a policy to Danny Ludwick insuring his home and its contents. The policy named Citizens Bank & Trust Company as the first mortgagee. The dwelling was subsequently destroyed by fire. However, based on material misrepresentations in Ludwick's application, Nationwide voided the policy back to its inception. Citizens submitted a claim to Nationwide. Nationwide denied the claim on the basis that the policy was void ab initio, allegedly extinguishing not only Ludwick’s interest but also Citizen’s interest as mortgagee. Citizens filed a complaint for wrongful denial of its claim. The circuit court granted summary judgment to Citizens. The Supreme Court affirmed, holding (1) an insurance company is entitled to rescission of its insured’s policy based on the insured’s fraud or misrepresentation, but the rescission of the policy has no effect on an independent contract with the mortgagee; and (2) because the policy at issue contained a standard mortgage cause, which operated as an independent contract between the insurance company and the named mortgagee, the rescission of Nationwide’s policy had no effect on the independent contract with Citizens. View "Nationwide Mut. Ins. Co. v. Citizensbank & Trust Co." on Justia Law
Adams v. Cameron Mut. Ins. Co.
Petitioners had a homeowners' insurance policy with Respondent that covered Petitioners' dwelling. The policy stated that any covered loss would be paid based on actual cash value, rather than replacement value, but the policy did not define the term "actual cash value." After Petitioners' dwelling was damaged by a tornado, Respondent valued Petitioners' loss at $48,647 after calculating the repair costs and the depreciation of the items requiring repair. Petitioners brought a class action in federal district court against Respondent, alleging that Respondent breached the insurance policy, and those policies of the putative class members, when it improperly applied a depreciation factor to the labor portion of repairs required at their respective dwellings. Specifically, Petitioners contend that their policy's failure to address depreciation of labor rendered the policy's term "actual cash value" ambiguous. The federal district court certified a question of law to the Supreme Court, which answered by holding that an insurer, in determining the "actual cash value" of a covered loss under an indemnity insurance policy, may not depreciate the costs of labor when the term "actual cash value" is not defined in the policy. View "Adams v. Cameron Mut. Ins. Co." on Justia Law
Corn v. Farmers Ins. Co., Inc.
After Opal Corn was rear-ended by Martha Gafford, she settled with Gafford and Gafford's insurer. Opal and L.B. Corn subsequently filed an underinsured motorist (UIM) claim with their insurer, Farmers Insurance Company, for the remaining damages from the accident. The Corns then filed suit against Farmers and a driver and company also involved in the accident (collectively, Eden). The Corns settled their claims with Eden, but their settlement was for less than the limits of Eden's insurance policy. Farms refused to offer UIM benefits and moved for summary judgment, arguing that because the Corns had failed to exhaust Eden's liability policy, they had not triggered UIM coverage under their policy with Farmers. The circuit court entered summary judgment for Farmers, finding that, based on the exhaustion requirement of UIM coverage and the policy language, the Corns were not entitled to UIM benefits. The Supreme Court affirmed, holding (1) insured persons are required to exhaust all liability insurance policies of all tortfeasors before they are entitled to receive UIM benefits; and (2) under the terms of the policy, UIM coverage was not triggered until all policy limits had been exhausted. View "Corn v. Farmers Ins. Co., Inc." on Justia Law
S. Farm Bureau Cas. Ins. Co. v. Parsons
Petitioner Southern Farm Bureau Casualty Insurance Company petitioned for a writ of prohibition with the Supreme Court, arguing the circuit court did not have jurisdiction after ninety days to set aside its previous order in this case. This matter stemmed from a motorcycle accident in which Stuart Parsons was injured with an uninsured driver. Parsons had uninsured-motorist coverage with Farm Bureau. He made a claim against that coverage, and signed a release allowing farm bureau to obtain his medical bills, and received a personal-injury protection payment. Parsons' medical bills exceeded the policy limit. Farm Bureau them filed a complaint for interpleader, requesting the circuit court disburse its uninsured-motorist limits. At that time, no other party had filed a lien nor claimed any interest in the policy proceeds. Acting pro se, Parsons answered and requested his policy be paid to him. The circuit court ordered Farm Bureau to deposit the funds into the court's registry and to disburse the money accordingly. Then Parsons filed a counterclaim seeking a statutory penalty, interst and attorney's dees, and to dismiss Farm Bureau's interpleader. After a hearing, the circuit court vacated an earlier order thereby allowing Parsons to proceed with his counterclaims against Farm Bureau. Farm Bureau then filed for a writ of prohibition, arguing the circuit court had no jurisdiction to set aside the order after ninety days from entry of the order. The Supreme Court considered Farm Bureau's petition for a writ of prohibition as a request for a writ of certiorari, and found that Farm Bureau had another adequate remedy. As such, the Court denied Farm Bureau's petition for certiorari, and dismissed the petition for the writ of prohibition as moot. View "S. Farm Bureau Cas. Ins. Co. v. Parsons" on Justia Law