Justia Insurance Law Opinion Summaries

Edwin Mitchell, a lobster fisherman, was sued by Victor Ames, who alleged that a group of lobster fishermen had conspired to prevent him from fishing for lobster in the area. The Ames complaint alleged that Mitchell had, among other things, converted Ames's personal property. Mitchell held a homeowners policy with Allstate Insurance Company. By the policy's terms, Allstate agreed to provide a defense if the policyholder was sued for such damages. Allstate, however, declined to provide coverage to Mitchell on the Ames litigation, after which Mitchell sued Allstate for breach of contract. The superior court granted summary judgment in favor of Allstate, concluding that Allstate had no contractual duty to defend Mitchell because a policy exclusion for certain intentional acts applied. The Supreme Court vacated the superior court's judgment, holding that Allstate did have a duty to defend because the liability alleged in the Ames complaint had the potential to result in covered liability.

In November 1998, Respondent David Moeller’s 1996 Honda Civic CRX was damaged in a collision. Respondent had an insurance policy through Farmers Insurance Company of Washington (Farmers). Farmers chose to repair Respondent's damaged car, and he authorized the repairs. In May 1999, Respondent brought suit on behalf of himself and other similarly situated Farmers policy holders in Washington State asserting a breach of contract claim on the grounds that Farmers failed to restore his vehicle to its "preloss condition through payment of the difference in the value between the vehicle's pre-loss value and its value after it was damaged, properly repaired and returned." The issue on appeal before the Supreme Court was whether the contract between Farmers and Respondent provided for the diminished value of the post-accident, repaired car. Upon review, the Court affirmed the appellate court which held that the policy language at issue here allowed for recovery for the diminution in value.

Defendant is a captive insurer owned by plaintiff plans across the nation. In 2003 healthcare providers filed class action suits in Florida against all of those plans. Twelve plans, which had errors-and-omissions insurance from defendant, asked it to assume the defense and indemnify. Defendant declined, and the plans demanded arbitration. Acting under the Federal Arbitration Act, 9 U.S.C. 5, the district court held that the arbitrators could determine whether arbitration of a class action or consolidated arbitration were authorized by contract and appointed a third arbitrator. The court dismissed the appeal of the court's first ruling for lack of jurisdiction and affirmed the appointment. If defendant wanted a judge to decide whether the plans' demands should be arbitrated jointly or separately, it should have refused to appoint an arbitrator. Both sides appointed arbitrators, however, and the proceeding got under way. Nothing in the Federal Arbitration Act authorizes anticipatory review of the arbitrators' anticipated decisions on procedural questions.

On June 17, 2006, wife applied for a $500,000 life insurance policy. She paid $100 and signed a conditional receipt agreement for immediate coverage, subject to conditions that "on the Effective Date the Proposed Insured(s) is (are) insurable exactly as applied for under the Company’s printed underwriting rules for the plan, amount and premium rate class applied for; ... (C) the Proposed Insured(s) has/have completed all examinations and/or tests requested by the Company." On June 28, wife was examined and submitted specimens. Her cholesterol level and urine sample raised concerns. The company sought medical records from her physician and a second urine specimen. On July 22, 2006, wife was diagnosed with a brain tumor. On August 9, the company declared wife uninsurable based on her brain surgery. About a year later, she died. Husband claimed that the request for the second urine specimen was communicated in a untimely and ineffective fashion. The district court entered summary judgment for the insurance company on claims of breach of contract, estoppel, bad faith, and negligence. The Seventh Circuit affirmed, finding no evidence of purposeful misconduct; if there was no contract, any duty of good faith did not come into play.

Anthony Alsidez died in a single-car accident after a passenger, Gregory Segura, grabbed the steering wheel of the Jeep Anthony was driving. The Jeep was owned by Melissa Alsidez, Anthony's mother, who had a policy with American Family Mutual Insurance Company. Melissa filed a negligence suit against Segura, combined with a coverage action against American Family. After Melissa settled with Segura at an amount that did not compensate her for her claimed loss, Melissa sought to recover underinsured motorist coverage from American Family. The district court granted summary judgment in favor of Melissa, holding, among other things, that the exclusion from the underinsured coverage in Melissa's policy for vehicles "owned by or furnished or available for the regular use of you or a relative" was not void as against public policy. The Supreme Court affirmed, holding that the district court did not err in its judgment where (1) the Jeep was not an "underinsured vehicle" under the policy, and (2) the "regular use" exclusion was consistent with the Uninsured and Underinsured Motorist Insurance Coverage Act and not void as against public policy.

This insurance coverage case arose out of an underlying personal injury lawsuit brought by Michael Parr against Gilbane Building Company. Gilbane, a general contractor, sought defense and indemnification from Admiral Insurance Company based on an insurance policy held by Empire Steel Erectors, a subcontractor. On cross-motions for summary judgment, the district court determined that Admiral owed a duty to defend and indemnify. As a preliminary matter, the court held that Gilbane qualified as an additional insured. The court held that, pursuant to the strict eight-corners rule, Admiral had no duty to defend where the petition did not affirmatively allege any facts implicating the negligence of either Empire or Parr. Therefore, the district court erred in granting summary judgment in favor of Gilbane on the duty to defend. The court held, however, that the district court did not clearly err in determining that Admiral owed Gilbane a duty to indemnify for the cost of its settlement with Parr and the district court's summary judgment on that matter was affirmed.

Plaintiff sued defendant, with which she had a catastrophic medical insurance policy, because defendant told her that she had not yet "incurred" sufficient charges to satisfy its deductible. Plaintiff claimed that defendant's refusal to pay benefits rested on a deliberate misinterpretation of "incurred" and breached the insurance contract. The district court held that plaintiff, a Medicare recipient, could not have incurred charges that her physicians had agreed with Medicare to forgo prior to providing treatment. On appeal, plaintiff argued that the district court incorrectly read "incurred" in the insurance policy as including only those amounts that the insured paid or was legally obligated to pay. The court held, however, that the district court correctly interpreted "incurred," and therefore affirmed.

The Travelers Indemnity Company of Connecticut appealed a judgment in which it was ordered to pay $251,913.91 to Willie A. Miller. Smith House Movers, Inc. (Smith), was hired was hired to move houses located in the path of road construction to be performed. Miller entered into a contract with Smith to purchase one of the houses and to move it from Red Bay to Vina. The contract provided that Smith was to move the house, pour a foundation, and place the house on the new foundation. Smith cut the house into two pieces and delivered the first piece. However, the foundation was improperly poured and did not fit, and the house had been damaged in the move. Ultimately Miller had to hire another company to complete the move and repair the damage. Miller then sued Smith alleging breach of contract, negligence and wantonness. Smith did not answer or appear, and Miller moved to a default judgment against Smith. In an attempt to collect the amount of the default judgment, Miller sent a copy to Smith's general liability insurer, Travelers. As Miller tried to get Travelers to respond to its demand, Miller learned that Smith had declared bankruptcy. Two years following the default judgment, the bankruptcy trustee lifted its stay on Smith's affairs to allow him to collect on the default judgment to the extent that the insurance coverage would allow. Travelers subsequently denied the claim. Miller then sued Travelers for payment. Travelers moved for summary judgment to dismiss Miller's claim, arguing that the general liability policy did not provide coverage based on the terms in the policies. The trial court denied the motion, and eventually entered judgment against the company. Travelers then appealed to the Supreme Court. The issue before the Court was whether the notice of the original lawsuit was timely. The Court found that because Miller's knowledge of Smith's certificate of insurance from the underlying lawsuit put Miller on notice that he should have notified Travelers of the default judgment. As such, the Court concluded that Miller was barred from recovering under Smith's policies. The Court reversed the trial court and remanded the case for further proceedings.

Plaintiff brought suit seeking declaratory judgment and asserted claims for breach of contract and bad faith when its insurers asserted that certain sublimits in plaintiff's policy capped reimbursement for damages caused by flood and that those sublimits applied to both property damage and business interruption losses. Plaintiff claimed that the sublimits only applied to property damage. The court concluded that there was no factual dispute regarding whether an insurance brokerage employee shared the same understanding as the underwriters and whether that understanding bound plaintiff. Consequently, the interpretation of the contract did not depend "on the credibility of extrinsic evidence or on a choice among reasonable inferences that can be drawn from the extrinsic evidence," and thus the district court did not err when it granted insurers' judgment as a matter of law on the declaratory judgment and breach of contract claims.

At issue in this case was the interpretation of approximately sixty collective bargaining agreements (CBAs) between the City of Duluth and its employees. Subject to certain conditions and exceptions, the CBAs guaranteed retired City employees health insurance benefits "to the same extent as active employees." The dispute in this case centered on the meaning of that phrase, specifically, whether the phrase guaranteed health insurance benefits to retirees to the same extent as employees who were active at the time of a retiree's departure, or to the same extent as current City employees. Several retired City employees filed a lawsuit, alleging that the City had wrongfully changed or threatened to change their health insurance benefits and claiming that CBAs guaranteed that health insurance benefits for retirees would be frozen as of the time of retirement. The district court held for the City. The court of appeals affirmed the district court's interpretation of the active-employees clause. The Supreme Court affirmed, holding that the CBAs unambiguously guaranteed health insurance benefits to retirees to the same extent as current City employees.