Justia Insurance Law Opinion Summaries

Two houseguests suffered serious injuries after their host left her car running overnight in an attached garage and the house filled with carbon monoxide. Plaintiff, the insurer with whom the homeowner had a homeowner's insurance policy, brought a declaratory judgment action against Defendants, the homeowner, the houseguests, and the homeowner's automobile insurer, seeking a declaration that the homeowner's policy did not cover the injuries suffered by the houseguests. The trial court granted summary judgment in favor of Plaintiff, finding that the policy did not cover the injuries because they fell within the policy exclusion for injuries arising out of the use of a motor vehicle. The Supreme Court affirmed, holding that the injuries suffered by the houseguests fell under the policy's motor vehicle exclusion.

Plaintiff insured defendants. Defendant Schilli is a freight broker that arranges freight and provides risk management services for claims against other defendants, trucking companies, but does not own tractor-trailers or employ drivers. Plaintiff advanced funds to defend or settle claims against defendants for accidents that occurred during the duration of the policy. The policy had a coverage limit of $1,000,000 for each accident and a $100,000 basket deductible per occurrence and provides that "[y]ou agree to repay us up to this deductible amount for all damages caused by any one accident, as soon as we notify you of the judgment or settlement." Schilli's name and address are included in the definition of "you;" the other companies are named as insureds. Plaintiff sought reimbursement for amounts, up to the $100,000 deductible, that it advanced in defending and settling each case. Schilli refused to pay. In granting summary judgment in favor of plaintiff, the district court stated that the policy unambiguously defines "you" as all of the corporations. The Seventh Circuit reversed, finding the policy ambiguous as to the nature of defendants' liability for the deductible.

Defendant-Appellant Nodak Mutual Insurance Company appealed from a judgment awarding Plaintiff-Appellee Barry Myaer $34,933.24 plus interest in his breach of contract action against Nodak. Upon review, the Supreme Court concluded the district court did not err in ruling Plaintiff was entitled to deferred commissions payable to him in December 2009, but did err in ruling those commissions could exceed 10 percent under the terms of the parties' contract.

The Supreme Court consolidated "Matsyuk v. State Farm Fire & Casualty Company" and "Weismann v. Safeco Insurance Company of Illinois" for the purpose of clarifying the pro rata sharing rule announced in several precedential cases, including "Mahler v. Szucs" (957 P.2d 632). The rule is based on the "common fund" exception to the "American rule" on attorney fees. The rule requires personal injury protection (PIP) insurers to share pro rata in the attorney fees incurred by injured persons when the PIP insurer wins at trial. Plaintiffs in these cases recovered PIP funds as insureds under policies held by the tortfeasors. They incurred attorney fees arising from the recovery of the liability insurance. The insurance companies attempted to offset the funds expended under PIP policies by reducing plaintiffs' award under the tortfeasors' liability insurance. The Court of Appeals held that neither plaintiff was entitled to recoup a pro rata share of attorney fees. Upon review, the Supreme Court reversed the appellate court, holding that the pro rata fee sharing rule applied in this context.

In 2005, Plaintiff Marlene Harris purchased a car from Defendant David Stanley Chevrolet. Her purchase agreement contained an arbitration provision that applied to any "controversy, claim or dispute between the Purchaser and the Dealer arising out of, or related to this sale or transaction, including but not limited to, any and all issues or disputes arising as a result of this sale or transaction whether said issues arise prior to, during or subsequent to the sale or attempted sale of a vehicle." A few days after executing the purchase agreement, Plaintiff entered into a GAP insurance contract sold to her by an employee of the dealership (acting as an agent of the insurance company). In 2009, the car was a total loss. The GAP insurance company refused to pay the total difference between the insurance proceeds and the amount owed on the car, and Plaintiff sued to compel the GAP coverage. Plaintiff maintained that the purchase of the vehicle and the purchase of the policy were separate transactions, and that the arbitration clause of the purchase contract was inapplicable to the underpayment of coverage (GAP coverage). She argued no claim was brought against the GAP insurance company which was related to the sale or financing of the vehicle, conceding the arbitration clause would have applied to claims related to the sale or financing issues. After reviewing the motions of the parties, the trial court denied Defendant's Motion to Compel arbitration without an evidentiary hearing. Upon review, the Supreme Court concluded that the two contracts involved two separate subjects, executed on different dates, and the arbitration clause in the purchase agreement did not mention or reference GAP insurance or any relationship between the two contracts. The trial court did not abuse its discretion in denying the evidentiary hearing and ruling that the arbitration clause did not apply as a matter of law.

St. Paul appealed from the district court's grant of a petition by Scandinavian to vacate an arbitral award in St. Paul's favor and denying a cross-petition by St. Paul to confirm the same award. St. Paul had initiated the arbitration to resolve a dispute concerning the interpretation of the parties' reinsurance contract. The principal issue on appeal was whether the failure of two arbitrators to disclose their concurrent service as arbitrators in another, arguably similar, arbitration constituted "evident partiality" within the meaning of the Federal Arbitration Act (FAA), 9 U.S.C. 10(a)(2). The court concluded, under the circumstances, that the fact of the arbitrators' overlapping service in both the Platinum Arbitration and the St. Paul Arbitration did not, in itself, suggest that they were predisposed to rule in any particular way in the St. Paul Arbitration. As a result, their failure to disclose that concurrent service was not indicative of evident partiality. Therefore, the court reversed and remanded with instruction to the district court to affirm the award.

Insureds, Minnesota residents, filed class action complaints against their automobile insurers alleging violations of a Minnesota statute, Minn. Stat. 65B.285, requiring insurers to provide a discount for cars which have antitheft devices and breach of contract claims based on the failure to apply the statutory discount. The court affirmed the district court's dismissal of the insureds' amended complaints, rejecting their attempts here, particularly in the absence of any indication that Minnesota's administrative remedies were inadequate, to circumvent Minnesota's administrative remedies in order to create a private right of action.

Todd Olson filed suit against Robert Farrar, alleging he was liable for property damage to Olson's trailer home and vehicle. Farrar's insurer, Mt. Morris Mutual Insurance Company, sought a declaration that it had neither a duty to defend nor a duty to indemnify Farrar under the terms of its insurance policy. The circuit court granted a declaratory and summary judgment in favor of Mt. Morris. The court of appeals reversed. Mt. Morris appealed, arguing that it had no duty to defend or indemnify because of certain coverage exclusions. The Supreme Court affirmed, holding that the policy provisions at issue were ambiguous; therefore, the Court construed them in favor of coverage. Remanded.

This case involved a dispute between Insured and Insurer regarding underinsured motorist benefits. The district court denied Insurer's motion for summary judgment and entered judgment in favor of Insured with interest running from the date Insured filed his action against Insurer. Insured filed a motion to modify the judgment, asking the court to amend the judgment to start the running of interest from the date Insured filed his action against the original tortfeasors. The district court granted the motion and modified the judgment. The court of appeals affirmed. The Supreme Court (1) found that the order denying Insurer's motion for summary judgment was not reviewable; (2) vacated the court of appeals; (3) affirmed the district court's judgment required Insurer to pay its underinsured motorist limit to Insured; and (4) reversed the part of the judgment awarding interest from the date Insured filed the original action against the tortfeasors, holding that Insured failed to timely file his posttrial motion and that the district court erred when it considered the motion. Remanded.

Plaintiffs-Appellants Randolph Farber, Scott Becker, and Critter Clinic (Farber) alleged that the Manager of the Defendant-Respondent State Insurance Fund (SIF or "the Fund") failed to comply with I.C. 72-915, which provides the means by which the SIF Manager may distribute a dividend to policyholders. The district court determined that the gravamen of Farber's claim implicated the statute and held that the three-year statute of limitation provided by I.C. 5-218(1) barred all claims that accrued prior to July 21, 2003. Farber timely appealed. Upon review, the Supreme Court held that the five-year statute of limitation in I.C. 5-216 applied to Farber's claim. Therefore, the Court reversed the trial court's decision and remanded the case for further proceedings.