Justia Insurance Law Opinion Summaries

A devastating fire occurred in Lahaina on August 8, 2023, resulting in over one hundred deaths and widespread property and economic damage. Following the fire, individually represented plaintiffs and class action plaintiffs filed lawsuits in state and federal courts against entities including Hawaiian Electric, Kamehameha Schools, the State of Hawaiʻi, and the County of Maui. These class actions were eventually consolidated and refiled as a single case in the Circuit Court of the Second Circuit. Through court-ordered mediation, parties reached a “global settlement” in August 2024, resolving all claims for a total of $4.037 billion, with a portion allocated to a class settlement fund.Prior to the present appeal, the Circuit Court of the Second Circuit coordinated complex proceedings, including appointment of a special settlement master and consolidation of cases. The court issued an order establishing exclusive jurisdiction over subrogation claims related to the settlement. After the settlement was publicized and the Hawaiʻi Supreme Court issued its opinion in In re Maui Fire Cases, which clarified that insurers’ exclusive remedy after settlement is a statutory lien under HRS § 663-10, Subrogating Insurers moved to intervene in the class action, claiming protectable equitable subrogation rights if some class members did not file claims.The Supreme Court of the State of Hawaiʻi held that Subrogating Insurers do not possess a protectable interest that justifies intervention by right or permissive intervention in the class action settlement under Hawaiʻi Rules of Civil Procedure Rule 24. The court found that the statutory lien process under HRS § 663-10 is the exclusive remedy for insurers, and settlement extinguishes subrogation rights, even if some class members do not claim settlement funds. The court affirmed the Circuit Court’s order denying intervention. View "Burnes v. Hawaiian Electric Company, Inc." on Justia Law

The dispute centers on an injury suffered by Catherine Dudley at a property owned by Michel Kanyambo and Speciose Mahirwe, which was insured under a general liability policy issued by Hudson Specialty Insurance Company. The policy, procured through intermediaries, was in effect from September 14, 2017, to September 14, 2018. Before the expiration, a renewal quote was relayed from Hudson’s intermediary to Kanyambo via their insurance agent, but Kanyambo and Mahirwe never received a written quote nor communicated directly with Hudson or its intermediary. They took no steps to renew, and no written notice of nonrenewal was sent to them. Dudley was injured on the property nine days after the policy’s expiration and, after settling her claims against the owners, she initiated a statutory “reach-and-apply” action against Hudson.In the Androscoggin County Superior Court, both Dudley and Hudson sought summary judgment on whether the policy was effective at the time of the injury. The Superior Court granted summary judgment to Hudson, reasoning that the owners’ receipt of the renewal quote via their agent meant Hudson was not required to provide written notice of nonrenewal. The court found there was no material fact in dispute and held the policy was not in effect, barring Dudley’s claims against Hudson.The Maine Supreme Judicial Court reviewed the case de novo. It concluded that under the plain language of Maine’s statutes, an insurer must send a written notice of nonrenewal before a policy terminates at its expiration, regardless of whether the insurer offered to renew. The statutory definition of “nonrenewal” encompasses any termination at the expiration date, and failure to provide the required notice means the policy does not terminate. The Court vacated the summary judgment in favor of Hudson and remanded for further proceedings, holding that Hudson was obligated to send notice and its failure to do so meant coverage remained in effect. View "Dudley v. Hudson Specialty Insurance Company" on Justia Law

A truck driver, acting as an agent for a trucking company, was involved in a collision with a vehicle driven by Bianca Spotted Thunder, which was insured under her father’s Liberty Mutual policy. After obtaining an unsatisfied default judgment against Bianca, the trucking company sought recovery from Liberty Mutual under the Spotted Thunders’ policy. Liberty Mutual had previously paid collision coverage but denied liability coverage, citing lack of cooperation from its insureds in the investigation and lack of notice regarding the lawsuit against Bianca.The Circuit Court of the Seventh Judicial Circuit, Pennington County, initially granted Liberty Mutual’s motion to dismiss for failure to state a claim, finding that notice of the suit was a prerequisite to coverage. On appeal, the Supreme Court of South Dakota reversed, holding that a third-party claimant need not plead satisfaction of conditions precedent in the complaint. On remand, Liberty Mutual moved for summary judgment based on noncompliance with policy conditions requiring cooperation and notice. The circuit court granted summary judgment, concluding there were no material facts in dispute regarding noncompliance.The Supreme Court of South Dakota reviewed the matter and clarified that while an insurer may raise noncompliance with policy conditions as a defense in a direct action, South Dakota’s financial responsibility statutes make liability coverage up to statutory minimums “absolute,” barring defenses based on policy conditions for that minimum coverage. However, insurers retain such defenses for excess coverage above statutory requirements. The court affirmed summary judgment in favor of Liberty Mutual for any excess coverage but reversed as to the mandatory minimum coverage required by statute, remanding the case for amended judgment in accordance with this distinction. View "Kaiser Trucking, Inc. V. Liberty Mutual" on Justia Law

GEICO and its subsidiaries brought a lawsuit in the United States District Court for the Eastern District of New York against Dr. Bhargav Patel and his medical practice, alleging that the defendants engaged in a scheme to defraud GEICO by manipulating New York’s no-fault automobile insurance system. GEICO claimed that from 2019 to 2023, defendants submitted approximately $3.4 million in reimbursement claims for treatments that were unnecessary, experimental, excessive, illusory, or not provided at all. These claims allegedly resulted from a fraudulent scheme involving kickbacks for patient referrals and the provision of services by unlicensed individuals or contractors.After GEICO initiated its federal action, the defendants responded by filing over 600 collection actions in New York state courts and arbitration tribunals, seeking recovery for disputed or denied claims totaling more than $2 million. GEICO, facing the prospect of fragmented litigation and the risk of inconsistent judgments, sought a preliminary injunction from the district court to stay all pending state and arbitration proceedings and to prevent the defendants from filing new collection actions until the federal court resolved the RICO claims. The district court granted the injunction, finding that GEICO had demonstrated irreparable harm, serious questions going to the merits, and a balance of hardships tipping in GEICO’s favor. The court also determined it had authority under the “in aid of jurisdiction” exception to the Anti-Injunction Act to enjoin the parallel proceedings.On appeal, the United States Court of Appeals for the Second Circuit reviewed the district court’s decision for abuse of discretion and found none. The appellate court held that the preliminary injunction was justified by the real risk of irreparable harm to GEICO posed by inconsistent judgments and the inability to fully adjudicate the alleged fraudulent scheme in piecemeal state actions. The Second Circuit further held, consistent with its recent precedent in State Farm Mutual Automobile Insurance Company v. Tri-Borough NY Medical Practice, P.C., that the injunction did not violate the Anti-Injunction Act because it was expressly authorized under RICO. The court affirmed the district court’s order. View "GEICO v. Patel" on Justia Law

A fatal shooting occurred in 2017 at an apartment complex insured by both a primary and an excess insurer. The decedent’s estate sued the insured for negligence and related claims. The primary insurer agreed to defend and, during the litigation, rejected three settlement offers that were at or below its $1 million policy limit. Eventually, the suit settled pretrial for $5 million. The primary insurer contributed its policy limit, and the excess insurer paid the remaining $4 million under protest, reserving its right to seek reimbursement.The excess insurer then filed suit in a California federal district court, claiming equitable subrogation against the primary insurer. The excess insurer argued that the primary insurer breached its duty of good faith and fair dealing by failing to settle within policy limits and that it was entitled to stand in the shoes of the insured to recover the $4 million paid. The district court, applying Nevada law, dismissed the claim, finding that Nevada precedent barred equitable subrogation when the underlying settlement was within the combined limits of the insurers. The excess insurer appealed to the United States Court of Appeals for the Ninth Circuit, which determined that Nevada law was unsettled on this question and certified the issue to the Supreme Court of Nevada.The Supreme Court of Nevada held that, under Nevada law, an excess insurer may state a claim for equitable subrogation against a primary insurer when the insured would have suffered a loss absent the excess insurer’s payment, regardless of whether the settlement was within the combined policy limits. The court explained that the excess insurer may assert any claims that the insured could have made against the primary insurer, including claims for failure to settle in good faith. The court answered the certified question in the affirmative. View "NORTH RIVER INS. CO. VS. JAMES RIVER INS. CO." on Justia Law

Harman International Industries was acquired by Samsung Electronics in a reverse triangular merger, after which a class of former Harman shareholders filed a federal securities lawsuit alleging that disclosures made in connection with the transaction were misleading and violated Sections 14(a) and 20(a) of the Securities Exchange Act. The shareholders claimed they were deprived of a fully informed vote and the full value of their shares, seeking damages equal to the difference between the merger price and Harman’s true value. The parties settled the suit for $28 million, which was distributed to a class defined as shareholders who held Harman stock at any time during the relevant period, including some who did not receive merger consideration.Harman sought coverage for the $28 million settlement under its Directors and Officers (D&O) insurance policies with Illinois National Insurance Company, Federal Insurance Company, and Berkley Insurance Company. The insurers denied coverage, invoking a “Bump-Up Provision” that excluded settlements representing an effective increase in deal consideration for claims alleging inadequate consideration in an acquisition. Harman sued the insurers for breach of contract in the Delaware Superior Court. After initial motions were denied due to insufficient facts, both sides moved for summary judgment on the applicability of the Bump-Up Provision.The Delaware Superior Court held that the Bump-Up Provision did not exclude coverage because the underlying complaint did not allege inadequate consideration as a viable remedy, and the settlement amount did not represent an effective increase in deal consideration. On appeal, the Supreme Court of Delaware affirmed the Superior Court’s judgment, holding that although the complaint did allege inadequate consideration, the insurers failed to prove the settlement amount effectively increased the deal consideration. Thus, the $28 million settlement was covered under Harman’s policies. View "Illinois National Insurance Company and Federal Insurance Company v. Harman International Industries, Incorporated" on Justia Law

A nonprofit organization, which hosts an annual art auction, held its 2022 event virtually. To facilitate the livestreamed auction and online bidding, it contracted with two vendors: one to provide the video feed and another to supply bidding software. The video vendor created a YouTube link for attendees to view the auction, and the bidding software synced with this feed, enabling participants to watch and bid on a single screen. Minutes before the event, the video vendor lost its internet connection, causing the YouTube link to break and severing the connection between the video feed and the bidding platform. As a result, auction attendees could neither view the auction nor place bids through the intended system. The auction was hurriedly redirected to a different platform, which resulted in a less effective, asynchronous experience and significantly lower fundraising.The nonprofit threatened legal action against the video vendor for breach of contract and negligence. The vendor, unable to pay, assigned its insurance claim to the nonprofit. The vendor’s insurer, Auto-Owners Insurance Company, had issued a general liability policy that covered certain types of property damage but contained a specific exclusion for damages arising out of the loss or inability to access electronic data. Auto-Owners filed for a declaratory judgment in the United States District Court for the Western District of Missouri, seeking a ruling that its policy did not provide coverage. The district court granted summary judgment to Auto-Owners, holding that the policy’s electronic-data exclusion barred recovery.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the district court’s interpretation of Missouri law de novo. The appellate court held that the policy’s electronic-data exclusion clearly and unambiguously applied to the circumstances, barring coverage for the losses. Therefore, the Eighth Circuit affirmed the district court’s grant of summary judgment in favor of Auto-Owners Insurance Company. View "Auto-Owners Insurance Company v. Halo Foundation: Helping Art Liberate Orphans" on Justia Law

Selina Anderson, a federal employee with a history of severe lung disease, broke her leg in a parking lot accident and subsequently died less than a week later following complications from surgery. Her official cause of death was a pulmonary embolism, but her autopsy noted that her longstanding interstitial lung disease contributed to her death. Anderson’s daughter, Brittany Finney, was the beneficiary of Anderson’s life insurance policy under the Federal Employees’ Group Life Insurance Act (FEGLI), which included both standard and accidental death benefits.After Anderson’s death, Finney submitted claims for both types of benefits to Metropolitan Life Insurance Company (MetLife), the insurer. MetLife paid the standard life insurance benefit but denied the additional accidental death benefit. The denial was based on two grounds: that Anderson’s death was not “accidental” within the policy’s meaning, and that her death was “contributed to by” her pre-existing physical illness, thus falling under an exclusion in the policy. Finney filed suit in the United States District Court for the Northern District of Alabama, arguing that the denial breached the insurance contract. Both parties moved for judgment as a matter of law. The district court ruled in favor of MetLife, finding that the denial was reasonable under the policy’s physical illness exclusion.On appeal, the United States Court of Appeals for the Eleventh Circuit affirmed the district court’s judgment. The Eleventh Circuit held that MetLife’s decision to deny accidental death benefits was not arbitrary or capricious, as the policy clearly excluded coverage when a physical illness contributed to the insured’s death. The court concluded that Anderson’s pre-existing lung disease contributed to her death and that MetLife’s denial was reasonable under the terms of the insurance contract. View "Finney v. Metropolitan Life Insurance Company" on Justia Law

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