Justia Insurance Law Opinion Summaries

Bernard Perez, an ophthalmologist, entered into a disability insurance contract with MONY Life Insurance Company in 1988. After being diagnosed with throat cancer in 2011, Perez began receiving monthly disability benefits. MONY later suspected Perez of dishonesty in his disability claims and financial information, leading to the discontinuation of payments in February 2018. MONY sued Perez for unjust enrichment, and Perez counterclaimed for breach of contract.The Middle District of Florida held a nine-day trial where evidence showed Perez's deceitful conduct, including misrepresenting his ownership in his medical practice and overstating his physical ailments. The jury found in favor of MONY on the unjust enrichment claim, awarding $388,000, and rejected Perez's breach of contract counterclaim.The United States Court of Appeals for the Eleventh Circuit reviewed the case. The court held that under Florida law, an unjust enrichment claim cannot proceed when an express contract covers the same subject matter. Therefore, the district court erred in allowing the unjust enrichment claim to go to the jury. The Eleventh Circuit set aside the jury's verdict on this claim and directed the district court to vacate the judgment awarding MONY $448,930.06.Regarding Perez's breach of contract counterclaim, the Eleventh Circuit found that the district court erred in failing to interpret the ambiguous term "acceptable proof of loss" in the insurance contract. However, this error was deemed harmless because the evidence overwhelmingly showed Perez's dishonesty in his proofs of loss. Thus, the jury's verdict against Perez on his breach of contract counterclaim was affirmed. The court also affirmed the district court's evidentiary rulings and denial of sanctions. View "MONY Life Insurance Co. v. Perez" on Justia Law

A property insurance dispute arose between a church in Albany, Georgia, and its insurer following storm damage in 2014. The church's property, which included asbestos tile roofs, was insured under an all-risks policy. After the storm, the insurer's adjuster estimated repair costs at $2,300, but the church's contractor estimated over $1.3 million for full roof replacement. The church sued for breach of contract and bad faith. In 2018, Hurricane Michael caused further damage, and the church filed a claim with a different insurer, obtaining a lower repair estimate. The original insurer argued that the church's failure to disclose this second claim constituted a material misrepresentation.The United States District Court for the Middle District of Georgia excluded evidence of the alleged misrepresentation, finding it irrelevant. The jury awarded the church $1.75 million in damages, and the insurer's motion for a new trial was denied. The insurer appealed, arguing that the exclusion of misrepresentation evidence was erroneous and that the damages award was speculative and contrary to the policy terms.The United States Court of Appeals for the Eleventh Circuit reviewed the case. It found that the insurer had waived its misrepresentation defense by not objecting during trial and by explicitly withdrawing the defense. The court also held that the jury's award, which included increased construction costs due to delays, was supported by sufficient evidence and did not constitute double recovery when combined with prejudgment interest. The court affirmed the district court's rulings and the jury's verdict. View "Central Baptist Church of Albany Georgia Inc v. Church Mutual Insurance Co." on Justia Law

Jason Rahimzadeh was injured while riding his bicycle and sought underinsured motorist (UIM) coverage from his employer's commercial automobile insurance policy with Ace American Insurance Company. Ace denied the claim, stating that Rahimzadeh did not qualify as an insured under the policy. Rahimzadeh then filed a lawsuit in Illinois state court, alleging breach of the insurance contract. Ace removed the case to the United States District Court for the Northern District of Illinois, which granted Ace's motion to dismiss for failure to state a claim.The district court found that the terms of the insurance policy were unambiguous and that Rahimzadeh did not meet the policy's requirement of "occupying" a covered vehicle to qualify as an insured. The court also rejected Rahimzadeh's argument that the occupancy requirement was unenforceable as contrary to public policy, distinguishing the case from Galarza v. Direct Auto Insurance Co., which involved a personal automobile insurance policy. The court relied on Stark v. Illinois Emcasco Insurance Co., which upheld occupancy requirements in commercial policies.The United States Court of Appeals for the Seventh Circuit reviewed the district court's decision de novo. The court affirmed the district court's judgment, holding that the occupancy requirement in the commercial automobile insurance policy was permissible and did not violate Illinois public policy. The court distinguished the case from Galarza, noting that the public policy concerns in personal insurance policies do not apply to commercial policies. Therefore, Rahimzadeh was not entitled to UIM coverage under his employer's policy. The court also declined to certify the question to the Supreme Court of Illinois, finding no genuine uncertainty about the state law issue. View "Rahimzadeh v. Ace American Insurance Co." on Justia Law

William Navarre purchased a house that had been damaged by two hurricanes in 2020. The previous owners, Bal and Rita Sareen, had received insurance payments from AIG Property Casualty Company but had not assigned their post-loss insurance rights to Navarre at the time of the sale. Navarre filed a lawsuit against AIG, claiming he had been assigned these rights as of the purchase date. However, the formal assignment document was not executed until January 2023, well after the lawsuit was filed and after the prescriptive period for the claims had expired.The United States District Court for the Western District of Louisiana granted summary judgment in favor of AIG, concluding that Navarre lacked standing to file the lawsuit because the assignment of rights had not been executed at the time he filed the suit. The court also noted that the prescriptive period for the claims had expired by the time the assignment was executed.The United States Court of Appeals for the Fifth Circuit reviewed the case and affirmed the district court's judgment. The appellate court agreed that the documents Navarre relied on (Addendum A and the Side Letter) did not constitute a present assignment of rights but rather contemplated a future assignment. Since the formal assignment was not executed until January 2023, Navarre did not have standing to sue when he filed the lawsuit in June 2022. Additionally, the court held that the prescriptive period for the claims had expired by the time the assignment was executed, and thus, Navarre could not retroactively cure the deficiency in his original petition. View "Navarre v. AIG Prop Cslty" on Justia Law

Best Inn Midwest, LLC (Best Inn) owned and operated a hotel in Indianapolis, Indiana, which faced numerous issues, including health code violations and criminal activity. In 2017, Best Inn purchased a commercial property insurance policy from Ohio Security Insurance Company (Ohio Security). The policy excluded coverage for vandalism if the building was vacant for sixty consecutive days or more. Best Inn filed a claim for vandalism to air conditioning units on the hotel’s roof, which Ohio Security denied, citing vacancy. Ohio Security requested information about the hotel's occupancy, which Best Inn failed to provide, leading Ohio Security to file a suit seeking a declaration that the policy did not cover the claim.The United States District Court for the Southern District of Indiana granted Ohio Security's motion for summary judgment on Best Inn's counterclaim for bad faith. The court found that Best Inn had failed to comply with discovery requests and court orders, leading to a sanction declaring the hotel vacant during the relevant period. This finding was based on Best Inn's repeated failure to provide requested documents and information, despite numerous attempts by Ohio Security to obtain them.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court's decision. The appellate court held that the district court did not abuse its discretion in imposing sanctions and declaring the hotel vacant. This declaration meant that the insurance policy did not cover the vandalism claim, and thus, Ohio Security was entitled to summary judgment on Best Inn's bad faith counterclaim. The appellate court concluded that the sanctions were appropriate and proportionate to Best Inn's conduct, and there were no remaining disputes as to any material fact. View "Ohio Security Insurance Company v Best Inn Midwest, LLC" on Justia Law

Nancy Stark, as the legal guardian and mother of Jill Finley, an incapacitated person, filed a lawsuit against Reliance Standard Life Insurance Company. Finley, who suffered a hypoxic brain injury in 2007, was initially approved for long-term disability benefits by Reliance. However, in 2022, Reliance terminated her benefits, claiming recent testing did not support her total disability. Stark appealed, and Reliance reinstated the benefits in 2023. Stark then sued, seeking a surcharge for financial harm caused by the wrongful termination, claiming breach of fiduciary duty for not providing internal records, and contesting the deduction of social security payments from Finley's disability payments.The United States District Court for the Western District of Oklahoma granted Reliance's motion to dismiss under Rule 12(b)(6) for failure to state a claim. The court found that Stark did not plausibly allege a claim for equitable relief under ERISA, nor did she demonstrate that Reliance's actions violated the terms of the insurance policy or breached fiduciary duties.The United States Court of Appeals for the Tenth Circuit reviewed the case. The court affirmed the district court's dismissal, holding that Stark was not entitled to attorney’s fees incurred during the administrative appeal under ERISA’s § 1132(a)(3) or § 1132(g). The court also found that Stark's claims regarding the SSD offset were time-barred and waived due to failure to exhaust administrative remedies. Additionally, the court concluded that Stark did not allege any concrete harm resulting from Reliance's alleged failure to provide requested records during the administrative appeal. Consequently, the Tenth Circuit affirmed the district court's decision to dismiss all of Stark's claims. View "Stark v. Reliance Standard Life Insurance Company" on Justia Law

Plaintiffs, representing a class of drivers, alleged that Progressive Specialty Insurance and Progressive Advanced Insurance systematically underestimated the actual cash value (ACV) of their totaled vehicles, thereby breaching their insurance agreements. The plaintiffs claimed that Progressive's method of calculating ACV, which included a "Projected Sold Adjustment" (PSA) to account for the fact that used cars often sell for less than their listed prices, was improper and resulted in underpayment.The United States District Court for the Eastern District of Pennsylvania certified two damages classes, finding that the plaintiffs' claims centered on the legitimacy of the PSAs and that this issue could be resolved on a class-wide basis. The court held that the plaintiffs had standing and rejected Progressive's arguments against commonality, predominance, superiority, and adequacy.The United States Court of Appeals for the Third Circuit reviewed the case and concluded that the District Court had abused its discretion in certifying the classes. The Third Circuit held that proving whether Progressive undercompensated each class member was an individual issue that could not be resolved on a class-wide basis. The court emphasized that the key issue was whether each class member received less than the true ACV of their vehicle, which would require individualized inquiries. As a result, the court found that common issues did not predominate over individual ones, and the District Court's certification of the classes was reversed and remanded for further proceedings. View "Drummond v. Progressive Specialty Insurance Co." on Justia Law

Jose Cruz-Muniz and Sandra Cruz were injured in a car accident in 2018 and received treatment from C-Spine Orthopedics, PLLC. They assigned their rights to seek personal protection insurance (PIP) benefits from Progressive Michigan Insurance Company to C-Spine. C-Spine then assigned its accounts receivable, including the claims for unpaid benefits, to several factoring companies. Progressive argued that C-Spine lacked standing to seek payment because it had assigned its rights to the factoring companies. C-Spine countered with signed counter-assignments from the factoring companies, purportedly restoring its right to bring suits. The trial court initially denied Progressive's motion but later granted it, concluding that C-Spine lacked standing when the complaints were filed.In a separate case, Parie Wallace was injured in a bus accident and received treatment from several providers, including C-Spine. Wallace assigned her rights to seek PIP benefits to these providers. She later filed a lawsuit against Suburban Mobility Authority for Regional Transportation (SMART) seeking payment of PIP benefits. SMART argued that Wallace could not bring the action because she had assigned her rights to the providers. The trial court allowed Wallace to obtain revocations of the assignments, which she did, and then denied SMART's motion for summary disposition. The Court of Appeals reversed, holding that Wallace was not the real party in interest when she filed her complaint and that her claims were barred by the one-year-back rule.The Michigan Supreme Court held that both C-Spine and Wallace had standing to file their lawsuits but were not the real parties in interest at the time they filed suit because they had assigned their claims. The Court ruled that defects in real party in interest status could be cured after filing a lawsuit. In C-Spine's case, the Court of Appeals' judgment was affirmed on alternate grounds, and the case was remanded to the trial court for further proceedings. In Wallace's case, the Court of Appeals' judgment was affirmed in part, reversed in part, and vacated in part, and the case was remanded for the trial court to consider whether equitable rescission was warranted and whether the real party in interest defect could be cured. View "C-Spine Orthopedics PLLC v. Progressive Michigan Insurance Company" on Justia Law

C-Spine Orthopedics, PLLC, filed two actions in the Macomb Circuit Court against Progressive Michigan Insurance Company to recover personal protection insurance (PIP) benefits for care provided to Jose Cruz-Muniz and Sandra Cruz, who were injured in a 2018 car accident. Jose and Sandra assigned their rights to seek PIP benefits to C-Spine, which then assigned its accounts receivable, including these claims, to factoring companies. Progressive moved for summary disposition, arguing C-Spine lacked standing as it had assigned its rights. The trial court initially denied but later granted the motion, concluding C-Spine lacked standing when the complaints were filed. The Court of Appeals reversed, holding C-Spine retained its claims for PIP benefits under MCL 500.3112.Parie Wallace filed an action in the Wayne Circuit Court against Suburban Mobility Authority for Regional Transportation (SMART) seeking PIP benefits after being injured in a bus accident. Wallace assigned her rights to PIP benefits to her medical providers. SMART moved for summary disposition, arguing Wallace could not bring the action due to the assignments. The trial court allowed Wallace to obtain revocations of the assignments, which she did, and then denied SMART’s motion. The Court of Appeals reversed, holding Wallace was not the real party in interest when she filed her complaint and that her claims were barred by the one-year-back rule.The Michigan Supreme Court held that both C-Spine and Wallace had standing to file their lawsuits but were not real parties in interest at the time of filing due to their assignments. The Court ruled that defects in real party in interest status could be cured after filing. In C-Spine’s case, the Court of Appeals’ judgment was affirmed on alternate grounds, and the case was remanded to the trial court to consider whether C-Spine could cure the defect. In Wallace’s case, the Court of Appeals’ judgment was affirmed in part, reversed in part, and vacated in part, and the case was remanded for the trial court to consider whether equitable rescission was warranted and whether the real party in interest defect could be cured. View "Wallace v. Smart" on Justia Law

A general contractor, Keluco General Contractors, Inc., secured a workers’ compensation and employers’ liability policy through Travelers Property Casualty Company of America. The policy was set to last one year, expiring on March 5, 2017. After the policy expired, a Keluco employee was injured at work. Keluco attempted to make a claim on its workers’ compensation policy and discovered it had expired. Travelers claimed to have sent a notice of nonrenewal to Keluco and its insurance agent, Gretchen Santerre, but Keluco claimed it never received the notice.Keluco sued Santerre and her employer, Country Mutual Insurance Company, for failing to inform it of the nonrenewal notice. Santerre filed a third-party complaint against Travelers. The Superior Court of Alaska granted partial summary judgment against Travelers, ruling that it failed to send the nonrenewal notice in the manner required by statute, specifically by not obtaining a certificate of mailing from the United States Postal Service (USPS). The court found that Travelers breached its contract with Keluco.The Supreme Court of the State of Alaska reviewed the case. The court affirmed the Superior Court’s rulings on summary judgment, agreeing that Travelers violated AS 21.36.260 by not obtaining a certificate of mailing from USPS and thus breached its contract with Keluco. The court also affirmed the dismissal of Travelers’ contribution claim against Santerre, noting that Alaska law allows for the allocation of fault to a party who has settled out of a case.However, the Supreme Court reversed the Superior Court’s determination of when prejudgment interest began to accrue. The Supreme Court held that prejudgment interest should begin to accrue on September 20, 2017, the date the Keluco employee was injured and entitled to workers’ compensation benefits, rather than January 9, 2017. The case was remanded for recalculation of prejudgment interest. View "Travelers Property Casualty Company of America v. Keluco General Contractors" on Justia Law