Justia Insurance Law Opinion Summaries

The First Circuit reversed the judgment of the district court ruling that Insured's claim of unfair claim settlement practices in violation of Mass. Gen. Laws ch. 176D and 93A was barred by the choice-of-law provision of the marine insurance policy he purchased from Great Lakes Insurance SE (GLI), holding that the district court erred.Insurer, the insurer of Insured's forty-seven-foot catamaran sailing vessel, brought a declaratory judgment action to determine whether the "constructive total loss" of Insured's vessel was covered under the relevant policy. Insured brought a counterclaim alleging violations of Mass. Gen. Laws ch. 176D, 3(9) and ch. 93A, 9(3A). The district court ruled that pursuant to the policy's choice-of-law provision, New York law barred Insured's Massachusetts counterclaim because New York law does not provide for a chapters 176D and 93A claim. The First Circuit reversed, holding (1) Insured's statutorily-based counterclaim was extra-contractual; (2) the plain language of the choice-of-law provision was not broad enough to unambiguously encompass an extra-contractual claim; and (3) any ambiguity in the policy must be construed in favor of Insured. View "Great Lakes Insurance SE v. Andersson" on Justia Law

Appellants Robert and Kelly Franks sought automobile insurance from Appellee, State Farm Mutual Automobile Insurance Company in 2013 for their two vehicles. Appellants included underinsured motorist coverage (“UIM”) in their policy but completed a form rejecting stacked UIM coverage in compliance with Section 1738(d)(2) of the Motor Vehicle Financial Responsibility Law (“MVFRL”). Absent such waiver, stacked coverage would be the default. Appellants removed one of the original vehicles and added a third vehicle to the policy effective 2014, and again rejected stacked UIM coverage. They made another change to the policy in 2015, removing the other of the original insured vehicles with a different car. No additional form rejecting stacked UIM coverage was offered or sought to be completed on the occasion of the removal of the last vehicle, and the ongoing premiums paid by Appellants reflected the lower rate for non-stacked UIM overage on two vehicles. Robert was injured in an accident caused by the negligence of a third party. That party had insufficient liability coverage to cover Robert's injuries. Appellants initiated a claim for UIM benefits under their policy with State Farm, but the parties disagreed on the limit to their benefits. Appellants contended with the last change to the policy, there was no valid waiver of stacked UIM coverage, resulting in a default stacked coverage mandated by statute. The issue presented for the Pennsylvania Supreme Court's review in this matter was whether the Superior Court erred as a matter of law by holding that removal of a vehicle from a multiple motor vehicle insurance policy, in which stacked coverage had previously been waived, did not require a renewed express waiver of stacked coverage pursuant to Section 1738(c). The Supreme Court concluded the Superior Court did not err and affirmed its judgment. View "Franks, et al. v. State Farm Mutual" on Justia Law

Plaintiffs own a large ten-thousand-square-foot house in Austin, Texas. They insured their home with Crestbrook Insurance Company. Their policy included “Biological Deterioration or Damage Clean Up and Removal” coverage (“mold coverage”). In April 2019, Plaintiffs discovered a widespread mold infestation in their home. Although Crestbrook covered many of their losses, it denied a generalized claim for mold growing in Plaintiffs’ walls and heating, ventilation, and air conditioning system. On cross-motions for summary judgment, a magistrate judge issued a report and recommendation in favor of Crestbrook, and the district court adopted the magistrate judge’s conclusions. At issue on appeal is whether the optional mold coverage Plaintiffs purchased in their Crestbrook policy, which provided $1.6 million in mold damage insurance in exchange for $4,554.53 in additional premiums, covers a generalized mold loss.   The Fifth Circuit affirmed. The court held that the district court incorrectly applied the Texas insurance coverage burden-shifting framework. However, Crestbrook is entitled to summary judgment regardless. The court wrote that the insurance company has demonstrated that a generalized mold claim is excluded under the policy. Plaintiffs have not met their burden of showing that an exception to the exclusion in their insurance contract brings their claim back within coverage View "Buchholz v. Crestbrook" on Justia Law

The Supreme Court reversed the judgment of the court of appeals in this insurance dispute, holding that an insurance policy does not incorporate by reference the payout limits in an underlying service agreement.Two employees that were severely burned in a workplace accident at an ExxonMobil Corporation refinery sought compensation for their injuries and settled for a collective amount over $24 million. When two of Exxon's insurers, National Union Fire Insurance Company and Starr Indemnity & Liability Insurance Company, denied Exxon coverage under their umbrella policies Exxon sued both insurers for breach of contract. The trial court sided with Exxon, ruling that National Union was obligated to reimburse Exxon. The court of appeals reversed, concluding that Exxon was not insured under National Union's umbrella policy. The Supreme Court reversed, holding (1) Exxon was an insured under National Union's umbrella policy, and the court of appeals erred in ruling otherwise; and (2) because the court of appeals' holding with respect to Starr's policy was predicated on a similar error, judgment in favor of Starr must also be reversed. View "ExxonMobil Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA" on Justia Law

Tessco Technologies Inc. hired Landstar Ranger, Inc. as a transportation broker to secure a motor carrier to transport an expensive load of Tessco’s cargo to a purchaser across state lines. But Landstar mistakenly turned the shipment over to a thief posing as a Landstar-registered carrier, who ran off with Tessco’s shipment. Tessco’s insurer, Aspen American Insurance Company, sued Landstar, claiming Landstar was negligent under Florida law in its selection of the carrier. The district court dismissed Aspen’s negligence claims against Landstar, concluding those claims were expressly preempted by the Federal Aviation Administration Authorization Act (“FAAAA”).   The Eleventh Circuit affirmed. The court explained that just as the phrase “with respect to the transportation of property” “massively limits” the preemption provision, the court reads the phrase “with respect to motor vehicles” to impose a meaningful limit on the exception to the preemption provision. Second, the court found that the phrase “with respect to motor vehicles” has an operative effect only by requiring a direct connection between the state law and motor vehicles. The court reasoned that the specifics of Aspen’s complaint make us even more confident that Aspen’s claims are not “with respect to motor vehicles” within the meaning of the safety exception. Aspen’s complaint says nothing at all about motor vehicles. And Aspen’s negligence and gross negligence counts challenge only Landstar’s “selection of the motor carrier.” The complaint does not purport to enforce any standard or regulation on the ownership, maintenance, or operation of “a vehicle, machine, tractor, trailer, or semitrailer propelled or drawn by mechanical power and used on a highway in transportation.” View "Aspen American Insurance Company v. Landstar Ranger, Inc." on Justia Law

Plaintiff sued Aspen Specialty Insurance Company (“Aspen”) for breach of contract and sought a declaration that its 2016 and 2017 policies (the “Matthew” and “Irma” Policies)—covered damages caused by named windstorms. The parties cross-moved for summary judgment, teeing up a discrete and dispositive question of law: Do the policies cover named-windstorm-related losses? The district court granted summary judgment to Aspen. It held that “no reasonable jury” could find that the parties “intended the policies at issue to exclude named windstorm coverage.”   The Eleventh Circuit reversed. The court held that whatever the evidence of the contracting parties’ subjective intentions and expectations, the Irma Policy’s plain language unambiguously covers losses caused by named windstorms. Further, the court wrote that although potentially ambiguous, the Matthew Policy likewise—and, again, whatever the evidence of the parties’ subjective intentions and expectations—covers losses caused by named windstorms pursuant to the contra proferentem canon, according to which ambiguous insurance contracts are construed in favor of coverage and against the insurer. View "Shiloh Christian Center v. Aspen Specialty Insurance Company" on Justia Law

This case involves an insured who sued for breach of contract and for breach of the implied duty of good faith and fair dealing when its insurer denied coverage for business income losses that the insured incurred during the COVID19 pandemic. The insured alleged that the COVID-19 virus was present on its premises and that state government closure orders prevented it from fully making use of its insured property due to infections and prohibitions on elective medical procedures. The district court dismissed the insured’s suit for failure to state a claim.   The Ninth Circuit certified the following question to the Oregon Supreme Court: Can the actual or potential presence of the COVID-19 virus on an insured’s premises constitute “direct physical loss or damage to property” for purposes of coverage under a commercial property insurance policy? View "THE OREGON CLINIC, PC V. FIREMAN'S FUND INS. CO." on Justia Law

Plaintiff Tutor Perini Building Corp. appealed from the district court’s order affirming an order of the United States Bankruptcy Court, which held that Plaintiff may not use 11 U.S.C. Section 365(b)(1)(A) to assert a “cure claim” against the Trustee for the Trustee’s assumption of an unexpired lease to which Plaintiff was neither a party nor a third-party beneficiary.   The Second Circuit affirmed. The court held that a creditor who seeks to assert a “cure claim” under Section 365(b)(1)(A) must have a contractual right to payment under the assumed executory contract or unexpired lease in question, and the court agreed that Plaintiff is not a third-party beneficiary of the assumed lease. The court explained that Tutor Perini’s expansive view of the priority rights conferred by 11 U.S.C. Section 365(b)(1)(A) is inconsistent with applicable principles of Bankruptcy Code interpretation, and its third-party beneficiary argument is inconsistent with controlling principles of New York contract law. View "In re: George Washington Bridge" on Justia Law

Plaintiff Union Mutual Fire Insurance Company (“Union Mutual”) appealed from a district court judgment. On March 4, 2017, a fire started at Liberty Avenue in Queens, New York, spreading to and damaging four neighboring buildings insured by Union Mutual. After an investigation, the fire marshals concluded, but could not determine with certainty, that the fire originated in the extension cords used by Ace Caribbean Market. Union Mutual paid proceeds to the damaged neighboring buildings and subrogated into their owners’ tort claims. Union Mutual then sued Ace Caribbean Market and others (collectively, “Defendants”), alleging that their negligent use of the extension cords caused the fire. The district court granted summary judgment for Defendants. At issue on appeal is whether evidence that a fire may have originated in the extension cords is sufficient to show that (a) the owners and proprietors were negligent in their use of the extension cords and (b) if they were negligent, that negligence was the cause of the fire.   The Second Circuit affirmed, holding that such evidence is not sufficient. The court held that, at most, Union Mutual produced weak circumstantial evidence that something wrong with the extension cords caused the fire. But, even assuming a reasonable jury could so conclude, Union Mutual showed no evidence of negligence whatsoever on Defendants’ part, and evidence of causation by itself is not evidence of negligence. The court concluded that there may have been negligence and that negligence may have been the cause of the fire. But no inference that it was Defendants’ negligence is permissible on the facts. View "Union Mut. Fire Ins. Co. v. Ace Caribbean Mkt." on Justia Law

Appellant Southern Orthopaedic Specialists, L.L.C. (“Southern Orthopaedic”) sued its insurer, State Farm Fire & Casualty Company (“State Farm”), to recover business interruption losses caused by covid-related shutdowns. It also claims that State Farm negligently misrepresented the scope of the policy’s coverage. The district court dismissed these claims as foreclosed by the policy and Louisiana law.   The Fifth Circuit affirmed. The court held that Southern Orthopaedic’s pleadings fall short. They do not allege that covid caused “tangible or corporeal” property damage. Nor do they allege that the presence of covid particles required physically repairing or replacing any part of Southern Orthopaedics’s property. Nor do they claim that the presence of covid necessitated lasting alterations to the property. Without allegations of this nature, Southern Orthopaedic cannot meet the requirement of pleading an “accidental direct physical loss” under the policy. View "S Orthopaedic Spclt v. State Farm Fire" on Justia Law