Justia Insurance Law Opinion Summaries

Several insurance companies (the Insurers) appealed the denial of their motions to intervene in a construction defect action between a property owners' association (the Association) and a number of construction contractors and subcontractors (the Insureds). The underlying construction defect action proceeded to trial, resulting in a verdict for the Association. After review, the South Carolina Supreme Court determined the Insurers were not entitled to intervene as a matter of right, and the trial court did not abuse its discretion in denying them permissive intervention. However, the Court held the Insurers had a right to a determination of which portions of the Association's damages are covered under the commercial general liability (CGL) policies between the Insurers and the Insureds. The Court also recognized that the Insurers had the right and ability to contest coverage of the jury verdict in a subsequent declaratory judgment action. "In that action, the Insurers and the Insureds will be bound by the existence and extent of any jury verdict in favor of the Association in the construction defect action. However, they will not be bound as to any factual matters for which a conflict of interest existed, such as determining what portion of the total damages are covered by any applicable CGL policies." View "Builders Mutual Insurance Company" on Justia Law

After a mother requested life-insurance proceeds for the benefit of her two minor children after the death of the children’s father, the insurance company requested that she provide the appropriate guardianship documentation. The insurance company received the order appointing the mother guardian and providing directions for the issuance of funds. But the insurance company did not issue the funds as instructed by the order, and the mother misappropriated the funds. A guardian ad litem was then appointed by the chancery court for the minor children and eventually sued the insurance company in the Mississippi Circuit Court for negligence and breach of contract. The circuit court granted the insurance company’s motion for summary judgment, holding that because the insurance company was not a party to the guardianship proceeding in chancery court, the insurance company was not subject to liability for an alleged violation of the guardianship order. The Mississippi Supreme Court found, however, that a genuine issue of material fact existed as to the insurance company’s liability and that summary judgment should not have been granted. Therefore, the Supreme Court reversed and remanded for a trial on the merits. View "Samson v. Unum Life Insurance Company of America" on Justia Law

In 1854, the Washington Territory and nine Native American tribes, including the Squaxin Island Tribe (the Tribe), entered into the 1854 Treaty of Medicine Creek (the Treaty), under which the Tribe relinquished their rights to land but retained “the right of taking fish at all usual and accustomed grounds and stations . . . , in common with all citizens of the Territory.” The District Court for the Western District of Washington has interpreted “fish” under the Treaty to include shellfish. In 1978, Leslie and Harlene Robbins (Robbins) purchased property in Mason County, Washington that included tidelands with manila clam beds. In connection with the purchase of the property, Robbins obtained a standard policy of title insurance from Mason County Title Insurance Company (MCTI) which provided MCTI would insure Robbins “against loss or damage sustained by reason of: . . . [a]ny defect in, or lien or encumbrance on, said title existing at the date hereof.” For years Robbins had contracted with commercial shellfish harvesters to enter Robbins’s property to harvest shellfish from the tidelands. The issue this case presented for the Washington Supreme Court's review was whether MCTI had a duty to defend Robbins when the Tribe announced it planned to assert its treaty right to harvest shellfish from the property. The Court affirmed the Court of Appeals and remanded to the superior court for further proceedings. The Supreme Court held that because the insurance policy conceivably covered the treaty right and no exceptions to coverage applied, MCTI owed the property owners a duty to defend and, in failing to do so, breached the duty. Because this breach was unreasonable given the uncertainty in the law, MCTI acted in bad faith. Further, because the property owners did not seek summary judgment on MCTI’s affirmative defenses, the Supreme Court remanded to the superior court for consideration of the defenses. View "Robbins v. Mason County Title Ins. Co." on Justia Law

The Tenth Circuit Court of Appeals certified two questions of law to the Oklahoma Supreme Court. Billy Hamilton, a small-business owner in Council Hill, Oklahoma, filed a claim in December 2015 with his insurer, Northfield Insurance Company, seeking coverage for his building's leaking roof. Northfield twice denied his claim: once in February 2016, and again in April 2016. Hamilton filed suit against Northfield in November of that year, alleging bad-faith denial of his insurance claim and breach by Northfield of the insurance contract. Hamilton rejected a proposed settlement, and the matter went to trial. A jury awarded him $10,652, the maximum amount of damages the judge instructed the jury it could award. Hamilton then sought attorney fees and statutory interest under 36 O.S. section 3629(B). Northfield responded that Hamilton was not the prevailing party under the statute, given that he had recovered less than its settlement offer to him. The federal district court agreed with Northfield, and Hamilton appealed to the Tenth Circuit Court of Appeals. Initially, a panel of that court affirmed the district court's determination that Hamilton was not the prevailing party for purposes of awarding attorney fees under section 3629(B). Following a petition for en banc rehearing by Hamilton and additional briefing by amicus curiae, the Tenth Circuit Court of Appeals granted panel rehearing sua sponte, vacated its opinion as to the issues raised in Hamilton's appeal, and certified the two questions to the Oklahoma Court. The questions were: (1) in determining which is the prevailing party under 36 O.S. 3629(B), should a court consider settlement offers made by the insurer outside the sixty- (formerly, ninety-) day window for making such offers pursuant to the statute?; and (2) should a court add to the verdict costs and attorney fees incurred up until the offer of settlement for comparison with a settlement offer that contemplated costs and fees? The Oklahoma Court answered both questions "no:" (1) a court may consider only those timely offers of settlement of the underlying insurance claim--and not offers to resolve an ensuing lawsuit that results from the insurer's denial of the same; and (2) this is strictly limited to the specific context of determining prevailing-party status under section 3629(B) alone. The Oklahoma Court expressed no opinion on a trial court's evaluation of the form of settlement offer described in the certifying court's second question when made outside the section 3629(B) setting. View "Hamilton v. Northfield Ins. Co." on Justia Law

William Persichette, through Franklin D. Azar & Associates, P.C., brought an underinsured-motorist (“UIM”) action against Owners Insurance Company (“Owners”) for allegedly handling his insurance claim unreasonably and in bad faith. About three months later, Persichette retained Mark Levy of Levy Law, P.C. (collectively “Levy Law”) as co-counsel. Owners promptly moved to disqualify Levy Law pursuant to Colo. RPC Rule 1.9(a) on the ground that Levy Law was Owners’ longtime former counsel and had a conflict of interest. The district court denied the motion, finding that Levy Law’s representation of Persichette was not “substantially related” to Levy Law’s decade-plus representation of Owners. Owners then filed a C.A.R. 21 petition invoking the Colorado Supreme Court's original jurisdiction. The Supreme Court concluded the district court erred in denying Owners’ motion to disqualify, and reversed. View "Persichette v. Owners Ins. Co." on Justia Law

Progressive Northwestern Insurance filed suit to obtain a declaratory judgment that it had not violated any duty to its insureds in the defense of a wrongful-death suit. The underlying suit had been brought in 2013 by Gabriel Gant against Justin Birk; his parents, Edward and Linda; and the Birks’ family company, Birk Oil. The suit alleged that Justin had negligently killed Kathyrn Gant (Gabriel’s wife) in a car accident; that his parents were liable because they had negligently entrusted the vehicle to him; and that Birk Oil was liable under the doctrine of respondeat superior because Justin was driving the vehicle incidental to his employment by the company. Gant’s attorneys estimated damages of many million dollars, which far exceeded defendants’ insurance coverage. Defendants had assets from which Gant could have collected additional money on a judgment against them, but his attorneys apparently thought that a better way to collect a large judgment would be if defendants had a claim against Progressive for not representing them properly and exposing them to a judgment far exceeding their insurance coverage. Accordingly, shortly before trial Gant entered into an agreement with the Birks in which Gant promised not to execute any judgment against the Birks, and in exchange the Birks assigned to Gant their rights to the policy limits under the Progressive and corporate insurance policies, and any claims the Birks had against Progressive for breach of contract, negligence, or bad faith. After a bench trial, Gant was awarded $6.7 million in damages. Progressive then brought this declaratory-judgment action and Gant counterclaimed, arguing that Progressive: (1) breached its duty to discover and disclose the corporate insurance policy; (2) was negligent in hiring attorney Kevin McMaster to defend the suit; and (3) was vicariously liable for McMaster’s conduct. The district court granted summary judgment in favor of Progressive on its claim and the counterclaims. Finding no reversible error, the Tenth Circuit affirmed the district court. View "Progressive Northwestern Ins v. Gant" on Justia Law

In 2005, a van containing six family members van slipped off the edge of an Illinois roadway. In the ensuing rollover crash, everyone was hurt; one passenger died. The crash occurred in a construction zone; a guardrail had been removed and not replaced. All lines had not been repainted on the repaved road, and pieces of asphalt lay on the shoulder. In a suit against the construction companies, the defense attorney told the plaintiffs that the two companies were operating as a joint venture with a $1 million liability insurance policy. The parties settled for $1 million. Plaintiffs signed a release of all claims that stated the plaintiffs agreed they were not relying on any statements by any parties’ attorneys. Four years later, the plaintiffs discovered that the companies carried separate liability policies.The district court ruled as a matter of law that the failure to identify the individual policies violated FRCP 26; that the undisclosed policies would have covered plaintiffs’ claims; and no joint venture agreement existed under Illinois law, so joint venture exclusions in the individual policies were inapplicable. A jury awarded damages of $8,169,512.84 for negligent misrepresentation. The Seventh Circuit reversed. The district court erred in allowing plaintiffs to rely on a Federal Rule of Civil Procedure for a duty of care; in deciding, before trial, that plaintiffs reasonably relied on the insurance disclosures; and in excluding the defense’s expert testimony on liability and settlement value. View "Turubchuk v. Southern Illinois Asphalt Co., Inc." on Justia Law

The Louisiana Supreme Court granted review in this case to determine whether the Louisiana Commissioner of Insurance was bound by an arbitration clause in an agreement between a health insurance cooperative and a third-party contractor. The Louisiana Health Cooperative, Inc. (“LAHC”), a health insurance cooperative created in 2011 pursuant to the Patient Protection and Affordable Care Act, entered an agreement with Milliman, Inc. for actuarial and other services. By July 2015, the LAHC was out of business and allegedly insolvent. The Insurance Commissioner sought a permanent order of rehabilitation relative to LAHC. The district court entered an order confirming the Commissioner as rehabilitator and vesting him with authority to enforce contract performance by any party who had contracted with the LAHC. The Commissioner then sued multiple defendants in district court, asserting claims against Milliman for professional negligence, breach of contract, and negligent misrepresentation. According to that suit, the acts or omissions of Milliman caused or contributed to the LAHC’s insolvency. Milliman responded by filing a declinatory exception of lack of subject matter jurisdiction, arguing the Commissioner must arbitrate his claims pursuant to an arbitration clause in the agreement between the LAHC and Milliman. The Supreme Court concluded, however, the Commissioner was not bound by the arbitration agreement and accordingly could not be compelled to arbitrate its claims against Millman. The Court reversed the appellate court's judgment holding to the contrary, and remanded the case for further proceedings. View "Donelon v. Shilling" on Justia Law

The Tenth Circuit Court of Appeals certified a question of law to the Colorado Supreme Court. The certified question arose from a dispute in which plaintiff Amica Life Insurance Company sought a declaratory judgment that it was not required to pay defendant Michael Wertz benefits under a life insurance policy naming Wertz as the beneficiary. The policy, which was issued in compliance with a standard enacted by the Interstate Insurance Product Regulation Commission (the “Commission”), contained a two-year suicide exclusion, and the insured committed suicide more than one year but less than two years after Amica had issued the life insurance policy to him. Wertz contended that the policy’s two-year suicide exclusion was unenforceable because it conflicted with Colorado statute, section 10-7-109, C.R.S. (2019). Wertz asserted that the Colorado General Assembly could not properly delegate to the Commission the authority to enact a standard that would effectively override this statute. After review, the Colorado Supreme Court agreed with Wertz, and accordingly, answered the certified question narrowly: the General Assembly did not have the authority to delegate to the Commission the power to issue a standard authorizing the sale of life insurance policies in Colorado containing a two-year suicide exclusion when a Colorado statute prohibited insurers doing business in Colorado from asserting suicide as a defense against payment on a life insurance policy after the first year of that policy. View "Amica Life Insurance Company v. Wertz" on Justia Law

In 2015, Elizabeth Byars was visiting a residence in Huntsville, Alabama owned by Hannelore Sims ("Hannelore") when she was attacked by a pit bull kept by Hannelore's adult grandson Cody Sims ("Cody"), who also resided at the property. The pit bull was allegedly owned by Belinda Jones (whose relationship to Cody and Hannelore was not made clear from the trial court record). Byars sued Hannelore, Cody, and Jones seeking to recover damages for her injuries. Cody was served with notice of Byars's lawsuit, but he failed to answer the complaint. The trial court entered a default judgment against Cody, awarding Byars $200,000. Byars thereafter amended her complaint to assert a claim against State Farm. Specifically, Byars alleged that State Farm had issued a homeowner's insurance policy insuring Hannelore's property and that, because a judgment had been entered against Cody, Byars could assert a claim against State Farm under the direct-action statute. State Farm moved to dismiss, arguing that the direct- action statute did not allow Byars to simply amend her complaint to add State Farm as a defendant. Rather, State Farm argued, Byars was required to initiate a separate action to pursue any claim she might have against State Farm. State Farm petitioned the Alabama Supreme Court for mandamus relief when the trial court denied its motion. In denying State Farm's petition, the Supreme Court determined State Farm failed to meet its burden or establishing that it had no adequate remedy aside from a writ of mandamus. View "Ex parte State Farm Fire & Casualty Co." on Justia Law