Justia Insurance Law Opinion Summaries

Residents near a medical-equipment sterilization facility in Willowbrook, Illinois, brought a mass tort action alleging that Griffith Foods International, Inc., and its successor Sterigenics U.S., LLC had emitted ethylene oxide (EtO) for more than 35 years, resulting in cancer and other illnesses. The policyholders held commercial general liability (CGL) insurance policies issued by National Union Fire Insurance Company of Pittsburgh, PA, covering 1983-1985, which included a standard pollution exclusion clause. The policyholders sought a declaration in federal court that the insurer had a duty to defend them in the underlying tort litigation.The United States District Court for the Northern District of Illinois ruled in favor of the policyholders, holding that the pollution exclusion did not bar coverage because the EtO emissions were authorized under a permit from the Illinois Environmental Protection Agency (IEPA). National Union appealed to the United States Court of Appeals for the Seventh Circuit. The Seventh Circuit, noting conflicting interpretations of Illinois law regarding the relevance of permits to pollution exclusions, certified a question to the Supreme Court of Illinois for clarification.The Supreme Court of Illinois reviewed the certified question. The court held that a permit or regulation authorizing emissions has no relevance in determining the application of a pollution exclusion in a standard-form CGL policy. The holding clarifies that coverage is barred for injuries arising out of the discharge of pollutants regardless of whether the emissions were authorized by a governmental permit. The court explicitly overruled contrary appellate decisions in Erie Insurance Exchange v. Imperial Marble Corp. and Country Mutual Insurance Co. v. Bible Pork, Inc., and stated that the existence of a permit does not create ambiguity or exception to the pollution exclusion. The certified question was answered accordingly. View "Griffith Foods International Inc. v. National Union Fire Insurance Company of Pittsburgh, PA" on Justia Law

Atlanta Gas Light Company and Southern Company Gas contracted with United States Infrastructure Corporation (USIC) to locate and mark gas lines in Georgia. In 2018, USIC failed to mark a line, leading to a gas explosion that seriously injured three people. The injured parties settled with USIC but not with Atlanta Gas Light. After being sued in Georgia state court, Atlanta Gas Light sought defense and indemnification under USIC’s excess liability policy issued by Navigators Insurance Company, claiming status as an additional insured. Navigators denied coverage, asserting Atlanta Gas Light was not an additional insured for these claims because they were based solely on Atlanta Gas Light's conduct.Before the United States District Court for the Southern District of Indiana, Atlanta Gas Light sued Navigators for breach of contract, breach of fiduciary duty, and bad faith. The district court dismissed claims related to Navigators’s conduct prior to USIC’s primary policy exhaustion but allowed the breach of contract claim to proceed. On summary judgment, the district court ruled that Atlanta Gas Light was an additional insured under the excess policy and denied Navigators's motion as to breach of contract. The court entered final judgment for Atlanta Gas Light, and both parties appealed aspects of the ruling.The United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. It held that, under Indiana law and the policies’ language, Atlanta Gas Light was an “additional insured” because its liability in the underlying suits arose, at least in part, from USIC’s acts or omissions. The court also held that Navigators had no duty to defend or indemnify Atlanta Gas Light before the primary policy was exhausted, and that Navigators’s denial of coverage, based on a nonfrivolous interpretation of the policy, did not constitute bad faith or breach any fiduciary duty. View "Atlanta Gas Light Company v Navigators Insurance Company" on Justia Law

A fire occurred at an auto repair shop, causing significant property damage to the shop and several vehicles. An insurer paid more than $1.6 million to its insureds under an insurance policy containing a subrogation clause, which allowed the insurer to seek reimbursement from anyone responsible for the loss. The insurer suspected that a specific vehicle, insured by another insurance company, was the source of the fire and requested that the vehicle be preserved for further investigation. Despite assurances, the vehicle was sold at salvage auction, eliminating the possibility of further examination and hindering the insurer’s potential claims against other responsible parties.The insurer, acting as subrogee of its insureds, filed suit in the Court of Common Pleas of Erie County against the other insurer, alleging promissory estoppel due to the failure to preserve evidence. The trial court granted summary judgment to the defendant, concluding that the promissory estoppel claim was in substance a claim for negligent spoliation of evidence, a cause of action not recognized in Pennsylvania, and that subrogation principles did not allow recovery because the defendant had not caused the original property loss. The Superior Court, sitting en banc, reversed, finding that the facts alleged might support a promissory estoppel claim and that the trial court erred in dismissing the complaint on grounds of speculative damages and unrecognized causes of action.The Supreme Court of Pennsylvania reviewed the matter to determine whether the insurer, as subrogee, had any right to recovery against the other insurer and whether its claim was properly characterized. The Supreme Court held that, as subrogee, the insurer’s rights were limited to recovery from the party responsible for the original loss, and because the defendant did not cause the fire, no right of recovery existed. The Court vacated the Superior Court’s decision and reinstated the trial court’s order in favor of the defendant. View "Erie Insurance Exchange v. United Services Auto" on Justia Law

Fayez Dahleh purchased a flexible premium universal life insurance policy originally issued to Gilda Perlas. Dahleh had no known prior relationship with Perlas, but acquired the policy as an investment after Perlas designated him as owner in July 2019. The policy allowed the holder to vary premium amounts and payment schedules, and policy charges were assessed monthly. After becoming owner, Dahleh frequently maintained the policy by making payments at the end of grace periods triggered by insufficient account funds. In February 2022, Dahleh failed to make the required payment before the grace period expired, resulting in Minnesota Life cancelling the policy.Dahleh filed suit in the United States District Court for the Northern District of Illinois, Eastern Division, seeking a declaratory judgment that the policy remained in force. He argued that Minnesota Life failed to provide the statutory notice and six-month grace period required by 215 Ill. Comp. Stat. 5/234 before cancelling the policy. Both parties moved for summary judgment. The district court granted summary judgment in favor of Minnesota Life, holding that proper notice was given and no six-month grace period was required.Reviewing the case de novo, the United States Court of Appeals for the Seventh Circuit considered whether the policy’s required monthly charges constituted “premiums” under Section 234 and whether the policy was exempt from statutory notice and grace-period requirements. The appellate court held that the charges were premiums, but that the policy was exempt from the statutory requirements because premiums were payable monthly, fitting the exception in Section 234(2). Therefore, Minnesota Life was not required to provide additional notice or a six-month grace period before termination. The Seventh Circuit affirmed the judgment of the district court. View "Dahleh v. Minnesota Life Insurance Co." on Justia Law

Under Armour, a publicly traded sports apparel company, faced significant legal claims and government investigations over its financial forecasts and accounting practices following the bankruptcy of a major customer, Sports Authority, in 2016. Shareholders alleged that Under Armour made misleading public statements about its financial prospects and that company insiders sold stock at inflated prices. These allegations led to a federal securities class action, derivative demands, and eventually an SEC investigation into whether Under Armour manipulated its accounting by pulling forward revenue to maintain the appearance of strong growth.In the United States District Court for the District of Maryland, Under Armour’s insurers sought a declaratory judgment, arguing that the securities litigation, derivative actions, and government investigations constituted a single claim under the terms of Under Armour’s directors and officers insurance policies and therefore were subject only to the coverage limit of the earlier policy period. Under Armour countered that the government investigations were a separate claim, entitling it to an additional $100 million in coverage under a subsequent policy. The district court sided with Under Armour, finding that the government investigations and the earlier shareholder claims were not sufficiently related to constitute a single claim under the policy’s language.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s decision de novo. The Fourth Circuit held that, under the plain meaning of the 2017–2018 insurance policy’s “single claims” provision, the claims related to Under Armour’s public financial statements and its accounting practices were “logically or causally related” and thus constituted a single claim. As a result, only the coverage limits from the earlier, 2016–2017 policy period applied. The Fourth Circuit reversed the district court’s judgment in favor of Under Armour. View "Navigators Insurance Co. v. Under Armour, Inc." on Justia Law

Daevieon Towns purchased a new Hyundai Elantra in 2016, and over the next 19 months, the car required multiple repairs for alleged electrical and engine defects. In March 2018, either Towns or his wife, Lashona Johnson, requested that Hyundai buy back the defective vehicle. Before Hyundai acted, the car was involved in a collision, declared a total loss, and Johnson’s insurance paid her $14,710.91.Towns initially sued Hyundai Motor America in the Superior Court of Los Angeles County for breach of express warranty under the Song-Beverly Consumer Warranty Act. As trial approached, Towns amended his complaint to add Johnson as a plaintiff, arguing she was the primary driver and responsible for the vehicle. The trial court allowed the amendment, finding Johnson was not a buyer but permitted her to proceed based on its interpretation of Patel v. Mercedes-Benz USA, LLC. At trial, the jury found for Towns and Johnson, awarding damages and civil penalties. However, the court reduced the damages by the insurance payout and adjusted the prejudgment interest accordingly. Both parties challenged the judgment and costs in post-trial motions.The California Court of Appeal, Second Appellate District, Division Four, reviewed the case. It held that only a buyer has standing under the Act, so Johnson could not be a plaintiff. The court also held that third-party insurance payments do not reduce statutory damages under the Act, following the Supreme Court’s reasoning in Niedermeier v. FCA US LLC. Furthermore, prejudgment interest is available under Civil Code section 3288 because Hyundai’s statutory obligations do not arise from contract. The court affirmed in part, reversed in part, and remanded for the trial court to enter a modified judgment and reconsider costs. View "Towns v. Hyundai Motor America" on Justia Law

Several entities affiliated with Allstate sued a group of individuals and entities that own, manage, and operate Memorial Heights Emergency Center in Houston, Texas. The plaintiffs alleged that, starting in 2018, defendants entered into agreements with personal injury attorneys to refer clients to the Center under letters of protection, guaranteeing future payment from insurance settlements. Defendants billed these patients—primarily car accident victims—using emergency billing codes at rates far above standard charges, often conducting expensive diagnostic tests without documented medical necessity and discharging patients without additional treatment. The bills were then sent to attorneys, who submitted them to Allstate for inclusion in settlement demands. Between August 2018 and November 2022, Allstate settled with 635 claimants and subsequently alleged it discovered a fraudulent scheme, seeking to recover $4.7 million plus treble damages and attorney fees.The United States District Court for the Southern District of Texas dismissed all claims with prejudice. The district court held that Allstate failed to sufficiently allege reliance on the fraudulent bills, undermining its RICO, common-law fraud, conspiracy, unjust enrichment, and money-had-and-received claims. The court also found Allstate had not adequately pleaded direct or proximate causation, concluded that Allstate was “complicit” in the alleged fraud due to its continued settlements after learning of the scheme, and determined that the complexity of the case made it unmanageable as a single lawsuit.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the dismissal de novo. The Fifth Circuit held that the district court applied the wrong legal standards to Allstate’s RICO claims by requiring reliance, which is not necessary for a RICO claim predicated on mail fraud. The appellate court further found that Allstate adequately pleaded proximate cause, damages, and the elements of its common-law and equitable claims. The judgment of the district court was reversed and the case remanded for further proceedings. View "Allstate Indemnity Co v. Bhagat" on Justia Law

A veteran who suffered a traumatic brain injury from an improvised explosive device while deployed sought financial assistance under the Traumatic Servicemembers’ Group Life Insurance (TSGLI) program after experiencing a stroke within two years of the injury. The Army denied his claim, determining the stroke was a physical illness or disease, not a qualifying traumatic injury as defined by the relevant statute and regulations. The veteran then petitioned the Department of Veterans Affairs (VA) to amend its rules to include coverage for illnesses or diseases caused by explosive ordnance, arguing these conditions are analogous to those already covered under existing exceptions for injuries resulting from chemical, biological, or radiological weapons.The VA initially denied the rulemaking petition but agreed to further review as part of a program-wide assessment. After several years, extensive consultation with medical experts, and consideration of the petition and supporting materials, the VA issued a final denial. It concluded that expanding coverage to delayed illnesses or diseases linked to explosive ordnance would be inconsistent with TSGLI’s purpose, which focuses on immediate injuries, would deviate from the insurance model underlying the program, and could threaten its financial stability. The VA also found insufficient evidence of a direct causal relationship between explosive ordnance, traumatic brain injury, and downstream illnesses like stroke.The United States Court of Appeals for the Federal Circuit reviewed the VA’s denial under the highly deferential “arbitrary and capricious” standard of the Administrative Procedure Act. The court held that the VA provided a reasoned explanation addressing the petitioner’s arguments and the record, and did not act arbitrarily or capriciously. The petition for review was therefore denied. View "MCKINNEY v. SECRETARY OF VETERANS AFFAIRS " on Justia Law

Randy Granger was severely injured in an automobile accident while driving a company truck. The at-fault driver’s insurance paid its policy limit of $25,000, which was insufficient to cover Randy’s injuries. Randy then made a claim under his own underinsured-motorist policy with Auto-Owners Mutual Insurance Company, which paid him up to its per-person limit of $250,000. Beverly Granger, Randy’s wife, subsequently filed her own underinsured-motorist claim with Auto-Owners for loss-of-consortium damages, seeking compensation for the decline in affection, care, companionship, and services resulting from Randy’s injuries.Auto-Owners refused Beverly’s claim, treating it as derivative of Randy’s and asserting that the $250,000 per-person limit for underinsured-motorist benefits had already been exhausted by Randy’s claim. Auto-Owners then sought a declaratory judgment in the United States District Court for the Western District of Missouri, arguing it owed no further payment. Beverly counterclaimed for breach of contract. The district court granted summary judgment to Auto-Owners, concluding that Beverly’s loss-of-consortium claim was inseparable from Randy’s bodily injury claim and thus subject to the same per-person limit.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the insurance policy’s language de novo, applying Missouri law. The court found the policy ambiguous regarding whether Beverly’s loss-of-consortium claim was subject to the same per-person limit as Randy’s bodily injury claim or whether each spouse could recover under separate per-person limits for their distinct losses. Resolving the ambiguity in favor of the insured, as required by Missouri law, the Eighth Circuit held that Beverly may recover loss-of-consortium damages and is not barred by the per-person limit applied to Randy’s claim. The court reversed the district court’s judgment and remanded for entry of judgment in Beverly’s favor. View "Auto-Owners Mutual Insurance Company v. Granger" on Justia Law

The plaintiff was involved in a car accident with the defendant, after which he sought damages for the diminished value and loss of use of his vehicle, alleging the accident was caused by the defendant’s negligence. The defendant’s insurer paid the full property damage coverage limit to the plaintiff’s insurer, based on the assertion that the plaintiff had been made whole. The plaintiff then amended his complaint to allege that his insurer was unjustly enriched for accepting the payment and exhausting the defendant’s coverage before the plaintiff was fully compensated, in violation of the make whole doctrine.The case was brought in the Superior Court for the judicial district of Hartford, which dismissed the unjust enrichment claim against the insurer, finding it was not ripe for adjudication. The court reasoned that the plaintiff’s claim depended on the outcome of his negligence action against the defendant. The plaintiff appealed, and the Connecticut Appellate Court affirmed the dismissal, concluding the unjust enrichment claim would only become ripe after the plaintiff obtained a judgment against the defendant and exhausted collection efforts, because the injury was contingent on whether and to what extent the plaintiff could recover and on the defendant’s ability to satisfy a judgment.On review, the Supreme Court of Connecticut held that the Appellate Court incorrectly affirmed the dismissal on ripeness grounds. The Supreme Court ruled that a claim based on premature subrogation in violation of the make whole doctrine is ripe for adjudication even before a judgment against the tortfeasor is obtained, because the alleged injury—violation of the plaintiff’s priority right to the defendant’s insurance coverage—had already occurred. The court also found the plaintiff had standing to assert his claim. The Supreme Court reversed the Appellate Court’s judgment and remanded for further proceedings. View "Orlando v. Liburd" on Justia Law