Justia Insurance Law Opinion Summaries

Plaintiffs obtained a homeowners insurance policy from American Family Mutual Insurance Company. After Plaintiffs’ home sustained substantial fire damage, a dispute arose regarding the amount of insurance claim benefits payable under the policy. Plaintiffs subsequently filed a complaint against American Family and Michael Meek, the insurance agent through whom they obtained their insurance, for negligence. The trial court granted summary judgment for Defendants, concluding that Plaintiffs failed to commence the action within the applicable statute of limitations. The court of appeals affirmed. The Supreme Court affirmed, holding that the trial court was correct to grant summary judgment on the basis of the applicable two-year statute of limitations. View "Groce v. Am. Family Mut. Ins. Co." on Justia Law

Nationwide Retirement Solutions, Inc. ("NRS"), appealed a circuit court judgment awarding PEBCO,Inc. over a million dollars in attorney fees and $29,132.01 in expenses. In 2007, participants in the State of Alabama Public Employees Deferred Compensation Plan filed a class action against Nationwide Life Insurance Company ("NL"), NRS, the Alabama State Employees Association ("ASEA"), and PEBCO, Inc., alleging breach of fiduciary duty, conversion, and breach of contract in the administration of the Plan. The parties filed a "Stipulation of Settlement," which the trial court approved in its final order entered in 2011. Pursuant to the settlement, NL and NRS paid $15.5 million to the participants in the Plan and $2.9 million in attorney fees to settle class claims against all defendants, including ASEA and PEBCO. In its findings of fact, the trial court stated: "ASEA is being permitted to retain more than $12 million in sponsorship payments that it allegedly received unlawfully, and ASEA is receiving full release from any liability." A day before the parties filed their "Stipulation of Settlement," Nationwide moved for an order barring ASEA and PEBCO from filing any indemnification claims. The trial court granted the order except for claims for attorney fees and costs. "[I]n light of Nationwide's substantial contributions to the settlement," the court wrote that it was "fair and reasonable that ASEA and PEBCO be barred from pursuing any claims against Nationwide for reimbursement, indemnification, or contribution other than claims for attorney fees and costs ...." A month before entering its final order in the class action, the trial court ordered severance of ASEA and PEBCO's claim for fees and directed the Circuit Court clerk to docket that claim as "a separate and independent action," with ASEA and PEBCO as plaintiffs and NL and NRS as defendants. The trial court found that the indemnification clause in the agreement required that NRS pay the fees and costs incurred by ASEA and PEBCO in defending the class action. Noting that NRS "has contended, and still contends, that indemnification is improper based on the language of the agreement and the attending facts," the trial court stated that it "has held hearings on that issue and by prior order has ruled that indemnification is appropriate. The instant action was filed to enforce indemnification." The court ordered NRS to pay PEBCO $863,988.50 in attorney fees and $15,297.54 in expenses for the class-action litigation, and $210,039 in attorney fees and $13,834.47 in expenses for litigating the severed cross-claim. NRS timely appealed that decision to the Supreme Court. The Supreme Court reversed and remanded: "[b]ecause NRS did not fail to perform those duties under the agreement that ultimately gave rise to the class action, it did not, as a matter of law, breach the indemnification clause in the agreement. . . . Alabama does not permit a party to seek indemnification for defending against its own allegedly wrongful acts." View "Nationwide Retirement Solutions, Inc. v. PEBCO,Inc. " on Justia Law

Appellants were injured in automobile accidents, but Geico, which insured both Appellants, denied coverage of their medical expenses. Appellants subsequently instituted a class action of behalf of themselves and others similarly situated, alleging that Geico violated Nev. Rev. Stat. 687B.145(3), which provides that a motor vehicle insurer must offer its insured the option of purchasing medical payment coverage, because, while Geico may have offered its insureds medical payment coverage, it did not obtain written rejections from them of the offered coverage. The district court granted Geico’s motion to dismiss. The Supreme Court affirmed, holding that section 687B.145(3) does not require a written rejection of medpay coverage, and therefore, Appellants’ claims failed. View "Wingco v. Gov't Employees Ins. Co." on Justia Law

Randall and Toni Faehnrich were Mississippi residents when they entered into an automobile insurance policy with Progressive Gulf Insurance Company that was negotiated, delivered, and renewed in Mississippi. The policy contained a choice-of-law provision providing that disputes about coverage shall be governed by Mississippi law. The couple subsequently divorced, and Toni moved to Nevada. While driving the Jeep that she and Randall co-owned, Toni was involved in an accident in which the couple’s two boys, who were Nevada residents when the accident occurred, suffered serious injuries. Randall presented a claim to Progressive for his sons’ injuries, but Progressive denied coverage, citing a household exclusion included in the policy that eliminated coverage for the boys’ claims against Toni. The district court held that the exclusion violated Nevada public policy, and, in accordance with Nevada choice of law rules, Mississippi law validating such exclusions did not apply. The Ninth Circuit Court of Appeals certified a question of Nevada public policy to the Supreme Court, which answered by holding that Nevada’s public policy did not preclude giving effect to the choice-of-law provision in the insurance contract, even when that effect would deny recovery to Nevada residents who were injured in Nevada. View "Progressive Gulf Ins. Co. v. Faehnrich" on Justia Law

An Insured obtained an insurance policy to reimburse its expenses in regaining control of an oil well in the event the well blew out. The well subsequently blew out and caught fire. The Insured represented to the Insurer that it owed 100 percent working interest in the well, andthe Insurer paid claims accordingly. After the Insurer discovered that the Insured might have possessed less than 100 percent working interest in the well, the Insurer filed a lawsuit for a return of its payments under breach of contract and equity claims. The court of appeals entered summary judgment in favor of the Insurer on its equity claims, but a different court of appeals overturned the prior rulings, concluding that the Insurer had no equitable right to reimbursement. The Supreme Court agreed with the court of appeals that the Insurer could not proceed on its equity claims but for different reasons, holding that because the insurance contract addressed the Insured’s conduct, the Insurer could not rely on its equity claims. Remanded to the court of appeals to address the contract claims. View "Gotham Ins. Co. v. Warren E&P, Inc." on Justia Law

Appellant was severely injured in an automobile collision in Kentucky while driving a truck for Miller Pipeline Corporation. Appellant received workers’ compensation benefits and settled with the tortfeasor and then sought to recover the remainder of his damages from underinsured motorist (UIM) coverage in Miller’s policy with Zurich American Insurance Company. Zurich denied coverage because Miller had allegedly rejected UIM coverage in Kentucky. The trial court ultimately granted summary judgment in favor of Zurich, concluding that the inclusion of UIM coverage in the policy was a mutual mistake by Miller and Zurich. The court of appeals affirmed. The Supreme Court reversed, holding that the doctrine of mutual mistake was erroneously applied by the courts below. Remanded for an order granting Appellant’s motion for partial summary judgment on the issue of UIM coverage. View "Nichols v. Zurich Am. Ins. Co." on Justia Law

Appellee AGCO Corporation (AGCO) manufactured and sold a self-propelled, agricultural spray applicator called the "RoGator." In 2005, AGCO began offering an Extended Protection Plan (EPP) to its RoGator customers. Appellant Lloyd’s Syndicate No. 5820 d/b/a Cassidy Davis provided the master policy of insurance for the EPP program, which covered AGCO for certain liability to customers who purchased the RoGator EPP. Glynn General Corporation administered the plans. Between 2005 and 2008, AGCO enrolled about 2,050 RoGator machines in the EPP program. In 2008, a number of customers presented claims under the EPP based on the failure of wheel motors on the RoGator. After it paid about 25 claims related to this failure, Cassidy Davis invoked the "Epidemic Failure Clause" of the master insurance policy and refused to pay for any more claims. AGCO then sued Cassidy Davis asserting various claims, namely claims for breach of contract and bad faith denial of insurance coverage. The trial court granted partial summary judgment to AGCO and denied partial summary judgment to Cassidy Davis on a breach of contract issue, holding that the EPP covered failures caused by design and engineering defects in the RoGators. The trial court also denied Cassidy Davis’s motion for summary judgment on the bad faith claim, rejecting the insurer’s argument that it was not obligated to indemnify AGCO until a court entered a judgment establishing AGCO’s legal liability to its customers. The Court of Appeals affirmed the trial court on both issues. Cassidy Davis appealed, arguing: (1) that the Court of Appeals erred in its interpretation of the coverage provision of the extended protection plan; and (2) the Court of Appeals erred in its interpretation of the indemnity provision of the master policy of liability insurance. Upon review of the matter, the Supreme Court concluded the Court of Appeals misinterpreted the relevant language of both contracts. Therefore the Court reversed on both issues. View "Lloyd's Syndicate No. 5820 v. AGCO Corporation" on Justia Law

Jonathan Quinn and his family were residential tenants of Barker & Little, Inc., when Quinn’s daughter was diagnosed with lead poisoning, Quinn sued Barker & Little for the injuries his daughter sustained from the high concentrations of lead in the leased premises. Barker & Little tendered the claim to Farmers Insurance Exchange (Farmers) and Truck Insurance Exchange (Truck). Farmers declined to defend Barker & Little under the applicable insurance policies. After a trial, the circuit court rendered judgment for Quinn. Quinn then asserted standing to bring all claims against Farmers and Truck that otherwise could have been brought by Barker & Little. Farmers and Truck moved for summary judgment on the basis of exclusions in the applicable policies. The circuit court granted the motion, concluding that Farmers had no duty to defend or indemnify Barker & Little in the underlying action. The Supreme Court reversed, holding that genuine issues of material fact existed that precluded summary judgment in this case. View "Quinn v. Farmers Ins. Exch." on Justia Law

An underinsured motorist collided with a city bus driven by Plaintiff. Plaintiff received a net workers’ compensation award of $71,958. Plaintiff also received $25,000 from the tortfeasor’s insurer. Plaintiff carried an underinsured (UM) policy issued by American Family Mutual Insurance Company that provided coverage up to $50,000 per person. Plaintiff submitted a UM claim to American Family, which denied coverage. Plaintiff filed a breach of contract action against American Family, asserting that he was entitled, under the terms of the policy, to $25,000 - the difference between his UM policy limit of $50,000 and the $25,000 he received from the tortfeasor’s insurer. The trial court granted summary judgment for American Family, concluding that the workers’ compensation benefits Plaintiff received operated as a setoff against the policy limit, thus reducing American Family’s liability to zero. The Supreme Court reversed, holding (1) the policy language unambiguously provided for a setoff against the policy limit; but (2) because this particular set-off would reduce the policy limit below the statutory minimum, Plaintiff was entitled to recover the remaining $25,000 from American Family. View "Justice v. Am. Family Ins. Co." on Justia Law

After Plaintiff was rear-ended by an underinsured motorist (UM), Plaintiff requested her $100,000 UM policy limits from State Farm. Plaintiff indicated that her damages were estimated to be $3.5 million because she suffered from reflex sympathetic dystrophy syndrome. State Farm responded that Plaintiff must schedule a compulsory medical examination (CME) pursuant to the terms of the policy. Plaintiff refused to attend a CME and instead filed suit against State Farm. The trial court entered judgment against State Farm for the UM policy limits. The court of appeal affirmed, holding (1) Plaintiff breached the contract when she failed to attend the CME; but (2) State Farm must plead and prove prejudice to avoid liability based on noncompliance with the CME clause, and State Farm failed to meet its burden in this case. The Supreme Court approved of the court of appeal’s decision, holding (1) the forfeiture of benefits under a UM policy will not automatically result upon an insured’s breach of a CME provision unless the insurer pleads and proves actual prejudice as an element of its affirmative defense; and (2) the undisputed facts demonstrate that State Farm was not prejudiced in this case. View "State Farm Mut. Auto. Ins. Co. v. Curran" on Justia Law