Justia Insurance Law Opinion Summaries

Articles Posted in Insurance Law
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The Seventh Circuit affirmed the judgment of the district court dismissing North American Elite Insurance Company's (North American) claims against Menard, holding that there was no error.After a Menard employee hit a customer with a forklift the customer brought a negligence suit against Menard and its employee in state court. Menard carried two levels of personal injury liability insurance at the time. Liability exceeding $3 million fell under an umbrella policy with North American. The jury returned a $13 million verdict, which was reduced to a $6 million settlement. North American indemnified Menard for liability in excess of $3 million then brought this action against Menard in federal court, arguing that Menard violated its duties under Illinois law by rejecting a settlement offer and proceeding to trial. The district court dismissed all claims. The First Circuit affirmed, holding that North American was not entitled to relief on its claims of error. View "North American Elite Insurance v. Menard, Inc." on Justia Law

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Liberty Insurance Corporation (“Liberty”) sought to rely on a general coverage exclusion, it was aware that its policy also contained an exception to the general exclusion if the Defendant homeowners, could show that the all-terrain vehicle (ATV) was not subject to motor vehicle registration and was used to “service” their cabin. One of Defendant homeowners was the only witness who testified during a bench trial.   After the trial concluded, the district court (at Liberty’s request) imposed Rule 37(c)(1) sanctions on Defendants for failing to disclose a witness. The district court also excluded one of the homeowner’s testimony about whether the ATV was registered and used to service the cabin, based on the theory that he had not been properly disclosed as a witness. The district court ruled that ATV was used to service the cabin at any time,” and thus found that the Defendants were not entitled to coverage.   The Ninth Circuit reversed the district court’s order imposing sanctions and remanded for a new trial. The court held that because Defendants complied with Rule 26(a)(1)(A)(i)’s requirement to disclose “individuals likely to have discoverable information—along with the subjects of that information” for the purpose of identifying potential fact witnesses, sanctions under Rule 37(c)(1) were not justified. But even Defendants had not complied with Rule 26, the district court abused its discretion by imposing Rule 37(c)(1) sanctions without analyzing (1) whether the alleged defects in the disclosures were harmless and (2) whether the defects involved willfulness, fault, or bad faith. View "LIBERTY INSURANCE CORPORATION V. YVONNE BRODEUR" on Justia Law

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The Eighth Circuit Rymer Companies, LLC, and Cannon Falls Mall (collectively, “Rymer”) claim their insurance policy (the “Policy”) with Cincinnati Insurance Company (“Cincinnati”) covers the costs of replacing the roof on a shopping mall owned by Rymer. Rymer appealed the district court’s grant of summary judgment in favor of Cincinnati and its denial of Rymer’s motion for summary judgment.   At issue on appeal is whether the Policy’s ordinance-or-law endorsement covers the total replacement cost for the mall’s roof. The Second Circuit reversed the district court’s grant of summary judgment and remanded. Here, the causal link between the tornado and the enforcement of Section 1511.3.1.1 is clear—the ordinance would not have been enforced “but for” the tornado. But for causation only requires a showing that in the absence of the former event, the latter would not have occurred Thus, the district court erred in concluding Rymer failed to show but-for causation between the tornado and the County’s enforcement of Section 1511.3.1.1. View "Cincinnati Insurance Company v. Rymer Companies, LLC" on Justia Law

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Affirming the district court’s summary judgment in favor of National Railroad Passenger Corporation and other railroad companies, the Ninth Circuit held that, as to railroad employees, the federal Railroad Unemployment Insurance Act preempts California’s Healthy Workplaces, Healthy Families Act, which requires employers to provide employees with paid sick leave that they may use for specified purposes.   RUIA provides unemployment and sickness benefits to railroad employees, and it contains an express preemption provision disallowing railroad employees from having any right to “sickness benefits under a sickness law of any State.” Looking at the plain meaning of the statutory text, the court concluded that the preemption provision broadly refers to compensation or other assistance provided to employees in connection with physical or mental well-being. The court concluded that RUIA’s statutory framework and stated purposes confirm the breadth of its preemptive effect.   The court found unpersuasive an argument by the California Labor Commissioner and union-intervenors that RUIA does not preempt the California Act as to railroad employees because the benefits the Act offers are different in kind than RUIA’s benefits. The court also found unpersuasive (1) an argument that RUIA should be interpreted as preempting only the kinds of state laws that existed at the time RUIA was amended to provide for sickness benefits; and (2) various textual arguments in support of a narrower interpretation of the preemption provision. View "NAT'L RAILROAD PASSENGER CORP. V. JULIE SU" on Justia Law

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The First Circuit affirmed the judgment of the district court in favor of an employee's widow in this insurance dispute, holding that the employee did not lose life insurance coverage under his employer's group policy after he developed a brain tumor that disrupted his usual work.Plaintiff, the employee's widow, submitted a statement to Insurer claiming approximately $1 under her late husband's life insurance policy. Insurer denied the claim. Plaintiff then sued, alleging wrongful denial of benefits under section 502(a) of ERISA, 29 U.S.C. 1132(a)(1)(B), (a)(3). The insurance company denied life insurance coverage on the grounds that the employee's coverage under the policy had lapsed. The district court granted summary judgment for Plaintiff. The First Circuit affirmed, holding (1) because the policy language invoked by Insurer in this case was less than clear the rule that ambiguous terms in an insurance policy should be read in favor of coverage applied; and (2) the employee was covered at the time of his demise. View "Ministeri v. Reliance Standard Life Insurance Co." on Justia Law

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After disputes arose between a general contractor and two of its subcontractors, an arbitrator awarded the subcontractors money for the labor and material they had provided the general contractor along with associated costs, attorneys' fees, interest, and other sums. The general contractor declared bankruptcy before paying up, and the surety company that issued a bond guaranteeing the subcontractors would be paid tendered amounts representing only the part of the awards that compensated for labor and material (and some interest). But the subcontractors (or in one case, the subcontractor's assignee) wanted the whole of the awards and sued in federal court to get it.   The district court sided with the surety and granted it summary judgment. The Eighth Circuit reversed and remanded the district court’s decision granting summary judgment to the surety. The court held that the bond at issue obligates the surety to pay not only for labor and material but also for other related items to which Plaintiffs’ subcontracts entitle them (or their assignees). The court explained that the bond provided that if the subcontractors were not paid in full, which is the case here, they were entitled to sums "justly due," which included costs, attorneys' fees and interest. View "Owners Insurance Company v. Fidelity & Deposit Company" on Justia Law

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Rock Dental Arkansas PLLC and Rock Dental Missouri LLC (Rock Dental) operate dental clinics in Arkansas and Missouri. After Rock Dental’s insurer, Cincinnati Insurance Company (Cincinnati), denied coverage for Rock Dental’s claims for losses related to the COVID-19 pandemic, Rock Dental sued for breach of contract. The district court granted Cincinnati’s motion to dismiss for failure to state a claim.   The Eighth Circuit affirmed. The court explained that Rock Dental has failed to plausibly allege that COVID-19 physically damaged its properties or that removal of any virus from its properties was required. Further, Rock Dental has not shown that it is entitled to coverage under the Civil Authority Coverage. The court explained that coverage requires allegations of physical loss of or damage to properties other than Rock Dental’s clinics. Rock Dental’s complaint contains no such allegations. View "Rock Dental Arkansas PLLC v. Cincinnati Insurance Company" on Justia Law

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The Louisiana Independent Pharmacies Association (“LIPA”) sued Express Scripts on behalf of its members, seeking a declaratory judgment on whether La. Rev. Stat. Ann. Sections 22:1860.1 and 46:2625 are preempted by Medicare Part D.1 Express Scripts moved to dismiss LIPA’s request for declaratory judgment regarding the reimbursement provision for failure to state a claim, see Fed. R. Civ. P. 12(b)(6), on the basis that Medicare Part D preempts the reimbursement provision for prescriptions covered by Part D plans The district court concluded, however, that Express Scripts failed “to meet its burden of showing preemption or any other basis for dismissal.” Express Scripts moved to certify the order denying its motion to dismiss for interlocutory appeal under 28 U.S.C. Section1292(b). The district court granted certification,   The Fifth Circuit vacated the district court’s order concluding that the court lacks both federal question and diversity jurisdiction. The court explained that here, LIPA seeks a declaration that Express Scripts’ state law and related contractual obligation to reimburse LIPA’s member pharmacies for the provider fee is not preempted by federal law. Applying the well-pleaded complaint rule requires the court to imagine a hypothetical coercive lawsuit brought by Express Scripts against LIPA’s member pharmacies. But none is conceivable, thus, because Express Scripts has no possible ground for a coercive lawsuit, no federal question arises for purposes of jurisdiction in LIPA’s declaratory judgment case. Accordingly, the court concluded that LIPA must make the same showing to satisfy the amount in controversy requirement. View "LA Indep Pharmacies v. Express Scripts" on Justia Law

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The issue this case presented for the Pennsylvania Supreme Court's review centered on whether Appellant’s legal malpractice claims against Appellees, her former attorneys, were barred under the Court’s decision in Muhammad v. Strassburger, McKenna, Messer, Shilobod & Gutnick, 587 A.2d 1346 (Pa. 1991), which held that a plaintiff could not sue his attorney on the basis of the adequacy of a settlement to which the plaintiff agreed, unless the plaintiff alleged the settlement was the result of fraud. Appellant, Dr. Ahlam Kahlil, owned a unit in the Pier 3 Condominiums in Philadelphia; the unit was insured by State Farm Fire and Casualty Company (“State Farm”). The Pier 3 Condominium Association (“Pier 3”) was insured under a master policy issued by Travelers Property Casualty Company of America (“Travelers”). In May 2007, Appellant sustained water damage to her unit as a result of a leak in the unit directly above hers, which was owned by Jason and Anne Marie Diegidio. Due to the water damage, Appellant moved out of her unit and stopped paying her condominium fees. Appellant filed suit against State Farm and Travelers, alleging breach of contract and bad faith, and against the Diegidios, alleging negligence. A year later, Pier 3 filed a separate lawsuit against Appellant for her unpaid condominium fees and charges. In affirming in part and reversing in part the trial court, the Supreme Court found that by finding Appellant’s claims were barred under Muhammad, the lower courts ignored other averments in Appellant’s complaint which did not allege fraud, but, rather, alleged legal malpractice by Appellees in allowing Appellant to enter into a settlement agreement in the Water Damage Case that subsequently precluded her from raising her desired claims in the Fees Case, while repeatedly advising Appellant that the settlement agreement would not preclude those claims. "[A]s our review of Appellant’s complaint demonstrates that she was not merely challenging the amount of her settlement in the Water Damage Case, but rather alleged that Appellees provided incorrect legal advice regarding the scope and effect the Travelers Release, we hold that Muhammad’s bar on lawsuits based on the adequacy of a settlement is not implicated in this case." View "Khalil v. Williams" on Justia Law

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In this insurance dispute, the Supreme Court reversed the order of the district court granting Homeowners' cross-motion for partial summary judgment and denying Employer's Mutual Casualty Company's (EMC) motion for summary judgment, holding that the district court erred in concluding that a certain exclusion in the relevant policy precluded coverage for Homeowners' potential liability in the underlying lawsuits.EMC, who was defending Insureds in the underlying lawsuits, filed a declaratory judgment action seeking a declaration that, pursuant to the policy's "Earth Movement Exclusion," there was no coverage for Homeowners' claims against Insured. Homeowners then initiated a declaratory judgment action seeking a ruling that EMC was obligated to indemnify Insureds for Homeowners' claims under the applicable policy limits. The district court concluded that EMC had a duty to provide coverage for Homeowners' claims. The Supreme Court reversed, holding that the district court erred in concluding that coverage existed under the policy. View "Loendorf v. Employers Mutual Casualty Co." on Justia Law