Justia Insurance Law Opinion Summaries

Hall, the debtor in bankruptcy, is a former distributor of asbestos products. Tens of thousands of asbestos claims were filed against Hall, which had $10 million remaining in insurance coverage from one of its insurers, Integrity, itself bankrupt. Integrity challenged whether the policy covered the loss for which Hall was seeking indemnity. The parties agreed to settle for $4.125 million; the bankruptcy judge approved the settlement. Columbia, an excess insurer of Hall’s asbestos liabilities, with maximum coverage of $6 million, was concerned that Hall, having settled against Integrity rather than persisting in litigation, increased the likelihood of Columbia’s having to honor its secondary‐coverage obligation. Columbia filed an objection to the settlement. The bankruptcy judge refused to consider the objection, on the ground that Columbia had no right to object. The district judge affirmed. The Seventh Circuit, affirmed, stating that the matter was not a question of “standing,” but whether the Bankruptcy Code, in providing that “a party in interest, including the debtor, the trustee, a creditors’ committee, an equity security holders’ committee, a creditor, an equity security holder, or any indenture trustee, may raise and may appear and be heard on any issue in a case [arising] under” the Code, 11 U.S.C. 1109(b), conferred a right to be heard on a debtor’s insurer. View "In Re: C.P. Hall Co." on Justia Law

Amzak appealed the district court's summary judgment on its loan loss claims against its title insurance policy provider and related entities. The court concluded that Amzak failed to show that it suffered actual loss because of a failure of title and STL could not be held responsible for any harm suffered by Amzak. The court formalized the holding in First State Bank v. American Title and likewise rejected the guarantee rationale of Citicorp Savings of Illinois v. Stewart Title Guaranty Co., and agreed with the district court's rejection of Amzak's argument that STL breached the title policy at the time of the loan because its mortgage was voidable at that time. The court also disposed of Amzak's negligence claim where STL's delay in making a complete filing of Amzak's mortgage was not a legal cause of Amzak's loss. Accordingly, the court affirmed the judgment of the district court. View "Amzak Capital Mgmt. v. Stewart Title" on Justia Law

Appellant appealed the Bankruptcy Appellate Panel's (BAP) judgment holding that the bankruptcy estate of her former employer, Racing Services, was entitled to the liquidation proceeds of a cash-value life insurance policy the employer purchased for her. Because the trustee had presented no evidence demonstrating that appellant could have demonstrated insurability, the court rejected the argument that the purported "equities" of this case required that the court deem appellant's failure to reinstate the policy as an act of surrender. The terms of the agreement between appellant and Racing Services granted Racing Services only the limited right to receive a repayment of policy premiums from the cash value upon surrender of the policy. Accordingly, the court reversed where appellant at no time surrendered the policy and the estate did not possess a right to control the policy or receive its liquidation proceeds. View "Kaler v. Bala" on Justia Law

This case stemmed from a dispute involving a Master Services Agreement (MSA) between BHP and Deep Marine. At issue on appeal was whether Underwriters could enforce BHP's contractual insurance, defense, and indemnity obligations to Deep Marine after Deep Marine's bankruptcy discharge. The court concluded that, even assuming arguendo that the MSA required indemnification against liability and that Deep Marine will eventually be held liable, Underwriters still could not prevail because BHP's indemnification obligation runs only to Deep Marine; Deep Marine would not, and could not, incur any loss in the Duval action, so Underwriters could not seek indemnification from BHP; because BHP had agreed to continue providing Deep Marine with a nominal defense, Underwriters would not have a breach of contract claim against BHP; the additional insured and primary insurance requirements do not apply BHP's self-insurance; BHP's only obligation was an indemnification obligation to Deep Marine; unlike Underwriters, it had no secondary liability to injured tort victims, like Duval; and Duval had no claim against BHP and, therefore, tender under Federal Rule of Civil Procedure 14(c) was improper. Accordingly, the court affirmed the judgment. View "Duval v. Northern Assurance Co." on Justia Law

The Trustee in bankruptcy of ESA appealed from the affirmance by the district court of the award of summary judgment by the bankruptcy court to Hanover. The bankruptcy court concluded that ESA's transfer of $1.375 million to Hanover within 90 days of ESA's filing a petition for bankruptcy was not an avoidable preference under 11 U.S.C. 547(b). The court held that, although the bankruptcy court erred in finding that the earmarking defense applied in this case, the court found no error in its determination that Hanover was entitled to the new value defense under section 547(c) to the Trustee's claim of a preferential transfer. Therefore, the court affirmed the judgment of the bankruptcy court awarding summary judgment to Hanover. View "ESA Environmental Specialists, Inc. v. The Hanover Ins. Co." on Justia Law

DWS Properties (DWS) owned rental property. The sole member of DWS was Dustin Shore. After a pipe burst at the property causing substantial damage, Shore executed contracts with Performance Adjusting Public Insurance Adjusters (Performance) and Multi-State Restoration (Multi-State), in which Performance agreed to provide public adjusting service relative to the loss, and Multi-State agreed to perform emergency clean-up work at the property. Performance and Multi-State (Plaintiffs) were never paid for the services they provided, and after Shore filed for personal bankruptcy, Shore's debts to Plaintiffs were discharged. Plaintiffs subsequently filed suit against DWS, seeking damages for book account, breach of contract, quasi-contract, and unjust enrichment. DWS filed a motion to dismiss, which the hearing justice converted into a motion for summary judgment and granted, reasoning that Shore had signed the contracts in an individual capacity without making any reference to DWS. The Supreme Court vacated the judgment of the superior court and remanded, holding (1) summary judgment was inappropriate on Plaintiffs' contract claims; and (2) the fact that DWS was not explicitly named on the contracts did not entitle it to judgment as a matter of law on Plaintiffs' equitable claims. View "Multi-State Restoration, Inc. v. DWS Props., LLC" on Justia Law

Defendant was a former employee and sole stockholder of RSI Holdings. RSI Holdings was the sole stockholder of the debtor. This appeal involved a dispute over a life insurance policy where defendant's estate was listed as the beneficiary. The Bankruptcy Appellate Panel (BAP) affirmed the bankruptcy court's summary judgment determination that the bankruptcy estate was entitled to the cash value proceeds of the life insurance policy debtor had obtained for defendant during her employment. View "Kaler v. Bala" on Justia Law

Debtors filed for bankruptcy protection under Chapter 13. At issue was whether debtors could exclude an annuity debtor received under the Railroad Retirement Act of 1974 (RRA), 45 U.S.C. 451m(a), when calculating their "projected disposable income," which determined the amount they must repay creditors to qualify for Chapter 13 relief. The court concluded that the Bankruptcy Appellate Panel's decision was reviewable. Applying a trust law understanding of the statute pursuant to Hisquierdo v. Hisquierdo, the court held that the RRA's anti-anticipation clause, which provided that the payment of an annuity shall not be "anticipated," referred to premature receipt of payment, and thus did not preclude the inclusion of the RRA annuity payments in Chapter 13 debtors' projected disposable income. View "In re: Robert Scholz & Carolyn Scholz" on Justia Law

Joseph Terry, who received long-term disability benefits, filed a Chapter 7 bankruptcy petition. Terry later sued the bankruptcy trustee, seeking a declaration that his disability insurance provider, Standard Insurance Company, should not have reduced his benefits by the amount of certain "voidable" payments. The bankruptcy court ruled that Standard was precluded from recouping the payments. The bankruptcy appellate panel (BAP) reversed, holding that recoupment was subject to a a "balancing of the equities." On remand, the bankruptcy court found that the equities prevented Standard from recouping the payments. The Eighth Circuit Court of Appeals reversed, holding that the BAP (1) erred by introducing a balancing of the equities test into the doctrine of recoupment and by invoking these equitable principles to deny Standard a right of recoupment; and (2) abused its discretion in how it weighed the equities. View "Terry v. Standard Ins. Co." on Justia Law

Sandra Emas owned a life insurance policy issued by ReliaStar. The policy named her estate as the beneficiary. When Emas died intestate, she left her son, Jaysen McCleary, as her only heir. McCleary was appointed the administrator of his mother's estate. McCleary later filed for personal bankruptcy. McCleary, as the administrator of the estate, subsequently filed suit against ReliaStar, alleging that ReliaStar had wrongfully refused to pay the estate benefits under Emas's insurance policy. ReliaStar moved for summary judgment, arguing that Emas's interest in any cause of action against ReliaStar passed immediately to McCleary upon her death. The district court granted summary judgment in favor of ReliaStar. The Eighth Circuit Court of Appeals affirmed, holding (1) the estate was functionally closed, and McCleary could not bring a suit on behalf of a closed estate; and (2) there was not an issue of fact as to whether McCleary sold the estate's interest in his bankruptcy proceedings, as McCleary had the authority to sell the estate's interest in its claims against ReliaStar. View "McCleary v. Reliastar Life Ins. Co." on Justia Law