Justia Insurance Law Opinion Summaries

Stephen O'Bryant, a commercial truckdriver, was killed during the course of his employment as the result of a motor vehicle accident. Sylvia Devese, the representative of his estate, sought to recover under O'Bryant's occupational accident policy with Transguard Insurance Company of America. Transugard denied the claim on the ground that O'Bryant did not have a valid commercial driver's license (CDL) at the time of the accident, and the personal representative brought this action against Transguard for breach of contract and bad faith. The policy stated that no benefits would be paid for any claim resulting from any loss occurring while the insured person was operating a vehicle without a valid CDL. The trial court granted summary judgment in favor of Transguard. On appeal, the Supreme Court reversed and remanded, holding that Neb. Rev. Stat. 44-358 applies so as to require a showing of causation between the breach and the loss, despite the language of the policy.

This lawsuit arose from the dispute between the parties about how much appellant was obligated to pay appellee for auto-glass goods and services rendered on behalf of appellant's insureds. Appellants appealed from the district court's orders dismissing its counterclaim that appellee violated Minnesota's anti-incentive statute, Minn. Stat. 325F.783, granting summary judgment in favor of appellee on appellant's counterclaim for breach of contract, and denying appellant's motion to vacate the arbitration award. The court held that, given the plain language of the statute and the ordinary meaning of the terms of rebate and credit, appellee's practice did not violate the anti-incentive statute. The court also held that even if the blast faxes at issue constituted offers to enter into unilateral contracts, appellee rejected the offers when its actions failed to conform to the terms of the offer. The court further held that the arbitration award did not require reversal or new proceedings because the award was based on the finding that appellant failed to pay the competitive price standard set forth in the applicable endorsement and Minnesota law.

After appellant Stephanie Riley, who was insured by State Farm, was involved in a car accident, Riley settled with the tortfeasor's insurer, GEICO. Riley asserted that State Farm filed a lien on her settlement before it knew whether she would be made whole by the settlement. After taking her case to trial court, Riley appealed with a Ark. R. Civ. P. 54(b) certification the dismissal of count one of her amended petition for declaratory judgment and complaint, which sought a declaratory judgment that appellee State Farm had failed to establish a legal lien or right to subrogation under Arkansas law. The Supreme Court reversed and remanded, holding that the circuit court erred in interpreting Ark. Code Ann. 23-89-207 and the state's subrogation law. The subrogation lien cannot arise, or attach, until the insured has received the settlement proceeds or damage award and until there is a judicial determination that the insured has been made whole.

Gervis Sadler owned a house that he insured through a limited-peril policy issued by North Carolina Farm Bureau Mutual Insurance Company (Farm Bureau). Farm Bureau adjusters investigated the home on two separate occasions, but Sadler disagreed with the amount of loss and asked for a disinterested appraisal. In the disinterested appraisal, Farm Bureau's appraiser valued the loss at $31,561. The appraisal award calculated by Sadler's appraiser and the umpire valued the loss at $162,500. Farm Bureau filed a complaint for declaratory relief, alleging the appraisal award failed to itemize the damages so Farm Bureau could determine the covered losses. Sadler moved for partial summary judgment on his breach of contract counterclaim. The trial court granted Sadler's request for partial summary judgment. Farm Bureau appealed. The Supreme Court reversed, holding that the trial court erred in granting partial summary judgment in favor of Sadler because genuine issues of material fact needed to be resolved before the loss covered by the policy could be determined.

Megan Bradley, who was insured by State Farm, was injured in a motor-vehicle accident. State Farm paid $3844 in medical benefits to Bradley. State Farm then pursued a subrogation claim against the tortfeasor's insurer, Farmers Insurance. Bradley responded that the settlement with Farmers Insurance was not sufficient for her to be made whole. State Farm refused to release its subrogation claim. Bradley filed a petition for declaratory judgment and complaint for bad faith against State Farm and later filed an amended declaratory action to invalidate lien and complaint for injunctive relief, deceptive trade practices, bad faith and tortious interference with a contract. The circuit court dismissed count one of Bradley's amended pleading, finding (1) State Farm had a valid but unenforceable lien for sums paid to Bradley, (2) State Farm's right of subrogation arose at the time State Farm paid the medical benefits by operation of law, and (3) State Farm's right of subrogation is not enforceable until a subsequent judicial determination that Bradley was made whole by the settlement. The Supreme Court reversed and remanded for the reasons set forth on the same day in Riley v. State Farm Mutual Automobile Insurance Co.

Gregory Schindler purchased insurance from USAA for a house he owned. The house was destroyed by fire a year and a half later. USAA denied coverage on the basis that Schindler had committed fraud during his application conversation. Specifically, USAA determined that Greg had misrepresented that the house was his primary residence and a single family dwelling when instead it was a rental divided into eight apartment units. Schindler and his wife filed suit against USAA asserting breach of insurance contract and implied obligation of good faith and fair dealing. USAA defended on the basis of fraud. The jury found for USAA and awarded USAA the monies it had advanced to the Schindlers. The Schindlers appealed. The Supreme Court affirmed, holding (1) the district court did not err in denying the Schindlers' motion for summary judgment; (2) the district court did not abuse its discretion in allowing testimony from a USAA employee; (3) the district court did not abuse its discretion in denying the Schindlers' motion in limine to preclude USAA from introducing evidence of fraud; and (4) the district court did not abuse its discretion in requiring the Schindlers to order and pay for additional transcripts.

Wanda Brethorst submitted an uninsured motorist (UM) claim to her insurer, Allstate. Brethorst made a demand for settlement, and Allstate responded with only a partial settlement. Brethorst rejected the offer then filed suit against Allstate for bad faith. Allstate filed a motion asking that Brethorst's contract claim for UM coverage be bifurcated from her bad faith claim and that discovery on the bad faith claim be stayed until the contract claim was resolved. Brethorst opposed the motion on the grounds that she had filed only one claim, and thus no bifurcation or stay of discovery was appropriate. The circuit court agreed with Brethorst and denied Allstate's motion. The Supreme Court affirmed, holding (1) an insured may file a bad faith claim without also filing a breach of contract claim; and (2) Brethorst had supplied the insurer and the court with sufficient evidence of a breach of contract by the insurer to proceed with discovery on her bad faith claim.

In 2006, appellantâs vehicle was stolen from respondent hotelâs valet parking lot. Appellantâs insurer issued a check to appellant for the cost of the vehicle but not including the cost of customizations. Appellant filed a lawsuit in district court against respondent, alleging negligence and breach of a bailment contract and seeking damages exceeding $10,000. The district court determined that Nev. Rev. Stat. 651.101(1) shielded respondent from liability and entered summary judgment in favor of respondent. Appellant appealed, and the Supreme Court reversed. The Court found as a threshold matter appellant to be a real party in interest with standing to sue because appellant was not fully compensated by his insurer for his losses and thus the principle of total subrogation did not apply. The Court also held that Nev. Rev. Stat. 651.101(1) did not protect respondent against liability arising out of the theft of appellantâs vehicle because the statute, which limits the liability of hotels for the theft or destruction of any property brought by a patron upon the premises or "left in a motor vehicle upon the premises," unambiguously places motor vehicles outside of its scope.

The decedent, killed in a motorcycle accident in 2008, was covered by a life insurance policy, subject to the Employee Retirement Income Security Act, 29 U.S.C. 1101. The insurance company denied a claim by the decedent's widow, claiming that the decedent's anti-coagulant medications contributed to his death so that it fell within an exclusion for medical conditions. The district court concluded that the policy gave the company discretionary authority to determine eligibility and entered summary judgment in the company's favor. The Third Circuit reversed in part and remanded. Deferential review was not appropriate, given the language of the policy. The words "proof of loss satisfactory to Us," surrounded by procedural requirements, do not notify participants that the company has the power to re-define the entire concept of a covered loss on a case-by-case basis. The district court's interpretation of the medical exclusion, in favor of the company, was correct; the clause was not ambiguous.

A jury in the district court concluded that plaintiff did not breach its homeowners insurance policy with defendants and that one defendant had committed fraud when applying for the policy. Defendants appealed a district court order denying their motion for summary judgment and motions in limine and granting plaintiff's motion that defendants order and pay for additional transcripts on appeal. The court held that defendants were not entitled to estopp plaintiff from defending itself because genuine issues of material fact existed regarding whether the one defendant applied for the policy in good faith. The court held that the district court appropriately permitted plaintiff's customer service representative to testify as to her recollection of the defendant's statements. The court further held that the district court acted within its discretion in permitting plaintiff to defend itself via section 33-15-403, MCA, by allowing the customer service representative to testify about the defendant's alleged fraudulent statements. Accordingly, the district court did not abuse its discretion in denying defendants' motion in limine. The court finally held that the district court did not abuse its discretion in ordering additional transcripts under Montana Rule of Appellate Procedure 8(3)(b).