Justia Insurance Law Opinion Summaries

In this dispute between an Insurer and pension holders, the Second Circuit granted in part and denied in part Insurer's motion to dismiss. Plaintiffs did not timely appeal from the district court’s orders addressing the methodology for computing individual relief, so the court lacked jurisdiction over that portion of Plaintiffs’ appeal. However, the court found that it had jurisdiction over the portion of Plaintiffs’ appeal challenging the district court’s order denying sanctions. Considering that order on the merits, the court concluded that it was not an abuse of discretion and affirmed. View "Amara v. Cigna Corporation" on Justia Law

The Travelers Indemnity Company appeals the judgment entered after the superior court denied Travelers’ petition for a writ of administrative mandate challenging the Insurance Commissioner’s decision that certain agreements relating to workers’ compensation insurance policies issued to Adir International, LLC were unenforceable. Travelers contended that Adir’s lawsuit in the trial court, which included a request for a declaratory judgment the agreements were void, barred the Commissioner, under the doctrine of exclusive concurrent jurisdiction, from exercising jurisdiction while that lawsuit was pending. Travelers also appealed the post-judgment order granting Adir’s motion for attorney fees, contending attorney fees were not authorized.   The Second Appellate Division affirmed the order and judgment denying Travelers’s petition. The court explained that the exclusive concurrent jurisdiction doctrine does not apply in this context to proceedings pending before the trial court and an administrative agency; and, in any event, it was reasonable and consistent with the primary jurisdiction doctrine for the trial court to defer to the Commissioner’s determination of the validity of the agreement at issue. In addition, because Adir’s administrative claim fell within the agreement’s attorney fee provision, the court affirmed the post-judgment order awarding Adir attorney fees. View "The Travelers Indemnity Co. v. Lara" on Justia Law

Respondent Myra Windham was seriously injured while driving a rental car that was considered a temporary substitute vehicle under her State Farm policy. In this declaratory judgment action instituted by Petitioner State Farm, the issue this case presented for the South Carolina Supreme Court's determination was whether Windham could stack her underinsured motorist ("UIM") coverage pursuant to section 38-77-160 of the South Carolina Code. The circuit court agreed with State Farm that stacking was prohibited, and the court of appeals reversed. Because both parties offered reasonable interpretations of the policy language, the Supreme Court found an ambiguity existed, which it construed against the drafter. Accordingly, the Court agreed with the court of appeals that Windham could stack, and affirmed as modified. View "State Farm v. Windham" on Justia Law

Bliss Sequoia Insurance and Risk Advisors held an insurance policy from Allied Property and Casualty Insurance (Allied Property) covering any liability that Bliss Sequoia might incur for “damages because of ‘bodily injury.’” One of Bliss Sequoia’s clients was a water park, and after a park guest was injured, the park sued Bliss Sequoia for professional negligence, alleging that the coverage limits on the park’s liability insurance were too low. This appeal presents the question whether that negligence claim arose “because of” the guest’s “bodily injury” and is therefore covered by Bliss Sequoia’s policy. We agree with the district court that the answer is no.   The panel affirmed the district court’s summary judgment in favor of Allied Property. Allied’s policy provided that it covered any sums Bliss Sequoia was “legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage.’” Bliss Sequoia alleged that the bodily injury at issue was a “but-for” cause of Bliss Sequoia’s professional-negligence liability. The panel held that pure but-for causation would result in infinite liability for all wrongful acts, and therefore, the law almost never employs that standard without limiting it in some way. The law cuts off remote chains of causation by applying common law principles of proximate causation. Further, the personal-injury lawsuit against the water park arose “because of bodily injury,” but the claims of professional negligence did not. Because Bliss Sequoia’s policy did not cover those claims, Allied had no duty to defend or indemnify Bliss Sequoia against them. View "BLISS SEQUOIA INSURANCE, ET AL V. ALLIED PROPERTY & CASUALTY INS" on Justia Law

In 2012, a competitor sued Creation for trademark violations. Creation requested that Selective Insurance provide coverage. Selective refused. Creation’s settlement with its competitor prevented Creation from selling one of its primary lines. Creation struggled financially. Selective sought a declaration in Illinois state court that it had no duty to defend. Creation countersued and also alleged breach of the insurance policy. The Illinois court entered partial summary judgment for Creation on its duty-to-defend claim, limited to fees Creation incurred before the original trademark litigation was settled.In 2014—in the middle of the state-court litigation—Creation sued Selective in federal court for breach of contract and under the Illinois Insurance Code. In 2016, Creation voluntarily dismissed its state-court breach-of-contract claim with leave to refile. The Illinois court expressly reserved Creation’s right to maintain its federal action on its contract claim. After the 2017 state court award, the federal district court awarded Creation nearly $3 million in damages on the Insurance Code claim. After remand, Creation unsuccessfully sought to amend its complaint to seek punitive damages. The district court then concluded that the doctrines of claim and issue preclusion barred Creation’s remaining contract claim.The Seventh Circuit reversed, noting that the case is an “anomaly.” The state court expressly reserved Creation’s right to file the claim in federal court, so the suit is not precluded by its earlier state-court litigation. View "Creation Supply, Inc. v. Selective Insurance Co. of the Southeast" on Justia Law

A declaratory judgment action was filed in the context of two insurance- company liquidation matters. The parties asserted they informally agreed, among themselves, and the single Commonwealth Court Judge overseeing the cases, to a procedure for a three-judge panel of the Commonwealth Court to render a decision to be reviewable via exceptions by the Commonwealth Court, en banc. However, as the agreement was not memorialized as of record, the party aggrieved by the panel opinion, the statutory liquidator, lodged an immediate appeal with the Pennsylvania Supreme Court after that opinion and order were filed, and then filed exceptions with the Commonwealth Court, en banc. After the Commonwealth Court, en banc, rendered a second opinion and order, overruling the exceptions and confirming the panel’s initial decision, the statutory liquidator filed a second appeal with the Supreme Court parallel to the first. This raised a jurisdictional question. The Supreme Court found two of four petitions filed were properly dismissed for want of jurisdiction. The other two were properly before the Court, and on the merits, the Court affirmed the Panel's July 9, 2021 order: “[t]here is simply no statutory authority for this well-intentioned proposal [or] any standard to guide the Liquidator’s establishment [of the proposal] or [the Commonwealth Court’s] evaluation thereof.” View "In Re: American Network Ins. Co." on Justia Law

The Supreme Court affirmed the judgment of the district court dismissing this action brought by Millard Gutter Company against Shelter Mutual Insurance Company seeking to recover damages for breach of insurance contracts and for first-party bad faith, holding that the district court did not err in concluding that Millard Gutter did not have standing to assert first-party bad faith claims against Shelter.After a storm, Millard Gutter obtained assignments from various policyholders of Shelter. Thereafter, Millard filed suit against Shelter in its own name, as assignee, alleging breach of contract and first-party bad faith in failing to settle the claims. The district court granted Shelter's motion to dismiss, concluding that the complaint did not contain sufficient factual allegations to establish standing to assert first-party bad faith claims. The Supreme Court affirmed, holding that Millard Gutter lacked standing to prosecute the policyholders' tort actions for first-party bad faith against Shelter. View "Millard Gutter Co. v. Shelter Mutual Insurance Co." on Justia Law

Tarrar operated “a utility consultant business” in Contra Costa County. Associated issued Tarrar a comprehensive commercial liability and property insurance policy to “pay for direct physical loss of or damage to Covered Property,” and in particular to “pay for the actual loss of Business Income you sustain due to the necessary suspension of your operations during the period of restoration." The suspension must be caused by direct physical loss of or damage to property at the described premises. The loss or damage must be caused by or result from a Covered Cause of Loss.Based on the 2020 “shelter-in-place orders,” Tarrar made an unsuccessful claim for “business income loss.” The trial court dismissed Tarrar’s subsequent suit without leave to amend. While several California courts of appeal have resolved this issue against the insureds, one court held for the insured on the basis it had pled the element missing from earlier cases: it “adequately alleged direct physical loss or damage.” While Tarrar’s complaint did not allege the necessary “direct physical loss of or damage to property,” Tarrar should be permitted to amend. A plaintiff need not even request leave to amend an original complaint. Unless the complaint shows on its face that it is incapable of amendment, denial of leave to amend constitutes an abuse of discretion. View "Tarrar Enterprises, Inc. v. Associated Indemnity Corp." on Justia Law

Jimi Redman shot and killed Lynn Harrison with a rifle while both were in their vehicles at a stoplight. Immediately before the shooting, Redman, who was driving a Ford Escape, approached Harrison's GMC in the lane to her right. A witness, who was directly behind Harrison in the left lane, saw Redman make hand gestures and blow kisses toward Harrison. There is no evidence that Harrison attempted to evade Redman or that she even saw his gestures. Instead, as the two vehicles stopped at the red light, Redman pulled out a rifle and fired one shot which traveled through Harrison's passenger side window, killing her. Redman subsequently sped away, while Harrison's vehicle, which was still in drive, crept forward until coming to rest in the median. Redman was arrested a few blocks away. The issue this case presented for the South Carolina Supreme Court's review was whether uninsured or underinsured benefits could be recovered when an individual was shot and killed by another motorist as both cars were stopped at a traffic light. In deciding this question, the Court revisited and attempted to clarify conflicting jurisprudence as to whether such injuries arise out of the "ownership, maintenance, or use" of an automobile. To this, the Court held that gunshot injuries do not arise out of the use of an automobile. Therefore, it reversed the court of appeals and reinstated the judgment of the circuit court. View "Progressive Direct v. Groves" on Justia Law

A fire at the Barclay assisted living facility caused four residents’ deaths. Their estates sued Barclay and Johnson Controls, which maintained and monitored Barclay’s fire-suppression system. After Barclay and its liability insurers settled with the estates, the insurers sued Johnson in federal court, asserting diversity jurisdiction. The insurers alleged that they stood in the shoes of Barclay as its subrogees and were entitled to damages for the settlement payments they made on Barclay’s behalf. The insurers are structured as reciprocal insurance exchanges--distinct legal entities that can sue or be sued but without corporate existence. Each is an unincorporated association whose subscribers exchange contracts and pay premiums for the purpose of insuring themselves and each other. The subscribers are simultaneously both the insureds of and insurers to one another, with the exchanges of insurance between them effected by a common representative.The district court, reasoning that there was no clear Pennsylvania subrogation law prohibition on insurers “asserting tort-based claims against third-party tortfeasors,” denied Johnson’s motion to dismiss. The Third Circuit vacated without reaching the issue of the availability of the tort claims under Pennsylvania law. Before any federal court can decide the merits of such a question, it must have jurisdiction, which may be lacking in this case. For purposes of diversity jurisdiction, the citizenship of reciprocal insurance exchanges turns on the citizenship of their subscribers, who may not be completely diverse from Johnson. Additional fact-finding is needed. View "Peace Church Risk Retention Group v. Johnson Controls Fire Protection LP" on Justia Law