Justia Insurance Law Opinion Summaries

In an appeal related to a California insurance insolvency proceeding, the New York Plaintiffs requested clarification from the San Francisco Superior Court as to whether its orders "prohibit or stay" their New York claims. In the insolvency case, the trial court appointed the California Insurance Commissioner (Commissioner) as conservator, and later as liquidator, of CastlePoint. The trial court, as part of the process, issued injunctions and approved releases pertaining to claims filed against or on behalf of CastlePoint or its assets.The Court of Appeal concluded that some of the causes of action in the New York lawsuit are not barred. These causes of action relate to: (i) the alleged breach of so-called "successor obligor provisions"; and (ii) an alleged $143 million payment from ACP to shareholders of TGIL. The court explained that these causes of action are not asserted against CastlePoint or the insurance companies that were merged into it, and there is no indication the Commissioner could have asserted these causes of action on behalf of the insolvent insurance companies. Therefore, the court reasoned that permitting them to proceed in New York will not interfere in any meaningful way with the plan for CastlePoint's liquidation, especially given the New York Plaintiffs' agreement not to assert any judgment against the insolvent insurance companies' estate or assets.However, prior to entering into releases, the Commissioner could have asserted fraudulent conveyance causes of action and a cause of action for unjust enrichment because they are based on alleged improper transfers of assets of the insolvent insurance companies. Accordingly, the court concluded that these causes of action are barred by the injunctions and releases in the liquidation proceeding. The court affirmed in part and reversed in part. View "Lara v. Castlepoint National Insurance Co." on Justia Law

National Western Life Insurance Company (NWL) appealed a jury verdict holding the company liable for negligence and elder abuse arising from an NWL annuity sold to Barney Williams by Victor Pantaleoni, an independent agent. In 2016, Pantaleoni sold a $100,000 NWL annuity to Williams, who had contacted Pantaleoni to revise a living trust after the death of Williams’ wife. When Williams returned the annuity to NWL during a 30-day “free look” period, Pantaleoni wrote a letter over Williams’ signature for NWL to reissue a new annuity. In 2017, when Williams cancelled the second annuity, NWL charged a $14,949.91 surrender penalty. The jury awarded Williams damages against NWL, including punitive damages, totaling almost $3 million. NWL moved for judgment notwithstanding the verdict, which was denied. The Court of Appeal reversed: “Assuming NWL had monitored Pantaleoni as Williams suggested, there was no evidence showing that NWL knew or should have known of Pantaleoni’s fraud. … That Williams wrote the note cancelling the first annuity and Pantaleoni apparently wrote the letter requesting that it be reissued for Williams’ signature did not suggest to NWL that the letter was forged.” View "Williams v. National Western Life Insurance Co." on Justia Law

Foremost provided insurance for McIsaac's motorcycle. The uninsured motorist coverage endorsement included an arbitration provision. McIsaac was involved in an accident. The other driver’s insurance policy provided $15,000 of coverage. McIsaac’s policy provided uninsured/underinsured motorist coverage of up to $100,000 per person per accident. McIsaac initiated an uninsured motorist claim. Foremost opened an investigation and sent a settlement offer. McIsaac served Foremost with an arbitration demand. Foremost suggested proceeding with discovery and sent McIsaac interrogatories and a deposition notice.Months later, McIsaac filed suit, alleging breach of contract, unjust enrichment, breach of the covenant of good faith and fair dealing, and bad faith. Foremost filed a petition to compel arbitration. McIsaac argued his dispute was not solely about damages, but whether Foremost breached the contract and acted in bad faith. Foremost argued arbitration was a “condition precedent” to McIsaac’s lawsuit. The trial court denied the petition, stating that arbitration does not apply to claims of bad faith by the insurer.The court of appeal reversed. Under Insurance Code section 11580.2(f), disputes between insureds and insurers over entitlement to recover damages caused by an uninsured or underinsured motorist, or the amount of damages, must be resolved by agreement or arbitration. Foremost made a showing that the parties dispute the amount of damages. View "McIsaac v. Foremost Insurance Co." on Justia Law

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

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

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

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

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

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

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