Justia Insurance Law Opinion Summaries

Articles Posted in California Courts of Appeal
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CMA and others filed suit against Aetna, seeking among other claims, an injunction for alleged violations of the Unfair Competition Law (UCL; Bus. & Prof. Code, section 17200). The trial court found that CMA lacked standing under the UCL because it was not directly injured by Aetna's policy.The Court of Appeal affirmed the trial court's grant of Aetna's motion for summary judgment, concluding that the body of law permitting an association to bring a nonclass representative action does not bestow standing upon CMA to seek an injunction against Aetna under the UCL, whether or not CMA individually suffered injury in fact and lost money or property. The court also concluded that CMA's evidence that it diverted substantial resources to assist its physician members who were injured by Aetna's policy did not create a material disputed fact as to whether CMA itself suffered injury in fact and lost money or property. The court explained that an association must sustain direct economic injury to itself and not just its members to bring a UCL claim. Furthermore, evidence that an association diverted resources to investigate its members' claims of injury and advocate for their interests is not enough to show standing under the UCL. In this case, the federal authorities CMA cites are neither binding on this court nor instructive. View "California Medical Ass'n v. Aetna Health of California, Inc." on Justia Law

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After plaintiffs lost their home in a fire, they promptly submitted a claim under their homeowner’s insurance policy to their insurer, Mid-Century. Mid-Century denied the claim on the ground that the policy had been canceled for nonpayment of premium six days before the fire. Plaintiffs immediately paid the past due premium, the policy was reinstated, but Mid-Century continued to deny the claim. Plaintiffs filed suit for breach of contract and breach of the implied covenant of good faith and fair dealing. The trial court granted summary adjudication for plaintiffs on the issue of Mid-Century's duty to provide coverage and denied Mid-Century's motion for summary judgment in its entirety.The Court of Appeal concluded that the trial court properly denied Mid-Century's motion for summary judgment but improperly granted plaintiff's motion for summary adjudication. The court rejected Mid-Century's argument that the loss-in-progress rule precludes coverage. Rather, the court concluded that the law allowed Mid-Century to retroactively reinstate the policy with no lapse in coverage. However, the court concluded that there exists a triable issue of material fact regarding Mid-Century's intent when it reinstated the policy that precludes summary adjudication for either party. View "Antonopoulos v. Mid-Century Insurance Co." on Justia Law

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The Court of Appeal affirmed the trial court's order denying Federal's special motion to strike a civil complaint for fraud as a strategic lawsuit against public participation under Code of Civil Procedure section 425.16, as well as the trial court's order overruling its evidentiary objections. In the underlying action, plaintiffs filed lawsuits against Moldex, alleging Moldex manufactured defective air respirators and masks that failed to protect them. This litigation ensued between Truck, Federal, and First State over coverage and the extent to which Truck was obligated to reimburse Federal and First State for payments made for Moldex's defense and indemnity, plus interest. Federal argued that Truck's complaint for fraud is based on Federal's "acts in furtherance of its right to petition" and are thus protected speech pursuant to section 425.16, subdivisions (e)(1) and (e)(2).The court affirmed the trial court's rulings on Federal's evidentiary objections and concluded that the first amended complaint is not relevant to the court's review of the anti-SLAPP motion. The court also affirmed Federal's special motion to strike Truck's complaint for fraud, concluding that Federal met its burden of showing that Truck's complaint for fraud arises from Federal's protected activity, and that the trial court correctly found that Truck met its burden to establish a probability of success on the merits of its fraud cause of action.In this case, a factfinder considering all the circumstances could reasonably conclude that when Truck signed the July 2013 settlement agreeing to pay nearly $5 million to Federal and to dismiss its pending appeal of the February 2013 judgment, it did so in reasonable reliance on Federal's course of conduct and Federal's stated position that it had a duty to defend Moldex pursuant to its policy. Furthermore, Truck agreed to file a request for dismissal of its pending appeal, with prejudice, when it entered the settlement agreement, which further supports a finding of extrinsic fraud by Federal. Finally, Federal is mistaken in its belief that Truck "released the claim for which it now seeks damages" by signing the July 2013 settlement agreement. View "Truck Insurance Exchange v. Federal Insurance Co." on Justia Law

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Plaintiff, together with her parents, filed suit against FAIR Plan, alleging bad faith insurance allegations founded in their dissatisfaction with how FAIR Plan handled their claim of smoke damage to the home's contents. In this case, the parents lived with plaintiff in their home and the insurance policy at issue listed the parents as the insured. Furthermore, the FAIR Plan expressly disclaimed coverage for unnamed people, and the policy does not name plaintiff.The Court of Appeal affirmed the judgment and award of costs in favor of FAIR Plan, concluding that the trial court properly sustained the demurrer to plaintiff's cause of action without leave to amend. The panel concluded that plaintiff lacks standing to sue FAIR Plan for bad faith because she was not a signatory to the policy; she was not an additional insured person under the particular policy; and she was not a third party beneficiary of the FAIR Plan contract. Therefore, plaintiff lacked a contractual relationship with FAIR Plan. The panel also concluded that the relevant insurance provisions are unambiguous; concluded that plaintiff incorrectly claims precedent supports her; and rejected her claim under the insurable interest doctrine where a sound view of this legal doctrine reveals that the parents obviously had an insurable interest in plaintiff's property in their home. View "Wexler v. California Fair Plan Association" on Justia Law

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Defendant Daniel Clapp plead no contest to concealing the true extent of his physical activities and abilities from his employer, the Department of the California Highway Patrol (CHP), and the State Compensation Insurance Fund (SCIF). Consistent with a resolution negotiated by the parties, the trial court granted defendant three years’ probation, and as a condition of probation, ordered him to pay restitution. Following a hearing, defendant was ordered to pay $30,095.68 to SCIF for temporary disability benefits and $81,768.01 to CHP for benefits wrongfully obtained. He was also ordered to pay $1,350 and $70,159 to SCIF and CHP respectively for investigative costs. Defendant appealed the restitution award as to investigation costs contending that, as public investigative agencies, neither SCIF nor CHP was entitled to reimbursement for the costs of investigating his claim. After review, the Court of Appeal concluded that as direct victims of defendant’s fraud, both CHP and SCIF were indeed entitled to restitution for investigative costs incurred in an effort to justify discontinuance of payments and recoup money defendant fraudulently obtained. View "California v. Clapp" on Justia Law

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An electronic gaming device designed and supplied by Planet Bingo, LLC caused a fire in the United Kingdom. Several third parties made demands that Planet Bingo pay their damages resulting from the fire. However, Planet Bingo’s liability insurer, the Burlington Insurance Company (Burlington), denied coverage. Planet Bingo filed this action for breach of contract and bad faith against Burlington. In a previous appeal, the Court of Appeal held that Burlington’s policy did afford coverage, though only if one of the third-party claimants filed suit against Planet Bingo in the United States or Canada. Such a suit was then filed. Burlington accepted the defense and managed to settle the suit for its policy limits. In this action, the trial court granted summary judgment for Burlington, ruling that Burlington had provided all of the benefits due under the policy. Planet Bingo appealed, contending that Burlington conducted an inadequate investigation, and that Burlington wrongfully failed to settle the third-party claims, instead, denying coverage in the hope that the claimants would sue Planet Bingo in the United Kingdom, which would have let Burlington off the coverage hook. Planet Bingo claimed (and Burlington did not dispute) that it lost profits because the fire claims remained pending and unsettled. The Court of Appeal held Planet Bingo made out a prima facie case that Burlington was liable for failure to settle. Even though none of the claimants made a formal offer to settle within the policy limits, one subrogee sent a subrogation demand letter; according to Planet Bingo’s expert witness, in light of the standards of the insurance industry, this represented an opportunity to settle within the policy limits. The Court therefore did not address Planet Bingo’s claim that Burlington conducted an inadequate investigation. The Court also did not decide whether lost profits were recoverable as damages, because this issue was not raised below. View "Planet Bingo LLC v. The Burlington Ins. Co." on Justia Law

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After judgment was entered against Farmers based solely on a special verdict, Farmers argued that the judgment must be vacated because the jury did not find, and no evidence established, that it acted unreasonably in failing to settle plaintiff’s claim against the insured.The Court of Appeal concluded that, in the context of a third party insurance claim, failing to accept a reasonable settlement offer does not constitute bad faith per se. Rather, bad faith liability requires a finding that the insurer acted unreasonably in some respect. The court explained that, to be liable for bad faith, an insurer must not only cause the insured's damages, it must act or fail to act without proper cause, for example by placing its own interests above those of its insured. In this case, the special verdict was facially insufficient to support a bad faith judgment because it included no finding that Farmers acted unreasonably in failing to accept plaintiff's settlement offer.The court also concluded that a special verdict based solely on an insufficient jury instruction cannot support a judgment. In this case, the jury was neither asked to nor did find that Farmers acted unreasonably or without proper cause in failing to accept plaintiff's settlement offer. Therefore, because a cause of action for bad faith requires a finding that the insurer acted unreasonably, the absence of such a finding precludes judgment for the plaintiff on that claim. Finally, the court concluded that the proper remedy is to vacate the judgment and enter a new judgment for Farmers. View "Pinto v. Farmers Insurance Exchange" on Justia Law

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Plaintiff filed suit against Quicken, on behalf of himself and others similarly situated, alleging causes of action for breach of fiduciary duty and violations of Civil Code section 2954.8 and Business and Professions Code section 17200, contending that section 2954.8 requires a lender to pay interest on insurance proceeds held in escrow following the partial or total destruction of the insured's residence or other structure. In this case, plaintiff's home was destroyed by Ventura's Thomas Fire and his hazard insurance policy jointly paid him and his mortgage lender, Quicken, a total of $1,342,740. The Deed of Trust allowed Quicken to hold the insurance proceeds in escrow and to disburse the funds as repairs to the home were being made.The Court of Appeal affirmed the trial court's decision sustaining Quicken's demurrer to the complaint without leave to amend, concluding that neither section 2954.8 nor the parties' loan agreement required the payment of interest. Based upon the statutory and contractual language, the court agreed with Lippitt v. Nationstar Mortgage, LLC (C.D.Cal. Apr. 16, 2020, No. SA CV 19-1115-DOC-DFM) 2020 U.S. Dist. Lexis 122881, that section 2954.8 "applies to common escrows maintained to pay taxes, assessments, and insurance premiums -- not to the comparatively unique example of hazard insurance proceeds held by a lender pending property rebuilding." Therefore, the court concluded that the insurance proceeds held by Quicken pursuant to section 5 of the Deed of Trust fall outside the scope of section 2954.8. Furthermore, plaintiff's secondary reliance on the purported purposes of section 2954.8 does not and cannot circumvent the statute's plain language. View "Gray v. Quicken Loans, Inc." on Justia Law

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A subcontractor built a retaining wall that collapsed years later, causing damage to a nearby residential lot. The homeowner sued the subcontractor, obtained a default judgment, and then sued the subcontractor’s insurance company to enforce the default judgment. The insurance company moved for summary judgment, arguing the homeowner’s damages occurred long after the insurance policy had expired, and therefore the insurance company had no duty to cover the default judgment. The trial court agreed and granted the motion. On appeal, the homeowner alleged “continuous and progressive” damage began to occur shortly after the subcontractor built the retaining wall during the coverage period of the insurance policy. The insurance company disagreed. The Court of Appeal determined that was a triable issue of material fact, thus reversing the trial court’s grant of summary judgment. View "Guastello v. AIG Specialty Insurance Company" on Justia Law

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The Court of Appeal affirmed the trial court's order dismissing with prejudice plaintiffs' claims against defendants for breach of the implied covenant of good faith and fair dealing (bad faith claim) and violation of the Unfair Competition Law, Bus. & Prof. Code, section 17200 et seq. (UCL claim).The court concluded that an evaluation of the policy considerations underlying tort liability in the traditional insurance context demonstrates that home protection contracts are not sufficiently analogous to insurance to support the imposition of tort liability. Furthermore, the fact that the Insurance Code may regulate a company is not dispositive of whether that company should be subject to the same tort liability as traditional insurance companies. Rather, that issue is determined based on the policy considerations set forth in Cates Construction, Inc. v. Talbot Partners (1999) 21 Cal.4th 28, 43–44, and regardless of whether home protection companies are subject to certain Insurance Code regulations. The court also concluded that plaintiffs forfeited their judicial estoppel argument by failing to timely or adequately raise it in opposition to the demurrer. Finally, the court rejected plaintiffs' unfair competition claims, concluding that California Code of Regulations, title 10, section 2695.9 does not apply to defendant. View "Chu v. Old Republic Home Protection Company, Inc." on Justia Law