Justia Insurance Law Opinion Summaries

Jessenia Burton, a student driver, was involved in a car accident during a drivers' education course on April 30, 2017. Burton and her parents sued several defendants, including West Bend Mutual Insurance Company, which provided coverage for the vehicles used in the course. Burton retained neuropsychologist Dr. Daniel Tranel, who conducted an evaluation and diagnosed her with a concussion, postconcussion syndrome, PTSD, and major depressive disorder. Dr. Tranel's report included summaries of psychological and neuropsychological tests administered to Burton.The Iowa District Court for Polk County granted West Bend's motion to compel the production of Dr. Tranel's psychological test material and test data. The court reasoned that since Burton made her mental condition an element of her claim, the information was discoverable under Iowa Code section 228.6(4)(a). The court ordered the information to be produced to West Bend and its attorneys, issuing a protective order to limit further disclosure.The Iowa Supreme Court reviewed the case and reversed the district court's decision. The court held that Iowa Code section 228.9 explicitly prohibits the disclosure of psychological test material and test data in a judicial proceeding to anyone other than a licensed psychologist designated by the individual. The court emphasized that the statute's language is clear and unambiguous, and the only exception to this prohibition is disclosure to another licensed psychologist. The court concluded that the district court erred in granting the motion to compel and vacated the protective order. The case was remanded for further proceedings consistent with this interpretation. View "Burton v. West Bend Mutual Insurance Company" on Justia Law

Francine Pickett sued American Bankers Insurance Company of Florida, American Modern Property and Casualty Insurance Company, Davison Insurance Agency, and various fictitiously named defendants. Pickett alleged that she sought to replace her existing mobile home insurance policy with American Bankers for a lower premium through Davison. She claimed that Davison advised her to purchase a policy from American Modern, which she did. However, American Bankers canceled her previous policy for nonpayment without her knowledge. When her mobile home was damaged by fire, American Modern refused to pay the claim, alleging fraud due to non-disclosure of the previous policy's cancellation. Pickett alleged bad faith, breach of contract, negligent procurement of insurance, civil conspiracy, and negligence against the defendants.The Wilcox Circuit Court denied American Bankers' motion to compel arbitration and stay litigation. American Bankers argued that Pickett had agreed to arbitration through a binder and previous insurance applications. The trial court found that Pickett never received a policy or arbitration agreement in 2022 and thus could not have accepted or rejected the arbitration clause. The court also found that previous policies or arbitration agreements were irrelevant to the current matter.The Supreme Court of Alabama reviewed the case and reversed the trial court's decision. The court held that the binder, which included an arbitration agreement, was a contract that Pickett relied upon for her claims. Therefore, she could not seek the benefits of the binder while avoiding its arbitration provision. The court concluded that Pickett's claims against American Bankers arose from and relied on the binder, making her bound by its terms, including the arbitration agreement. The case was remanded for further proceedings consistent with this opinion. View "American Bankers Insurance Co. of Florida v. Pickett" on Justia Law

Roger and Therese Hutchinson purchased rural property in Madison County, Montana, in 2016, which included an easement for access via a private road. They obtained a title insurance policy from Old Republic National Title Insurance Company. Disputes arose with Nugget Creek Ranch, the owner of the adjoining property, over the use and control of gates on the easement. In 2020, the Hutchinsons sued Nugget Creek, which counterclaimed for declaratory judgment, trespass, nuisance, negligence, slander, defamation, vexatious litigation, and reverse adverse possession. The reverse adverse possession claim was dismissed by the court.The Hutchinsons requested Old Republic to defend them against Nugget Creek's counterclaims, but Old Republic denied coverage, citing policy exclusions for disputes arising from the easement and for actions taken by the insured after the policy date. The Hutchinsons filed a lawsuit against Old Republic for breach of contract and unfair claim settlement practices. The District Court granted summary judgment in favor of Old Republic, finding no duty to defend because the policy excluded coverage for disputes related to the easement and for actions occurring after the policy date.The Supreme Court of the State of Montana reviewed the case and affirmed the District Court's decision. The court held that Old Republic had no duty to defend the Hutchinsons because the policy explicitly excluded coverage for disputes arising from the easement and for actions taken by the insured after the policy date. The court also noted that the policy did not cover tort claims or actions that occurred after the policy's effective date. Thus, the court concluded that Old Republic unequivocally demonstrated a lack of coverage under the policy. View "Hutchinson v. Old Republic" on Justia Law

Sterling Senechal submitted a claim to Allstate Vehicle and Property Insurance Company for water damage caused by a broken water heater. Allstate issued three payments totaling $12,410.48. After a dispute over the loss amount, an appraisal determined the actual cash value to be $58,396.58, which Allstate paid minus the deductible and prior payments. Senechal then filed a lawsuit alleging breach of contract, violations of the Texas Prompt Payment of Claims Act (TPPCA), bad faith claims under Chapter 541 of the Texas Insurance Code, and breach of the common law duty of good faith and fair dealing. Allstate removed the case to federal court and paid what it calculated as the maximum potential interest owed.The United States District Court for the Southern District of Texas granted summary judgment in favor of Allstate on all claims. Senechal conceded the breach of contract claim but opposed summary judgment on the other claims. The district court ruled that Allstate's payment of the appraisal award and interest defeated Senechal's claims.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court affirmed the summary judgment on Senechal's bad faith claims under Chapter 541 and common law, citing the Texas Supreme Court's decision in Ortiz v. State Farm Lloyds, which held that payment of an appraisal award and interest precludes recovery for bad faith claims unless there is an independent injury. However, the court vacated the summary judgment on Senechal's TPPCA claims, noting that payment of an appraisal award and interest does not automatically absolve an insurer of TPPCA liability. The case was remanded for further proceedings to determine whether Allstate's initial payment "roughly corresponds" with the appraisal award and whether Allstate is liable under the TPPCA. View "Senechal v. Allstate" on Justia Law

The plaintiff, New England Property Services Group, LLC (NEPSG), appealed from a summary judgment in favor of the defendant, NGM Insurance Company (NGM). NEPSG had been assigned the insurance claim benefits by the policyholders, Stephen and Betty Callahan, for storm-related damage to their residence. NGM initially covered some damages but denied others, leading to a series of inspections and disagreements over the loss amount. Eventually, an appraisal process was conducted, resulting in an award that NEPSG found unsatisfactory due to updated labor costs published after the award was signed.The Superior Court granted summary judgment to NGM, finding that NEPSG was not entitled to a modification of the appraisal award or a second appraisal. The court also found that NEPSG failed to establish its claims for breach of contract, bad faith, unjust enrichment, and tortious interference with contractual relations. NEPSG argued that the award should be modified due to a miscalculation of labor costs and that NGM acted in bad faith by using unlicensed appraisers, among other claims.The Rhode Island Supreme Court reviewed the case de novo and affirmed the Superior Court's judgment. The court held that the appraisal award was akin to an arbitration award and thus subject to limited judicial review. NEPSG's request for modification based on post-award labor cost updates was not supported by admissible evidence. The court also found no basis for a second appraisal or for NEPSG's claims of breach of contract and bad faith, as NGM had fulfilled its contractual obligations and there was no evidence of bad faith. Additionally, the court rejected NEPSG's claims of unjust enrichment and tortious interference, finding no inequitable benefit retained by NGM and no evidence of intentional harm to NEPSG's contract with the policyholders. View "New England Property Services Group, LLC v. NGM Insurance Company" on Justia Law

Following a wildfire near their home, plaintiffs Hovik Gharibian and Caroline Minasian submitted a claim to their property insurer, Wawanesa General Insurance Company. Wawanesa paid the plaintiffs over $20,000 for professional cleaning services that were never used. Dissatisfied with the resolution, the plaintiffs filed a lawsuit against Wawanesa for breach of contract and breach of the implied covenant of good faith and fair dealing.The Superior Court of Los Angeles County granted Wawanesa’s motion for summary judgment, finding that the plaintiffs' insurance policy did not provide coverage for the claimed loss. The court determined that there was no evidence of "physical loss" as required by the policy. Plaintiffs appealed the decision.The California Court of Appeal, Second Appellate District, reviewed the case. The court held that the plaintiffs did not demonstrate a "direct physical loss to property" as required by their insurance policy. The court referenced the California Supreme Court's decision in Another Planet Entertainment, LLC v. Vigilant Ins. Co., which clarified that "direct physical loss" requires a distinct, demonstrable, physical alteration to property. The court found that the wildfire debris did not cause such an alteration and could be easily cleaned or removed. Consequently, the court affirmed the trial court's decision, concluding that Wawanesa did not breach the insurance policy since the plaintiffs' claim was not covered. All remaining arguments were deemed moot. View "Gharibian v. Wawanesa Gen. Ins. Co." on Justia Law

Joseph Mirelez submitted a claim under his homeowner’s insurance policy with State Farm Lloyds for wind damage to his property. Disputes arose regarding the amount of loss and repair costs, leading Mirelez to invoke the appraisal process. In January 2023, an agreement on the loss amount was reached, but coverage issues persisted. Mirelez filed a lawsuit in state court in May 2023, alleging breach of contract, violations of the Texas Prompt Payment of Claims Act (TPPCA), various bad faith claims under the Texas Insurance Code, and breach of the duty of good faith and fair dealing. State Farm removed the case to federal court, citing diversity jurisdiction, and subsequently paid the appraisal award amount, minus the deductible and prior payments, plus interest.The United States District Court for the Southern District of Texas granted summary judgment in favor of State Farm on all claims. Mirelez conceded that summary judgment was appropriate for his breach of contract and TPPCA claims but contested the dismissal of his statutory and common law bad faith claims. The district court concluded that State Farm had paid all benefits owed under the policy and that Mirelez was not entitled to any additional damages under the Texas Insurance Code.The United States Court of Appeals for the Fifth Circuit reviewed the case de novo and affirmed the district court’s decision. The court held that under Texas Supreme Court precedent, specifically Ortiz v. State Farm Lloyds, payment of an appraisal award forecloses an insurer’s liability for breach of contract and bad faith claims unless the insured suffered an independent injury. Since Mirelez only sought policy benefits that had already been paid and did not allege any independent injury, his extracontractual bad faith claims were barred. View "Mirelez v. State Farm" on Justia Law

Sioux Steel Company, a South Dakota corporation, designed and manufactured a new line of hopper bins for grain storage. After selling one of these bins to a distributor in Mexico, the bin failed catastrophically, causing fatalities and property damage. Sioux Steel had an insurance policy with the Insurance Company of the State of Pennsylvania (ISOP), which included a professional services exclusion. ISOP denied coverage based on this exclusion, leading Sioux Steel to settle with the affected party without ISOP's involvement.The United States District Court for the District of South Dakota granted summary judgment in favor of ISOP, finding that the professional services exclusion in the insurance policy was unambiguous and applicable, thus precluding coverage. The court also dismissed Sioux Steel's claims for bad faith, punitive damages, and attorney's fees.The United States Court of Appeals for the Eighth Circuit reviewed the case de novo. The court affirmed the district court's decision, holding that the professional services exclusion was clear and unambiguous. The exclusion applied because the damage arose from professional engineering services provided by Sioux Steel's employee and an external engineering firm. The court also found that ISOP did not breach its duty to defend, as no civil proceeding or alternative dispute resolution process had been initiated with ISOP's consent. Consequently, Sioux Steel's claims for breach of contract and insurance bad faith were dismissed, and the district court's judgment was affirmed. View "Sioux Steel Company v. Ins. Co. of the State of PA" on Justia Law

A&T Maritime Logistics, Inc. had an insurance contract with RLI Insurance Company and a bareboat charter agreement with Alexis Marine, L.L.C. While operating the M/V Uncle John, a vessel owned by Alexis Marine, A&T Maritime caused the ship to allide with an embankment. Believing the damage to be minimal, A&T Maritime did not take immediate action. After a lawsuit was filed, RLI was notified of the claim. A&T Maritime and Alexis Marine sought defense and indemnification from RLI, which denied coverage under the insurance contract. The district court upheld RLI's denial of coverage on summary judgment, finding that RLI was prejudiced by the delayed notice.The United States District Court for the Eastern District of Louisiana initially denied A&T Maritime's and Alexis Marine's motions for partial summary judgment seeking reimbursement for defense costs, noting that the policy did not include a duty to defend. The Champagnes, who had purchased the damaged property, settled their claims for $200,000, funded solely by Alexis Marine. RLI then moved for summary judgment, arguing that the Uncle John was not covered under the policy. The district court disagreed but granted partial summary judgment to RLI, holding that the prompt notice requirements were breached and RLI was prejudiced.The United States Court of Appeals for the Fifth Circuit reviewed the case and affirmed the district court's decision. The court held that RLI was actually prejudiced by the delayed notice from both A&T Maritime and Alexis Marine, as the damage worsened over time and the opportunity to settle for a lower amount was lost. Consequently, the denial of coverage for both A&T Maritime and Alexis Marine was appropriate. The court also concluded that RLI had no duty to reimburse defense costs, as indemnification depended on coverage, which was voided due to the breach of the prompt notice requirement. View "A&T Maritime Logistics v. RLI Insurance Co." on Justia Law

Alexion Pharmaceuticals, Inc. develops therapies for rare disorders and was insured under two director and officer liability insurance programs covering different periods. The first program provided $85 million of coverage for claims made between June 27, 2014, and June 27, 2015 (Tower 1). The second program provided $105 million of coverage for claims made between June 27, 2015, and June 27, 2017 (Tower 2). In 2015, the SEC issued a formal investigation order against Alexion, which led to a subpoena seeking information related to Alexion’s grant-making activities and compliance with the Foreign Corrupt Practices Act (FCPA). Alexion disclosed this investigation to its Tower 1 insurers.The Superior Court of Delaware found that the SEC investigation and a later securities class action against Alexion were unrelated, placing the securities class action coverage in Tower 2. The court applied the “meaningful linkage” standard and concluded that the connection between the SEC investigation and the securities class action was insufficient to make them related.The Supreme Court of Delaware reviewed the case and disagreed with the Superior Court’s conclusion. The Supreme Court found that the securities class action was meaningfully linked to the wrongful acts disclosed in Alexion’s 2015 notice to its Tower 1 insurers. Both the SEC investigation and the securities class action involved the same underlying wrongful acts, including Alexion’s grant-making activities and compliance with the FCPA. The Supreme Court held that the securities class action claim should be deemed to have been first made during the Tower 1 coverage period, and therefore, coverage should be under Tower 1. The judgment of the Superior Court was reversed. View "In re Alexion Pharmaceuticals, Inc. Insurance Appeals" on Justia Law