Justia Insurance Law Opinion Summaries

The plaintiff, a roofing business owner, sought a judgment declaring that the defendant, a workers' compensation insurance carrier, was obligated to defend and indemnify him in connection with a claim filed by his employee. The trial court granted the plaintiff's motion for summary judgment, determining that the defendant did not effectively cancel the workers' compensation insurance policy. The court found that the conflicting notices provided by the defendant, including a noncooperation notice and a cancellation notice, did not constitute an unambiguous and unequivocal notice of cancellation.The Appellate Court reversed the trial court's judgment, concluding that the defendant effectively canceled the policy before the employee's injury by complying with the statutory requirements of § 31-348, which governs the reporting and cancellation of workers' compensation insurance policies. The plaintiff argued that the Appellate Court incorrectly concluded that the cancellation notice effectively canceled the policy.The Supreme Court of Connecticut reviewed the case and concluded that insurers must strictly comply with § 31-348 when canceling a workers' compensation insurance policy. However, compliance with the statute does not supplant an insurer's obligations under contract law, which requires that a notice of cancellation must be definite, certain, and unambiguous. The court held that the Appellate Court incorrectly limited its analysis to the statutory compliance and failed to consider all relevant communications between the parties.The Supreme Court found that the defendant's notice of cancellation was not objectively definite and certain due to the conflicting noncooperation and cancellation notices, which provided indefinite and ambiguous information about the status of the plaintiff's insurance coverage. Consequently, the Supreme Court reversed the judgment of the Appellate Court and remanded the case with direction to affirm the trial court's judgment in favor of the plaintiff. View "Napolitano v. Ace American Ins. Co." on Justia Law

Eiden Construction, LLC (Eiden) entered into a subcontract with Hogan & Associates Builders, LLC (Hogan) for earthwork and utilities on a school construction project. Hogan sued Eiden and its bonding company, AMCO Insurance Company (AMCO), for breach of contract, claiming Eiden failed to complete its work, including draining sewage lagoons and constructing a fire pond. Eiden counterclaimed for unpaid work, arguing it was not responsible for draining the lagoons and that Hogan did not comply with the subcontract’s notice and opportunity to cure provisions. AMCO argued it was not liable under the performance bond because Eiden did not breach the subcontract and Hogan did not provide proper notice.The District Court of Uinta County found for Hogan on the claim regarding the sewage lagoons but not on other claims, ruling AMCO was not liable under the bond due to lack of notice. Eiden and Hogan both appealed. Eiden argued the court erred in finding it responsible for draining the lagoons and in awarding Hogan damages billed to an associated company. Hogan contended the court erred in not awarding damages for other work and in its calculation of prejudgment interest.The Wyoming Supreme Court affirmed the lower court’s decision. It held Eiden breached the subcontract by not draining the lagoons and that Hogan was entitled to recover costs for supplementing Eiden’s work. The court found Eiden’s late completion of the septic system justified Hogan’s directive to expedite lagoon drainage. It also ruled Hogan properly paid the supplemental contractors, despite invoices being sent to an associated company. The court rejected Hogan’s claims for additional damages, concluding Eiden complied with the notice to cure provisions for the fire pond and other work. The court also upheld the lower court’s calculation of prejudgment interest, applying the offset before calculating interest. View "Hogan & Associates Builders, LLC v. Eiden Construction, LLC" on Justia Law

A five-year-old child tragically died after being struck by a vehicle driven by an Alltrade employee at an apartment complex owned by Whispering Brook Acquisitions LLC. Alltrade had a commercial general liability policy with Motorists Mutual Insurance Company, while Whispering Brook had a similar policy with First Specialty Insurance Corporation. Both policies contained "other insurance" provisions, which led to a dispute over which insurer was primarily responsible for covering the incident.The Jefferson Circuit Court determined that Alltrade and its employees were insured under First Specialty’s policy. The court found that the "other insurance" provisions in both policies were mutually repugnant excess clauses, meaning neither could claim to be secondary to the other. Consequently, the court ruled that both insurers shared primary liability and must contribute equally to defend and indemnify the insureds. Motorists' argument that First Specialty should be primarily liable due to an indemnification provision in the Service Agreement between Alltrade and Whispering Brook was rejected. First Specialty appealed, and the Court of Appeals reversed the trial court, holding that First Specialty’s provision was a nonstandard escape clause, making Motorists primarily liable.The Supreme Court of Kentucky reviewed the case and reversed the Court of Appeals' decision. The court held that both "other insurance" provisions were mutually repugnant excess clauses, requiring Motorists and First Specialty to share primary liability equally. The court also overruled the earlier decision in Empire Fire & Marine Insurance Co. v. Haddix, which the Court of Appeals had relied upon. Additionally, the court found that Motorists had waived its indemnification argument by not filing a cross-appeal and requesting the Court of Appeals to affirm the trial court's summary judgment. The case was remanded to the Jefferson Circuit Court for further proceedings. View "MOTORISTS MUTUAL INSURANCE COMPANY V. FIRST SPECIALTY INSURANCE CORP." on Justia Law

The case involves a dispute over whether an insurance policy issued by State Auto Property and Casualty Company to Greenville Cumberland Presbyterian Church covered the collapse of the Church’s roof. The Church's roof, part of a one-story sanctuary building, was around 120 years old. In September 2019, during a roof replacement project, a significant section of the roof dropped overnight. An engineer, Harold Gaston, found that the roof trusses had decayed due to long-term water infiltration, causing the roof to collapse. The Church filed a claim with State Auto, which was denied on the basis that the damage did not constitute a collapse under the policy.The Muhlenberg Circuit Court granted summary judgment in favor of State Auto, ruling that there was no collapse as defined by Kentucky precedent in Niagara Fire Ins. Co. v. Curtsinger and Thiele v. Kentucky Growers Ins. Co. The court held that the roof's condition did not meet the "rubble on the ground" standard for collapse.The Kentucky Court of Appeals reversed, finding that the roof had indeed collapsed under the Curtsinger definition, which does not require the building to fall to the ground. The court also found the policy ambiguous and ruled in favor of the Church.The Supreme Court of Kentucky affirmed the Court of Appeals, holding that the policy provided coverage for the actual collapse of any part of the building, including the roof. The court found that the roof had indeed collapsed due to hidden decay and insect damage, and that the Church had taken reasonable steps to mitigate further damage. The court vacated the circuit court’s summary judgment in favor of State Auto and remanded for entry of summary judgment in favor of the Church on its breach of contract claim, and for further proceedings on the Church’s extra-contractual claims. View "STATE AUTO PROPERTY & CASUALTY COMPANY V. GREENVILLE CUMBERLAND PRESBYTERIAN CHURCH" on Justia Law

Autumn Bertels was severely injured in a car accident involving her grandmother, Elizabeth Bertels, and another driver, Denver Barr, who both died in the crash. Autumn later filed a lawsuit against Elizabeth's estate, and they reached an agreement where the estate assigned its claims against Elizabeth's insurer, Farm Bureau Property & Casualty Insurance Company, to Autumn. The agreement stipulated that Autumn would not seek to collect from the estate's assets and would cover the estate's litigation expenses. A judge awarded Autumn a $15.75 million judgment against the estate, and she subsequently sued Farm Bureau for breach of contract and bad faith.The United States District Court for the District of Kansas dismissed Autumn's suit against Farm Bureau, ruling that she lacked standing because the assignment from the estate was invalid. The court determined that Autumn provided no consideration for the assignment, as her promises were already required by the Kansas nonclaim statute, which bars claims against a deceased person's estate after a certain period and requires the claimant to pay the estate's litigation expenses.The United States Court of Appeals for the Tenth Circuit reviewed the case and affirmed the district court's decision. The appellate court agreed that the nonclaim statute barred Autumn's claim against the estate's assets and required her to pay the estate's expenses, rendering her promises in the agreement illusory and without consideration. Consequently, the assignment was invalid, and Autumn lacked standing to sue Farm Bureau. The court also rejected Autumn's arguments regarding tolling of the nonclaim statute due to her minority and other constitutional claims, finding them unpersuasive or procedurally barred. View "Bertels v. Farm Bureau Property & Casualty Insurance Co." on Justia Law

A clothing retailer, Cato Corporation, with over 1,300 stores, purchased an "all-risk" commercial property insurance policy from Zurich American Insurance Company in July 2019. In the spring of 2020, Cato alleged that the COVID-19 virus and related government orders forced it to close or severely curtail operations, causing significant revenue losses and expenses for remediation and reconfiguration of its stores. Cato sought coverage for these losses under its insurance policy, but Zurich refused, leading Cato to file a lawsuit seeking a declaratory judgment and damages for breach of contract and violations of North Carolina's Unfair and Deceptive Trade Practices Act.The Superior Court of Mecklenburg County dismissed Cato's claims on a Rule 12(b)(6) motion, relying on the Court of Appeals' decision in North State Deli, LLC v. Cincinnati Insurance Co. The Court of Appeals affirmed the dismissal, concluding that tangible alteration to the property was necessary to recover for a "direct physical loss of or damage" to property, which Cato failed to allege sufficiently.The Supreme Court of North Carolina reviewed the case and agreed with the Court of Appeals' decision to affirm the dismissal but disagreed with its reasoning. The Supreme Court concluded that Cato sufficiently alleged a "direct physical loss of or damage" to property under the precedent set in North State Deli. However, the Court found that the viral contamination exclusion in Cato's policy precluded coverage for the alleged losses. Therefore, the Supreme Court modified the Court of Appeals' decision but affirmed its judgment dismissing Cato's claims. View "Cato Corp. v. Zurich American Insurance Co." on Justia Law

Lawanda Small, a beneficiary and additional insured of her deceased husband's Allianz life insurance policy, filed a class action lawsuit against Allianz Life Insurance Company. She alleged that Allianz violated California Insurance Code sections 10113.71 and 10113.72 by failing to comply with notice procedures required to prevent policies from lapsing due to nonpayment of premiums. Small sought to represent two subclasses: the "Living Insured Subclass" seeking equitable relief to reinstate life insurance coverage, and the "Beneficiary Subclass" seeking damages from death benefits where the insured was deceased.The United States District Court for the Central District of California certified the class, finding that both subclasses satisfied the requirements of Federal Rule of Civil Procedure 23(a) and 23(b). The court granted summary judgment for Small and the class on their breach of contract and declaratory relief claims, ruling that Allianz improperly lapsed the policies by failing to comply with the Statutes. Allianz appealed, arguing that the district court erred in certifying the class and that the summary judgment orders violated the one-way intervention prohibition.The United States Court of Appeals for the Ninth Circuit reversed the district court's order certifying the class and vacated the summary judgment orders. The appellate court held that to recover for alleged violations of the Statutes, plaintiffs must show not only that the insurer violated the notice requirements but also that the violation caused them harm. The court found that individual questions of causation and injury predominated over common questions, making class certification inappropriate. Additionally, the court determined that Small was not an adequate representative with typical questions to represent both subclasses. The case was remanded for further proceedings. View "Small v. Allianz Life Insurance Co. of North America" on Justia Law

Hurricane Katrina destroyed Paul and Sylvia Minor’s home in 2005. The Minors had a homeowner’s insurance policy with United Services Automobile Association (USAA) that covered wind damage but excluded storm surge or flood damage. USAA issued payments for wind damage but not for storm surge or flood damage, leading to a dispute. The Minors claimed a total loss due to wind and demanded policy limits. In 2013, a jury awarded the Minors $1,547,293.37 in compensatory damages.The Minor Estate appealed a pretrial order granting partial summary judgment to USAA on the Minors’ bad faith claim. The Mississippi Court of Appeals reversed the trial court’s decision, finding a genuine issue of material fact regarding USAA’s denial and delay of payment. The case was remanded for further proceedings on the bad faith claim. On remand, a jury awarded the Minors $10,000,000 in punitive damages and $457,858.89 in extra-contractual damages (attorneys’ fees). USAA appealed, and the Minor Estate cross-appealed the denial of its post-trial motion for additional attorneys’ fees.The Supreme Court of Mississippi reviewed the case and found no reversible error, affirming the jury’s award of $10,457,858.89 in damages. The court also reversed and rendered attorneys’ fees on behalf of the Estate in the amount of $4,500,000, plus post-judgment interest. The court held that the trial judge did not err in submitting the issue of punitive damages to the jury and that the $10 million punitive damages award was not unconstitutionally disproportionate. The court also found no error in the jury’s award of extra-contractual damages and no errors warranting a new trial. View "United Services Automobile Association v. Estate of Minor" on Justia Law

In 2015, Zongwei Shen, owner of a massage spa, purchased a commercial insurance policy from Continental Casualty Company, which included an exclusion for abuse or molestation. In 2019, Toiah Gordon, Morganne Mersadie Root, and Karina Carrero sued Shen and his wife, alleging Shen sexually assaulted them during massage sessions. After Continental declined to provide a defense, Shen and Xin stipulated to liability, resulting in a $6.8 million judgment against them. Shen and Xin assigned their rights against Continental to the plaintiffs in exchange for a covenant not to execute the judgment. The plaintiffs then sued Continental for breach of contract and related claims.The Superior Court of Los Angeles County granted Continental's motion for summary judgment, finding that the abuse or molestation exclusion in the insurance policy applied. The court concluded that Shen had care and control of Gordon during the massage, thus the exclusion applied to her injury. The court also found that the claims against Xin for negligent training fell within the exclusion, as negligent training is a form of negligent hiring, retention, or supervision.The California Court of Appeal, Second Appellate District, affirmed the trial court's decision. The appellate court held that the abuse or molestation exclusion applied to Shen's actions because Gordon was under Shen's care and control during the massage. The court also held that the exclusion applied to the claims against Xin, as negligent training is encompassed within negligent employment and supervision. Consequently, Continental had no duty to defend Shen and Xin, and the summary judgment in favor of Continental was affirmed. View "Gordon v. Continental Casualty Co." on Justia Law

Jon Willis, an employee of Shamrock Management, L.L.C., was injured while working on an offshore oil platform operated by Fieldwood Energy, L.L.C. The injury occurred when a tag line slipped off a grocery box being delivered by a vessel operated by Barry Graham Oil Service, L.L.C. Willis sued Barry Graham for negligence. Barry Graham then sought indemnification, defense, and insurance coverage from Shamrock and its insurer, Aspen, based on a series of contracts linking the parties.The United States District Court for the Western District of Louisiana denied Barry Graham's motion for summary judgment and granted Shamrock and Aspen's motion, ruling that Barry Graham was not covered under the defense, indemnification, and insurance provisions of the Shamrock-Fieldwood Master Services Contract (MSC). Willis's case was settled, and Barry Graham appealed the district court's decision on its third-party complaint.The United States Court of Appeals for the Fifth Circuit reviewed the case de novo. The court concluded that the MSC required Shamrock to defend, indemnify, and insure Barry Graham because Barry Graham was part of a "Third Party Contractor Group" under the MSC. The court also determined that the cross-indemnification provisions in the contracts were satisfied, and that the Louisiana Oilfield Anti-Indemnity Act (LOAIA) did not void Shamrock's obligations because Fieldwood had paid the insurance premium to cover Shamrock's indemnities, thus meeting the Marcel exception.The Fifth Circuit reversed the district court's judgment and remanded the case for further proceedings consistent with its opinion. View "Barry Graham Oil v. Shamrock Mgmt" on Justia Law