Justia Insurance Law Opinion Summaries

Stillwater Mining Company filed suit against its directors’ and officers’ liability insurers to recover the expenses it incurred defending a Delaware stockholder appraisal action. The superior court granted the insurers’ motions to dismiss after it found that Delaware law applied to the dispute and the Delaware Supreme Court’s decision in In re Solera Ins. Coverage Appeals (“Solera II”) precluded coverage for losses incurred in a stockholder appraisal action under a similar D&O policy. The primary issue on appeal was whether Delaware or Montana law applied to the claims in Stillwater’s amended complaint. Stillwater argued that the superior court should have applied Montana law because Montana had the most significant relationship to the dispute and the parties. If Montana law applied, according to Stillwater, it could recover its defense costs because Montana recognized coverage by estoppel, meaning the insurers were estopped to deny coverage when they failed to defend Stillwater in the appraisal action. Before the Delaware Supreme Court issued Solera II, the Solera I court held that D&O insureds could recover losses incurred in a stockholder appraisal action. Taking advantage of that favorable ruling, Stillwater argued in its complaint that Delaware law applied to the interpretation of the policies. Then when Solera II was issued, Stillwater reversed position and claimed that Montana law applied to the policies. Its amended complaint dropped all indemnity claims for covered losses in favor of three contractual claims for the duty to advance defense costs and a statutory claim under Montana law. In the Supreme Court's view, Stillwater’s amended claims raised the same Delaware interests that Stillwater identified in its original complaint – applying one consistent body of law to insurance policies that cover comprehensively the insured’s directors’, officers’, and corporate liability across many jurisdictions. It then held the superior court did not abuse its discretion when it denied Stillwater's motions. View "Stillwater Mining Company v. National Union Fire Insurance Company of Pittsburgh, PA" on Justia Law

Respondent Stephany Connelly was a passenger in a vehicle driven by co-worker Freya Trezona during the course and scope of their employment when Trezona negligently caused the accident, injuring Connelly. Because workers’ compensation benefits did not fully redress Connelly’s injuries, she made a claim for bodily injury and uninsured motorist (UM) benefits with her own insurance carrier and with Trezona’s carrier. Both companies denied the claim, contending Connelly’s sole remedy lay with the South Carolina Workers’ Compensation Act. Connelly filed suit seeking a declaration that both policies provided coverage. The parties agreed the dispute turned on the interpretation of the phrase “legally entitled to recover” found in the UM statute. The trial court ruled in favor of Connelly, and the court of appeals concurred the phrase was legally ambiguous. The South Carolina Supreme Court found the phrase unambiguous: the amount a plaintiff is “legally entitled to recover” under a UM provision of an insurance policy is the amount for which the plaintiff has secured a judgment against the at-fault defendant. Because the Act prevents Connelly from ever becoming “legally entitled to recover” from Trezona under the facts of this case, the Court reversed the trial court. View "Connelly v. Main Street America Group" on Justia Law

This appeal arises out of an insurance dispute involving a yacht, the Serendipity, that was destroyed by Hurricane Dorian, a Category 5 storm, that slammed into Great Abaco Island in the Bahamas. Serendipity at Sea, LLC (“Serendipity, LLC”), a holding company created by M.S. and J.E. (“the Managers”) to manage the Serendipity, sued Underwriters at Lloyd’s of London Subscribing to Policy Number 187581 (“Lloyd’s”) for breach of contract after Lloyd’s denied the the Managers insurance claim for the damage Hurricane Dorian caused to the Serendipity. In denying that it had breached the contract, Lloyd’s argued that it was not liable because Serendipity, LLC did not employ a full-time licensed captain in violation of the policy’s Captain Warranty, and that the breach increased the hazard to the yacht because a licensed captain would have operated the vessel back to Florida when Hurricane Dorian formed and was forecast to hit the Bahamas.   The district court granted summary judgment in favor of Lloyd’s. It found that the Captain Warranty was unambiguous; that Serendipity, LLC breached the agreement by failing to hire a full-time licensed captain; and that the breach increased the hazard posed to the Serendipity based on the purportedly undisputed testimony of an expert hired by Lloyd’s. The Eleventh Circuit reversed the district court’s grant of summary judgment in favor of Lloyd’s and remanded. The court explained that while it agreed with the district court’s conclusion that Serendipity, LLC breached the Captain Warranty, a disputed question of material fact remains about whether the breach increased the hazard posed to the vessel. View "Serendipity at Sea, LLC v. Underwriters at Lloyd's of London Subscribing to Policy Number 187581" on Justia Law

Plaintiff-appellant Chris LaBarbera hired Richard Knight dba Knight Construction (Knight) to remodel a house pursuant to a contract that provided Knight would defend and indemnify LaBarbera for all claims arising out of the work. Knight obtained a general liability insurance policy from defendant-respondent Security National Insurance Company (Security National) that covered damages Knight was obligated to pay due to bodily injury to a third party. As relevant here, the policy also covered Knight’s “liability for damages . . . [a]ssumed in a contract or agreement that is an ‘insured contract.’ ” Security National acknowledged the indemnity provision in Knight’s contract with LaBarbera was an “insured contract” within the meaning of the policy. The policy also provided, “If we defend an insured [i.e., Knight] against a suit and an indemnitee of the insured [i.e., LaBarbera] is also named as a party to the suit, we will defend that indemnitee” if certain conditions were met. During the remodeling work, a subcontractor suffered catastrophic injuries, and sued both LaBarbera and Knight. LaBarbera’s liability insurer (plaintiff-appellant Lloyd's of London Underwriters) defended him in that lawsuit, and Security National defended Knight. LaBarbera also tendered his defense to Knight and to Security National, but they either ignored or rejected the tender. After settling the underlying lawsuit for $465,000, LaBarbera and Underwriters sued Knight and Security National, seeking to recover the full $465,000 settlement amount and over $100,000 in expenses and attorney fees incurred defending LaBarbera in that lawsuit. Security National moved for summary judgment on the ground that all claims against it were barred because the undisputed facts established it did not have an obligation to defend or indemnify LaBarbera. The trial court granted the motion and entered judgment in favor of Security National. LaBarbera and Underwriters appealed, but the Court of Appeal affirmed, adopting different reasoning than the trial court. The Court agreed with Security National that the indemnitee defense clause in Knight’s general liability insurance policy did not bestow third party beneficiary rights on the indemnitee, LaBarbera, who benefitted only incidentally from the clause. Because LaBarbera was not a third party beneficiary under Knight’s policy, he was precluded from bringing a direct action against Security National. View "LaBarbera, et al. v. Security Nat. Ins. Co." on Justia Law

This action was brought by plaintiff Nancy Holm, administratrix of the estate of her husband, Christopher Friedauer, who died in 2015 after falling at his workplace, Holmdel Nurseries, LLC. As a longtime employee of the family-owned business, Christopher had been covered by workers’ compensation insurance, but he was no longer covered after he became a member of the LLC in 2012. Plaintiff claimed that defendant Daniel Purdy, who served as the insurance broker for Holmdel Nurseries from 2002 to 2015, failed to provide to the LLC the notice mandated by N.J.S.A. 34:15-36, and that Christopher was unaware that he no longer had workers’ compensation coverage in his new role as an LLC member. She alleged that as a result of defendant’s negligence and breach of fiduciary duty, Friedauer’s dependents were deprived of a workers’ compensation death benefit to which they would have been entitled under N.J.S.A. 34:15-13 had he been covered by workers’ compensation insurance at the time of his death. Defendant asserted that Friedauer’s father, Robert Friedauer, the LLC’s managing member for insurance issues, instructed defendant in 2002 that Holmdel Nurseries did not want to purchase workers’ compensation coverage for its LLC members because of the cost of that coverage. At the close of a jury trial, the trial court granted defendant’s motion for an involuntary dismissal pursuant to Rule 4:37-2(b) and his motion for judgment at trial pursuant to Rule 4:40-1. Informed by the New Jersey Legislature’s expression of public policy in N.J.S.A. 34:15-36, the New Jersey Supreme Court concurred with the Appellate Division that defendant had a duty to advise the LLC members, at the time of the workers’ compensation policy’s purchase or renewal, that an LLC member actively performing services on the LLC’s behalf was eligible for workers’ compensation coverage, but that the LLC must elect to purchase such coverage in order to obtain it. Consistent with N.J.S.A. 34:15-36, however, the Supreme Court held that defendant could not be held liable for breach of that duty unless the damages alleged were caused by defendant’s willful, wanton or grossly negligent act of commission or omission. The Supreme Court disagreed with the trial court’s assessment of the evidence presented by plaintiff on the question of proximate cause. Accordingly, the Court concurred that the trial court erred when it granted defendant’s motion to dismiss and his motion for judgment at trial, and affirmed as modified the Appellate Division’s judgment. The case was thus remanded to the trial court for further proceedings. View "Holm v. Purdy" on Justia Law

Rather than using the insurance agency’s in-house presiding officer, American Property Casualty Insurance Association (Association) requested an adjudicative hearing before an administrative law judge (ALJ) pursuant to RCW 48.04.010(5). The request was denied. The Association sought a writ of mandamus against Insurance Commissioner Mike Kreidler, requiring him to transfer the hearing. The Washington Supreme Court concluded the Association could have sought judicial review by way of the Administrative Procedure Act (APA), ch. 34.05 RCW, thus, the Association failed to demonstrate it had “no plain, speedy, and adequate remedy” at law, one of the three requirements for a writ to issue. Accordingly, the Supreme Court dismissed the petition. View "Am. Prop. Cas. Ins. Ass'n v. Kreidler" on Justia Law

Plaintiff challenged Lincoln’s denial of her claim for long-term disability benefits. On de novo review, the district court affirmed Lincoln’s denial of Plaintiff's claim, but it adopted new rationales that the ERISA plan administrator did not rely on during the administrative process. Specifically, the district court found for the first time that Plaintiff was not credible and that she had failed to supply objective evidence to support her claim.The Ninth Circuit held that when a district court reviews de novo a plan administrator’s denial of benefits, it examines the administrative record without deference to the administrator’s conclusions to determine whether the administrator erred in denying benefits. The district court’s task is to determine whether the plan administrator’s decision is supported by the record, not to engage in a new determination of whether the claimant is disabled. Accordingly, the district court must examine only the rationales the plan administrator relied on in denying benefits and cannot adopt new rationales that the claimant had no opportunity to respond to during the administrative process.Here, the district court erred because it relied on new rationales to affirm the denial of benefits. View "VICKI COLLIER V. LINCOLN LIFE ASSURANCE COMPANY" on Justia Law

Progressive Direct Insurance Company ("Progressive") appealed a circuit court order granting a motion for a partial summary judgment filed by Madison Keen and joined by Robert Creller and Alfa Mutual Insurance Company ("Alfa"); the trial court certified its order as final pursuant to Rule 54(b), Ala. R. Civ. P. In September 2019, Keen was involved in a motor-vehicle accident. She sought compensation from Creller, who was the driver of the other vehicle involved in the accident. The vehicle Creller was driving was owned by his parents and was insured by Alfa. The evidence suggested that Creller and his spouse were living with Creller's parents at the time of the accident. Alfa paid Keen the limits of the insurance policy, and Keen executed a settlement agreement and a release in favor of Creller and Alfa. In June 2021, Keen filed the lawsuit at issue here seeking underinsured-motorist benefits from two different policies, namely, a policy issued by Progressive covering the vehicle Keen was driving at the time of the accident and a policy issued by State Farm Automobile Insurance Company ("State Farm") covering a second vehicle in Keen's household. Because Keen was driving the vehicle insured by Progressive at the time of the accident, her Progressive underinsured-motorist coverage was the primary insurance and the State Farm underinsured-motorist coverage was the secondary insurance. During the litigation, Creller was deposed and revealed the existence of an additional insurance policy covering his spouse's vehicle, which had been issued by Allstate Insurance Company ("Allstate") and which identified Creller as a named insured. The discovery of the Allstate policy raised the possibility that Creller might have had additional liability insurance coverage that could have compensated Keen for her injuries. Based on the alleged existence of additional insurance benefits, she asserted that there had been a mutual mistake among the parties to the settlement agreement and the release. Keen eventually moved for partial summary judgment, arguing the Allstate policy did not provide coverage. For its part, Progressive opposed Keen's motion, because the availability of benefits under the Allstate policy might affect Progressive's interests with respect to Keen's underinsured- motorist claim. The trial court granted Keen's motion and certified its order as final pursuant to Rule 54(b). Progressive appealed. Because it appeared there was a question of fact based on the evidence before the trial court existed when it entered the partial summary judgment, the Alabama Supreme Court reversed that judgment and remanded the case for further proceedings. View "Progressive Direct Ins. Co. v. Keen, et al." on Justia Law

This appeal concerned a particular rate known as a “base rate,” which State Compensation Insurance Fund (State Fund) used to calculate premiums for its insureds. California Insurance Code section 11664(e)(6)(A) stated: “[i]f the premium rate in the governing classification for the insured is to be increased 25 percent or greater and the insurer intends to renew the policy, the insurer shall provide a written notice of a renewal offer not less than 30 days prior to the policy renewal date.” In a matter of first impression, the Court of Appeal found State Fund was not obligated to provide notice to cross-complainant Cover Right Roofing (Cover Right) under this statute. The increase at issue was not due to any change in the premium rate of Cover Right’s governing classification. Rather, a third party changed the applicable governing classification criteria, which caused Cover Right to be assigned a new governing classification with a higher premium rate. The statute did not require notice in such circumstances. Thus, the Court found the trial court correctly granted State Fund’s motion for summary judgment and affirm the judgment. View "Cover Right Roofing, Inc. v. State Compensation Ins. Fund" on Justia Law

Plaintiff Keene Auto Body, Inc. appealed a circuit court order that dismissed its complaint against defendant State Farm Mutual Automobile Insurance Company. Keene Auto Body, acting as an assignee of Caleb Meagher, who insured his vehicle through State Farm, sued State Farm for breach of contract for failing to cover the full cost of repairs to the insured’s vehicle. State Farm moved to dismiss the suit on grounds that, because of an anti-assignment clause in the insured’s policy, the insured’s assignment of his breach of contract claim to Keene Auto Body was not valid, and that, even if it was, Keene Auto Body did not sufficiently state a claim for breach of contract. The trial court granted the motion. The New Hampshire Supreme Court found the anti-assignment clause at issue here was ambiguous, and construed it against the insurer. Therefore, the clause did not prohibit the insured from assigning his post-loss claim to Keene Auto Body. Given this holding, the Supreme Court determined Keene Auto Body's factual allegations were sufficient to survive State Farm's motion to dismiss. Judgment was reversed and the matter remanded for further proceedings. View "Keene Auto Body, Inc. v. State Farm Mutual Automobile Insurance Company" on Justia Law