Justia Insurance Law Opinion Summaries

The plaintiff purchased an auto insurance policy covering two vehicles, providing information about her address, where the vehicles were typically garaged, and who resided with her. After being injured as a passenger in an accident involving an unidentified driver, the plaintiff sought personal protection insurance benefits from her insurer. The insurer investigated and discovered that the plaintiff had not accurately disclosed the garaging location of the vehicles and the presence of other resident-relatives in her household. These misstatements would have resulted in a significantly higher insurance premium had they been truthfully reported. As a result, the insurer rescinded the policy from its inception and refunded all premium payments to the plaintiff.The plaintiff then filed suit in the Washtenaw Circuit Court, arguing that the insurer had unlawfully denied her benefits and breached the contract. The insurer moved for summary disposition, asserting the policy was void due to material misrepresentations. The trial court denied this motion and instead ordered reformation of the policy to reflect the correct address and an increased premium, requiring the plaintiff to repay the difference. The insurer appealed. The Michigan Court of Appeals reversed the trial court’s order, finding that the plaintiff’s misrepresentations were material and that the equities favored rescission, not reformation. The plaintiff’s motion for reconsideration was granted as to clarifying the applicable standard of review but the appellate court again ruled for the insurer.Upon further appeal, the Michigan Supreme Court affirmed the Court of Appeals. It clarified that appellate courts should review the trial court's grant or denial of rescission for abuse of discretion, not de novo, after first ensuring there is no genuine issue of material fact. The Court held that rescission was the proper remedy given the plaintiff’s material misrepresentations and the absence of any wrongdoing by the insurer, and that the trial court had abused its discretion in ordering reformation. View "Sherman v. Progressive Michigan Insurance Company" on Justia Law

The plaintiff brought a suit under Puerto Rico law after her mother died while residing in an assisted living facility. The plaintiff alleged that the facility's staff, including a licensed practical nurse, incorrectly informed treating physicians that her mother was a Jehovah's Witness. As a result, necessary blood transfusions were not administered, and the mother died from heart failure. The facility’s insurer had denied coverage for the incident under its general liability policy, claiming that the alleged wrongful acts were excluded as “professional services.”The United States District Court for the District of Puerto Rico first granted partial summary judgment for the insurer, finding that certain actions—such as failing to call 911—were excluded as “professional services,” but allowed the case to proceed on claims related to record-keeping and miscommunication, concluding those were not “professional services” under existing precedent. After the case was reassigned, the new district judge reaffirmed that ruling, and a damages trial resulted in a verdict against the facility. Subsequent to a decision by the Puerto Rico Supreme Court in Rivera-Matos v. Commonwealth, which clarified the scope of “professional services” exclusions, the district judge permitted the insurer to relitigate the coverage issue, ultimately finding that the exclusion did apply to the acts in question and entering judgment for the insurer.On appeal, the United States Court of Appeals for the First Circuit held that the plaintiff had forfeited her argument that the Puerto Rico Supreme Court’s decision should not be applied retroactively, as she had not raised it below. The court further found no plain error in the application of the new precedent. The judgment of the district court in favor of the insurer was affirmed. View "Garcia-Navarro v. Universal Insurance Company" on Justia Law

A public entity contracted with a general contractor to construct a major rail line project. The general contractor, in turn, subcontracted a significant portion of the work to a subcontractor. As the project progressed, it experienced numerous delays and disruptions, which the subcontractor claimed increased its costs. After completing its performance, the subcontractor, relying on expert analysis of its additional costs, filed a verified statement of claim under the Colorado Public Works Act, asserting it was owed additional millions for labor, materials, and other costs, including those stemming from delay and disruption.Following the filing, the general contractor substituted a surety bond for the retained project funds and the subcontractor initiated litigation in Denver District Court. After a bench trial, the trial court found in favor of the subcontractor, concluding that its verified statement of claim was not excessive and that there was a reasonable possibility the claimed amount was due. The court awarded the subcontractor damages for delay, disruption, and unpaid funds. The general contractor appealed, contending the claim was excessive and should result in forfeiture of all rights to the claimed amount. The Colorado Court of Appeals reversed in relevant part, holding that the verified statement of claim was excessive as a matter of law and that the subcontractor forfeited all rights to the amount claimed. This disposition left certain issues raised by the subcontractor on cross-appeal unaddressed.The Supreme Court of Colorado granted review and held that, under the Public Works Act, disputed or unliquidated amounts—including delay and disruption damages—may be included in a verified statement of claim if they represent the specified categories of costs and the claim is not excessive under the statute. The court also held that filing an excessive claim results only in forfeiture of statutory remedies under the Act, not all legal remedies. The Supreme Court reversed the Court of Appeals’ judgment and remanded for further proceedings. View "Ralph L. Wadsworth Constr. Co. v. Reg'l Rail Partners" on Justia Law

An individual was injured while working in a farm shop operated by two defendants, allegedly due to carbon monoxide exposure from a portable heater. The farm’s liability insurance policy, issued by an insurer, covered bodily injuries occurring on the property but contained a pollution exclusion provision. The injured party filed suit in state court, claiming serious injuries caused by the carbon monoxide emission. The insurer then brought a declaratory judgment action in federal district court, seeking a determination that it was not obligated to defend or indemnify the insured farm operators for the state court suit, arguing that the pollution exclusion applied because carbon monoxide is a “pollutant” as defined by the policy.The United States District Court for the District of North Dakota granted summary judgment for the insurer. It found that the pollution exclusion in the insurance policy unambiguously barred coverage for the injuries alleged, because carbon monoxide is a gaseous contaminant and therefore a “pollutant” under the policy’s definition. The court declared that the insurer had neither a duty to defend nor indemnify the insured farm operators in the underlying state court action.On appeal, the United States Court of Appeals for the Eighth Circuit considered whether North Dakota law required a different interpretation of the pollution exclusion and whether the question should be certified to the North Dakota Supreme Court. The court declined to certify, finding that North Dakota insurance contract law was sufficiently clear. Reviewing the summary judgment ruling de novo, the court held that the policy’s pollution exclusion unambiguously excluded coverage for injuries resulting from carbon monoxide discharge and affirmed the district court’s judgment. The Eighth Circuit thus held that the insurer had no duty to defend or indemnify the insured farm operators for the injury claim arising from carbon monoxide exposure. View "North Star Mutual Ins. Co. v. Rodin" on Justia Law

Porch.com is the parent company of Homeowners of America Insurance Company (HOA), which entered into an agreement with Gallagher Reinsurance (Gallagher) to serve as its reinsurance broker. Gallagher brokered a reinsurance deal for HOA involving Whiterock as the insurer and Vesttoo as a financier, with the understanding that China Construction Bank (CCB) would provide a letter of credit as collateral. Instead, HOA was only given a letter from Yu Po Finance stating a letter of credit would be forthcoming, which was never issued. Gallagher continued to assure HOA that the collateral was valid, leading HOA to authorize a substantial withdrawal by Vesttoo. When it was later revealed that Vesttoo’s collateral was invalid and CCB had never issued the promised letter of credit, HOA suffered financial harm, including increased costs for replacement reinsurance and regulatory intervention.The United States District Court for the Northern District of Texas heard Porch’s breach-of-contract claims against Gallagher, alleging violations of several sections of their agreement. The district court dismissed all of Porch’s claims with prejudice, finding that Gallagher did not breach the contract and that amending the complaint would be futile.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the dismissal de novo. The Fifth Circuit affirmed the dismissal of Porch’s claims under Sections 5 and 11 of the contract, concluding Gallagher had no duty to procure collateral documents from CCB or to comply with Texas insurance laws under the economic sanctions provision. However, the Fifth Circuit reversed the dismissal of Porch’s claim under Section 13, finding that Porch plausibly alleged Gallagher failed to perform administrative services customarily expected of a reinsurance broker after contract placement. The case was remanded for further proceedings on the Section 13 claim. View "Porch.com v. Gallagher Re" on Justia Law

Thomas T.D. Polk and his wife, Katarzyna Kurek-Polk, were struck by a vehicle while assisting another motorist, resulting in serious injury to Thomas and Katarzyna’s death. They recovered $100,000 from the at-fault driver’s insurance and sought additional compensation under three separate underinsured motorist (UIM) policies: $1,000,000 from AMCO Insurance Company, $500,000 from Progressive Northern Insurance Company, and $500,000 from Secura Supreme Insurance Company. Each policy included a proportionate liability clause and an “Other Insurance” anti-stacking provision, which limited the total UIM recovery to the highest coverage available under a single policy.After receiving $800,000 from the AMCO policy and rejecting a $220,000 offer from Secura, Polk filed a breach of contract suit against Secura and Progressive in the United States District Court for the Northern District of Illinois. The district court granted summary judgment in favor of the insurers. It held that the anti-stacking provisions were unambiguous and limited Polk’s maximum recovery to $1,000,000—the highest limit among the policies—regardless of the number of insureds or policies. Since Polk had already received $900,000 from the tortfeasor and AMCO, the court ordered Secura to pay $100,000 to bring the total to $1,000,000, and ruled that Progressive owed nothing.On appeal, the United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. It held that the anti-stacking provisions in both the Progressive and Secura policies were clear and enforceable under Illinois law, and that the insurers’ liabilities were properly offset by the amounts already received, thus capping total recovery at $1,000,000. The court also rejected Polk’s arguments regarding policy ambiguity and statutory interpretation. View "Polk v Progressive Northern Insurance Company" on Justia Law

A woman was injured after slipping and falling in the parking lot of an automobile repair shop. She filed a claim with the shop’s insurance provider, which began covering some medical and wage expenses. After the insurance company’s representative informed her that liability for her claim was being accepted, the claimant ceased gathering evidence or seeking legal counsel, believing liability would not be contested. Over two years later, when settlement negotiations failed, she retained an attorney and sued both the repair shop and the insurer. After settling with the shop and dismissing it from the lawsuit, the claimant pursued multiple claims against the insurer, including breach of contract, promissory estoppel, spoliation, and equitable estoppel, contending that the insurer’s communications led her to detrimentally alter her conduct regarding evidence collection.The Fourth Judicial District Court initially indicated from the bench that the insurer was estopped from denying liability, but ultimately denied the claimant’s motion for partial summary judgment and granted summary judgment to the insurer on all claims. The District Court concluded that under Montana law as it existed before a 2023 statutory amendment, a third-party claimant could only bring statutory or common law bad faith claims against an insurer for mishandling a claim, and that the claimant had not sufficiently pled or could not prove the elements of her other asserted causes of action.The Supreme Court of the State of Montana held that, under the pre-2023 version of Montana law, third-party claimants are not restricted to statutory or common law bad faith claims and may assert other causes of action such as breach of contract or torts based on how an insurer handled a claim. The Court affirmed summary judgment for the insurer on promissory estoppel, breach of contract, and insufficiently pled claims, but reversed summary judgment on spoliation and equitable estoppel, remanding those claims for further proceedings. View "D'Hooge v. Cincinnati Insurance Co." on Justia Law

A tornado struck Goodhue County, Minnesota, damaging the roof of a mall owned by Rymer Companies, LLC. The roof had preexisting water damage, and the dispute centered on whether the insurance company, Cincinnati Insurance Company, was liable only for the tornado-related damage or for the cost of a full roof replacement, which was necessary to comply with local building codes. Cincinnati estimated its liability at about $10,000 for the tornado damage, while Rymer argued that a new roof was required, costing up to $1.7 million. After the parties could not agree, Cincinnati initiated a declaratory judgment action in federal court, and an appraisal panel awarded $23,226 for "mall roof repair."The United States District Court for the District of Minnesota initially concluded that any increased repair costs were Rymer’s responsibility, finding that the costs resulted from preexisting damage rather than the tornado. On appeal, the United States Court of Appeals for the Eighth Circuit held that it was sufficient if the tornado was a "but-for" cause of the county’s enforcement of the building code, and remanded the case for further proceedings, including clarification of the ambiguous appraisal award.Upon remand, the district court sought clarification from the appraisal panel as to whether the award covered repairs to the roof’s surface or just the flashing. The majority of the panel clarified that only flashing replacement was included. Rymer attempted to introduce later statements by the panel’s umpire to expand the scope of the award, but the district court held that such testimony is relevant only to allegations of panel misconduct, not to reinterpret or enlarge an award. The United States Court of Appeals for the Eighth Circuit affirmed this decision, holding that under Minnesota law, district courts may seek clarification of ambiguous appraisal awards, and that appraiser testimony cannot be used to expand or alter an award unless there is evidence of fraud or wrongdoing. View "Cincinnati Insurance Company v. Rymer Companies, LLC" on Justia Law

A Florida-based limited partnership invested in commercial real estate in Kentucky and purchased insurance for those properties from an insurer. The insured property suffered damage in March 2022, and the partnership promptly filed a claim. The insurer’s adjuster evaluated the damage, determined it was repairable, and offered to pay the cost of repairs minus a deduction for depreciation, explaining that the insured could recover the deducted amount after completing repairs. The partnership had purchased additional coverage that would pay for repairs “without deduction for depreciation” if repairs were completed within two years; however, at the time of the claim, the repairs had not been made.After rejecting the insurer’s offer, the partnership filed a putative class action in the United States District Court for the Southern District of Ohio, arguing that the insurer breached the policy by deducting depreciation from the repair-cost settlement. The insurer moved to dismiss the complaint for failure to state a claim. The district court granted the motion, finding that the policy allowed the insurer to deduct depreciation unless and until the insured completed repairs, at which point the depreciation could be recovered under the optional coverage.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court held that, under Kentucky law and the specific terms of the policy, the insurer was permitted to deduct depreciation from the payment for repair costs because the insured had not yet completed repairs. The court found that the optional coverage only eliminated the depreciation deduction if the insured actually repaired the property, which had not occurred. The Sixth Circuit affirmed the district court’s dismissal, concluding that the insurer’s actions were consistent with the contract’s terms. View "Schoening Investment LP v. Cincinnati Casualty Company" on Justia Law

A pedestrian was fatally struck by a vehicle on a public roadway in Riverside, California. The decedent’s family sued the City of Riverside and others for wrongful death and dangerous condition of public property. In response, the City filed a cross-complaint against various contractors and their insurers, including Design Services, Inc. (DSI) and RLI Insurance Company (RLI). The City alleged that DSI had contracted to perform street lighting evaluations and upgrades, and that the contract required DSI to obtain insurance from RLI naming the City as an additional insured. The City contended RLI refused to defend and indemnify the City against the wrongful death lawsuit, despite its obligations under the policy.The Superior Court of Riverside County sustained RLI’s demurrer without leave to amend, finding that under Royal Globe Ins. Co. v. Superior Court, a plaintiff may not sue both the insurer and the insured in the same action. The court held that joining RLI in the same lawsuit as its insured, DSI, would risk prejudice by alerting the jury to the existence of insurance, in violation of California Evidence Code section 1155. The court dismissed the City’s cross-complaint as to RLI but allowed the City to pursue its claims in a separate action.The California Court of Appeal, Fourth Appellate District, Division One, reversed the judgment of dismissal. The appellate court held that the prohibition on joining an insurer and its insured in the same action does not apply when the City, as an additional insured, asserts its own contractual rights against RLI. The court found the City’s contractual privity with RLI distinguishable from the situation in Royal Globe and noted that any risk of prejudice could be addressed through severance or bifurcation. The case was remanded for further proceedings on the City’s claims against RLI. View "City of Riverside v. RLI Insurance Co." on Justia Law