Justia Insurance Law Opinion Summaries

Following the destruction of their home in Hurricane Katrina, Michael and Mary Robichaux filed suit in October, 2006, in the circuit court against their insurers, Nationwide Mutual Fire Insurance Company (Nationwide) and their agent, Jay Fletcher Insurance (Fletcher Insurance). Plaintiffs sought declaratory and injunctive relief, including indemnity under the insurance contract, compensatory and punitive damages, specific performance of the insurance contract, attorneys' fees, and court costs and expenses for what they alleged were uncompensated, covered losses under their homeowners' policy. Also included in the complaint were claims of fraud and bad faith by the insurer and its agent. The trial court ultimately granted summary judgment in favor of Nationwide and Fletcher Insurance based on the Plaintiffs' failure to establish a genuine issue of material fact that the home was damaged by wind, which was covered by the subject policy, rather than its having been destroyed by flood, which the trial court found was excluded under the policy. Alternatively, the trial court found that Plaintiffs failed to show they had suffered uncompensated losses due to their having received compensation under their flood policy. Upon review of Plaintiffs' appeal, the Supreme Court found that the trial court erred in granting summary judgment on the issue of whether Plaintiffs suffered uncompensated, wind damage to structures other than their dwelling, and to personal property. Accordingly, the Court remanded the case for further proceedings.

Exum, an employer of Elrac, served a notice of intention to arbitrate on Elrac, seeking uninsured motorist benefits. Elrace petitioned to stay the arbitration. Supreme Court granted the petition, but the Appellate Division reversed, permitting the arbitration to proceed. The court affirmed and held that a self-insured employer whose employee was involved in an automobile accident could not be liable to that employee for uninsured motorist benefits, notwithstanding the exclusivity provision of the Workers' Compensation Law.

This insurance coverage case arose out of an underlying personal injury lawsuit brought by Michael Parr against Gilbane Building Company. Gilbane, a general contractor, sought defense and indemnification from Admiral Insurance Company based on an insurance policy held by Empire Steel Erectors, a subcontractor. On cross-motions for summary judgment, the district court determined that Admiral owed a duty to defend and indemnify. As a preliminary matter, the court held that Gilbane qualified as an additional insured. The court held that, pursuant to the strict eight-corners rule, Admiral had no duty to defend where the petition did not affirmatively allege any facts implicating the negligence of either Empire or Parr. Therefore, the district court erred in granting summary judgment in favor of Gilbane on the duty to defend. The court held, however, that the district court did not clearly err in determining that Admiral owed Gilbane a duty to indemnify for the cost of its settlement with Parr and the district court's summary judgment on that matter was affirmed.

Okmulgee Inn Venture, LLC (Okmulgee) leased space to a nightclub-bar and was a named insured on a liquor liability insurance policy. Okmulgee’s insurer, Mount Vernon Fire Insurance Company (Mt. Vernon), assumed a duty to defend Okmulgee against suits seeking damages for injuries covered by the policy. In 2006, three bar patrons sustained gunshot wounds during a fight at the nightclub and sued Okmulgee, alleging, among other things, that Okmulgee failed to ensure the safety of the bar’s patrons, properly train the bar's staff, or investigate the bar’s operator. The only specific allegations pertaining to alcohol were that two of the three victims were under-age but were admitted to the bar and served alcohol. Mt. Vernon refused to defend Okmulgee in these suits. Mt. Vernon asserted there was no coverage under the policy, and thus no duty to defend or indemnify, because the allegations did not indicate the injuries were caused by the selling, serving, or furnishing of alcoholic beverages. Mt. Vernon then initiated this declaratory judgment action to determine its obligations. On cross motions for summary judgment, the district court ruled in favor of Mt. Vernon. Okmulgee insisted Mt. Vernon owed it a duty to defend because the facts showed that coverage was provided by the policy. Because the victims had yet to establish Okmulgee’s liability for any claims, the Tenth Circuit concluded after its review that the question of Mt. Vernon’s duty of indemnification was not ripe for adjudication. Mt. Vernon is obligated to defend its insured, and Okmulgee was entitled to summary judgment on the duty-of-defense issue.

In 2006, a fire consumed an apartment building rented by Plaintiffs Paul Whittington, Jr. and Westbrook Cooper. Mr. Whittington died from injuries he sustained in the fire, while Mr. Cooper was injured but survived. The building was owned by Defendant William Lipscomb, and it was located on the same property as Mr. Lipscomb's residence. Plaintiffs sued Mr. Lipscomb and amended their complaint to seek declaratory judgment against Lipscomb's insurer, the Automobile Insurance Company of Hartford, Connecticut (AIC), on the issue of coverage. AIC filed a motion to sever and a motion for summary judgment, which the trial court denied. AIC filed two separate petitions for interlocutory appeal and requested that the Court consolidate the two issues raised in the separate petitions. After reviewing the complaint, together with the insurance policy and the relevant deposition testimony, the Supreme Court determined there was no genuine issue of material fact as to the issue of coverage, and that AIC’s motion for summary judgment should have been granted. AIC was dismissed from the case with prejudice.

Plaintiff Joseph Zbegner appealed a district court order dismissing without prejudice his claims against Allied Property and Casualty Insurance Co. (Allied) as not ripe for adjudication. Plaintiff was in an automobile accident in Boulder, Colorado in 2007. At that time he had an automobile insurance policy with Allied, which included underinsured motorist (UIM) coverage. In his complaint against Allied, Plaintiff alleged that he suffered severe injuries as a result of the accident and sustained damages exceeding $150,000. He claimed the driver of the other car was the person at fault in the accident, but was underinsured. Allstate paid Plaintiff $351.74 for property damage and offered him $2,145.00 to settle his injury claim. Plaintiff did not accept Allstate’s offer and did not resolve his claim against the driver. After Allied declined his claim, Plaintiff filed this action. Allied moved to dismiss Plaintiff's claim, asserting it could not know the amount due Plaintiff for UIM benefits until he had resolved his claim against Allstate, the driver's insurer. Because his claims were contingent on a future event, Allied contended they were not ripe for adjudication. The district court granted Allied’s motion, and dismissed Plaintiff's claims without prejudice. On appeal to the Tenth Circuit, Plaintiff contended the district court misconstrued Colorado law in its ripeness analysis. After careful review, the Tenth Circuit concluded the district court was correct in its analysis of Colorado law, and that Plaintiff's claim was not yet ripe for review.

The Travelers Indemnity Company of Connecticut appealed a judgment in which it was ordered to pay $251,913.91 to Willie A. Miller. Smith House Movers, Inc. (Smith), was hired was hired to move houses located in the path of road construction to be performed. Miller entered into a contract with Smith to purchase one of the houses and to move it from Red Bay to Vina. The contract provided that Smith was to move the house, pour a foundation, and place the house on the new foundation. Smith cut the house into two pieces and delivered the first piece. However, the foundation was improperly poured and did not fit, and the house had been damaged in the move. Ultimately Miller had to hire another company to complete the move and repair the damage. Miller then sued Smith alleging breach of contract, negligence and wantonness. Smith did not answer or appear, and Miller moved to a default judgment against Smith. In an attempt to collect the amount of the default judgment, Miller sent a copy to Smith's general liability insurer, Travelers. As Miller tried to get Travelers to respond to its demand, Miller learned that Smith had declared bankruptcy. Two years following the default judgment, the bankruptcy trustee lifted its stay on Smith's affairs to allow him to collect on the default judgment to the extent that the insurance coverage would allow. Travelers subsequently denied the claim. Miller then sued Travelers for payment. Travelers moved for summary judgment to dismiss Miller's claim, arguing that the general liability policy did not provide coverage based on the terms in the policies. The trial court denied the motion, and eventually entered judgment against the company. Travelers then appealed to the Supreme Court. The issue before the Court was whether the notice of the original lawsuit was timely. The Court found that because Miller's knowledge of Smith's certificate of insurance from the underlying lawsuit put Miller on notice that he should have notified Travelers of the default judgment. As such, the Court concluded that Miller was barred from recovering under Smith's policies. The Court reversed the trial court and remanded the case for further proceedings.

Appellant appealed the district court's grant of summary judgment in favor of Zurich, SRS, and an insurance adjuster on his claim for wrongful denial and delay of workers' compensation benefits under Texas state and common law. At issue on appeal was whether appellees complied with the duty of good faith and fair dealing in resolving appellant's claim. The court affirmed summary judgment and held that appellant failed to raise a material fact issue with respect to his common-law bad faith cause of action.

Employee suffered an industrial injury and received surgery on his right shoulder, after which Employee returned to work for self-insured Employer. Employee experienced renewed shoulder complaints four years later and asked Employer to add new shoulder conditions to Employee's workers' compensation claim and authorize surgery to correct them. Employer and the Industrial Commission denied Employee's request after finding that the proposed procedure was unrelated to the conditions allowed in Employee's workers' compensation claim. At issue on appeal was a doctor's report upon which the Commission based its decision. The court of appeals granted a limited writ in mandamus that ordered the Commission to reconsider the application after finding inconsistencies within the report. The Supreme Court reversed, concluding that none of the alleged inconsistencies noted in the doctor's report affected the viability of the doctor's opinion that further surgery was not reasonably related to the allowed conditions, and therefore, the report was evidence supporting the Commission's decision.

In previous workers' compensation cases, the Montana Supreme Court had determined that its decisions apply retroactively to claims that are not "final" or "settled" at the time the decision was issued. Under statute, two types of claims fall under the definition of "settled," (1) claims where there has been a formal settlement agreement, and (2) claims that are "paid in full." In this case, the workers' compensation court (WCC) defined "paid in full" to mean that an injured worker received all the applicable benefits prior to a new judicial decision and had not received subsequent benefits on his or her pre-judicial decision claim. The Supreme Court affirmed, holding that the WCC properly applied retroactivity law in formulating its definition of "paid in full."