Justia Insurance Law Opinion Summaries

When an insurance company authorized to transact business in Illinois becomes insolvent and unable to pay claims, the Illinois Insurance Guaranty Fund pays those claims after an order is entered liquidating the company, 215 ILCS 5/532. A cap on individual claims is inapplicable to workers compensation claims under the Workers’ Compensation Act, 820 ILCS 305/1. The plaintiff is the successor to Wells, a manufacturer. A Wells employee was seriously injured on the job in 1985, and, in 1993, the Industrial Commission ordered weekly lifetime benefits for total, permanent disability. Wells began to make the payments directly to the employee. Wells was self-insured, but had excess insurance from Home Insurance. After Wells’ payments to the injured employee reached $200,000, Home paid benefits until Home became insolvent in 2003 and was liquidated. The Illinois Insurance Guaranty Fund took over Home’s obligations, but stopped paying the employee in 2005, arguing that payments to an excess, rather than a primary, insurer were not payments of “workers’ compensation claims” exempted from the cap. Wells continued paying the employee and sought a declaration that the Fund’s payments should continue. The circuit court agreed with Wells, awarding summary judgment, and the appellate court affirmed. The Illinois Supreme Court affirmed, rejecting the distinctions made by the Fund between excess and primary coverage and between payments made directly or indirectly to employees. View "Skokie Castings, Inc. v. IL Ins. Guar. Fund" on Justia Law

Plaintiff, the owner of an apartment building, complained when Armory Plaza, the owner of the lot next to Plaintiff's building, began excavating the lot to make way for a new building. The excavation purportedly caused cracks in the walls and foundations of Plaintiff's building. After Plaintiff's insurer (Defendant) rejected Plaintiff's claims under its policy, Plaintiff brought suit. The U.S. district court granted summary judgment for Defendant, holding that the alleged conduct of Armory and its contractors was not "vandalism" within the meaning of the policy. On appeal, the Second Circuit Court of Appeals certified two questions of law to the New York Court of Appeals, which answered by holding (1) for purposes of construing a property insurance policy covering acts of vandalism, malicious damage may be found to result from an act not directed specifically at the covered property; and (2) the state of mind required to find malicious damage is a conscious and deliberate disregard of the interests of others that the conduct in question may be called willful or wanton. View "Georgitsi Realty, LLC v. Penn-Star Ins. Co." on Justia Law

Appellants purchased property that was subject to a Master Plan that restricted the use and development of the property. Appellants obtained title insurance from Insurer, but the policy did not mention the Master Plan. Appellants only later learned of the Master Plan when they were informed they were in violation of the Master Plan and faced substantial penalties if they failed to comply with the Plan. Appellants sued Insurer, claiming a breach of the terms of the title insurance policy, negligence, and bad faith. The district court granted summary judgment in favor of Insurer on all claims brought in Appellants' complaint. The Supreme Court affirmed, holding that the district court did not err in entering judgment in favor of Insurer. View "Sonnett v. First Am. Title Ins. Co." on Justia Law

YA, a nonprofit corporation serving at-risk youth, transported young people to an event using vans that it owned. After the event four people were unable to board because a van was full. A YA employee requested that 16-year-old Lee, a YA participant who had driven to the event in a separate vehicle, drive them home. Lee agreed. Lee did not possess a valid driver’s license and the car that he was driving had been stolen during a carjacking. Police saw Lee driving erratically, ran a license plate check, and gave chase. Lee lost control and hit a tree. Lee survived, but all four passengers were killed. Their estates filed suit. YA requested defense and indemnification under policies issued by Indemnity: a commercial general liability policy with a $1 million limit and a commercial excess liability policy with a $2 million limit. Indemnity provided a defense, but disputed coverage and sought a federal declaratory judgment. YA counterclaimed that Indemnity breached its duty of good faith and violated the Kentucky Unfair Claims Settlement Practices Act, by misrepresenting coverage and failing to affirm liability within a reasonable time. The district court held that Indemnity was obligated under the CGL policy but not under the excess policy. The state court action settled with Indemnity’s payment of the $1 million limit of the CGL policy, plus $800,000 of the excess policy. The federal court dismissed the bad-faith counterclaims, reasoning that, as a matter of law, Indemnity’s coverage position had not been taken in bad faith. The Sixth Circuit affirmed. View "Philadelphia Indem. Ins. Co. v. Youth Alive, Inc." on Justia Law

Plaintiffs Kylie and Michael D. Shuba appealed the Superior Court's denial of their cross-motion for summary judgment and its grant of summary judgment in favor of Defendant United Services Automobile Association's ("USAA") motion for summary judgment. The Shuba's sought to be covered persons for the wrongful death of their mother under an insurance policy issued by USAA and held by the Shubas' step-mother. It was undisputed that their mother was not a named insured under the policy or a resident of the stepmother's household as the Shubas were. The Shubas claimed the trial court erred in finding the Shubas could not recover uninsured motorist benefits under the USAA policy. In making their claim, the Shubas asked the Supreme Court to overrule two Superior Court cases, "Temple v. Travelers Indemnity Co" and "Adams-Baez v. General Accident Co.," the latter of which the Supreme Court affirmed based on the trial court opinion. The Supreme Court declined to overrule those cases as precedent, and affirmed the Superior Court's judgment. View "Shuba v. United Services Automobile Association" on Justia Law

Safeway Insurance Company of Alabama, Inc. petitioned the Supreme Court for a writ of mandamus to direct the Circuit Court to grant its Rule 12(b)(1), Ala. R. Civ. P., motion to dismiss a bad-faith claim against it for lack of subject-matter jurisdiction. Richard Kimbrough alleged that a deer ran across the road causing a truck traveling in the opposite direction to swerve into the Kimbrough's lane. According to Kimbrough, the truck struck his vehicle and ran him off the road and into a creek bed. The driver of the truck allegedly fled. Kimbrough broke his right femur, right hand, and nose. Kimbrough sued Safeway, asserting claims of breach of contract and bad faith, alleging that Safeway, without justification, had intentionally refused to pay Kimbrough's claim. Safeway moved to dismiss the case for lack of subject-matter jurisdiction, arguing that the claim for uninsured-motorist benefits was not ripe for adjudication until liability and damages were established. The trial court denied the motion to dismiss, as well as Safeway's subsequent motion to reconsider. Upon careful consideration, the Supreme Court concluded Safeway did not clearly demonstrate this case was not ripe or that the trial court lacked subject-matter jurisdiction. Therefore, Safeway did not have a clear legal right to mandamus relief. View "Kimbrough v. Safeway Insurance Company of Alabama, Inc." on Justia Law

At issue in this case was what constituted a "proof of loss" in a claim for UIM benefits and what sufficed to trigger the safe harbor provision. The insured provided notice of an injury automobile accident to her insurer, but did not submit a UIM benefits claim at that time. Nearly two years later, the insurer learned of the possible UIM claim. The insurer agreed in writing that it accepted coverage, that the only remaining issues were liability and damages, and that it was willing to submit to binding arbitration. After recovering on her UIM claim, the insured asked for attorney fees. The insurer claimed the benefit of the safe harbor provision of ORS 19 742.061(3). The Court of Appeals concluded that the insurer did not send its safe harbor letter within six months of the insured's "proof of loss." According to the Court of Appeals, the "proof of loss" was the initial report of injury two years earlier. Upon review, the Supreme Court concluded that the initial report of injury did not provide sufficient information to constitute a proof of loss for a UIM claim and that the insurer's safe harbor letter was sufficient to trigger the statutory exception to an attorney fee award. View "Zimmerman v. Allstate Property and Casualty Ins." on Justia Law

First American Cash Advance, owned by Valued Services, L.L.C. was robbed twice. The first robbery occurred on New Year's Eve 2008, and the second was in the spring of 2009. Respondent-Claimant Leslie Tregenza was the branch manager and the only employee on the premises during both robberies. A man wearing something covering his face and a ball cap committed the first robbery; in the second, two men stole all of the cash on hand in the office. These men did not have guns. However, one of the robbers threw an empty plastic cash drawer at respondent's head. She did not return to work for her employer after the second robbery. Claimant filed her Form 3 in October 2009, alleging an accidental injury arising out of and in the course of her employment. She alleged she sustained an injury to her head with psychological overlay in the form of post-traumatic stress disorder (PTSD) and PTSD headaches. She sought permanent total disability (PTD) as a result of her injuries, claiming she was unable to work or to be out in public. The trial the court concluded respondent was permanently totally disabled and awarded her continuing medical maintenance in the nature of four annual office visits and prescription medication. The employer appealed the trial court's holding and the appellate court reversed. After its review, the Supreme Court concluded the Workers' Compensation Court received competent evidence that Claimant was permanently totally disabled. The Court vacated the appellate court's decision and affirmed the order of the lower court. View "Valued Services, LLC v. Tregenza" on Justia Law

Defendants Leisure Life Industries a/k/a Leisure Life Industries, Inc. a/k/a Leisure Life Industries, LLC (Leisure Life) and Knothe Apparel Group, Inc. appealed a superior court order that denied their motion for summary judgment and granted the cross-motion for entry of final judgment on the issue of indemnity filed by plaintiffs, JoAnne Gray, Jeffrey Gray, Jeffrey J. Gray, and Jonathan Gray. The defendants also appealed the trial court’s order denying their motion for summary judgment on successor liability. Jeffrey Gray purchased a robe from The Orvis Company (Orvis) for his wife, JoAnne. Orvis purchased the robe from the manufacturer, Leisure Life. Mrs. Gray was wearing the robe when she added a piece of firewood to her wood stove and the robe caught fire. As result, she was severely burned and suffered extensive injuries. Plaintiffs sued the defendants and Orvis along with other parties involved either in the design and distribution of the robe or the manufacture and sale of the wood stove. Leisure Life argued that it was not liable for the plaintiffs" injuries because it was no longer the same entity that manufactured the robe, and the circumstances of the purchase did not support holding Knothe liable as a successor. The trial court denied the motion. Orvis claimed that it "had no involvement in the design and manufacturing of the robe" and that it "was simply a 'pass-through' entity." As a result, Orvis sought indemnity or contribution from the defendants for any damages it ultimately owed to the plaintiffs, including the amount of any judgment against, or settlement by, Orvis. Immediately prior to the scheduled start of the trial, all parties except Leisure Life settled with the plaintiffs. The parties involved in the sale and manufacture of the wood stove settled the claims against them for five million dollars. Orvis settled the claims against it for one million dollars and assigned to the plaintiffs "any and all rights to indemnity" that Orvis had against the defendants. The settlement did not extinguish the plaintiffs' claims against the defendants. The plaintiffs, as Orvis's assignees, subsequently moved for summary judgment against the defendants on the indemnity claim. On appeal, the defendants argue that the trial court erred in granting summary judgment for the plaintiffs on the issue of indemnity. They further contend that there is no basis for the trial court’s award of attorney’s fees and costs and that, therefore, the award must be set aside. Finally, the defendants argue that the trial court erred in finding Knothe liable as a successor to Leisure Life. Upon review, the Supreme Court concluded plaintiffs' indemnity claim failed because when Orvis settled with the plaintiffs, it extinguished its own liability, but not that of the defendants. The trial court's order addressing the settlement stated that "[t]his case has been settled as to all defendants except Leisure Life Industries." In consideration for the receipt of one million dollars and the assignment of Orvis's indemnity rights against the defendants, the plaintiffs released Orvis from all claims of liability asserted against it. In contrast, there was no release of liability running to the defendants, and the defendants remained potentially liable to the plaintiffs under the theories of direct liability asserted against them, including the strict liability claim. The Court reversed the trial court’s denial of summary judgment with respect to the plaintiffs’ indemnity claim. View "Gray v. Leisure Life Industries " on Justia Law

John and Judith Valloze and Nationwide Mutual Insurance Company; State Farm Mutual Auto Insurance Company; Freightliner Custom Chassis Corporation; Freightliner, Allison Transmission, Inc. ("Allison Transmission"); and Cummins Atlantic, LLC, separately petitioned the Supreme Court for writs of mandamus to direct the Franklin Circuit Court to dismiss the declaratory-judgment actions filed against them by Tiffin Motor Homes, Inc. Tiffin manufactured and sold custom-made motor homes. In its complaint in the Valloze action, Tiffin alleged that the Vallozes, who reside in Florida, purchased a Tiffin "Allegro Red" motor home that was manufactured by Tiffin in Red Bay, Florida. In 2011, the Vallozes' motor home caught fire somewhere in South Carolina and was declared a total loss. Nationwide insured the motor home, and it paid the Vallozes for their loss. Tiffin subsequently filed a complaint against the Vallozes, Nationwide, Freightliner, Allison Transmission, and Cummins in Alabama, describing Allison Transmission and Cummins as manufacturers of component parts for Tiffin that Tiffin alleged were the source of the fire. The Vallozes, Nationwide, Allison Transmission, Freightliner and Cummins filed motions to dismiss which were ultimately denied. The trial court did not provide reasons for its rulings. All parties appealed. In the Katnich action, Tiffin alleged that Karen Katnich purchased a Tiffin "Phaeton" motor home in Virginia, and somewhere in North Carolina, the motor home caught fire and suffered a total loss. Tiffin sued State Farm, Custom Automated Services, Inc., Waterway, Inc., Maxzone Auto Parts Corporation and Freightliner, alleging each manufactured parts for Tiffin that were the source of the fire. In both cases, Tiffin asserted that a real, present justiciable controversy existed between the parties as to the cause and origins of the motor home fires. Again the trial court denied motions to dismiss, and provided no reasons for its ruling. After its review, the Alabama Supreme Court concluded with the conclusion of the overwhelming majority of other jurisdictions that declaratory-judgment actions were not intended to be a vehicle for potential tort defendants to obtain a declaration of nonliability. Because a bona fide justiciable controversy did not exist either action, the Court concluded that the trial court erred in denying the petitioners' motions to dismiss Tiffin's complaints. View "Tiffin Motor Homes, Inc. v. Valloze " on Justia Law