Justia Insurance Law Opinion Summaries

In 1998 Ryerson sold subsidiaries to EMC for $29 million. The following year EMC sought rescission, claiming that Ryerson concealed that a subsidiary’s largest customer had declared that unless it slashed prices, the customer would stop buying from the subsidiary. Three years later, the parties settled, with Ryerson making a $8.5 million "price adjustment." Federal refused to indemnify Ryerson under an “Executive Protection Policy.” The policy covers loss for which the insured becomes legally obligated to pay on account of any claim for a wrongful act [defined to include a "misleading statement" or "omission"] allegedly committed by the insured. Federal denied that "loss: includes restitution paid by an insured, as distinct from damages. The Seventh Circuit affirmed summary judgment in favor of Federal, stating that reimbursement of disgorgement of the profits of fraud would “encourage fraud.” Having to surrender those profits was not a loss within the meaning of the policy. The court also rejected an argument that Federal's change of position on why it denied the claim violated the doctrine of "mend the hold." In Illinois that doctrine does not forbid the defendant to add a defense after being sued.

When Plaintiffs' efforts to act as general contractors on a new home foundered because of faulty work performed by a framing subcontractor, they made a claim on the homeowner's insurance policy issued to them by Defendant, Peerless Insurance Company. After Defendant denied the claim, citing two exclusions in the policy, Plaintiffs filed a declaratory-judgment action against the carrier. A hearing justice determined that the terms of the policy were ambiguous. Consequently, the hearing justice construed the policy against the insurer and entered judgment for the plaintiffs. The Supreme Court affirmed, holding (1) the trial justice did not err when she determined that the policy was ambiguous; and (2) Plaintiffs were entitled to coverage for the repairs that were necessary to bring their home into compliance with the applicable building code.

Plaintiffs were catastrophically injured in automobile accidents. All sustained traumatic brain injuries and are now mentally impaired. State Farm initially paid no-fault insurance benefits for the cost of attendant care services rendered at home, but reduced the rates on the basis of market surveys of the cost of the services. State Farm refused to raise the rates because it could not verify whether plaintiffs had received the type of care that would justify paying higher rates. Plaintiffs refused to submit documentation regarding the nature and extent of the care they were receiving. Plaintiffs sued. The district court awarded plaintiffs monetary sanctions, instead of default judgment, in response to State Farm’s violation of discovery orders. A jury rendered a verdict in State Farm’s Favor. The Sixth Circuit dismissed appeal regarding the discovery sanctions, for lack of jurisdiction, but otherwise affirmed.

In two civil actions, Plaintiffs in the underlying action alleged that Cheaters, Inc. and Cheaters Holding Corporation negligently and/or recklessly served alcoholic beverages to William Powers, who afterwards drove a vehicle off the premises and collided with other vehicles, resulting in one death and injuries to others. Before the accident, United National Insurance Corporation had issued an insurance policy to Cheaters and the Holding Corporation. Based on the policy's on-premises endorsement and liquor liability exclusion, United National disclaimed any responsibility for the defense and/or indemnification of the Holding Corporation. Plaintiff corporations then filed a complaint seeking a declaratory judgment as to their rights under the terms of the policy. The superior court hearing justice granted United National's motion for summary judgment on the grounds that the on-premises endorsement, which limited coverage to on-premises losses only, applied. The Supreme Court affirmed, holding that coverage was barred by the on-premises endorsement.

After sustaining injuries in an auto accident, Tavis McArthur filed this suit in federal district court to recover underinsured motorist (UIM) benefits under his State Farm automobile insurance policy. The district court granted summary judgment in favor of State Farm, concluding that McArthur had failed to exhaust the liability limits of the tortfeasor's insurance, a precondition of his UIM benefits policy. On appeal, the Tenth Circuit Court of Appeals certified two questions to the Utah Supreme Court. The Supreme Court held (1) exhaustion clauses that require the liability insurer to pay out its full policy limits before permitting payment of UIM benefits are generally enforceable in the State of Utah; and (2) because UIM exhaustion provisions are conditions precedent and not covenants capable of being breached, no showing of prejudice is required to sustain their invocation.

This case arose from a contract between the school district and DJH to perform heating, ventilation, and air condition work. The contract required DJH to obtain a performance bond which DJH secured from Nova, a compensated surety. At issue was whether Nova was discharged from it surety obligation to the school district on the bases that the school district allegedly violated New York's Lien Law 70[1] by improperly diverting construction contract payments constituting trust fund assets to a non-beneficiary and breached the terms of the parties' performance bond. The court held that under the facts, Nova had not demonstrated that discharge of its surety obligation was warranted. The court also considered whether the school district was entitled to attorneys' fees expended in the prosecution of the litigation and concluded that the request for attorneys' fees was properly denied.

James Bennett, the father of Brooke Bennett and the administrator of her estate, appealed a trial court's declaration of no coverage for the claims made in the lawsuit filed against homeowner Denise Woodward for negligent supervision and damages arising out of the abduction, assault, and death of his daughter, Brooke. Woodward was formerly married to Brooke’s uncle, Michael Jacques, who was alleged to have kidnapped, sexually assaulted, and murdered Brooke. Woodward's insurer brought a declaratory judgment action asking the trial court to hold that its policy does not cover these claims. The trial court decided the case on summary judgment, holding that the insurance policy excluded coverage and Bennett appealed. The trial court granted summary judgment for the insurer, concluding that insurer owed no duty of defense or indemnification in the underlying suit in part because the policy barred coverage for intentional acts by "an insured" that are not "occurrences." The court rejected Bennett's argument that the separate insureds, or severability clause provided coverage for homeowner because the complaint alleged that the uncle committed intentional acts. On appeal, father reiterated his argument that Jacques' alleged intentional acts did not preclude coverage for homeowner because the policy contained a severability clause. Upon review, the Supreme Court found that the plain meaning of the terms in the insurance policy at issue did not include intentional tortious acts nor allowed for severability under the facts of this case.

Plaintiff, an auto parts distributor with operations in multiple states, secured general liability, automotive liability, and workers' compensation policies from defendants for annual coverage periods between September 1992 and September 2003. At issue was whether the six-year statue of limitations applicable to the insurers' breach of contract counterclaims began to run when they possessed the legal right to demand payment from the insured or years later after they issued invoices. Under the terms of the insurance contracts in this case, the court concluded that the counterclaims accrued when the insurers had the right to demand payment.

Appellant was injured when she was involved in a motor vehicle accident. The other vehicle involved in the accident, a truck, was listed on two different insurance policies: an Allstate policy issued to Jeremy Lucas and a Mountain West policy issued to Wyoming Electric Company. Appellee, Mountain West, filed a complaint for declaratory judgment, requesting that the district court find Mountain West did not have to cover the truck under the policy. The district court granted summary judgment in favor of Mountain West, finding that the owner of Wyoming Electric had given the truck to Lucas and, therefore, the truck was no longer covered under the company's insurance policy. The Supreme Court affirmed, holding that although the truck was titled and registered in the name of Wyoming Electric and was still listed as a specific vehicle on the Mountain West Policy, Mountain West was not required to pay under the policy because, on the date of the accident, Wyoming electric no longer owned the truck and the truck was no longer covered under the Mountain West insurance policy.

Robert Johnson filed a summons and complaint against Cintas Corporation, alleging he had automobile liability insurance coverage through Cintas. Johnson subsequently served his summons and complaint upon the registered agent for Cintas Corporation No. 2, a wholly owned subsidiary of Cintas. Johnson then amended his summons and complaint to name Cintas No. 2 as the correct defendant. The circuit court granted default judgment against Cintas No. 2 and denied that Cintas No. 2 was entitled to notice of the amended summons and complaint. The court of appeals reversed, holding that because Johnson's summons and complaint did not name Cintas No. 2 as a defendant, the circuit court lacked personal jurisdiction over Cintas No. 2, and therefore, the default judgment was void. The Supreme Court affirmed, holding that service in this case was fundamentally defective because Johnson failed to name Cintas No. 2 as a defendant in his summons and complaint, and therefore, the circuit court lacked personal jurisdiction over Cintas No. 2, regardless of the manner in which Cintas No. 2 held itself out to the public or to Johnson specifically.