Justia Insurance Law Opinion Summaries

Plaintiff-Appellant Neil Hall appealed the district court’s grant of summary judgment in favor of Defendant-Appellee Allstate Fire and Casualty Insurance Company (Allstate) on his claim for underinsured motorist benefits. Hall challenged the district court’s determination that Allstate successfully asserted the affirmative defense of failure to cooperate, and that his bad faith claim also failed as a result. Hall was injured in a car accident caused by underinsured motorist Teri Johnson. Johnson only carried $25,000 in liability insurance coverage. Hall carried underinsured motorist coverage through Allstate. Allstate gave Hall permission to settle with Johnson for her $25,000 limit. Hall’s counsel submitted a request for benefits to Allstate asserting that he was entitled to more than the $25,000 he had received. An Allstate claims adjuster reviewed the medical expenses in the letter and determined that the reasonable amount of expenses was $25,011.68. Allstate sent Hall’s counsel a payment of $11.68 along with a letter that stated: “I will be in contact with you to resolve the remaining components of your client’s claim.” Counsel did not respond to any of the five attempts over three months: two voicemails and three letters. Without any prior notice to Allstate, Hall filed suit against Allstate for breach of contract, statutory unreasonable delay or denial of payment of benefits, and common law bad faith. The Tenth Circuit affirmed the district court, finding that because the district court found the insured's failure to cooperate resulted in a material and substantial disadvantage to the insurer, the insurer properly denied coverage on this ground, and summary judgment was proper as to the insured's bad faith claim. View "Hall v. Allstate Fire" on Justia Law

After a jury trial, Noranda Aluminum Holding Corporation, an aluminum-products manufacturer, won a judgment against its insurance companies for more than $28 million. The Delaware Supreme Court affirmed, and the Superior Court awarded Noranda post-judgment interest at 6 percent (the same rate as pre-judgment interest) because that was the legal rate in effect when the insurance liability first arose. On appeal, Noranda argued the Superior Court should have used an interest rate of 7.5 percent, which was the legal rate on the date judgment was entered. To this, the Supreme Court agreed, holding that, in 6 Del. C. section 2301(a)'s final sentence, the judgment entered by the Superior Court in Noranda’s favor “shall, from the date of the judgment, bear post-judgment interest of 5% over the Federal Reserve discount rate[.]” Because the Federal Reserve discount rate was 2.5 percent on October 17, 2019, the date the Superior Court entered judgment, the Supreme Court reversed and remanded with instructions to award Noranda post-judgment interest at 7.5 percent. View "Noranda Aluminum Holding Corporation v. XL Insurance America, Inc." on Justia Law

Plaintiff State Farm Mutual Automobile Insurance Company (State Farm) filed an Insurance Fraud Protection Act (IFPA) action alleging defendants Sonny Rubin, M.D., Sonny Rubin, M.D., Inc., and Newport Institute of Minimally Invasive Surgery (collectively, defendants) fraudulently billed insurers for various services performed in connection with epidural steroid injections. A month prior, however, another insurer, Allstate, filed a separate IFPA lawsuit against the same defendants, alleging they were perpetrating a similar fraud on Allstate. The trial court sustained defendants’ demurrer to State Farm’s complaint under the IFPA’s first-to-file rule, finding it alleged the same fraud as Allstate’s complaint. State Farm appealed, arguing its complaint alleged a distinct fraud. After review, the Court of Appeal agreed the demurrer was incorrectly sustained, but for another reason. The Court found the trial court and both parties only focused on whether the two complaints alleged the same fraudulent scheme, but in this matter of first impression, the Court found the IFPA’s first-to-file rule required an additional inquiry. "Courts must also review the specific insurer-victims underlying each complaint’s request for penalties. If each complaint seeks penalties for false insurance claims relating to different groups of insurer-victims, the first-to-file rule does not apply. A subsequent complaint is only barred under the first-to-file rule if the prior complaint alleges the same fraud and seeks penalties arising from the false claims, submitted to the same insurer-victims." Judgment was reversed and the matter remanded for further proceedings. View "California ex rel. State Farm Mutual Automobile Ins. Co. v. Rubin" on Justia Law

In a previous opinion, the district court affirmed a $34.3 million jury verdict in favor of the class represented by plaintiff and reversed the district court's denial of prejudgment interest. The court then remanded the matter for the district court to reconsider plaintiff's motion for prejudgment interest. State Farm appealed.The Eighth Circuit affirmed the district court's award of prejudgment interest, concluding that plaintiff was entitled to prejudgment interest at the 4% rate contained in the contract, and the district court did not err in calculating the amount of interest due and awarding plaintiff $4,521,674 in prejudgment interest. View "Vogt v. State Farm Life Insurance Co." on Justia Law

After a tractor manufactured by CNH caught fire, Floyd filed suit against CNH in federal court under a theory of product liability, claiming that its insureds owned the tractor and other property on the tractor, both of which were damaged in the fire, and that Floyd was subrogated to its insureds' claims against CNH because Floyd had paid its insureds' claim for the damage. The district court dismissed the case for lack of subject matter jurisdiction under 28 U.S.C. 1332.The Eighth Circuit affirmed and concluded that section 1332's amount-in-controversy requirement was not satisfied in this case. The court concluded that the Iowa Supreme Court would hold that the economic-loss doctrine permits recovery only for the other property and not for the product itself. Accordingly, the Iowa Supreme Court would bar recovery in tort for damage that a defective product causes to itself, even if the plaintiff also seeks recovery for damage to other property. Here, Floyd's recovery is limited as a matter of law to the alleged $22,787.81 in damage to property other than the tractor. The court denied the motion to certify a question of law to the Iowa Supreme Court and upheld the district court's dismissal based on lack of subject matter jurisdiction. View "Floyd County Mutual Insurance Ass'n v. CNH Industrial America LLC" on Justia Law

National American Insurance Company ("NAICO") brought suit against New Dominion, LLC, seeking a declaratory judgment that four consecutive commercial general liability policies it issued to New Dominion did not provide coverage for bodily injury and property damage claims asserted in a number of separate lawsuits ("the Earthquake Lawsuits"). These claims allegedly arose out of seismic activity caused by New Dominion's oil and gas operations. New Dominion filed a counterclaim alleging breach of contract, seeking defense and indemnity, and asserting equitable claims for estoppel and reformation. The trial court bifurcated the issues pleaded, conducted separate bench trials for the contract interpretation questions and the equitable claims. Following the first bench trial, the court issued a declaratory judgment holding that the Total Pollution Exclusions and the Subsidence and Earth Movement Exclusions in the commercial general liability policies clearly and unambiguously precluded coverage for the claims asserted in the Earthquake Lawsuits. Following the second trial, the court estopped NAICO from denying claims for bodily injury during one of the four policy periods but denied all other equitable claims. Both parties appealed, raising "a litany" of issues with the trial court's orders. The Oklahoma Supreme Court joined the cases and held: (1) the Total Pollution Exclusions did not clearly and unambiguously preclude coverage; (2) the Subsidence and Earth Movement Exclusions clearly and unambiguously precluded coverage; and (3) there was no basis for New Dominion's estoppel or reformation claims. View "National American Ins. Co. v. New Dominion" on Justia Law

In 1955-1976, WPC, a manufacturer of industrial valves, bought primary and excess level liability insurance policies from OneBeacon’s predecessor. In 2001, asbestos lawsuits started coming against WPC. OneBeacon began its defense. The parties reached an impasse over several issues.WPC sought declaratory relief in Ohio state court concerning OneBeacon’s obligations. WPC also sued OneBeacon in federal court, alleging breach of contract. OneBeacon unsuccessfully moved to dismiss or stay the case. The district court rejected OneBeacon’s argument that the federal and state proceedings were parallel. WPC amended its state complaint, adding breach of contract claims. The state court held that OneBeacon had not committed the alleged breaches. OneBeacon again moved to dismiss WPC’s federal lawsuit, arguing that the state court’s ruling precluded WPC’s federal claims. The court acknowledged that the state court judgment likely satisfied the elements of claim preclusion, but declined to dismiss. The court stayed the case, noting that WPC’s amended state court complaint made the state and federal proceedings parallel. After OneBeacon filed its federal notice of appeal, the Ohio Court of Appeals reversed in part, finding that OneBeacon breached some of the policies. Pennsylvania subsequently liquidated OneBeacon and stayed all litigation.The Sixth Circuit reversed, first holding that exercising appellate jurisdiction here will in no way “hinder [the] operation” of Pennsylvania’s claims process and priority scheme. Claim preclusion bars the federal suit. View "William Powell Co. v. National Indemnity Co." on Justia Law

In 1999, Kristina drugged her sons and put them, and herself, in a running car in a closed garage. Matthew died; Adam and Kristina survived. Kristina was convicted of second-degree murder and remained in prison until 2016. In 1999, Kristina had State Farm automobile and homeowners insurance policies. In 2001, Matthew’s estate, Adam, and their father (the Rotells) sued Kristina for wrongful death and bodily injury.Kristina tendered her defense to State Farm, which filed state court declaratory judgment actions, seeking determinations that her policies did not cover the incident. The Rotells allege that State Farm rejected a settlement offer even though Kristina wished to accept it. The state court then held that the policies did not cover the incident. State Farm withdrew from the wrongful-death lawsuit. The state court entered a default judgment against Kristina; a jury entered a $505 million verdict. Kristina was insolvent, so the Rotells petitioned for involuntary Chapter 7 bankruptcy. The bankruptcy court entered an order subjecting Kristina’s assets (claims against State Farm for bad faith and malpractice) to its control and appointed Carapella as trustee. The verdict is Kristina’s only liability. Carapella sued State Farm in Florida state court. State Farm then sought to intervene, post-judgment, in the wrongful-death action and moved to vacate the judgment, arguing that the Rotells’ fifth amended complaint was untimely and that the default judgment was void.The district court and the Eleventh Circuit affirmed the denial of the motion. The Bankruptcy Code’s “automatic stay” provision, 11 U.S.C. 362(a), precluded State Farm’s motion to intervene. View "State Farm Florida Insurance Co. v. Carapella" on Justia Law

Former students sued Kamehameha Schools, alleging sexual abuse by a doctor who had practiced on SFMC’s campus. Kamehameha filed crossclaims against SFMC, which sent these crossclaims to its insurer, Argonaut. Argonaut ultimately represented SFMC subject to a reservation of rights. Neither party could determine the terms of the relevant policies from decades earlier. Argonaut sought declaratory relief in federal court under 28 U.S.C. 2201, as to what policies Argonaut had issued to SFMC during the relevant period and the terms of those policies. SFMC asked the district court to decline jurisdiction and, alternatively counterclaimed for declaratory and monetary relief.The Ninth Circuit affirmed the district court’s order, declining to exercise jurisdiction. Generally, a district court has the discretion to decline jurisdiction over a 28 U.S.C. 2201 declaratory-relief claim, after considering the relevant factors but when a declaratory claim is joined with an independent monetary one, the court usually must retain jurisdiction over the entire action. That mandatory jurisdiction rule did not apply; parties can plead a conditional counterclaim and still preserve objections to jurisdiction. SFMC’s counterclaims were conditional. Because SFMC did not waive its threshold defense, the district court still had discretionary jurisdiction. The district court thoroughly considered and correctly concluded that each relevant factor favored declining jurisdiction, noting that the declaratory claims could be filed in state court and that deciding them would not settle all aspects of the controversy or clarify the parties’ legal relationships. View "Argonaut Insurance Co. v. St. Francis Medical Center" on Justia Law

The Supreme Court held in this case that the circuit court had the power to enter an order precluding a party to a West Virginia lawsuit from instituting or prosecuting collateral litigation in a sister state.This lawsuit was brought by a pharmaceutical distributor against the insurance companies that provided it with liability insurance. At issue on appeal was the West Virginia circuit court's "anti-suit injunction" prohibiting the insurance companies from pursuing parallel litigation against the distributor in California. The Supreme Court affirmed in part and reversed in part, holding (1) the circuit court clearly had the authority to enter an anti-suit injunction; but (2) an anti-suit injunction was not narrowly tailored to protect the court's authority while respecting the sister state court, necessitating remand. View "St. Paul Fire & Marine Insurance Co. v. AmerisourceBergen Drug Corp." on Justia Law