Justia Insurance Law Opinion Summaries

Claimant Carl Wynne was a truck driver. While he was in Tennessee driving a truck for his former employer, he heard that Triad Transport, Inc. was hiring. Claimant called Triad’s headquarters in McAlester and spoke to a recruiter who had hiring authority. Claimant requested that an application be sent by fax to Odessa, Texas, where he lived. He completed the application and sent it by fax to McAlester. A week or so later, the recruiter phoned while Claimant was driving somewhere between Georgia and Arizona that his application had been approved. Claimant agreed to travel to McAlester for orientation. He returned his prior employer's truck to a terminal in Tuscon, Arizona, and a Triad employee gave him a ride to a Triad satellite terminal in Laveen, Arizona. There, he passed a drug test, was provided a fuel card, and dispatched to Rockwall, Texas with a load. In 2010, Claimant was injured in a motor vehicle accident in Colorado while he was driving Triad’s truck. He filed a Form 3 claim for benefits in the Oklahoma Workers' Compensation Court which Triad opposed. The trial tribunal conducted a hearing solely on the issue of the court's jurisdiction. Two witnesses were presented, Claimant and the President of Employer. Claimant testified concerning when and where he was actually hired, and Employer's President testified to the general hiring practices of his company. The recruiter was not called to testify. The trial tribunal made several findings of fact and concluded that it had jurisdiction to hear the case of Claimant's subsequent injury as Claimant's hiring and final assent to permanent employment relationship between claimant and respondent occurred in Oklahoma. A three-judge panel of the Workers' Compensation Court unanimously affirmed the decision. The Supreme Court’s de novo review of the record, the testimony of the witnesses, and the arguments of the parties lead to the conclusion that Claimant's final assent to employment did not occur until he attended the orientation in Oklahoma, “[t]hat process began when Claimant first made contact with [Triad’s] recruiter, but it did not end until Claimant gave his final assent to employment during the orientation in Oklahoma. The Workers' Compensation Court did not err in determining that it has jurisdiction to hear the claim.”

Robert Johnson filed a summons and complaint against Cintas Corporation, alleging he had automobile liability insurance coverage through Cintas. Johnson subsequently served his summons and complaint upon the registered agent for Cintas Corporation No. 2, a wholly owned subsidiary of Cintas. Johnson then amended his summons and complaint to name Cintas No. 2 as the correct defendant. The circuit court granted default judgment against Cintas No. 2 and denied that Cintas No. 2 was entitled to notice of the amended summons and complaint. The court of appeals reversed, holding that because Johnson's summons and complaint did not name Cintas No. 2 as a defendant, the circuit court lacked personal jurisdiction over Cintas No. 2, and therefore, the default judgment was void. The Supreme Court affirmed, holding that service in this case was fundamentally defective because Johnson failed to name Cintas No. 2 as a defendant in his summons and complaint, and therefore, the circuit court lacked personal jurisdiction over Cintas No. 2, regardless of the manner in which Cintas No. 2 held itself out to the public or to Johnson specifically.

This case required the Supreme Court to answer a threshold question concerning whether an appeal in this insurance company rehabilitation case could go forward. The court of appeals granted the motion of the Office of the Commissioner of Insurance to dismiss the appeal by the United States. The Commissioner had argued that the appeal should be dismissed either on the grounds that the notice of appeal was fundamentally defective such that the court of appeals had no jurisdiction or on the grounds that the United States had waived its right to appeal issues by failing to appear in the circuit court. The court of appeals concluded that the notice of appeal did not include a signature of an "attorney of record" as Wis. Stat. 802.05 required and dismissed on jurisdictional grounds without deciding the waiver issue. The Supreme Court affirmed on the basis of waiver, holding that the U.S.'s failure to litigate any issues involved in the circuit court precluded the U.S. from pursuing relief in the court of appeals.

Insured appealed the circuit court's grant of judgment on the pleadings to Broker on Insured's claims that Broker violated a fiduciary duty of loyalty to Insured by not disclosing that Broker received contingent commissions from Insurers for directing Insured's business to them and that Broker kept all interest earned on the premiums Insured sent it between the time Broker received them and the time they were forwarded to the Insurers. In addition, Insured argued that Broker breached a duty to find it the least costly policy possible. The Supreme Court reversed, holding (1) brokers do not have a duty to find insureds the lowest possible cost insurance available to meet their needs; (2) Missouri law specifically authorizes a broker to receive commissions from the insurer and to deposit premiums in an account pending their payment to the insurer or refund to the insured; but (3) the trial court erred by dismissing the petition because it could not be said as a matter of law that Emerson could not recover on one or more of its claims. Remanded.

Auto Owners Insurance, Inc. (Auto Owners) appealed a circuit court's denial of its motion to dismiss or, in the alternative, to compel arbitration in an action against it filed by Blackmon Insurance Agency, Inc. Blackmon and Auto Owners entered into an "agency agreement" authorizing Blackmon to act as an agent for the sale of Auto Owners' insurance in Alabama (the 1995 agreement). A 2005 document entitled "Letter of Instructions" was alleged to be an independent document from the 1995 agreement. Auto Owners contended that the 2005 document was contemplated by and incorporated into the 1995 agreement. The 2005 document contained instructions governing the issuance of a variety of bonds by an agency of Auto Owners. In late 2010, Blackmon filed a complaint in the circuit court seeking a declaratory judgment as to the arbitrability of a dispute between Blackmon and Auto Owners as to which Auto Owners had already initiated arbitration proceedings in its home state of Michigan. Blackmon also alleged that in the Michigan arbitration proceeding Auto Owners based its claims on the 2005 document and a 2009 agreement. Upon review of the matter, the Alabama Supreme Court concluded that the circuit court erred in denying Auto Owners' motion to compel arbitration. The Court therefore reversed that order and remanded the case for the circuit court to grant the motion to compel arbitration and either issue a stay of these proceedings pending arbitration or dismiss the case.

Anthem Health Plans of Maine appealed from a judgment entered in the Business and Consumer Docket affirming a decision by the Superintendent of Insurance (1) determining that Anthem's proposed rate increase for its individual health insurance products was excessive and unfairly discriminatory, and (2) indicating that an average rate increase with a lower profit margin for those products would be approved. Anthem appealed, contending that the Superintendent's decision violated Me. Rev. Stat. Ann. 24-A, 2736 (the statute) and the state and federal Constitutions because the approved rate increase eliminated Anthem's opportunity to earn a reasonable profit on its line of individual health insurance products. The Supreme Court affirmed, holding (1) the Superintendent properly balanced the competing interests within the statutory framework of the statute in arriving at its approved rate increase; and (2) because the approved rate provided a built-in risk and profit margin, Anthem's argument that the Superintendent improperly cross-subsidized between Anthem's regulated and unregulated product lines, and the corollary argument that the approved rate resulted in an unconstitutional confiscatory taking, necessarily failed as a matter of law.

In 2005, Plaintiff Marlene Harris purchased a car from Defendant David Stanley Chevrolet. Her purchase agreement contained an arbitration provision that applied to any "controversy, claim or dispute between the Purchaser and the Dealer arising out of, or related to this sale or transaction, including but not limited to, any and all issues or disputes arising as a result of this sale or transaction whether said issues arise prior to, during or subsequent to the sale or attempted sale of a vehicle." A few days after executing the purchase agreement, Plaintiff entered into a GAP insurance contract sold to her by an employee of the dealership (acting as an agent of the insurance company). In 2009, the car was a total loss. The GAP insurance company refused to pay the total difference between the insurance proceeds and the amount owed on the car, and Plaintiff sued to compel the GAP coverage. Plaintiff maintained that the purchase of the vehicle and the purchase of the policy were separate transactions, and that the arbitration clause of the purchase contract was inapplicable to the underpayment of coverage (GAP coverage). She argued no claim was brought against the GAP insurance company which was related to the sale or financing of the vehicle, conceding the arbitration clause would have applied to claims related to the sale or financing issues. After reviewing the motions of the parties, the trial court denied Defendant's Motion to Compel arbitration without an evidentiary hearing. Upon review, the Supreme Court concluded that the two contracts involved two separate subjects, executed on different dates, and the arbitration clause in the purchase agreement did not mention or reference GAP insurance or any relationship between the two contracts. The trial court did not abuse its discretion in denying the evidentiary hearing and ruling that the arbitration clause did not apply as a matter of law.

As a result of Hurricane Katrina, the Mississippi Windstorm Underwriting Association (MWUA) sustained great losses well in excess of its reinsurance. MWUA assessed its members to cover the loss. Members are required to share in MWUA’s expenses, profits, and losses based on their percentages of wind and hail insurance premiums written in the previous calendar year. After the initial assessments, several member companies complained that they had incorrectly reported the previous year's figures. The Board of Directors gave the members a one-time opportunity to submit corrected data (a true-up). Some members (most of whom did not submit corrected data) appealed the assessment following the true-up. The Board denied their appeals. The members appealed their claims to the Insurance Commissioner, and the Commissioner denied their requested relief. Thereafter, the members appealed the Commissioner’s decision to the chancery court, which granted the members relief on all but one issue. Aggrieved, MWUA appealed the chancery court's judgment, and the members filed a cross-appeal. MWUA presented eight issues on appeal to the Supreme Court. Upon review, the Supreme Court affirmed the chancellor's judgment on two issues: grouping and reinsurance allocation. But the Court reversed and remanded the chancellor's judgment on the remaining issues.

Okmulgee Inn Venture, LLC (Okmulgee) leased space to a nightclub-bar and was a named insured on a liquor liability insurance policy. Okmulgee’s insurer, Mount Vernon Fire Insurance Company (Mt. Vernon), assumed a duty to defend Okmulgee against suits seeking damages for injuries covered by the policy. In 2006, three bar patrons sustained gunshot wounds during a fight at the nightclub and sued Okmulgee, alleging, among other things, that Okmulgee failed to ensure the safety of the bar’s patrons, properly train the bar's staff, or investigate the bar’s operator. The only specific allegations pertaining to alcohol were that two of the three victims were under-age but were admitted to the bar and served alcohol. Mt. Vernon refused to defend Okmulgee in these suits. Mt. Vernon asserted there was no coverage under the policy, and thus no duty to defend or indemnify, because the allegations did not indicate the injuries were caused by the selling, serving, or furnishing of alcoholic beverages. Mt. Vernon then initiated this declaratory judgment action to determine its obligations. On cross motions for summary judgment, the district court ruled in favor of Mt. Vernon. Okmulgee insisted Mt. Vernon owed it a duty to defend because the facts showed that coverage was provided by the policy. Because the victims had yet to establish Okmulgee’s liability for any claims, the Tenth Circuit concluded after its review that the question of Mt. Vernon’s duty of indemnification was not ripe for adjudication. Mt. Vernon is obligated to defend its insured, and Okmulgee was entitled to summary judgment on the duty-of-defense issue.

Doctors' Associates, Inc. (DAI) owns the "Subway" trademark and franchises the right to operate Subway sandwich shops nationwide. A claimant sought workers' compensation benefits for a work-related injury sustained while working for an uninsured Subway franchisee. The DAI and Uninsured Employers' Fund (UEF) were later joined as parties. The sole issue submitted for a decision by the ALJ was whether DAI was a contractor and, thus, liable to the employee of its uninsured subcontractor. The ALJ dismissed the UEF's claim against DAI, ruling that Ky. Rev. Stat. 342.610, which provides that a contractor can be liable to the employee of its uninsured subcontractor, imposed no liability on DAI because the statute did not encompass franchise relationships. The workers' compensation board affirmed. The court of appeals reversed, holding that the ALJ committed by legal error by concluding that the legislature did not intend for section 34.610 to encompass the franchisor-franchisee relationship simply because the statute failed to mention the relationship. The Supreme Court reversed, holding (1) the ALJ erroneously interpreted section 342.610, but (2) the error did not require reversal of the ALJ's ruling because the ALJ properly analyzed the facts of the case under the statute.