Justia Insurance Law Opinion SummariesArticles Posted in Delaware Supreme Court
USAA Casualty Ins. Co. v. Carr
USAA Casualty Insurance Company (“USAA”) sought a declaratory judgment that it was not obligated to defend, indemnify, or provide insurance coverage for claims made in two lawsuits against Trinity Carr, the daughter of a USAA homeowner’s-insurance policyholder. The plaintiffs in the underlying lawsuits sought money damages from Carr and others for personal injuries and wrongful death suffered by Amy Joyner-Francis in a physical altercation - described in both complaints as a “brutal, senseless, forseeable [sic] and preventable attack” - between Joyner-Francis and Carr and her friends. USAA argued at trial, as it did before the Delaware Supreme Court, that the incident - whether it be labeled an altercation, an attack, or otherwise - was not an “accident” and therefore not a covered occurrence under the policy and that, even if it were, the purported liability was excluded from coverage. The Superior Court disagreed and entered summary judgment in favor of Carr. The Delaware Supreme Court agreed with USAA’s interpretation of the relevant policy provisions and therefore reversed the Superior Court’s judgment. "To label an intentional assault, as the parties agree occurred here, an accident is to disregard the ordinary, everyday meaning of 'accident.' We thus hold that whether an assault is an 'accident' is determined by the intent of the insured, and not by the viewpoint of the victim. ... even though Carr may not have intended to cause [the victim's] death, she certainly intended to cause injury to her." View "USAA Casualty Ins. Co. v. Carr" on Justia Law
In Re Verizon Insurance Coverage Appeals
In 2006, Verizon divested its print and electronic directories business to its stockholders in a tax-free “spin-off” transaction. As part of the transaction, Verizon created Idearc, Inc. and appointed John Diercksen, a Verizon executive, to serve as Idearc’s sole director. Verizon then distributed Idearc common stock to Verizon shareholders. Idearc launched as a separate business with $9.1 billion in debt. In connection with the Idearc spinoff, Verizon and Idearc purchased primary and excess Executive and Organizational Liability Policies (“Idearc Runoff Policies"). The Idearc Runoff Policies covered certain claims made against defined insureds during the six-year policy period that exceeded a $7.5 million retention. Relevant here, Endorsement No. 7 to the policies stated that “[i]n connection with any Securities Claim,” and “for any Loss . . . incurred while a Securities Claim is jointly made and maintained against both the Organization and one or more Insured Person(s), this policy shall pay 100% of such Loss up to the Limit of Liability of the policy.” “Securities Claim” was defined in pertinent part as a “Claim” against an “Insured Person” “[a]lleging a violation of any federal, state, local or foreign regulation, rule or statute regulating securities (including, but not limited to, the purchase or sale or offer or solicitation of an offer to purchase or sell securities).” Under the policy, Verizon could recover its “Defense Costs” when a Securities Claim was brought against it and covered directors and officers, and Verizon indemnified those directors and officers. Idearc operated as an independent, publicly traded company until it filed for bankruptcy in 2009; a litigation trust was set up to pursue claims against Verizon on behalf of creditors. Primary amongst the allegations was Dickersen and Verizon saddled Idearc with excessive debt at the time of the spin-off. This appeal turned on the definition of a "Securities Claim;" the Superior Court found the definition ambiguous. Using extrinsic evidence, the court held that fiduciary duty, unlawful dividend, and fraudulent transfer claims brought by a bankruptcy trustee against Verizon Communications Inc. and others were Securities Claims covered under the policy. The Delaware Supreme Court disagreed, finding that, applying the plain meaning of the Securities Claim definition in the policy, the litigation trustee’s complaint did not allege any violations of regulations, rules, or statutes regulating securities. Thus, the Superior Court’s grant of summary judgment to Verizon was reversed and that court directed to enter summary judgment in favor of the Insurers. View "In Re Verizon Insurance Coverage Appeals" on Justia Law
Henry v. Cincinnati Insurance Co.
Two cases consolidated for review by the Delaware Supreme Court involved automobile accidents. John Henry and Charles Fritz sustained injuries in accidents while operating employer-owned vehicles during the course of their employment. In both cases, the accidents were allegedly caused by a third-party tortfeasor. Both employees received workers’ compensation from their respective employers’ insurance carriers. In each case, the vehicle was covered by an automobile liability insurance policy issued to the employer by Cincinnati Insurance Company. The superior court issued an order in Henry’s case first, finding the exclusive-remedy provision in the Delaware Workers’ Compensation Act in effect at the time of his accident precluded Henry from receiving underinsured motorist benefits under the Cincinnati policy. Following that decision, the Fritz court granted Cincinnati’s motion for summary judgment on the same ground. Henry and Fritz argued on appeal to the Delaware Supreme Court that the superior court erred in finding the Act’s exclusivity provision precluded them from receiving underinsured motorist benefits through the automobile liability policies their respective employers purchased from Cincinnati. The Supreme Court agreed both trial courts erred in finding the Act’s exclusivity provision prevented underinsured motorist benefits. The Court reversed and remanded for further proceedings. View "Henry v. Cincinnati Insurance Co." on Justia Law
Homeland Insurance v. Corvel Corp
Homeland Insurance Company of New York appealed a superior court judgment entered against it in the amount of $13.5 million plus pre-judgment interest. The litigation that led to the judgment was initiated by CorVel Corporation, a Delaware company that operated a national Preferred Provider Organization (PPO) network. Homeland issued CorVel a claims-made errors and omissions liability policy with limits of $10 million and a policy period of October 31, 2005 to October 31, 2006. Thereafter, Homeland issued similar renewal policies. CorVel’s PPO network included agreements with medical providers in Louisiana. In late 2004 and early 2005, Louisiana medical providers began filing claims asserting that CorVel had improperly discounted medical payments without providing proper notice in violation of a Louisiana PPO statute. Litigation in Louisiana ultimately involved millions of dollars of claims against CorVel. In 2011, CorVel entered into a settlement of the litigation. As part of the settlement consideration, CorVel paid $9 million. In 2015, CorVel filed its complaint in this case, alleging that Homeland owed it damages and penalties under another Louisiana statute, La. R.S. 22:1973. CorVel alleged that Homeland knowingly misrepresented facts or policy provisions in a complaint that Homeland filed in a declaratory judgment action in Delaware in 2011. The alleged misrepresentation was an averment that CorVel had not timely reported the PPO claims in accordance with the policy’s requirements. The damages CorVel sought were the $9 million that it paid to settle the Louisiana litigation, penalties, attorneys’ fees, and pre-judgment interest. The Delaware superior court agreed with CorVel’s claim and awarded it $9 million in damages, $4.5 million in penalties, and pre-judgment interest. Homeland argued on appeal: (1) the allegation in its declaratory judgment complaint was a statement of a coverage position that could not give rise to a finding of bad faith under either Delaware or Louisiana law; (2) no causal connection existed between the allegation in the declaratory judgment complaint and CorVel’s decision to settle the PPO claims; and (3) the applicable statute of limitations barred CorVel’s claim. The Delaware Supreme Court concluded that the statute of limitations did bar CorVel’s claim and that the superior court erred by ruling that it did not. Because the statute of limitations barred CorVel’s claim, the Court did not address Homeland’s first two arguments. View "Homeland Insurance v. Corvel Corp" on Justia Law
Certain Underwriters at Lloyds, London, et al. v. Chemtura Cororporation
At the heart of this appeal was a coverage dispute between a chemical company and a group of insurers over whether the insurers had to compensate the company for expenses and fines associated with environmental claims against the company in Ohio and Arkansas. The policies in question were part of a comprehensive insurance program that covered the chemical company‘s operations around the world. The chemical company and the insurers disputed what law applied to their contract law dispute regarding the application of the insurance policy. The Superior Court held that the insurance policy was not, in fact, to be interpreted by a consistent law, but instead that the underlying contract law of the states where the environmental claims arose would govern on a claim-by-claim basis. The Delaware Supreme Court agreed with the insurer that the Superior Court erred in its application of the relevant choice-of-law principles, and, instead, applied a consistent choice of law principle. New York was the principal place of business for the chemical company‘s predecessors at the beginning of the coverage, and there were a number of contacts with New York over time after the beginning of the coverage, the most significant relationship among the parties for these contracts was New York. Thus, New York law should have been applied to resolve this contract dispute. The Superior Court was therefore reversed and the case remanded for further proceedings. View "Certain Underwriters at Lloyds, London, et al. v. Chemtura Cororporation" on Justia Law
City of Wilmington v. Nationwide Insurance Co.
This dispute centered on subrogation claims Victoria Insurance Company and Nationwide Insurance Company asserted against the City of Wilmington. This appeal presented a question of first impression before the Supreme Court: whether, under Delaware's motor vehicle insurance statute governing subrogation disputes among insurers and self-insurers, the losing party may appeal de novo to the Superior Court from an adverse arbitration award. In considering consolidated motions to dismiss two such appeals filed by the City against the insurers, the Superior Court determined that 21 Del. C. 2118(g)(3), which mandated arbitration for subrogation disputes arising between insurers and self-insurers, did not provide a right to appeal. Because the statute unambiguously provided for appeals from mandatory arbitration of subrogation disputes between insurers and self-insurers, the Supreme Court reversed. View "City of Wilmington v. Nationwide Insurance Co." on Justia Law
Roos Foods v. Guardado
Magdalena Guardado, an undocumented worker, was employed as a machine manager for Roos Foods when she was involved in a work-related accident. She injured her left wrist and thereafter received total disability benefits. The employer petitioned the Industrial Accident Board (“the Board”) to terminate those benefits on the ground that the worker was no longer disabled and could return to work. The Board found: (1) the employer met its initial burden of showing that the worker was no longer totally disabled; (2) that the worker was a prima facie displaced worker based solely on her status as an undocumented worker; and (3) the employer had failed to meet its burden of showing regular employment opportunities within the worker’s capabilities. Accordingly, it denied the employer’s petition. The questions this case presented for the Delaware Supreme Court's review were: (1) whether an injured worker’s immigration status alone rendered her a prima facie displaced worker; and (2) whether the Board properly found that the employer failed to meet its burden of showing regular employment opportunities within the worker’s capabilities because its evidence failed to take into account the worker’s undocumented status. The Court concluded that an undocumented worker’s immigration status was not relevant to determining whether she was a prima facie displaced worker, but it was a relevant factor to be considered in determining whether she is an actually displaced worker. The Court also concluded that the Board correctly rejected the employer’s evidence of regular employment opportunities for the worker because that evidence failed to consider her undocumented status. View "Roos Foods v. Guardado" on Justia Law
Greenville Country Club (Guard Insurance) v. Greenville Country Club (Technology Insurance)
Appellant Greenville Country Club, through its workers’ compensation carrier, Guard Insurance (“Guard”), appealed a Superior Court Order affirming a decision of the Industrial Accident Board (the “Board”). While working for Greenville Country Club, Jordan Rash suffered injuries to his lumbar spine in two separately compensable work accidents. The first accident occurred in 2009 while the country club was insured by Guard Insurance Group. The second accident occurred in 2012 while the country club was insured by Technology Insurance (“Technology”). In 2014, Rash filed two Petitions to Determine Additional Compensation, one against Guard and one against Technology. After a hearing, the Board determined that the condition at issue was a recurrence of the 2009 work injury and not an aggravation of the 2012 work injury, and concluded that Guard was therefore wholly liable for the additional compensation to Rash. Guard appealed, arguing: (1) the Board failed to properly apply the rule for determining successive carrier liability; and (2) there was no substantial evidence to support the Board’s finding that Rash fully recovered from the 2012 accident or that his ongoing condition was solely caused by the 2009 work accident. After review, the Delaware Supreme Court found no error in the Board’s decision, and that the decision was supported by substantial evidence. Accordingly, the Court affirmed the Board's decision. View "Greenville Country Club (Guard Insurance) v. Greenville Country Club (Technology Insurance)" on Justia Law
In Re Viking Pump, Inc. and Warren Pumps, LLC Insurance Appeals
Viking Pump, Inc. and Warren Pumps, LLC sought to recover under insurance policies issued to a third company, Houdaille Industries, Inc. In the 1980's, Viking and Warren acquired pump manufacturing businesses from Houdaille. As a result, Viking and Warren were confronted with potential liability flowing from personal injury claims made by plaintiffs alleging damages in connection with asbestos exposure claims dating back to when the pump manufacturing businesses were owned by Houdaille. Houdaille had purchased occurrence-based primary and umbrella insurance from Liberty Mutual Insurance Company. Above the Liberty umbrella layer, Houdaille purchased layers of excess insurance. In total, Houdaille purchased 35 excess policies through 20 different carriers (the "Excess Policies"). Viking and Warren sought to fund the liabilities arising from the Houdaille-Era Claims using the comprehensive insurance program originally purchased by Houdaille. The insurance companies that issued the Excess Policies (the "Excess Insurers") contended that Viking and Warren were not entitled to use the Excess Policies to respond to the claims. The Excess Insurers also disputed the extent of any coverage available, particularly with respect to defense costs. The Supreme Court held, after careful consideration of the policies at issue: (1) the Superior Court correctly held that the 1980-1985 Liberty Primary Policies were exhausted; (2) the Superior Court held that 33 of the Excess Policies at issue in this appeal provided coverage to Viking and Warren for their defense costs, with many payments contingent on insurer consent; (3) the Court of Chancery correctly held that there were valid assignments of insurance rights to Warren and Viking under the Excess Policies; (4) the Superior Court was affirmed in part and reversed in part with respect to its determination of the Excess Policies' coverage for defense costs; and (5) the Superior Court erred with respect to the trigger of coverage under the Excess Policies. View "In Re Viking Pump, Inc. and Warren Pumps, LLC Insurance Appeals" on Justia Law
Enrique v. State Farm Mutual Automobile Insurance Co.
Joann Enrique appealed the Superior Court’s grant of summary judgment for State Farm Mutual Automobile Insurance Company in an action she brought for bad faith denial of uninsured motorist (“UM”) coverage stemming from a 2005 car accident. In 2005, an uninsured driver crashed into Enrique’s car by improperly turning into her lane. Enrique suffered a fractured rib, trauma to the right knee requiring arthroscopic surgery, trauma to the left knee for which she was a candidate for arthroscopic surgery, abrasions, and soft tissue injuries. Throughout the settlement negotiations and the processing of Enrique’s claim, State Farm personnel expressed concerns about whether Enrique’s knee injuries were caused by pre-existing conditions. The record was unclear as to why there were large lapses in time during the settlement negotiations. While the parties were waiting for the Independent Medical Examiner report, in July 2008, Enrique filed suit against State Farm, seeking benefits up to the $100,000 policy limits, as well as punitive damages against State Farm for bad faith by refusing to pay up to those limits. In support of the bad faith claim, Enrique alleged that State Farm refused to compensate her up to the UM policy limits without any reasonable justification. In October 2008, the Superior Court severed and stayed the bad faith claim pending resolution of the UM damages claim. The parties then stipulated to a partial dismissal of the bad faith claim without prejudice. Due to the continuing impasse, in September 2008 State Farm decided to advance Enrique $25,000, as the parties both agreed the claim was worth at least that much. As trial approached, State Farm offered Enrique another $20,000 to settle the case, for a total of $45,000. Enrique also revised her demand, and as of January 2010, was willing to settle for an additional $65,000, representing a $90,000 demand. The parties could not bridge the gap, and the damages case went to trial in February 2010. The jury returned a $260,000 verdict. State Farm did not seek remittitur, but did appeal on an evidentiary issue. The Delaware Supreme Court affirmed, and State Farm paid the remaining $75,000 of their policy limits, costs and interests. Enrique then pursued her bad faith claim against State Farm, claiming as damages the unpaid $160,000 portion of the jury verdict, prejudgment interest, and punitive damages. The Superior Court granted State Farm summary judgment because Enrique failed to make a prima facie showing of bad faith. The court based its decision on causation issues arising from Enrique’s pre-existing knee problems (which gave State Farm a reasonable basis for its actions), State Farm’s multiple valuations of Enrique’s claim that put it below policy limits, and her failure to offer facts showing State Farm exhibited reckless indifference in handling her claim. Finding no reversible error as to the Superior Court's grant of summary judgment, the Supreme Court affirmed. View "Enrique v. State Farm Mutual Automobile Insurance Co." on Justia Law