Justia Insurance Law Opinion Summaries

Covil Corporation, through its receiver, sued Pennsylvania National Mutual Insurance Company for breaching their insurance contract by not contributing to a settlement in an asbestos case. David Rollins had sued Covil and others, alleging negligent asbestos exposure caused his mesothelioma. Penn National insured Covil during part of the exposure period. Covil settled the case and sought $50,000 from Penn National, which the insurer refused to pay.The circuit court granted summary judgment for Covil, requiring Penn National to indemnify Covil for the settlement. The court rejected Penn National's arguments about untimely notice, premature summary judgment, and policy exclusions. The court of appeals affirmed the decision.The South Carolina Supreme Court reviewed the case and affirmed the court of appeals' decision with modifications. The court held that the notice-prejudice rule did not apply because the underlying plaintiff, Rollins, had already been fully compensated. The court also found that Covil's untimely notice was not a material breach of the insurance contract, as Covil's interests were adequately protected by other insurers' counsel. Additionally, the court ruled that Penn National did not waive its right to timely notice by attending mediation.The court further held that the policy's "Products Hazard" and "Completed Operations Hazard" exclusions did not apply. The Products Hazard exclusion was inapplicable because Covil's liability was based on installation, not supplying asbestos. The Completed Operations Hazard exclusion did not apply because Rollins's exposure occurred before Covil's work was completed. Thus, the court affirmed the lower court's summary judgment in favor of Covil. View "Covil Corporation v. Pennsylvania National Mutual Casualty Insurance Company" on Justia Law

Kalvin Earl Richardson purchased a house in St. Louis County, Missouri, through a Post Third Sale Offering, a process for selling tax-delinquent properties that have not been sold in three consecutive annual tax-collection auctions. Richardson then applied for homeowner insurance from Nationwide Mutual Insurance Company, stating on the application that the property was not purchased at a public auction. After a fire damaged the house, Nationwide refused to pay the claim, asserting that Richardson had misrepresented the purchase method. Nationwide sued, claiming the policy was void due to this misrepresentation.The United States District Court for the Eastern District of Missouri granted summary judgment in favor of Nationwide. The court ruled that the Post Third Sale Offering constituted a public auction and that Richardson's contrary statement on the insurance application was a material misrepresentation, rendering the insurance policy void ab initio.The United States Court of Appeals for the Eighth Circuit reviewed the case de novo. The appellate court found that the term "public auction" was not clearly defined in Nationwide's insurance application and that the Post Third Sale Offering did not meet the ordinary understanding of a public auction, which typically involves competitive bidding. The court noted that Missouri statutes and case law emphasize competition among bidders as a key element of a public auction, which was absent in the Post Third Sale Offering. Consequently, the court held that Nationwide did not meet its burden to prove that Richardson's representation was false in fact. The Eighth Circuit reversed the district court's summary judgment and remanded the case for further proceedings. View "Nationwide Mutual Insurance Company v. Richardson" on Justia Law

A commercial tenant and landlord entered into a contract for the construction and lease of a warehouse, with the landlord also acting as the general contractor. The contract included a waiver of subrogation, where both parties waived subrogation against each other for certain losses, including those caused by their subcontractors. After the warehouse sustained weather damage, the tenant’s insurer sought to recoup insurance payments by suing the subcontractors.The Circuit Court for Baltimore City granted summary judgment in favor of the subcontractors, concluding that they were intended beneficiaries of the waiver of subrogation in the contract between the tenant and landlord. The court did not consider any extrinsic evidence regarding the parties' intent. The Appellate Court of Maryland reversed this decision, finding that the waiver of subrogation in the contract did not unambiguously benefit the subcontractors and that the subcontractors were not intended third-party beneficiaries.The Supreme Court of Maryland reviewed the case and held that the waiver of subrogation in the contract between the tenant and landlord did not extend to the subcontractors. The court found that the language of the waiver was unambiguous and did not show an intent to benefit the subcontractors. However, the court found that the waiver of subrogation included in the subcontracts was ambiguous regarding whether it applied to the tenant’s insurer’s claims against the subcontractors. Therefore, the court held that extrinsic evidence was needed to determine the parties' intent regarding the scope of the subrogation waiver in the subcontracts.The Supreme Court of Maryland affirmed the Appellate Court's decision, reversing the Circuit Court's summary judgment in favor of the subcontractors, and remanded the case for further proceedings to consider extrinsic evidence. View "Lithko Contracting v. XL Insurance America, Inc." on Justia Law

The case involves a putative class action of approximately 2,000 payees who received structured settlement annuities to resolve personal injury claims. The plaintiffs, Renaldo White and Randolph Nadeau, alleged that defendants Symetra Life Insurance Company and Symetra Assigned Benefits Service Company wrongfully induced them to cash out their annuities in individualized “factoring” arrangements, whereby they gave up their rights to periodic payments in return for discounted lump sums.The district court certified two nationwide classes under Federal Rule of Civil Procedure 23. The first class consisted of all persons who were annuitants of a structured settlement annuity (SSA) issued by Symetra and who subsequently sold to a Symetra affiliate the right to receive payments from that SSA in a factoring transaction. The second class was a subclass of the first, consisting of all members of the class whose contract defining the annuity at issue included language explicitly stating that the annuitants lack the power to transfer their future SSA payments.The United States Court of Appeals for the Ninth Circuit reversed the district court’s certification of the two nationwide classes. The court held that individual issues of causation will predominate over common ones when evaluating whether defendants’ acts and omissions caused the plaintiffs to enter factoring transactions and incur their alleged injuries. The court also held that the district court erred in certifying the nationwide subclass of plaintiffs whose original settlement agreements with their personal injury tortfeasors contained structured settlement annuity (SSA) anti-assignment provisions. The record indicates that the annuitants hail from a wide array of different states, and some of the settlement agreements have choice of law provisions denoting the law of a state other than the location where the contract was executed. The apparent variations in state law on the enforceability of anti-assignment provisions in SSAs and the need to apply multiple state laws to the subclass raised a substantial question of whether individual issues predominate and how the matter can be fairly managed as a class action. View "WHITE V. SYMETRA ASSIGNED BENEFITS SERVICE COMPANY" on Justia Law

The case involves Brian Frye, a homeowner who claimed that his property had suffered damage due to underground mine subsidence. He submitted a claim to his home insurer, Erie Insurance Company, and notified the Board of Risk Insurance and Management (BRIM) of the damages. Both Erie and BRIM investigated the claim, but both denied it, stating that the damage was not due to mine subsidence. Frye then sued Erie for breach of contract and other claims. The Circuit Court of Ohio County granted summary judgment to Erie, concluding that Erie functioned as BRIM’s agent in the adjustment of Frye’s claim. Frye moved the court to alter or amend that judgment, arguing that it threatened the constitutionality of certain West Virginia statutes.The Supreme Court of Appeals of West Virginia vacated the lower court's decision and remanded the case for further proceedings. The court found that the lower court erred by failing to notify the Attorney General of the constitutional questions raised in Frye’s motion to alter or amend the summary judgment order. The court concluded that the appropriate remedy was to vacate the lower court’s order denying Frye’s motion and to remand the matter to permit the lower court to notify the Attorney General of these proceedings in accordance with Rule 24(c) of the West Virginia Rules of Civil Procedure. View "Frye v. Erie Insurance Company" on Justia Law

The case involves Ferrellgas Partners L.P. and its subsidiaries (collectively "Ferrellgas") and Zurich American Insurance Company ("Zurich"). Ferrellgas had an insurance policy with Zurich, which included a provision for the advancement of defense costs for litigation. Ferrellgas was involved in a separate lawsuit with Eddystone Rail Company, LLC ("Eddystone") over a breach of contract. Ferrellgas sought to have Zurich cover the defense costs for the Eddystone litigation under their insurance policy.In the lower court, the Superior Court of the State of Delaware, Ferrellgas filed a motion for summary judgment seeking a declaratory relief obligating Zurich to advance defense costs for the Eddystone litigation. Zurich also filed a motion for summary judgment seeking a declaration that it had no obligation to advance defense costs. The Superior Court denied Ferrellgas' motion and granted Zurich's motion, finding that the Eddystone litigation was excluded from coverage under the Zurich policy.On appeal, the Supreme Court of the State of Delaware affirmed the decision of the Superior Court. The Supreme Court found that the Eddystone litigation was a claim seeking relief for a breach of contract that occurred after the commencement of the Run-Off Coverage Period in the Zurich policy. As such, Zurich had no duty to advance defense costs for this matter due to the Run-Off Exclusion in the policy. The court also found that Ferrellgas' appeal was timely filed. View "Ferrellgas Partners, L.P. v. Zurich American Insurance Company" on Justia Law

The case involves Bristol SL Holdings, Inc., the successor-in-interest to Sure Haven, Inc., a defunct drug rehabilitation and mental health treatment center, and Cigna Health and Life Insurance Company and Cigna Behavioral Health, Inc. Bristol alleged that Sure Haven's calls to Cigna verifying out-of-network coverage and seeking authorization to provide health services created independent contractual obligations. Cigna, however, denied payment based on fee-forgiving, a practice prohibited by the health plans. Bristol brought state law claims for breach of contract and promissory estoppel against Cigna.The district court initially dismissed Bristol’s claims, but the Ninth Circuit Court of Appeals reversed the dismissal, holding that Bristol had derivative standing to sue for unpaid benefits as Sure Haven’s successor-in-interest. On remand, the district court granted Cigna’s motion for summary judgment, ruling that the Employee Retirement Income Security Act of 1974 (ERISA) preempted Bristol’s state law claims.On appeal, the Ninth Circuit Court of Appeals affirmed the district court's decision. The court held that Bristol’s state law claims were preempted by ERISA because they had both a “reference to” and an “impermissible connection with” the ERISA plans that Cigna administered. The court reasoned that Bristol’s claims were not independent of an ERISA plan because they concerned the denial of reimbursement to patients who were covered under such plans. The court also held that allowing liability on Bristol’s state law claims would interfere with nationally uniform plan administration, a central matter of plan administration. View "Bristol SL Holdings, Inc. v. Cigna Health and Life Insurance Co." on Justia Law

VT Halter Marine (VTHM), a shipbuilder, contracted to build a barge and a tug for a client. During construction, over a thousand steel flange plates were incorrectly bent due to the use of an improperly sized die, leading to thinning and cracking of the plates. The faulty plates were installed onto the vessels, and the cracking was discovered later. The cost of replacing and repairing the cracked flange plates amounted to approximately $3,300,000. VTHM submitted a claim to their insurer, Certain Underwriters of Lloyd’s of London (Underwriters), for the cracked flange plates.The Underwriters denied VTHM's claim, asserting that the policy excluded coverage for faulty workmanship and the cost of replacing or repairing improper or defective materials. VTHM contested the denial, leading to a lawsuit for breach of contract. Both parties filed motions for summary judgment in the trial court. The trial court granted Underwriters' motion for summary judgment, ruling that the policy unambiguously excluded coverage for faulty workmanship and the cost of repairing, replacing, or renewing any improper or defective materials.In the Supreme Court of Mississippi, VTHM appealed the trial court's decision, arguing that the flanges were part of the vessel and coverage for faulty workmanship exists if it results in cracking of the vessel. The Supreme Court, however, affirmed the trial court's judgment. The court found that the insurance policy unambiguously excluded the cost of replacing or repairing improper or defective materials. The court concluded that the faulty workmanship directly resulted in improper materials being installed, and the only resulting damage was to the improper materials themselves. Therefore, VTHM's claim for the costs of repairing and/or replacing the improper materials installed was not covered under the policy. View "VT Halter Marine, Inc. v. Certain Underwriters of Lloyd's of London" on Justia Law

The case involves a dispute between James Snell, a landscaper, and his insurer, United Specialty Insurance Company. Snell was sued for negligence after a child was injured on a trampoline he had installed at a client's home. United refused to defend Snell in the lawsuit, arguing that the accident did not arise from Snell’s landscaping work as defined in his commercial general liability policy. Snell sued United, alleging breach of contract and bad faith denial of coverage.The United States District Court for the Southern District of Alabama granted summary judgment in favor of United. The court held that the accident did not arise from Snell's landscaping work within the meaning of his insurance policy. The court also found that Snell's bad faith claim failed because United had a lawful basis to deny the claim.On appeal, the United States Court of Appeals for the Eleventh Circuit affirmed the district court's decision. The appellate court agreed that the allegations in the complaint did not trigger United’s duty to defend. The court also found that Snell's insurance application, which expressly stated that he did not do any recreational or playground equipment construction or erection, made clear that the policy did not cover his work in this case. The court further held that Alabama law does not preclude a decision on the duty to indemnify before judgment in the underlying case. Finally, the court concluded that Snell’s bad faith claim failed because he did not show that United wholly failed to investigate any part of his claim. View "Snell v. United Specialty Insurance Company" on Justia Law

A teacher, who was involved in a car accident caused by a third party, sustained serious injuries. The teacher was covered under his employer’s self-insured healthcare plan, which stipulates that the employer has a right of reimbursement for medical expenses if a covered person receives a separate settlement. The employer paid for the teacher’s medical expenses and the teacher also received $500,000 in settlements from two separate insurers. The teacher requested that the employer waive its right to reimbursement twice, but the employer never agreed. Two years after the teacher notified the employer of his insurance settlements, the employer requested reimbursement and later sued him for breach of contract.The Superior Court of the State of Alaska granted summary judgment to the employer on the issue of whether the teacher breached the contract to reimburse the employer. The employer then moved for summary judgment on the amount of damages, providing an affidavit from its Plan Administrator and a claims ledger. The teacher opposed the motion, providing his own affidavit and a self-created spreadsheet in support of his argument that some of the medical costs paid by the employer were not associated with the accident. The court granted the employer’s motion for summary judgment on contract damages.The Supreme Court of the State of Alaska affirmed the lower court’s summary judgment order regarding breach of contract, but held that the teacher raised a genuine dispute of material fact regarding damages. Therefore, the Supreme Court reversed and remanded the lower court’s summary judgment order regarding contract damages. View "Fischer v. Kenai Peninsula Borough School District" on Justia Law