Justia Insurance Law Opinion Summaries

Allstate Insurance Company petitioned for review of a court of appeals' judgment that reversed the dismissal of a breach of assignment claim brought by Medical Lien Management (MLM). The district court effectively construed MLM's Lien and Security Agreement with a motor vehicle accident victim (upon which the underlying complaint was premised), as failing to assign the victim's right to the proceeds of his personal injury lawsuit against Allstate's insured. The court of appeals found a valid assignment to MLM all rights to the future proceeds from the personal injury claim in an amount equal to the costs of medical services paid for by MLM, as well as a sufficient allegation in the complaint of an enforceable obligation by Allstate to pay the assigned sums to MLM. The Supreme Court reversed, finding that the court of appeals erred in finding the purported assignment in this case. View "Allstate Insurance Co. v. Medical Lien Management, Inc." on Justia Law

This case arose from a complicated series of transactions often called “fronting arrangements” in the insurance industry. Lincoln was awarded $16.5 million on its tortious interference claims against CSi and Alpha. The case involved the diversion of funds from a reinsurance arrangement involving insurer Lincoln and a claims administrator, U.S. Auto. Numerous issues were raised on appeal. The court affirmed: (1) the judgment entered against CSi and Alpha; (2) the grant of summary judgment on Lincoln’s conversion claims; (3) the denial of Lincoln’s cross-motion for summary judgment on its fiduciary duty claims; and (4) the denial of the motion to alter the judgment to include ZVN. The court also held that Lincoln forfeited the right to appeal the dismissal of its claims against Doug Maxwell asserting alter ego liability. The court reversed: (1) the refusal to alter the judgment to include Lincoln General’s breach of contract claim against U.S. Auto; (2) the grant of summary judgment on all the fiduciary duty claims that Lincoln appealed, including the claims for aiding and abetting; and (3) the tortious interference claim against Jim Maxwell. Accordingly, the court remanded for further proceedings. View "Lincoln Gen. Ins. Co. v. U.S. Auto Ins." on Justia Law

Cornhusker Casualty Company appealed a district court’s summary-judgment ruling, arguing that the district court incorrectly concluded that Cornhusker was estopped from asserting noncoverage as a defense to the claims of Shari and Steve Skaj. The Skajs cross-appealed the district court’s sua sponte entry of summary judgment against them on their counterclaim for attorneys’ fees. Vincent Rosty filed a cross-appeal too, alleging that the district court erred in granting summary judgment to Cornhusker on some of his tort-based counterclaims. R&R Roofing, Inc. was a Wyoming construction company primarily operated by Randy Rosty and Steven Rosty. R&R purchased a Cornhusker commercial liability policy listing “R&R” and “Randy Rosty” as the named insureds. Vincent, who was an R&R employee at that time, did not appear as a named insured under the Policy. Vincent drove R&R’s dump truck to the Skaj home to deliver roofing supplies. The truck was accidentally knocked into second gear, rolled forward toward Ms. Skaj as she approached, and pinned her against a parked motor home, injuring her. A laboratory test performed later that day detected the presence of marijuana and methamphetamines in Vincent’s bloodstream. The Skajs ultimately sued R&R, Steven, and Vincent, asserting several negligence claims. Counsel retained by Cornhusker to defend against the Skajs’ lawsuit sought and received an extension of “the answer deadline for all defendants.” Communication related to that request indicated that defense counsel at that point “d[id] not know if [she would] be representing all of the defendants.” Defense counsel filed an answer to the Skajs’ complaint on behalf of Steven and R&R only, noting, “I do not represent Vincent Rosty.” In filing its answer, Cornhusker did not attempt to advise Vincent of its decision at that time not to represent him. An entry of default against Vincent issued, and the non-defaulting defendants were dismissed from the litigation. The Skajs sought to recover a judgment as to Vincent. Cornhusker hired separate representation for Vincent who opposed the default-judgment proceedings. The state court issued a default-judgment order assessing a total in damages and costs of $897,344.24 against Vincent. One week after the default-judgment hearing, Cornhusker sent Vincent a letter purporting for the first time to deny coverage on grounds that Vincent was not a named insured to the R&R policy. Cornhusker repeated this ground in its declaratory judgment action in federal district court. Vincent responded by counterclaiming against Cornhusker, asserting various contract and tort theories. The Skajs filed their own counterclaim, seeking a declaration “that Cornhusker [was] required to pay the judgment in the underlying action." All parties filed motions for summary judgment, but the court announced that there would be no trial. It declared that Cornhusker was estopped from denying coverage to Vincent because Cornhusker had represented that it would provide a defense, never reserved its rights, and did not advise Vincent of its decision to deny coverage until more than sixteen months after the entry of default. Cornhusker appealed the district court's judgment. But finding no reversible error, the Tenth Circuit affirmed the court's judgment. View "Cornhusker Casualty Co. v. Skaj" on Justia Law

Jefferson County awarded the first phase of its courthouse remodeling plan to a contractor. Two subcontractors aided in the repairs. While the repairs were underway, a fire severely damaged the courthouse. Jefferson County’s contract with the contractor incorporated an American Institute of Architects (AIA) standard form. The AIA contract waives subrogation rights for damages caused by fire “to the extent covered by property insurance.” Jefferson County filed a subrogation claim against the Contractors to recover damages caused to its property unrelated to repairs. Defendants moved for summary judgment, arguing that Jefferson County had waived its claim under the AIA waiver because its insurance policy covered all the damages. The County responded that the subrogation waiver applied only to construction-related damages. The trial court granted summary judgment for Defendants, concluding that Jefferson County had waived subrogation rights for all claims. The Supreme Court affirmed, holding (1) the plain language of the AIA contract restricts the scope of the waiver based on the source and extent of property insurance coverage, not the nature of the damages; and (2) the County agreed to waive its rights to bring this subrogation claim by relying on its existing “all-risk” property insurance policy that covered the work and all other losses suffered in the fire. View "Bd. of Comm’rs v. Teton Corp." on Justia Law

Randy Spalding filed suit against Stewart Title Guaranty Company, alleging breach of contract and vexatious refusal to pay in regard to a title insurance policy. After a jury trial, the circuit court entered an amended judgment in favor of Spalding. The Supreme Court affirmed, holding that the circuit court did not err in (1) overruling Stewart Title’s motions for directed verdict and judgment notwithstanding the verdict where the title insurance policy was not time barred and where Spalding made a submissible case as to the existence and amount of the damages for the breach of contract; (2) refusing to give Stewart Title’s proposed instruction concerning its statute of limitations defense; (3) admitting evidence from an appraiser in regard to damages sustained from the title defect under the policy; and (4) giving a certain jury instruction regarding the measure of damages. View "Spalding v. Stewart Title Guaranty Co." on Justia Law

Weitz contracted with Hyatt to build an Aventura, Florida assisted-living facility, which was completed in 2003. Hyatt obtained post-construction insurance from defendants. Weitz was neither a party nor a third-party-beneficiary. The policies exclude faulty workmanship and mold, except to the extent that covered loss results from the faulty workmanship, such as business interruption losses. The construction was defective. Hyatt notified defendants of a $11 million loss involving moisture and mold at the care center, settled that claim for $750,000, and released defendants from claims relating to the care center. Hyatt next discovered moisture, mold, and cracked stucco at the residential towers. Hyatt gave defendants notice, but bypassed inevitable defenses based upon policy exclusions, and sued Weitz. Weitz sued its subcontractors and its own construction contract liability insurers. Weitz settled with Hyatt for $53 million and was indemnified by its insurers for $55,799,684.69. Weitz sued, claiming coverage under defendants’ policies, based on equitable subrogation or unjust enrichment. The Eighth Circuit affirmed dismissal, recognizing that Weitz, as subrogee, was subject to any defense Hyatt would have faced, and that Hyatt had discharged defendants from liability; that suit was barred by the contractual period of limitations; that Weitz was barred from suing for damage to the plaza because Hyatt did not give defendants notice of that damage; and that Weitz had already collected several million more than it paid. View "Weitz Co. v. Lexington Ins. Co." on Justia Law

The Eleventh Circuit Court of Appeals certified a question of law to the Georgia Supreme Court. The certified question arose out of a declaratory judgment action related to underinsured motorist (“UIM”) coverage under a commercial auto insurance policy issued by FCCI Insurance Co. (“FCCI”). The litigation was the result of a 2011 collision between a McLendon Enterprises, Inc. truck driven by McLendon employee Brooks Mitchell, with passengers Elijah Profit, III and Bobby Mitchell (“Bobby”), and an Evans County school bus driven by John Haartje. Profit, Bobby, and Mitchell claimed injuries as a result of the collision. In May 2013, Mitchell filed suit in state court against Haartje and the Evans County Board of Education to recover for his alleged damages. Mitchell served FCCI as McLendon's uninsured motorist (UM) carrier. At the time of the collision, the School District had an insurance policy with GSBA Risk Management Services, under whose policy, paid out the $1,000,000 liability limits for damages related to the collision. It settled with Profit and Bobby for $350,000 combined and agreed to pay Mitchell the remaining $650,000 in exchange for a limited liability release, thereby exhausting its $1,000,000 liability limits. Mitchell filed for UM benefits from FCCI. FCCI denied liability on the basis of the at-fault driver's statutory immunity. The question certified centered on whether an insured party could recover under an uninsured-motorist insurance policy providing that the insurer will pay sums “the insured is legally entitled to recover as compensatory damages from the owner or driver of an uninsured motor vehicle” despite the partial sovereign immunity of the tortfeasor. The Georgia Supreme Court answered the question in the affirmative. View "FCCI Insurance Co. v. McLendon Enterprises, Inc." on Justia Law

Plaintiffs, former police officers and firefighters employed by local public agencies, filed suit alleging that CalPERS's failure to pay enhanced retirement benefits under the Public Employees' Retirement Law (PERL), Gov. Code section 20000 et seq., gave rise to a variety of causes of action. In these consolidated appeals, the court affirmed in part and concluded that neither the PERL nor plaintiffs' contracts entitle plaintiffs to the additional retirement benefits they seek and therefore, their causes of action for breach of statutory duty and breach of contract fail as a matter of law. Further, plaintiffs' causes of action for constitutional torts also fail because, as a matter of law, CalPERS's interpretation of the applicable statutory provisions does not deny plaintiffs due process or equal protection of law and does not effect an unconstitutional impairment of contract. The court reversed, however, as to the causes of action for rescission and breach of fiduciary duty where plaintiffs' pleading was sufficient to survive demurrer and therefore demurrer should have been overruled as to these causes of action. In this case, plaintiffs alleged that CalPERS failed to disclose the potential loss of the value of purchased service credit if plaintiffs suffered disability - a disclosure that CalPERS, as a fiduciary, is alleged to have been required to make. View "Marzec v. CalPERS" on Justia Law

In 2001, representatives from the Moody Bible Institute of Chicago and Sysix Financial signed a master agreement, laying the groundwork for future leases of equipment from Sysix to Moody. In 2008, two lease schedules for computer items were executed; they appeared to have been signed by Moody’s vice president and Sysix’s president. Sysix assigned its interest in both leases to Rockwell, which acquired loans from PNB to finance the leases. PNB procured indemnification coverage for those loans from RLI in the form of a financial institution bond. Sysix’s president had forged the signature of Moody’s vice president on both lease schedules. Moody never agreed to either schedule nor did it ever receive any of the promised equipment. PNB notified RLI of its potential loss, but PNB itself soon went under. As receiver for PNB, the FDIC sued RLI. The district court granted summary judgment in FDIC’s favor. The Seventh Circuit affirmed, finding that the plain language of the bond covered FDIC’s losses The Financial Institutions Reform Recovery and Enforcement Act limitations period applies,12 U.S.C. 1821(d)(14), so the suit was timely. View "Fed. Deposit Ins. Corp. v. RLI Ins. Co." on Justia Law

Arch Specialty Insurance Company appealed the grant of summary judgment in favor of Amerisure Mutual Insurance Company. In 2006, Amerisure issued a Texas Commercial Package Policy to Admiral Glass & Mirror Co. The policy afforded coverage in excess of any coverage afforded by a controlled insurance program policy. Arch issued an Owner Controlled Insurance Program (“OCIP”) policy to Endeavor Highrise, LP and its contractors and subcontractors for bodily injury and property damage arising out of construction of the Endeavor Highrise. Admiral was a subcontractor insured under the OCIP policy. Endeavor sued Admiral and others for faulty work. Amerisure tendered the lawsuit to Arch as the primary insurer. Prior to Arch accepting the defense, Amerisure incurred $23,879.27 in defense fees. In April 2012, Arch withdrew from defense of the Endeavor lawsuit asserting that attorneys’ fees, defense costs, and settlements of $2,000,000.00 from defending Admiral and other subcontractor defendants exhausted policy limits. Amerisure took over the defense and incurred additional fees and costs of $114,957.14 before settling the claims against Admiral. In total, Arch paid a settlement of $1,555,000.00 and defense costs of $159,543.15 under the general coverage limit of the OCIP, and paid settlements totaling $1,472,032.61 and defense costs of $527,967.36 under the products-completed operations coverage of the OCIP policy. Amerisure sued Arch in Texas state court for breach of contract, contending that Arch wrongfully refused to defend and indemnify Admiral. Amerisure argued on appeal that the term “expenses” in the Supplementary Payments provision did not include attorneys’ fees and other costs of defense. It also argued that, even if “expenses” includes defense costs, the effect of the statement “All other terms and conditions of this Policy remain unchanged” read together with the language that the duty to defend expires when “we have used up the [policy limits] in the payment of judgments or settlements” means that the policy limits are eroded only by payment of “judgments or settlements,” not defense costs. For its part, Arch argued that “expenses” included defense costs and that the endorsement controlled over any contrary language such that it converts this policy into an eroding policy. The Fifth Circuit agreed with Arch, concluding that the endorsement transformed the policy into an “eroding limits” policy. The Court affirmed the district court’s judgment regarding the duty to indemnify, reversed the district court’s judgment regarding the duty to defend, and rendered judgment for Arch. View "Amerisure Mutual Ins. Co. v. Arch Specialty Ins. Co." on Justia Law