Justia Insurance Law Opinion Summaries

Articles Posted in California Courts of Appeal
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Defendant was charged with driving under the influence of alcohol and obtained a $35,000 bond for his release from custody. The surety promised to assure Defendant’s appearance for arraignment. The contract stated that, if Defendant left the jurisdiction, he would “voluntarily return” and “waive extradition.” On the day of the arraignment, Defendant's indemnitor informed the surety Defendant told her he was in Mexico. The court forfeited the bail bond. Under Penal Code 1305(c), the court was required to vacate the forfeiture if Defendant appeared in court, either voluntarily or in custody, within 180 days. The court extended the appearance period by six months. The surety then moved to vacate the forfeiture and exonerate the bond or to toll or extend time, arguing that Defendant was located in Mexico and “subject to “constructive custody,” having obtained a Mexican passport and applied for a U.S. visa. The surety contended the People were imposing improper conditions, including a requirement that the surety pay for extradition ($50,000). The surety argued Defendant was in effect detained as a result of immigration laws that precluded his reentry. The People argued they could not extradite Defendant on a misdemeanor charge and that he was not detained but left the country voluntarily. The court of appeal affirmed summary judgment against the surety, rejecting an argument that Defendant suffered from a “temporary disability” under Penal Code 1305(e), View "People v. The North River Insurance Co." on Justia Law

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After a customer purchased a pharmaceutical product from Target (the retailer) which was distributed by McKesson (the supplier), she experienced an adverse reaction to the product that resulted in serious bodily injury. The customer filed suit against Target, and McKesson and Golden State Insurance (the carrier) refused to defend it. Target then filed suit against McKesson and Golden State, seeking to compel them to defend it. The trial court granted McKesson and Golden State's motion for summary adjudication. The Court of Appeal affirmed, holding that the indemnification/defense clause in McKesson's contract with Target and the additional insured endorsement did not require McKesson and Golden State to defend Target against the customer's lawsuit. In this case, the customer's claim was based on Target's mislabeling of a product that was not defective. Therefore, Target's actions came within the exclusions of the additional insured endorsement for repackaging and labeling and relabeling. Furthermore, the additional insured endorsement did not impose on McKesson a duty to provide additional insured coverage that would protect Target from the customer's claim that it had mislabeled the medication and had failed to warn of possible adverse reactions and side effects. View "Target Corp. v. Golden State Insurance Co. Ltd." on Justia Law

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In 2005, Protective Life Insurance Company (Protective Life) issued William McHugh a 60-year term life policy (the policy) that provided for a 31-day grace period before it could be terminated for failure to pay the premium. McHugh failed to pay the premium due on January 9, 2013, and his policy lapsed 31 days later. McHugh passed away in June 2013. This appeal raised one fundamental issue: whether Insurance Code sections 10113.71 and 10113.72 ("the statutes"), which came into effect on January 1, 2013, applied to term life insurance policies issued before the statutes' effective date. Mchugh's daughter, Blakely McHugh, the designated beneficiary under the policy, and Trysta Henselmeier (appellants) sued Protective Life for breach of contract and breach of the implied covenant of good faith and fair dealing, claiming Protective Life failed to comply with the statutes' requirement that it provide a 60-day grace period before it terminated the policy for nonpayment of premium. The parties filed various trial court motions, and Protective Life, relying largely on interpretations of the Department of Insurance (the Department) argued that the statutes did not apply retroactively to McHugh's policy and the claim. The court rejected Protective Life's arguments and ruled that the statutes applied to the claim. The matter proceeded to jury trial and Protective Life prevailed. Appellants appealed both a special verdict in favor of Protective Life and an order denying their motion for judgment notwithstanding the verdict (JNOV). Pursuant to Code of Civil Procedure section 906, Protective Life requested that the Court of Appeal affirm the verdict on the additional ground that the statutes did not apply to the policy and the trial court erred by ruling to the contrary when it denied Protective Life's motion for a directed verdict. The Court of Appeal concurred with Protective Life, finding the trial court should have granted the company’s motion for a directed verdict. View "McHugh v. Protective Life Insurance" on Justia Law

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The Court of Appeal annulled the decision of the appeals board and remanded with directions to find that the special employer had a valid endorsement in its workers' compensation insurance policy excluding coverage for special employees. The court held that while the appeals board was correct that the limiting endorsement had not been signed by the special employer, the written affirmation required by the regulation then in effect is not limited to a signature. Taking into account the circumstances of the entire transaction and its history, the court held that there was substantial compliance with the requirement of a written affirmation. Therefore, the court held that CIGNA was liable for the claim as a covered claim within the meaning of Insurance Code section 1063.1. View "Travelers Property Casualty Co. v. Workers' Compensation Appeals Board" on Justia Law

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Appellants had been renting their San Francisco home to tenants for eight years when the front porch collapsed, causing injury to a tenant. When the tenants sued, appellants sought defense and indemnification from their insurance provider, respondent State Farm, which denied their claim, because appellants’ homeowners’ insurance policy excluded coverage for injuries arising out of an insured’s business pursuits or the rental of their home. Appellants sued State Farm for breach of contract and bad faith denial of their insurance claim. The court of appeal affirmed summary judgment in favor of State Farm. The court rejected an argument that coverage should be restored under an exception for activities that are “ordinarily incident to non-business pursuits.” Appellants sought “to fold into a homeowners policy coverage for the commercial risks attendant to renting their home as a for-profit venture. There is a separate policy tailored to those business risks, a rental dwelling policy, that appellants eschewed in favor of a cheaper policy. Appellants’ argument, if accepted, would upend the allocation of risks and costs associated with commercial or personal activities that insurers rely upon to keep homeowners’ premiums lower than that of business enterprises.” View "Terrell v. State Farm General Ins. Co." on Justia Law

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In the context of a demurrer by defendant Certain Underwriters at Lloyd’s, London Subscribing To Policy Number 11EPL-20208, the trial court interpreted the term “wage and hour or overtime law(s)” to encompass all provisions of the Labor Code. Plaintiff owned and operated over 250 Pizza Hut and Wing Street restaurants. Defendant provided to plaintiff Southern California Pizza Company, LLC, an employment practices liability insurance policy, which covered certain losses arising from specified employment-related claims brought against plaintiff. The trial court sustained defendant’s demurrer, concluding all causes of action in the underlying employment lawsuit against plaintiff fell within the scope of the Policy exclusion. Using well-established insurance policy interpretation principles, the Court of Appeal found the wage and hour law language of the exclusion was more narrow in scope than stated by the trial court: it concerned laws regarding duration worked and/or remuneration received in exchange for work. Applying that interpretation, and taking into account the Policy’s general coverage, the Court concluded many of the disputed underlying lawsuit claims were potentially subject to coverage. Thus, the trial court erred in sustaining defendant’s demurrer. View "Southern Cal. Pizza Co., LLC v. Certain Underwriters, etc." on Justia Law

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Plaintiffs rented cars from Midway and opted to purchase insurance coverage; Midway purchased the policies from KnightBrook and National Specialty; Midway was the insured but was authorized to extend coverage to its customers under the policies; and these policies and the rates charged Midway were approved by the California Department of Insurance. Plaintiffs brought a class action against Midway, asserting that they were economically harmed by unlawful and fraudulent business practices. Plaintiffs also named as defendants KnightBrook, National Specialty and their managing general agent. The Court of Appeal affirmed the trial court's judgment in favor of Midway and held that there was no fraudulent omission; the Rental Car Agents Act, not more general insurance provisions, applied to the disclosure at issue; and plaintiffs demonstrated no conflict between the Rental Car Agents Act and Proposition 10. The court also held that the insurer defendants did not charge an unapproved rate; Midway was not required to charge its customers the premium it paid to the insurer defendants; and the doctrine of judicial abstention was inappropriate here. View "Adhav v. Midway Rent A Car, Inc." on Justia Law

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Plaintiff filed suit against AUIC, alleging that the release it procured from the insured was fraudulent conveyance under statutory and common law. In this case, the insured was involved in a car accident that injured plaintiff. AUIC paid the insured to release any bad faith claim he had against the company for AUIC's failure to accept an earlier settlement offer. The Court of Appeal held that California's Uniform Voidable Transactions Act (UVTA) filing deadlines did not pose a bar to plaintiff's UVTA cause of action; the operative complaint stated a valid UVTA claim against the insured; and plaintiff waived any challenge to the demurrer ruling on the common law cause of action. Accordingly, the court reversed the judgment of dismissal and remanded for further proceedings. View "Potter v. Alliance United Insurance Co." on Justia Law

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Allstate filed suit under Insurance Code section 1871.7 on behalf of the People against defendant, her mother, and others for insurance fraud in violation of Penal Code section 550, which makes it unlawful to submit false or fraudulent claims to an insurance company. The jury found in favor of Allstate. The Court of Appeal affirmed, holding that the trial court did not abuse its discretion in denying defendant's ex parte application for a stay. The court also held that unlawful conduct under section 550 does not require a misstatement of fact in the insurance claim. In this case, defendant and her mother committed insurance fraud in violation of section 550 where they perpetrated a deceitful insurance scheme designed to acquire insurance proceeds illegally for personal gain. View "People ex rel. Allstate Insurance Co. v. Suh" on Justia Law

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The Court of Appeal reversed the trial court's denial of plaintiff's motion for costs of proof after State Farm denied eight of his requests for admissions. The court held that the trial court incorrectly placed on plaintiff the burden to prove that none of the exceptions to an award of costs as set out in Code of Civil Procedure section 2033.420, subdivision (b) applied. Rather, State Farm should have carried the burden of proof and failed to do so. Therefore, the court remanded to the trial court to determine the reasonable costs of proof. View "Samsky v. State Farm Mutual Automobile Insurance Co." on Justia Law