Justia Insurance Law Opinion Summaries

A neurosurgeon who co-owned a medical practice and several unrelated businesses purchased disability insurance policies through insurance brokers employed by a financial group. The brokers allegedly advised him he would receive maximum benefits if disabled, without disclosing that his other business interests could reduce his benefits. After being diagnosed with a vision condition that prevented him from performing neurosurgery, the plaintiff claimed maximum benefits but received only partial payments because of his unrelated business interests. He filed a complaint asserting, among other claims, that the brokers violated the New Jersey Consumer Fraud Act (CFA) by failing to obtain sufficient disability insurance.The Superior Court, Law Division, granted the brokers’ motion to dismiss the CFA count, relying on Plemmons v. Blue Chip Insurance Services, Inc., which held insurance brokers are exempt from the CFA as “semi-professionals.” The trial court noted but did not resolve the tension between Plemmons and Shaw v. Shand, which narrowly construed the CFA's “learned professional” exception. The Appellate Division affirmed the dismissal. The Supreme Court of New Jersey granted leave to appeal the CFA count.The Supreme Court of New Jersey held that insurance brokers, producers, and agents are not exempt from liability under the CFA, neither as “semi-professionals” nor under the “learned professional” exception. The Court found no support for a “semi-professional” exemption in the CFA’s text and determined that licensing or regulation alone does not justify exemption. The Court reversed the Appellate Division’s judgment, vacated the CFA count’s dismissal, and remanded for further proceedings, also inviting legislative clarification on professional exemptions under the CFA. View "Lowe v. Audet" on Justia Law

A lightning strike in October 2019 caused a destructive fire at a large mansion in southern Illinois owned by Wesley Gibson. Gibson had acquired the property nearly 30 years earlier as a family vacation home and, over time, extensively renovated it and filled it with valuable furniture, antiques, and artwork. Eventually, he transformed the mansion and surrounding properties into a commercial lodging and events venue, hosting weddings, corporate retreats, and other gatherings. Gibson’s family continued to use the mansion for about 70 nights per year, but the property’s primary use became commercial, as evidenced by tax filings and significant rental income.Following the fire, Gibson filed a claim with Chubb National Insurance Company under his homeowner’s policy, which provided $8.75 million for the dwelling and $3.5 million for its contents. Chubb paid the dwelling coverage in full but limited payment for the contents to $25,000, citing a business property exclusion in the policy that capped coverage for property used in business at that amount. Gibson sued Chubb in the United States District Court for the Northern District of Illinois for breach of contract and violations of Illinois insurance and consumer-fraud statutes. On cross-motions for summary judgment, the district judge found that the majority of the contents were used for business purposes and subject to the $25,000 limit, granting partial summary judgment to Chubb. The judge allowed Gibson’s claim to proceed only for certain items kept in areas not accessible to guests. After settling remaining issues, final judgment was entered.The United States Court of Appeals for the Seventh Circuit affirmed. The court held that under the terms of the policy and Illinois law, Chubb properly classified most of the mansion’s contents as business property and was only obligated to pay the $25,000 sublimit. The court also affirmed summary judgment for Chubb on the statutory claims. View "Gibson v Chubb National Insurance Company" on Justia Law

Two individuals filed a lawsuit on behalf of themselves and a proposed class, alleging that a life insurance company’s “Trendsetter LB” term life insurance policy misrepresented its premium structure. The plaintiffs argued that policy language stating the annual premium was “excluding riders” and that additional accelerated death benefit riders were included at “no charge” was misleading. They claimed consumers were led to believe these extra benefits were free, when in fact the premium included undisclosed charges for these riders. The plaintiffs did not allege they were denied any promised benefits, but contended the policy failed to break down the cost of its bundled components, allegedly causing consumers to misunderstand their options and overpay compared to a more basic policy.The case began in Alameda County Superior Court. Plaintiffs sought class certification for claims under California’s Unfair Competition Law (UCL), focusing only on alleged misrepresentations in the policy’s standardized language. The trial court initially found ascertainability and numerosity met, but denied class certification for most claims, ruling that determining liability would require individualized inquiries into what information each customer received from agents or marketing materials. The court certified only a narrow claim regarding compliance with a statutory notice requirement, but later, at plaintiffs’ request, denied certification entirely when they clarified they did not intend to pursue that claim.The Court of Appeal of the State of California, First Appellate District, Division One, affirmed the trial court’s denial of class certification. The court held that the policy language was, at best, ambiguous and that resolving liability would depend not just on the form policy language but also on individualized evidence about communications with each purchaser. The court determined that common issues did not predominate and that the trial court did not abuse its discretion in denying certification. The judgment was affirmed. View "Guthrie v. Transamerica Life Ins. Co." on Justia Law

Daevieon Towns purchased a new Hyundai Elantra in 2016, and over the next 19 months, the car required multiple repairs for alleged electrical and engine defects. In March 2018, either Towns or his wife, Lashona Johnson, requested that Hyundai buy back the defective vehicle. Before Hyundai acted, the car was involved in a collision, declared a total loss, and Johnson’s insurance paid her $14,710.91.Towns initially sued Hyundai Motor America in the Superior Court of Los Angeles County for breach of express warranty under the Song-Beverly Consumer Warranty Act. As trial approached, Towns amended his complaint to add Johnson as a plaintiff, arguing she was the primary driver and responsible for the vehicle. The trial court allowed the amendment, finding Johnson was not a buyer but permitted her to proceed based on its interpretation of Patel v. Mercedes-Benz USA, LLC. At trial, the jury found for Towns and Johnson, awarding damages and civil penalties. However, the court reduced the damages by the insurance payout and adjusted the prejudgment interest accordingly. Both parties challenged the judgment and costs in post-trial motions.The California Court of Appeal, Second Appellate District, Division Four, reviewed the case. It held that only a buyer has standing under the Act, so Johnson could not be a plaintiff. The court also held that third-party insurance payments do not reduce statutory damages under the Act, following the Supreme Court’s reasoning in Niedermeier v. FCA US LLC. Furthermore, prejudgment interest is available under Civil Code section 3288 because Hyundai’s statutory obligations do not arise from contract. The court affirmed in part, reversed in part, and remanded for the trial court to enter a modified judgment and reconsider costs. View "Towns v. Hyundai Motor America" on Justia Law

A teacher employed by the Los Angeles Unified School District purchased a variable annuity with an optional Guaranteed Minimum Income Benefit (GMIB) rider from an insurance company in 2010. The GMIB rider, which provided a guaranteed minimum level of payments, was subject to an annual fee that was disclosed both to the purchaser and on a state-maintained website as required by the California Education Code at the time of purchase. In 2018, the insurer ceased offering the GMIB rider to new customers, but permitted existing holders, including the plaintiff, to maintain the rider and continue paying the associated fee. After January 2019, the fee for the GMIB rider was no longer listed on the state-administered website, although the underlying annuity product remained available to new purchasers.The plaintiff filed a lawsuit in the Superior Court of Los Angeles County, alleging that the insurer’s collection of the GMIB rider fee after it was no longer disclosed on the state website constituted an unlawful business practice under California’s Unfair Competition Law (UCL). The plaintiff did not claim to have relied on the website or to have been misled about the fee, but asserted that the insurer was statutorily barred from collecting undisclosed fees. The trial court sustained the insurer’s demurrer, finding that the plaintiff failed to allege reliance necessary for standing under the UCL, and dismissed the action with prejudice when the plaintiff declined to amend the complaint.The California Court of Appeal, Second Appellate District, Division One, affirmed the dismissal, albeit on different grounds. The court held that the Education Code does not require continued disclosure of fees for optional product features, such as the GMIB rider, after those features are no longer offered to prospective purchasers. As a result, the insurer was not prohibited from collecting the fee from existing holders, and the plaintiff’s UCL claim failed as a matter of law. The court awarded the insurer its costs on appeal. View "Jacobson v. Metropolitan Life Insurance Co." on Justia Law

A 2018 data breach at Barracuda Networks exposed protected health information of patients of Zoll Services LLC, a subsidiary of Zoll Medical Corporation. Zoll had contracted with Fusion LLC for data security services, and Fusion in turn relied on Barracuda’s technology. The agreements between these companies included certain liability and indemnification provisions, as well as a right for Barracuda to audit Fusion’s customer contracts. After the breach, Zoll settled a class action brought by its customers whose data was compromised.Following these events, Zoll initiated arbitration against Fusion and filed suit against Barracuda in the U.S. District Court for the District of Massachusetts. Fusion intervened and asserted additional claims against Barracuda. The district court dismissed most claims but allowed Zoll’s equitable indemnification claim and Fusion’s breach of contract and breach of the covenant of good faith and fair dealing claims to proceed. After arbitration and settlements, Axis Insurance Company, as assignee and subrogee of Zoll and Fusion, was substituted as plaintiff. Barracuda moved for summary judgment on the remaining claims, which the district court granted.On appeal, the United States Court of Appeals for the First Circuit reviewed the district court’s summary judgment rulings de novo. The appellate court held that Axis failed to present evidence of a relationship between Zoll and Barracuda that would support derivative or vicarious liability necessary for equitable indemnification under Massachusetts law. The court found that Fusion did not meet a condition precedent in its contract with Barracuda, and Barracuda had not waived or was estopped from asserting that condition. Further, Axis could not show that Barracuda breached the covenant of good faith and fair dealing, as no relevant contractual right existed. The First Circuit affirmed the district court’s grant of summary judgment in favor of Barracuda on all claims. View "Axis Insurance Company v. Barracuda Networks, Inc." on Justia Law

Adir International, LLC operates a chain of retail stores, Curacao, which primarily serves low-income, Spanish-speaking immigrants in California, Nevada, and Arizona. Curacao offers store credit to customers, with over 90 percent of sales made on store credit. Since at least 2012, Curacao has offered optional “account protection” services (AGP Basic and AGP Plus) to credit customers, with AGP Plus including a credit property insurance component. Curacao was licensed as a credit insurance agent, but its sales associates, who were not licensed or endorsed, received bonuses for selling these insurance products. The AGP program allowed customers to defer payments under certain circumstances, but the fees for AGP often exceeded finance charges, and the program was highly profitable for Curacao.The People of the State of California filed a civil enforcement action in the Superior Court of Los Angeles County, alleging that Adir and its owner, Ron Azarkman, violated the Unfair Competition Law (UCL) through predicate violations of the Insurance Code and the Unruh Retail Installment Sales Act (Unruh Act). After a bench trial, the Superior Court found that Adir and Azarkman violated the Insurance Code by selling insurance through unlicensed employees, failing to use approved training materials, and providing required disclosures only after enrollment. The court held Azarkman personally liable due to his control and knowledge of the practices. However, the court ruled that the sale of account protection services did not violate the Unruh Act.On appeal, the California Court of Appeal, Second Appellate District, Division Eight, affirmed the trial court’s findings regarding the Insurance Code violations and Azarkman’s personal liability, rejecting arguments about primary jurisdiction, statutory interpretation, and statute of limitations. The appellate court reversed the trial court’s ruling on the Unruh Act, holding that the Act limits all permissible fees to those specifically authorized, and remanded for further proceedings on that claim. In all other respects, the judgment was affirmed. View "P. v. Adir Internat., LLC" on Justia Law

During the COVID-19 pandemic, two individuals who held automobile insurance policies with a major insurer in California alleged that the insurer’s rates became excessive due to a significant reduction in driving and traffic accidents. They claimed that the insurer was required by statute to refund a portion of the premiums collected during this period, even though the rates had previously been approved by the state’s insurance commissioner. The insurer did provide partial refunds in response to directives from the insurance commissioner, but the plaintiffs argued these refunds were insufficient and sought further restitution on behalf of a class of similarly situated policyholders.The Superior Court of Alameda County initially allowed the plaintiffs to amend their complaint after sustaining a demurrer. In their amended complaint, the plaintiffs continued to assert claims under California’s Unfair Competition Law and for unjust enrichment, maintaining that the insurer’s failure to provide full refunds violated Insurance Code section 1861.05(a). The trial court, however, sustained the insurer’s subsequent demurrer without leave to amend, holding that the statutory scheme did not require insurers to retroactively refund premiums collected under previously approved rates, even if those rates later became excessive due to changed circumstances.The California Court of Appeal, First Appellate District, Division One, reviewed the case on appeal. The court held that Insurance Code section 1861.05(a) does not impose an independent obligation on insurers to retroactively refund premiums collected under rates approved by the insurance commissioner, even if those rates later become excessive. The court reasoned that the statutory scheme provides for prospective rate adjustments through the commissioner’s review process, not retroactive modifications. The court also found that the insurer’s conduct was affirmatively permitted under the statutory “prior approval” system, and thus not actionable under the Unfair Competition Law. The judgment in favor of the insurer was affirmed. View "Davis v. CSAA Insurance Exchange" on Justia Law

Tody's Service, Inc. (Tody's), a towing company, billed Liberty Mutual Insurance Company (Liberty) a six-figure storage fee after towing and storing a vehicle involved in a fatal crash at the direction of the police. The vehicle, insured by Liberty, was held as evidence for nearly three years. After obtaining the vehicle's title, Liberty refused to pay the accrued storage charges, leading Tody's to sue Liberty to recover those fees.In the Superior Court, a judge granted summary judgment in favor of Liberty on all of Tody's claims, which included unjust enrichment, promissory estoppel, and failure to pay storage fees under G. L. c. 159B, § 6B. The judge found no evidence of unjust enrichment, ruled that § 6B does not provide a private right of action, and concluded that Tody's failed to demonstrate any actionable promise or reasonable reliance to support promissory estoppel.The Supreme Judicial Court reviewed the case and held that Liberty was not unjustly enriched as a matter of law, as there was no measurable benefit conferred on Liberty by Tody's storage of the vehicle. The court also found no evidence of reliance sufficient to support promissory estoppel, as Tody's stored the vehicle in response to a police directive, not in reliance on any promise by Liberty. Additionally, the court held that § 6B does not create a private right of action against a vehicle owner. Consequently, the Supreme Judicial Court affirmed the judgment in Liberty's favor. View "Tody's Service, Inc. v. Liberty Mutual Insurance Company" on Justia Law

John and Deena Dostart were awarded $182,408.30 in compensatory damages and $17,591.70 in exemplary damages by a jury for consumer fraud claims against their general contractor, Tyler Custom Homes, Ltd., and its owner, James Harmeyer. Columbia Insurance Group, which provided a commercial-general-liability (CGL) insurance policy to Tyler Custom Homes, declined to indemnify the judgment, arguing that consumer fraud is excluded from coverage under the CGL policy. Unable to collect directly from Tyler Custom Homes or Harmeyer, the Dostarts filed a suit seeking payment of the unsatisfied judgment from Columbia.The Iowa District Court for Polk County granted Columbia's motion for summary judgment regarding the exemplary damages but found that fact questions existed as to whether the consumer fraud was an "occurrence" under the CGL policy, whether the jury's award was for "property damage," and whether the intentional acts exclusion applied. The Iowa Court of Appeals affirmed the district court's decision, noting the lack of evidence about the underlying dispute beyond the verdict form and jury instructions.The Iowa Supreme Court reviewed the case and concluded that the consumer fraud involved in the underlying action is not a covered "occurrence" under the CGL policy and that the alleged harm does not include covered "property damage" as defined in the policy. The court vacated the decision of the Court of Appeals, reversed the district court's ruling, and remanded the case for entry of summary judgment in favor of Columbia. The court emphasized that defective workmanship or failure to complete construction does not constitute an "occurrence" under a CGL policy and that the damages sought were not for "property damage" as contemplated by the policy. View "Dostart v. Columbia Insurance Group" on Justia Law