Justia Insurance Law Opinion Summaries

Plaintiff filed a breach of contract action against Defendant, her insurer, claiming that Defendant improperly denied her claim for homeowners' insurance coverage after a fire damaged her home. BSI Financial Services, Inc., as the holder of the note and mortgage on Plaintiff's home, sought to intervene in the underlying action. The trial court denied the motion to intervene as untimely based on the policy's one year limitation period. The Supreme Court reversed, holding (1) the trial court erred in denying the motion to intervene without first determining whether the motion related back to the original complaint; and (2) the motion to intervene did not constitute a new, separate action but, rather, related back to Plaintiff's original complaint. Remanded. View "Austin-Cesares v. Safeco Ins. Co. of Am." on Justia Law

The NECA-IBEW Health and Welfare Fund provides health benefits to members of a local union of electrical workers. The Fund negotiated a Local Agreement with Sav-Rx, a provider of prescription-drug benefits, under which Sav-Rx reimburses pharmacies for dispensing medication and then invoices the Fund for some of its costs. The Local Agreement does not call for arbitration. A few months later, Sav-Rx negotiated a different agreement with the national organization of the IBEW, with which the local is affiliated. The National Agreement offers locals reduced charges and more services than the Local Agreement and contains a mandatory arbitration clause. Local unions and funds could opt into the National Agreement, but the Fund's trustees never voted on the matter. Over the next eight years the Fund accepted from Sav-Rx services provided by the National Agreement. The Fund sued Sav-Rx for invoicing the Fund at rates not authorized by either the Local or National Agreement. The district court dismissed, finding that Fund had accepted the benefits of the National Agreement and was bound to it; Sav-Rx established that the Fund knew it was accepting benefits under the National Agreement. The Seventh Circuit affirmed. View "NECA-IBEW Rockford Local Union 364 Health & Welfare Fund v. A&A Drug Co." on Justia Law

Petitioners had a homeowners' insurance policy with Respondent that covered Petitioners' dwelling. The policy stated that any covered loss would be paid based on actual cash value, rather than replacement value, but the policy did not define the term "actual cash value." After Petitioners' dwelling was damaged by a tornado, Respondent valued Petitioners' loss at $48,647 after calculating the repair costs and the depreciation of the items requiring repair. Petitioners brought a class action in federal district court against Respondent, alleging that Respondent breached the insurance policy, and those policies of the putative class members, when it improperly applied a depreciation factor to the labor portion of repairs required at their respective dwellings. Specifically, Petitioners contend that their policy's failure to address depreciation of labor rendered the policy's term "actual cash value" ambiguous. The federal district court certified a question of law to the Supreme Court, which answered by holding that an insurer, in determining the "actual cash value" of a covered loss under an indemnity insurance policy, may not depreciate the costs of labor when the term "actual cash value" is not defined in the policy. View "Adams v. Cameron Mut. Ins. Co." on Justia Law

Plaintiff filed suit against Farmers and American, insurance companies, for breach of contract and various state law violations, seeking recovery for additional loss. The court concluded that plaintiffs' claims for specific performance, unjust enrichment, and bad faith were expressly preempted by federal law; the court affirmed the district court's grant of Farmers' motion to dismiss plaintiffs' extracontractual claims because they were preempted under federal law; and the court affirmed the district court's grant of summary judgment to Farmers on the ground that plaintiffs failed to file a supplemental proof of loss, a strictly construed requirement, and thus did not satisfy the prerequisites for suing on their additional claims, rejecting plaintiffs' estoppel, duress, repudiation, and due process arguments. Further, the court affirmed the district court's grant of summary judgment for American, concluding that the American policy was supplemental and plaintiffs could not recover from American for flood damage because they had not exhausted their primary policy with Farmers. View "Gunter, et al. v. Farmers Ins. Co., et al." on Justia Law

Plaintiffs filed suit against Darwin alleging that the insurance company breached its duty to defend and its implied duties of good faith and fair dealing under the policy at issue. On appeal, plaintiffs challenged the district court's grant of summary judgment in favor of Darwin. The court concluded that Darwin owed no duty to defend plaintiffs because all of the claims at issue fell within the Customer Funds Exclusion; the district court's interpretation of the Customer Funds Exclusion did not violate the illusory coverage doctrine; and the reasonable expectations doctrine did not apply in this case. The court also concluded that the innocent insured doctrine did not obligate Darwin to defend plaintiffs and the district court did not err in granting summary judgment on plaintiffs' claim for breach of the implied contractual duties of good faith and fair dealing. Accordingly, the court affirmed the district court's judgment. View "Bethel, II, et al. v. Darwin Select Ins. Co." on Justia Law

Appellant was involved in a car accident with Kent Blough. Appellant's insurer, USAA Casualty Insurance Company, concluded that Appellant was the majority at fault for the accident and refused to honor Appellant's $300,000 UM/UIM coverage. Appellant filed suit against Blough, and in an apparent attempt to prevent Appellant from prevailing, USAA unsuccessfully tried to intervene in the lawsuit. Blough's insurer paid Appellant the limit of Blough's insurance policy. USAA's expert eventually determined that Blough, whom USAA had already paid under Appellant's policy, had been the majority at fault. USAA then tendered to Appellant its $300,000 UM/UIM policy limit. Appellant filed a complaint against USAA for, among other claims, violations of the Montana Unfair Trade Practices Act and emotional distress as a result of the mishandling of her claim. The district court entered summary judgment for USAA. The Supreme Court reversed, holding that the district court (1) erred in determining that Appellant may not pursue a claim based upon USAA's alleged failure to reasonably investigate her claim as required under Mont. Code Ann. 33-13-201(4); and (2) erred when it granted summary judgment in favor of USAA regarding Appellant's claim for damages arising from emotional distress. View " McVey v. USAA Cas. Ins. Co." on Justia Law

Petitioner was a guest passenger in a vehicle insured by Progressive Classic Insurance Company when the vehicle was rear-ended by a truck. Petitioner received medical payments coverage under the Progressive policy for some of the medical expenses she incurred for the treatment of her injuries. Petitioner later successfully sued the truck owner and driver and received damages. Progressive subsequently asserted a subrogation lien on the recovery for the amount it paid under the medical payments coverage. Petitioner filed this complaint against Progressive, alleging common law and statutory bad faith claims. The circuit court dismissed the action, determining that because Petitioner was not a named insured under the Progressive policy and paid no premiums for the policy, Petitioner was a third-party insured and was, therefore, precluded from pursuing her bad faith claims against Progressive. The Supreme Court reversed, holding (1) Petitioner was a first-party insured under the Progressive policy because the policy included within the definition of an insured person "any other person while occupying a covered vehicle"; and (2) therefore, Petitioner may pursue an action against Progressive for common law and statutory bad faith. View "Dorsey v. Progressive Classic Ins. Co." on Justia Law

Petitioner's decedent, Freda Bradley, purchased a named perils homeowners insurance policy from Farmers and Mechanics Mutual Insurance Company of West Virginia (Farmers). Bradley filed a claim under the policy for damage to her kitchen and bathroom floor. Farmers denied the claim citing a policy exclusion for water damage below the surface of the ground, fungi, wet or dry rot, or bacteria. Bradley filed a complaint against Farmers alleging several causes of action stemming from Farmers' denial of coverage under an insurance policy Bradley had purchased from Farmers. The circuit court granted summary judgment in favor of Farmers, concluding (1) damage done to Bradley's kitchen floor did not constitute a "collapse" as required by the policy; and (2) the alleged collapse was not caused by "hidden decay." Petitioner appealed. The Supreme Court reversed, holding (1) the circuit court erred in finding that the term "collapse" in the insurance policy was not ambiguous and that Bradley's kitchen floor did not collapse; and (2) whether Bradley should have known that decay was causing her kitchen floor to sink was a genuine issue of material fact to be decided by a jury. Remanded. View "Chafin v. Farmers & Mechanics Mut. Ins. Co. of W. Va." on Justia Law

The issue before the Supreme Court in this case arose from an alleged breach of contract and bad-faith denial of Dr. Jack and Margaret Hoover’s homeowner’s insurance claim against United Services Automobile Association (USAA) following Hurricane Katrina. The trial judge granted USAA’s motion for directed verdict as to the Hoovers’ claims for: (1) the unpaid portion of losses; (2) mental anguish and emotional distress; and (3) punitive damages. The trial court further determined that there were issues of fact for the jury as to whether the Hoovers’ roof structure was damaged, and as to the Hoovers’ claim for additional living expenses. The jury found for the Hoovers and granted compensatory damages. The Hoovers appealed and USAA cross-appealed. After its review of the record, the Supreme Court found that trial court applied an incorrect legal standard and improperly shifted a burden of proof to the Hoovers. Therefore the Court reversed the directed verdict as to the unpaid damages, and remanded the case for a jury to determine whether USAA proved by a preponderance of the evidence that the unpaid loss was caused by an excluded storm surge. The trial court did not err, however, in directing a verdict for USAA as to the Hoovers’ claims for mental anguish, emotional distress, and punitive damages. View "Hoover v. United Services Automobile Association" on Justia Law

After Opal Corn was rear-ended by Martha Gafford, she settled with Gafford and Gafford's insurer. Opal and L.B. Corn subsequently filed an underinsured motorist (UIM) claim with their insurer, Farmers Insurance Company, for the remaining damages from the accident. The Corns then filed suit against Farmers and a driver and company also involved in the accident (collectively, Eden). The Corns settled their claims with Eden, but their settlement was for less than the limits of Eden's insurance policy. Farms refused to offer UIM benefits and moved for summary judgment, arguing that because the Corns had failed to exhaust Eden's liability policy, they had not triggered UIM coverage under their policy with Farmers. The circuit court entered summary judgment for Farmers, finding that, based on the exhaustion requirement of UIM coverage and the policy language, the Corns were not entitled to UIM benefits. The Supreme Court affirmed, holding (1) insured persons are required to exhaust all liability insurance policies of all tortfeasors before they are entitled to receive UIM benefits; and (2) under the terms of the policy, UIM coverage was not triggered until all policy limits had been exhausted. View "Corn v. Farmers Ins. Co., Inc." on Justia Law