Justia Insurance Law Opinion Summaries

In April 2018, Mark Fiechtner was involved in a motor vehicle accident in Lincoln County, South Dakota, caused by another driver, Caitlyn Belliveau, who lost control on icy roads. Fiechtner subsequently experienced neck pain, headaches, vision problems, and memory issues, seeking treatment from various healthcare providers. He held an insurance policy with American West Insurance Company, which paid the $10,000 medical benefits limit. Fiechtner also received the $100,000 liability limit from Belliveau’s insurer. He then sought $900,000 in underinsured motorist (UIM) benefits from American West, but was offered only $10,000. After unsuccessful negotiations, Fiechtner sued American West for breach of contract, bad faith, punitive damages, and attorney fees.The case was tried in the Circuit Court of the Second Judicial Circuit, Lincoln County, South Dakota. At trial, evidence showed that American West’s investigation of the UIM claim was limited and did not include contacting Fiechtner or his healthcare providers, nor reviewing prior claim notes. The jury found in favor of Fiechtner on all counts, awarding $400,000 for breach of contract, $250,000 for bad faith, $890,000 in punitive damages, and attorney fees. The circuit court denied American West’s post-trial motions for judgment as a matter of law and for a new trial.The Supreme Court of the State of South Dakota reviewed the case. It affirmed the circuit court’s denial of American West’s motions, holding that sufficient evidence supported the jury’s findings of bad faith and punitive damages, and that the circuit court did not clearly err in awarding attorney fees under SDCL 58-12-3. The Supreme Court also found no abuse of discretion in the circuit court’s evidentiary rulings. View "Fiechtner v. American West Ins." on Justia Law

An attorney with over two decades of experience brought suit against an insurance company and its agent after his life insurance policy lapsed due to a missed payment. He claimed to have cured the lapse by paying the overdue premium and submitting required information, and alleged that the insurer confirmed reinstatement before later refunding his payment and rescinding the reinstatement. The insurer denied ever reinstating the policy and asserted it had expired by its own terms. The attorney filed suit in state court, alleging breach of contract and other claims. After removal to federal court, the parties mediated and signed a settlement memorandum outlining five essential terms, including a $10,000 payment to the plaintiff and mutual releases. The memorandum stated that final settlement language would use standard contractual terms.After mediation, the plaintiff refused to sign the draft settlement agreement, objecting to a non-reliance clause he claimed was not discussed during mediation. He also began raising new questions about the status of his insurance policy. He moved to vacate the settlement and sought further discovery, while the defendants moved to enforce the settlement. The United States District Court for the Western District of Missouri held an evidentiary hearing, which the plaintiff missed, and then granted the defendants’ motion to enforce the settlement and denied the plaintiff’s motions. The plaintiff’s motion for rehearing was also denied.On appeal, the United States Court of Appeals for the Eighth Circuit held that the settlement memorandum contained all essential terms and that the non-reliance clause in the draft agreement was standard language, not a material new term. The court found no clear error in the district court’s factual findings and no abuse of discretion in denying a new hearing. The Eighth Circuit affirmed the district court’s judgment enforcing the settlement. View "Schlecht v. Goldman" on Justia Law

Nilfisk, Inc. leased a large warehouse building in Springdale, Arkansas from Fort Worth Partners, LLC under an industrial lease that required Nilfisk to maintain property insurance covering the full replacement cost of the building, excluding certain foundation and below-grade structures. In March 2022, a tornado destroyed the building, and Nilfisk’s insurance coverage at the time was significantly less than the full replacement cost required by the lease. Fort Worth Partners sued Nilfisk and its parent company for breach of contract, seeking damages equal to the full replacement cost that would have been covered by adequate insurance.The United States District Court for the Western District of Arkansas reviewed cross-motions for summary judgment. It denied Nilfisk’s motion and granted Fort Worth Partners’ motion in part, finding Nilfisk had breached its insurance obligation under the lease. The court held a bench trial to determine damages, considering expert testimony from both parties. It awarded Fort Worth Partners damages for the building’s replacement cost, excluding foundation damages per the lease, and also awarded attorney’s fees and costs, with reductions for limited success and prevailing local rates. Nilfisk appealed the denial of summary judgment and the damages award, while Fort Worth Partners cross-appealed aspects of the damages and fee awards.The United States Court of Appeals for the Eighth Circuit affirmed the district court’s grant of partial summary judgment for Fort Worth Partners and its denial of Nilfisk’s summary judgment motion. The appellate court held that Fort Worth Partners’ claim was timely, as each deficient insurance policy constituted a separate breach with its own limitations period. The court also affirmed the district court’s interpretation of the lease excluding all foundation damages and upheld the reduction in attorney’s fees. However, it reversed and remanded the damages award for unrebutted costs, instructing the district court to make specific factual findings supporting that portion of the award. View "Fort Worth Partners, LLC v. Nilfisk, Inc." on Justia Law

L Squared Industries, Inc., a Florida-based operator of gas stations, purchased a storage tank liability insurance policy from Nautilus Insurance Company to cover cleanup costs resulting from pollution caused by underground storage tank discharges. In 2018, after a consultant’s report identified groundwater contamination at one of its stations, L Squared did not notify Nautilus of the pollution condition until eight months later, despite a policy requirement to provide notice within seven days of becoming aware of such a condition. L Squared subsequently sought indemnification from Nautilus for cleanup and defense costs, but Nautilus denied coverage.L Squared filed suit in Florida state court, seeking a declaration of coverage and damages for breach of contract. The case was removed to the United States District Court for the Middle District of Florida. Both parties moved for summary judgment. The district court granted summary judgment to Nautilus, finding that L Squared failed to comply with the policy’s seven-day notice provision, and thus Nautilus had no duty to defend or indemnify. L Squared’s motion for reconsideration was denied, and it appealed.The United States Court of Appeals for the Eleventh Circuit reviewed the district court’s summary judgment order de novo. The appellate court held that, under Florida law, when an insured breaches a prompt-notice provision but provides notice within the policy period, coverage is not automatically forfeited; rather, the insurer is presumed prejudiced, but the insured may rebut this presumption. In this case, L Squared failed to timely raise arguments or evidence to rebut the presumption of prejudice. The Eleventh Circuit affirmed the district court’s grant of summary judgment in favor of Nautilus, holding that L Squared’s failure to comply with the seven-day notice provision barred coverage. View "L. Squared Industries, Inc. v. Nautilus Insurance Company" on Justia Law

Noah Gilbert purchased a motor vehicle insurance policy from Progressive Northwestern Insurance Company, initially declining underinsured motorist (UIM) coverage but later adding a UIM endorsement with $25,000 per person and $50,000 per accident limits. The policy included an offset provision, reducing any UIM payout by amounts received from another party’s insurance. Gilbert paid premiums for this coverage but never filed a UIM claim or experienced an accident triggering such coverage. He later filed a putative class action, alleging that Progressive’s UIM coverage was illusory under Idaho law and asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, fraud, and constructive fraud.The District Court of the Fourth Judicial District, Ada County, reviewed cross-motions for summary judgment. The court raised the issue of standing and ultimately held that Gilbert lacked standing because he had not filed a claim or been denied coverage, and thus had not suffered an injury-in-fact. Alternatively, the court found that Gilbert’s claims failed on the merits: there was no breach of contract or bad faith without a denied claim, no damages to support fraud or constructive fraud, and unjust enrichment was unavailable due to the existence of a valid contract. The court granted summary judgment for Progressive and denied Gilbert’s motion for class certification as moot.On appeal, the Supreme Court of the State of Idaho held that Gilbert did have standing, as payment of premiums for allegedly illusory coverage constituted a concrete injury. However, the Court affirmed the district court’s judgment, finding that Gilbert’s claims failed on the merits because he never filed a claim, was never denied coverage, and did not incur damages. The Court also affirmed the dismissal of the unjust enrichment claim, as an enforceable contract provided an adequate legal remedy. The judgment in favor of Progressive was affirmed. View "Gilbert v. Progressive Northwestern Insurance Co." on Justia Law

In this case, Christopher C. Brown, through his company Tattooed Millionaire Entertainment (TME), owned a Memphis music studio and insured both the studio and its equipment with Hanover American Insurance Company. John Falls, a musician, leased Studio B and its equipment from Brown and also obtained insurance from Hanover for the equipment and lost business income. In 2015, the studio was damaged by arson, and both Brown and Falls submitted insurance claims. Hanover discovered Brown had forged receipts for equipment purchases and sued to recover advance payments and for a declaratory judgment of no further liability. Brown, Falls, and another lessee counter-sued for breach of contract. After a jury trial in the United States District Court for the Western District of Tennessee, Falls was awarded $2.5 million for equipment loss and $250,000 for business income, while Brown was found to have committed insurance fraud.Hanover moved to set aside the verdict under Rule 50(b), which the district court granted. On appeal, the United States Court of Appeals for the Sixth Circuit reversed, holding Hanover had forfeited its Rule 50(b) motion by failing to make a Rule 50(a) motion as to Falls, and ordered reinstatement of the jury verdict. Subsequent proceedings included a federal interpleader action and a parallel state court action between Falls and TME. The district court enjoined the state action, but the Sixth Circuit reversed the injunction.In the present appeal, the United States Court of Appeals for the Sixth Circuit affirmed the district court’s allocation of the insurance payout, holding that Hanover was precluded by res judicata from challenging Falls’s recovery on grounds that could have been raised earlier. The court found the district court’s error in interpreting the wrong lease was harmless and upheld the allocation of funds based on the value of Falls’s leasehold interest. The court also held that Tennessee public policy barred Brown from recovering his allocated share due to his insurance fraud. The district court’s judgment was affirmed. View "Hanover American Insurance Co. v. Tattooed Millionaire Entertainment" on Justia Law

Fieldwood Energy LLC, an oil and gas company, contracted with Island Operating Company, Inc. (IOC) through a Master Services Contract (MSC) to provide workers for oil and gas production services on offshore platforms in the Gulf of Mexico. The MSC defined the work as “Lease Operators,” and a subsequent work order requested “A Operators” to perform tasks such as compliance testing and equipment checks on the platforms. The contract required Fieldwood to provide marine transportation for workers and equipment, which it did by hiring Offshore Oil Services, Inc. (OOSI) to transport IOC employees, including Tyrone Felix, to the platforms. Felix was injured while disembarking from OOSI’s vessel, the M/V Anna M, and subsequently made a claim against OOSI.OOSI filed a complaint for exoneration or limitation of liability in the United States District Court for the Eastern District of Louisiana. OOSI also sought indemnification from IOC under the MSC’s indemnity provision. IOC moved for summary judgment, arguing that Louisiana law, specifically the Louisiana Oilfield Anti-Indemnity Act (LOAIA), rendered the indemnity provision unenforceable. The district court agreed, finding that the MSC was not a maritime contract because vessels were not expected to play a substantial role in the contract’s performance, and thus Louisiana law applied. The court granted summary judgment for IOC on indemnity and insurance coverage, and later on defense costs after OOSI settled with Felix.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s summary judgment de novo. The Fifth Circuit held that the MSC was not a maritime contract because neither its terms nor the parties’ expectations contemplated that vessels would play a substantial role in the contract’s completion. As a result, Louisiana law applied, and the LOAIA barred enforcement of the indemnity provision. The Fifth Circuit affirmed the district court’s summary judgment in favor of IOC. View "Offshore Oil Services, Inc. v. Island Operating Co." on Justia Law

Jessica De'Andrea, a patrol officer with the Montgomery Police Department, was involved in a motor vehicle collision while on duty. The driver of the other vehicle, Clint Walters, later sued De'Andrea individually for negligence, resulting in a $550,000 judgment against her after a jury trial. De'Andrea alleged that the City of Montgomery, which had procured liability insurance and acted as a self-insurer for its employees, failed to properly defend her, did not communicate settlement or appeal options, and refused to satisfy the judgment. She claimed these failures led to her bankruptcy and brought multiple claims against the City, including breach of contract, bad faith, fraudulent misrepresentation, and violations of the Alabama Legal Services Liability Act.The Montgomery Circuit Court denied the City's motions to dismiss, finding it was not apparent beyond doubt that De'Andrea could prove no set of circumstances entitling her to relief. The City then petitioned the Supreme Court of Alabama for a writ of mandamus, seeking dismissal of all claims on the basis of statutory immunity and other defenses.The Supreme Court of Alabama reviewed only the City's immunity defense as to the fraudulent misrepresentation claim, because the City had not preserved immunity arguments for the other claims in the lower court. The Court held that municipal immunity under § 11-47-190, Ala. Code 1975, does not automatically bar all fraudulent misrepresentation claims, as such claims can be based on innocent or mistaken misrepresentations, not just intentional torts. The Court denied the City's petition for a writ of mandamus, allowing De'Andrea's claims to proceed. The City may raise its other defenses on appeal if necessary. View "De'Andrea v. City of Montgomery" on Justia Law

A construction worker employed by a subcontractor was injured when a scaffold collapsed at a Manhattan worksite. The worker sued the property owner and general contractor in New York Supreme Court, alleging negligence and violations of state labor laws. The owner’s insurer, Liberty Insurance Corporation, sought a declaration in federal court that the subcontractor’s insurer, Hudson Excess Insurance Company, was obligated to defend and indemnify the owner as an additional insured under the subcontractor’s commercial general liability policy. The subcontract between the general contractor and the subcontractor required the latter to provide insurance coverage for the owner and general contractor.In the New York Supreme Court, summary judgment was granted to the injured worker on some claims, while other claims remained pending. The court denied summary judgment to the owner on its contractual indemnification claim against the subcontractor, finding factual questions about the scope of the subcontractor’s work. Later, after the federal district court’s decision, the state court dismissed all third-party claims against the subcontractor, finding the indemnity provision in the subcontract invalid due to lack of a meeting of the minds.The United States Court of Appeals for the Second Circuit reviewed the case. It affirmed the district court’s finding, after a bench trial on stipulated facts, that the subcontractor’s actions proximately caused the worker’s injuries and that Hudson owed a duty to indemnify the owner under the policy. The Second Circuit held that the later state court decision did not alter this result. However, the Second Circuit reversed the district court’s award of attorney’s fees to Liberty, holding that Hudson was entitled to a statutory safe harbor under New York Insurance Law, and thus was not required to pay Liberty’s attorney’s fees for the federal action. View "Liberty Insurance Corp. v. Hudson Excess Insurance Co." on Justia Law

Origis USA LLC and Guy Vanderhaegen (the Insureds) appealed a decision by the Superior Court of Delaware, which dismissed their claims against two sets of insurers: the 2021 Insurers and the 2023 Insurers. The Insureds sought coverage for defense costs and potential liabilities arising from an underlying lawsuit filed by former investors in Origis USA’s parent company, alleging fraudulent conduct and breaches of fiduciary duty.The Superior Court dismissed the claims against the 2021 Insurers based on a No Action Clause in the insurance policies, which required a final determination of the Insureds’ liability before any action could be taken against the insurers. The court also dismissed the claims against the 2023 Insurers, concluding that the allegations in the underlying lawsuit did not constitute a separate claim under the 2023 policies and were barred by Prior Acts Exclusions, which excluded coverage for wrongful acts occurring before November 18, 2021.The Delaware Supreme Court affirmed the Superior Court’s decision regarding the 2023 Insurers, agreeing that the allegations did not constitute a separate claim and were excluded by the Prior Acts Exclusions. However, the Supreme Court remanded the case for further consideration regarding the 2021 Insurers. The court noted that the Superior Court needed to more fully analyze the relationship between the No Action Clause, the Advancement and Allocation provisions, and how they function together, especially given the absence of a duty by the insurers to defend. The Supreme Court emphasized the need for a more in-depth analysis of the contract provisions and their intended function. View "Origis USA v. Great American Insurance" on Justia Law