Justia Insurance Law Opinion Summaries

"For more than one hundred and thirty years," the Mississippi Supreme Court has held that an insurance company may void a policy when the insured made material misrepresentations during the application process. While driving his mother’s 2003 Chevy Silverado in Rankin County, sixteen-year-old William Busby crashed into Kenneth Tarlton’s car, which in turn collided with a car driven by Katrice Jones-Smith. When William’s mother, Michelle, applied to Safeway Insurance Company for an insurance policy on the Silverado, the application required her to warrant that she had provided the names of all regular frequent drivers of the covered vehicles, as well as all residents of her household fourteen years old or older. Michelle failed to disclose that fifteen-year-old William resided in her home, and Safeway issued her a policy on the Silverado at a premium that was lower than the premium would have been had Safeway known about William. When Safeway learned that Michelle made a material misrepresentation when she applied for the motor-vehicle-liability policy at issue here, it had the policy declared void. The Supreme Court found no reason to disturb the trial court's grant of summary judgment in this case in favor of Safeway, so it affirmed. View "Jones-Smith v. Safeway Insurance Company" on Justia Law

A Union Pacific Railroad train t-boned an SRM dump truck as the truck crossed the tracks in the path of the train. The collision killed the truck driver and derailed the train causing extensive damage to the train’s engines, its cars, and three of its workers. The three injured train workers sued Union Pacific, SRM, and SRM’s primary auto liability insurer, Bituminous Insurance Company, in state court. Union Pacific cross-claimed against SRM and SRM counter cross-claimed. As SRM’s excess liability insurer, Great American Insurance Company, received notice of the claims and monitored the case for potential exposure under its umbrella policy. Under Oklahoma law, a primary insurer owes its insured a duty to initiate settlement negotiations with a third-party claimant if the insured’s liability to the claimant is clear and the insured likely will be held liable for more than its insurance will cover. Here, SRM sought to extend this obligation Great American. Specifically, SRM claimed that Great American breached its insurance policy and duty of good faith and fair dealing by not proactively investigating claims against SRM and by refusing to tender its policy limits to spur settlement negotiations. The district court granted Great American’s motion for summary judgment on SRM’s claims and denied SRM’s request to reconsider. The Tenth Circuit found no reversible error in the district court judgment and affirmed. View "SRM v. Great American Insurance" on Justia Law

In 1994, defendant Felicia Alford, then a minor, settled a personal injury claim against certain insureds of defendant State Farm Fire. Under the settlement, State Farm Life was to deliver an annuity providing for guaranteed payments. In July 2012, Alford entered into a contract with RSL Funding, LLC under which she received $30,000 in exchange for a $50,000 portion of the payment due on August 11, 2016. RSL assigned its payment to Extended Holdings, Ltd. (EHL). The trial court approved the transfer, and State Farm did not contest the transfer. A year later, Alford entered into a second contract with RSL in which Alford agreed to assign to RSL $25,000 of the $100,000 payment due on August 11, 2016, and $25,000 of the payment of $151,558.80 due on August 11, 2021, in exchange for a current payment of $22,500. RSL filed a petition for approval of the transfer. State Farm filed an opposition to the petition, asserting, among other grounds, that: (1) the proposed transfer would violate a California Ins. Code, sec. 10139.5, subd. (e)(3)), which provided that an annuity issuer and settlement obligor may not be required to divide payments; and (2) the proposed transfer would materially increase State Farm’s burdens and risks. The trial court approved the transfer petition, and State Farm appealed. After review, the Court of Appeal concluded that the trial court’s order indeed violated section 10139.5(e), and State Farm did not forfeit its right to oppose that order. The Court reversed the trial court and remanded for further proceedings. View "RSL Funding v. Alford" on Justia Law

Homeowners hired Benchmark Construction Services, Inc. to renovate their Massachusetts home. The homeowners hired an architect to design the renovation plans, and the architect hired a decorative painter to apply decorative painting to the interior walls. The painter's employee, Meghan Bailey, was assigned to the task. While Bailey was applying the decorative paint, she fell from a ladder and was injured. Bailey sued Benchmark, alleging negligence. Benchmark sought a defense from its insurer, United States Liability Insurance Company’s (ULSIC). USLIC determined that Bailey’s claims were not covered under Benchmark’s insurance policy and, therefore, USLIC had no duty to defend or indemnify Benchmark against those claims. USLIC then filed a declaratory judgment action to establish that the insurance policy did not provide coverage for Bailey’s claims and that, consequently, USLIC had no duty to defend or indemnify Benchmark against those claims. The district court entered judgment for USLIC, holding that the policy excluded Bailey’s claims. The First Circuit reversed, holding that Bailey’s claims fell within the bounds of insurance coverage, and therefore, USLIC had a duty to defend and indemnify Benchmark in the underlying negligence suit. View "U.S. Liability Ins. Co. v. Benchmark Constr. Servs., Inc." on Justia Law

Vandenberg, attending a cruise on a chartered yacht, was injured when he fell from the upper deck because the bench on which he was sitting tipped over, while the boat was anchored in Lake Michigan. The bench was not secured to the deck, nor did the upper deck have a railing. The fall left Vandenberg paralyzed from the chest down. The yacht was owned by a closely held corporation. Vandenberg alleged that Rose Paving, a company run by Rose, one of three owners of the corporation, was a booking agent that maintained a marketing relationship for the chartering of the yacht. He filed suit, alleging negligence, and settled with the defendants. The defendants agreed to pay $25 million through the assignment of their claims against their insurers. Westfield was the insurance provider for defendant Rose Paving. Westfield disputed that its insurance policies with Rose Paving covered the yacht accident and sought a declaratory judgment. The district court granted Westfield’s motion for judgment on the pleadings. The Seventh Circuit affirmed, finding that injuries came under the policies’ watercraft exclusion. View "Westfield Ins. Co. v. Vandenberg" on Justia Law

Dugan was involved in an automobile accident with a vehicle owned by Rainey and claimed more than $200,000 in damages. Rainey’s insurer, American Family, offered $100,000 (the limit under Rainey’s policy). The Dugans accepted, then sought recovery from Nationwide pursuant to the underinsured motorist provisions of their policy, which insured four vehicles and provided underinsured motorist coverage limits of $100,000 per person and $300,000 per accident for each of the four covered vehicles. The policy declarations page lists each of the vehicles separately with the separate underinsured motorist limit applicable to each vehicle and the separate premium charged for each vehicle. The Dugans made a demand of $400,000, the aggregate limit of the four underinsured motorist coverage limits. Nationwide denied payment, stating that express policy language limited their recovery to $100,000, less the $100,000 American Family payment. Nationwide sought a declaratory judgment and the Dugans counterclaimed, claiming that, because the policy’s language was ambiguous, they were entitled to aggregate, or “stack,” the underinsured motorist limits applicable to each vehicle, subject to the $100,000 setoff. The Seventh Circuit affirmed that, even if the policy permitted stacking, Illinois law entitles Nationwide to apply its setoff four times, once against each “separate, stackable policy” limit, thereby exhausting Nationwide’s underinsured motorist coverage View "Nationwide Agribusiness Ins. v. Dugan" on Justia Law

The Cleveland Indians hired National to produce Kids Day events at baseball games, with attractions, including an inflatable bouncy castle and inflatable slide. The contract required National to secure a five-million-dollar comprehensive liability policy. National submitted an Application to Doodson Insurance Brokerage, stating on the application that the Kids Day events would include inflatable attractions. Doodson arranged for National to obtain a policy, but it excluded from coverage injuries caused by inflatable slides. Johnson admiring a display at a 2010 Indians game, was crushed by an inflatable slide that collapsed onto him. He died of his injuries. Johnson’s estate won a $3.5 million state court default judgment against National. The Sixth Circuit held that the insurance policy did not cover Johnson’s injuries. National and the Indians sued Doodson and obtained settlements. Johnson’s estate, which has not collected on the default judgment against National, sued Doodson, alleging negligence and breach of contract. The Sixth Circuit affirmed dismissal. Under Michigan law, the broker’s contractual duty to its client to protect the client from negligence suits, without more, does not create a tort duty to an injured party who brings such suits and Johnson was neither a party to nor an intended third-party beneficiary of the contract between the broker and National. View "Johnson v. Doodson Ins. Brokerage" on Justia Law

Georgia citizen George Skipper was involved in a motor vehicle accident with a logging truck that was driven by Harold Moors and owned by Specialty Logging, LLC. Specialty had a commercial automobile insurance policy with a $1,000,000 per occurrence limit, which was issued by ACE Property and Casualty Insurance Company (ACE). Following the accident, Skipper retained an attorney who wrote a demand letter to ACE offering to settle the case for the limits of the Policy. ACE retained two lawyers from Atlanta, Brantley Rowlen and Erin Coia, to represent Specialty and Moors. Specialty and Moors offered Skipper $50,000. Not satisfied with that offer, Skipper and his wife filed a lawsuit in the Allendale County Court of Common Pleas against Specialty and Moors. Unbeknownst to ACE or its attorneys, the Skippers entered into a settlement with Specialty and Moors, agreeing to execute a Confession of Judgment for $4,500,000, in which they admitted liability for the Skippers' injuries and losses. The Specialty Parties also agreed to pursue a legal malpractice claim against ACE and its attorneys Rowlen and Coia, and assigned the predominant interest in that claim to the Skippers.1 In exchange for the Specialty Parties' admission of liability, the Skippers agreed not to execute the judgment as long as the Specialty Parties cooperated in the legal malpractice litigation against Defendants. Armed with the assignment, the Skippers and Specialty Parties filed a legal malpractice action against the attorneys, also with the Allendale County court. The case was removed to the United States District Court for the District of South Carolina. In federal court, ACE and its attorneys argued that the assignment of the malpractice claim was invalid and that the Skippers had no valid claims to assert. Because the question of whether a legal malpractice claim could be assigned between adversaries in litigation in which the alleged malpractice arose was a novel question in South Carolina, the South Carolina Supreme Court accepted a certified question South Carolina law from the federal district court. After review, the South Carolina Court held that in South Carolina, the assignment of a legal malpractice claim between adversaries in litigation in which the alleged malpractice arose was prohibited. View "Skipper v. ACE Property" on Justia Law

While in the course and scope of his employment with Employer, Plaintiff suffered serious injuries. Plaintiff recovered workers’ compensation insurance benefits in the amount of $207,147. Plaintiff subsequently brought this action against Employer, alleging that Employer was an uninsured employer under the Workers’ Compensation Act at the time of the accident. The district court granted summary judgment in favor of Employer, concluding that Employer was an insured employer under the Act and was therefore entitled to tort immunity pursuant to Mont. Code Ann. 39-71-411. The Supreme Court affirmed, holding that the district court did not err in concluding that Employer was an insured employer under the Act and therefore was entitled to tort immunity. View "Stokes v. Golden Triangle, Inc." on Justia Law

This case involved a lease agreement between Greyhound Lines, Inc., the lessee, and Utah Transit Authority (UTA), the lessor, for a section of UTA’s intermodal transportation facility (intermodal hub). The insurance procurement provision of the lease agreement required Greyhound to purchase commercial general liability insurance covering UTA. At issue was whether the provision required that this insurance cover UTA’s negligent acts. This litigation resulted from a Greyhound passenger’s fall from a concrete pedestrian ramp during a layover at the intermodal hub. UTA admitted negligence in not installing a handrail on the pedestrian ramp. UTA settled the injured passenger’s claim and requested that Greyhound reimburse it for the cost of the claim under the lease agreement. Greyhound refused. The district court entered judgment against Greyhound. The Supreme Court affirmed, holding (1) under Utah law, an agreement to procure insurance for the benefit of another is not subject to strict construction; (2) the district court did not err when it concluded that the injured passenger’s claim triggered Greyhound’s duty to procure insurance that covered UTA’s negligent acts; and (3) the district court did not abuse its discretion in awarding UTA’s attorney fees. View "Utah Transit Auth. v. Greyhound Lines, Inc." on Justia Law