Justia Insurance Law Opinion Summaries

Alexion Pharmaceuticals, Inc. develops therapies for rare disorders and was insured under two director and officer liability insurance programs covering different periods. The first program provided $85 million of coverage for claims made between June 27, 2014, and June 27, 2015 (Tower 1). The second program provided $105 million of coverage for claims made between June 27, 2015, and June 27, 2017 (Tower 2). In 2015, the SEC issued a formal investigation order against Alexion, which led to a subpoena seeking information related to Alexion’s grant-making activities and compliance with the Foreign Corrupt Practices Act (FCPA). Alexion disclosed this investigation to its Tower 1 insurers.The Superior Court of Delaware found that the SEC investigation and a later securities class action against Alexion were unrelated, placing the securities class action coverage in Tower 2. The court applied the “meaningful linkage” standard and concluded that the connection between the SEC investigation and the securities class action was insufficient to make them related.The Supreme Court of Delaware reviewed the case and disagreed with the Superior Court’s conclusion. The Supreme Court found that the securities class action was meaningfully linked to the wrongful acts disclosed in Alexion’s 2015 notice to its Tower 1 insurers. Both the SEC investigation and the securities class action involved the same underlying wrongful acts, including Alexion’s grant-making activities and compliance with the FCPA. The Supreme Court held that the securities class action claim should be deemed to have been first made during the Tower 1 coverage period, and therefore, coverage should be under Tower 1. The judgment of the Superior Court was reversed. View "In re Alexion Pharmaceuticals, Inc. Insurance Appeals" 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

Baylor Scott & White Holdings (BSW), the largest nonprofit health system in Texas, purchased a specialized commercial property insurance policy from Factory Mutual Insurance Co. (FM) to cover its facilities. The policy covered two types of claims—“Property Damage” and “Time Element” claims, which are synonymous with “business interruption” loss. BSW submitted a claim under the policy for its business interruption losses as a result of COVID-19, totaling over $192 million. FM denied the claim, stating that the only coverage under the policy for losses arising from COVID-19 came from the Communicable Disease Response Extension and the Interruption by Communicable Disease Extension, which had already been exhausted.FM moved to dismiss the amended complaint for failure to state a claim. The district court granted FM’s motion to dismiss, finding that BSW had not plausibly alleged “physical loss or damage” under the policy, and that the Contamination Exclusion and Loss of Use Exclusion barred BSW’s recovery under the policy. BSW appealed the district court’s dismissal order.The United States Court of Appeals for the Fifth Circuit affirmed the decision of the district court. The court held that, in the context of COVID-19 commercial-insurance coverage disputes, COVID-19 does not physically harm property. The court found that the alleged uniqueness of the policy’s language did not change this determination. The court also rejected BSW's contention that its complaint was wrongly dismissed because it included specific factual allegations of demonstratable, measurable, and tangible alteration of property caused by COVID-19. The court concluded that, as a matter of law, COVID-19 does not affect property in a “physical” way. View "Baylor Scott & White v. Factory Mutual" on Justia Law

The case revolves around an insurance dispute between the Bradshaw Family Trust Inc., operating as Hunton Office Supply Inc. (Hunton), and Twin City Fire Insurance Company (Twin City). In June 2019, Hunton renewed a business owner’s policy on its office supply store building, which included a building replacement cost of $1,378,000. In April 2020, the building sustained wind damage from a storm. Hunton sought an insurance payout for the building’s repairs, but Twin City only paid a fraction of what was expected. A dispute arose surrounding the effective date of proposed policy changes, leading Hunton to sue Twin City.Twin City moved for summary judgment in the United States District Court for the Eastern District of Arkansas, arguing that it did not breach the insurance contract. The district court granted Twin City’s motion for summary judgment. Hunton appealed the decision, arguing that the policy endorsement was invalid because there was no meeting of the minds, the endorsement was never delivered to him, and the extent of the insurance agent's authority was a material fact question precluding summary judgment.The United States Court of Appeals for the Eighth Circuit affirmed the district court's decision. The court found that the insurance agent had apparent authority to bind Hunton to the policy endorsement. It also concluded that based on the record, the only reasonable conclusion was that Hunton intended the policy changes to take effect immediately. Lastly, the court ruled that under Arkansas law, Hunton did not have to receive or sign the endorsement because it had requested the policy change. View "Bradshaw Family Trust Inc. v. Twin City Fire Insurance Co." on Justia Law

The case involves Illinois Casualty Company (ICC) and thirty-three models who contested whether arbitration was appropriate based on the assignment of several business insurance policies that ICC issued to B&S of Fort Wayne, Inc., Showgirl III, Inc., and Reba Enterprises, LLC (collectively, "Insured Clubs"). The models alleged that the Insured Clubs used their images for social media advertisements without their consent. The Insured Clubs had insurance policies with ICC, which they tendered for defense and indemnification. ICC denied coverage, leading to a settlement agreement between the Insured Clubs and the models, assigning the Insured Clubs’ rights against ICC to the models.The trial court compelled arbitration between ICC and the models. On appeal, the Indiana Court of Appeals reversed, finding that none of the models’ claims fell within the provision of the arbitration agreement. The models sought transfer to the Indiana Supreme Court.The Indiana Supreme Court held that an agreement to arbitrate in accordance with American Arbitration Association (AAA) rules constitutes “clear and unmistakable” intent to delegate arbitrability to an arbitrator. However, the court found that because no agreement to arbitrate existed between ICC and the Insured Clubs before 2016, the models could not compel arbitration for claims deriving from this period. The court affirmed in part and reversed in part, ruling that models with claims from 2016 and later could compel arbitration, but those with pre-2016 claims could not. View "Illinois Casualty Co. v. Burciaga" on Justia Law

The case involves Truck Insurance Exchange (Truck), the primary insurer for companies that manufactured and sold products containing asbestos. Two of these companies, Kaiser Gypsum Co. and Hanson Permanente Cement (Debtors), filed for Chapter 11 bankruptcy after facing thousands of asbestos-related lawsuits. As part of the bankruptcy process, the Debtors proposed a reorganization plan that created an Asbestos Personal Injury Trust (Trust) to handle all present and future asbestos-related claims. Truck, contractually obligated to defend each covered asbestos personal injury claim and to indemnify the Debtors for up to $500,000 per claim, opposed the Plan, arguing that it exposed them to millions of dollars in fraudulent claims due to different disclosure requirements for insured and uninsured claims.The District Court confirmed the Plan, concluding that Truck had limited standing to object to the Plan because it was “insurance neutral,” meaning it did not increase Truck’s prepetition obligations or impair its contractual rights under its insurance policies. The Fourth Circuit affirmed this decision, agreeing that Truck was not a “party in interest” under §1109(b) of the Bankruptcy Code because the plan was “insurance neutral.”The Supreme Court of the United States reversed the Fourth Circuit's decision, holding that an insurer with financial responsibility for bankruptcy claims is a “party in interest” under §1109(b) of the Bankruptcy Code and may raise and appear and be heard on any issue in a Chapter 11 case. The Court reasoned that §1109(b)’s text, context, and history confirm that an insurer such as Truck with financial responsibility for a bankruptcy claim is a “party in interest” because it may be directly and adversely affected by the reorganization plan. The Court also rejected the “insurance neutrality” doctrine, stating that it conflates the merits of an objection with the threshold party in interest inquiry. The case was remanded for further proceedings consistent with the Supreme Court's opinion. View "Truck Insurance Exchange v. Kaiser Gypsum Co." on Justia Law

In the case before the Supreme Court of California, Another Planet Entertainment, LLC, a live entertainment venue operator, sued its insurer, Vigilant Insurance Company, for denying its claim for coverage of pandemic-related business losses. The plaintiff argued that the actual or potential presence of the COVID-19 virus at its venues constituted "direct physical loss or damage to property," triggering coverage under its insurance policy. The district court dismissed the case, and the plaintiff appealed. The Ninth Circuit Court of Appeals then asked the Supreme Court of California to clarify whether the presence of the COVID-19 virus could constitute "direct physical loss or damage to property" under California law.The Supreme Court of California concluded that allegations of the actual or potential presence of COVID-19 on an insured’s premises do not, without more, establish direct physical loss or damage to property within the meaning of a commercial property insurance policy. Under California law, direct physical loss or damage to property requires a distinct, demonstrable, physical alteration to property. The physical alteration need not be visible to the naked eye, nor must it be structural, but it must result in some injury to or impairment of the property as property. The court found that Another Planet’s allegations did not satisfy this standard. While Another Planet alleges that the COVID-19 virus alters property by bonding or interacting with it on a microscopic level, Another Planet does not allege that any such alteration results in injury to or impairment of the property itself. Its relevant physical characteristics are unaffected by the presence of the COVID-19 virus. View "Another Planet Entertainment, LLC v. Vigilant Insurance Co." on Justia Law

The case revolves around a dispute between MMG Insurance Company (MMG) and the Estate of Philip J. Greenlaw. The dispute arose after the death of Philip Greenlaw, who died while wrestling with his friend, Joseph McNeely. Prior to the incident, McNeely, who operated a landscaping business, had visited Greenlaw's house to provide an estimate for a landscaping project. The visit was part of an informal social gathering where business-related topics were often discussed. After the incident, the Estate filed a wrongful death action against McNeely. MMG, which had issued a business insurance policy to McNeely, sought a declaratory judgment that it had no duty to indemnify McNeely in the wrongful death action.The Superior Court (Cumberland County) granted MMG's motion for summary judgment, determining that McNeely was not covered as an insured under MMG’s business insurance policy because his actions while wrestling with Greenlaw were not related to the conduct of his landscaping business. The Estate appealed this decision, arguing that there were triable issues of fact regarding whether Greenlaw’s death occurred with respect to the conduct of McNeely’s business.The Maine Supreme Judicial Court affirmed the lower court's judgment. The court found that the insurance policy provision was unambiguous and that McNeely was covered as an insured only with respect to the conduct of his business. The court also agreed with the lower court's determination that there was no genuine issue of material fact and that McNeely’s actions while wrestling with Greenlaw were not related to the conduct of his landscaping business. Despite the business-related discussions and activities that occurred earlier in the evening, the court concluded that McNeely's wrestling actions were not taken with respect to the conduct of his business. View "MMG Insurance Company v. Estate of Greenlaw" on Justia Law

Apex Solutions, Inc., a cannabis business, filed a lawsuit against Falls Lake Insurance Management Company, Inc., after the insurance company refused to pay the full amount of a claim Apex filed following a burglary at its facility. The burglars stole a large portion of Apex's cannabis inventory from two separate vaults. Apex claimed that the thefts constituted two separate occurrences, each subject to a $600,000 per occurrence limit under its insurance policy. Falls Lake, however, contended that the thefts constituted a single occurrence, subject to a single $600,000 limit.The Superior Court of California, County of Alameda, granted summary judgment in favor of Falls Lake, ruling that a single per occurrence limit applied. The court also rejected Apex's claim for additional payments under its business interruption coverage.On appeal, the Court of Appeal of the State of California, First Appellate District, Division Four, affirmed the lower court's ruling on the per occurrence limit, agreeing that the thefts constituted a single occurrence. However, the appellate court found that Apex had raised a triable issue of fact regarding the calculation of its lost business income. The court therefore reversed the judgment in part and remanded the case for further proceedings on that issue. View "Apex Solutions v. Falls Lake Insurance Management Co., Inc." on Justia Law

The case involves Century Aluminum Company and its subsidiaries (Century), and Certain Underwriters at Lloyd's, London (Lloyd's). Century uses river barges to transport alumina ore and other materials for its aluminum smelting operations. In 2017, the Army Corps of Engineers closed key locks on the Ohio River, causing Century to seek alternative transportation. Century filed a claim with Lloyd's, its maritime cargo insurance policy provider, for the unanticipated shipping expenses. While Lloyd's paid $1 million under the policy's Extra Expense Clause, it denied coverage for the rest of the claim.The case was first heard by the United States District Court for the Western District of Kentucky. Century sought a declaration that its denied claims were covered by the insurance policy and requested damages for Lloyd's alleged breach of contract among other violations of Kentucky insurance law. Lloyd's sought summary judgment, arguing that the policy did not cover the claims. The district court sided with Lloyd's.The appeal was heard before the United States Court of Appeals for the Sixth Circuit. Century argued that the policy's All Risks Clause, Risks Covered Clause, Shipping Expenses Clause, and Sue and Labour Clause required Lloyd's to cover the additional shipping expenses. The court rejected these arguments, affirming the district court's ruling. The court held that under the All Risks Clause and Risks Covered Clause, Century's alumina did not suffer any physical loss or damage. As for the Shipping Expenses Clause, it covered the risk of a failed delivery, not an untimely one. Lastly, under the Sue and Labour Clause, Century was required to mitigate Lloyd's exposure under the policy, but it did not obligate Lloyd's to pay anything for reducing losses that fall outside the policy. View "Century Aluminum Co. v. Certain Underwriters at Lloyd's, London" on Justia Law