Justia Insurance Law Opinion Summaries

The Fifth Circuit reversed the district court's grant of summary judgment in favor of the insurer in an insurance coverage dispute regarding flood damage to the property at issue. The insureds interpreted the flood deductible in the policy as covering most of the damage to the property, but the district court determined that the policy is unambiguous and adopted the insurer's interpretation.The court applied Louisiana law and concluded that the policy is ambiguous. The court explained that the predominant use of "Total Contract Value" to denote the value of the entire project indicates that the policy, read in its entirety, does not provide clarity regarding the term "total insured values at risk . . . as respects flood." The court remanded for the district court to determine whether extrinsic evidence resolves the ambiguity. View "Jung v. Starr Surplus Lines Insurance Co." on Justia Law

HC purchased commercial auto liability, commercial umbrella, and commercial general liability (CGL) coverage from United. An HC employee was operating a company truck and trailer. The trailer detached and hit another vehicle, killing the driver and injuring a passenger. To settle the resulting claims, United paid the combined $3 million limits of the commercial auto and umbrella policies but denied coverage under the CGL policy based on the Aircraft, Auto or Watercraft (AAW) exclusion, and the Multiple Liability Coverages Limitation (MLCL) endorsement. United argued that the injuries arose out of the use of a vehicle pulling a loaded equipment trailer, thus arising out of the use of an “auto,” precluding coverage under the CGL policy under the AAW exclusion. Because coverage was provided under the commercial auto policy, United argued that the CGL policy did not provide coverage, pursuant to the MLCL endorsement.The district court found the provisions unambiguous but unenforceable because they were not listed in a table of contents or notice section of important provisions. The Ninth Circuit certified the question to the Montana Supreme Court: Whether, when an insurance policy does not include either a table of contents or a notice section of important provisions, in violation of Mont. Code 33-15-337(2), the insurer may nonetheless rely on unambiguous exclusions or limitations to the policy’s coverage, given that 33-15-334(2) provides that 33-15-337(2) is “not intended to increase the risk assumed under policies subject to” its requirements? View "High Country Paving, Inc. v. United Fire & Casualty Co." on Justia Law

Ben E. Keith Company, Inc. ("BEK"), appealed a circuit court order entering summary judgment in favor of Lyndon Southern Insurance Company ("Lyndon") on Lyndon's complaint for a declaratory judgment. On December 14, 2018, Felicia Edwards and Robert Allen Marak were involved in a motor-vehicle accident in Dadeville. Felicia was driving a 2009 Toyota Camry automobile that was owned by Annette Edwards and insured by Lyndon. Marak was driving a tractor-trailer that was owned by BEK. As a result of the accident, BEK incurred damage to its tractor-trailer. BEK sued Felicia and Annette claiming negligence and wantonness against both Felicia and Annette and a claim of negligent entrustment against Annette. BEK later amended the complaint to add a negligent-maintenance claim against Annette. Lyndon filed a complaint for a declaratory judgment against Felicia, Annette, and BEK, asserting the policy it issued to Annette excluded coverage for "[a]ny operator of a vehicle who is not listed as a driver on the Policy Applications, Declarations, and/or added by Endorsement who is under the age of twenty-five and is either a Family Member or resides in the same household as the Named Insured" and for "[a]n operator of a vehicle who is an unlicensed driver or whose driving privileges have been terminated or suspended." BEK argued the trial court erroneously granted Lyndon's motion for a summary judgment because Lyndon did not produce substantial admissible evidence to establish that Felicia was a noncovered person under the policy that insured Annette's vehicle at the time of the accident. Specifically, it contended Lyndon did not produce substantial admissible evidence to establish that Felicia did not have a valid driver's license at the time of the accident or to establish Felicia's age and residence at the time of the accident. After review, the Alabama Supreme Court concurred Lyndon did not produce substantial evidence to establish that Felicia did not have a valid driver's license at the time of the accident and did not produce substantial evidence to establish that Felicia was under the age of 25 and resided in Annette's household at the time of the accident. Therefore, Lyndon did not shift the burden of proof to BEK. Accordingly, the trial court erred in granting Lyndon's motion for a summary judgment. Judgment was therefore reversed. View "Ben E. Keith Company, Inc. v. Lyndon Southern Insurance Company" on Justia Law

Three appeals arose from an insurance coverage dispute following a wildfire that burned in Siskiyou County, California. In September 2014, the Boles Fire damaged and destroyed numerous homes in the town of Weed, including the homes owned by plaintiffs Gary Andrighetto, James Dalin, and Matthew Vulk. Plaintiffs and others filed suit against their insurance company, defendant State Farm General Insurance Company, alleging various claims, including breach of contract and negligence. Central to the parties’ dispute was whether State Farm intentionally or negligently underinsured plaintiffs’ homes. Plaintiffs argued their homes were insufficiently insured due to State Farm’s alleged failure to calculate reasonable or adequate policy limits on their behalf for the full replacement cost of their homes. After the trial court granted State Farm’s motion for summary judgment against Andrighetto, Dalin and Vulk stipulated to entry of judgment in favor of State Farm. Each plaintiff timely appealed, and the Court of Appeal consolidated the appeals for argument and disposition. Thereafter, the Court requested that the parties discuss in their briefing whether the judgments in the Dalin and Vulk matters needed to be reversed pursuant to Magana Cathcart McCarthy v. CB Richard Ellis, Inc., 174 Cal.App.4th 106 (2009). After review, the Court affirmed the trial court in the Andrighetto matter; the Court reversed in the Dalin and Vulk matters, and remanded those for further proceedings. View "Vulk v. State Farm General Ins. Co." on Justia Law

In each of two automobile personal injury actions, plaintiffs moved for entry of a qualified protective order (QPO) pursuant to the Health Insurance Portability and Accountability Act (HIPAA), 110 Stat. 1936, and its implementing regulations (45 C.F.R. 160, 164) (Privacy Rule). Plaintiffs’ proposed QPOs would allow protected health information (PHI) to be released, subject to restrictions that nonlitigation use or disclosure of PHI is prohibited and PHI must be returned or destroyed at the conclusion of the litigation. State Farm, the liability insurer for the named defendants, intervened in each lawsuit and sought entry of its own protective order, which expressly allowed insurance companies to use, disclose, and maintain PHI for purposes beyond the litigation and expressly exempted insurers from the “return or destroy” requirement.In both cases the circuit court granted the plaintiffs’ motions. The appellate court and Illinois Supreme Court affirmed, rejecting State Farm’s argument that property and casualty insurers fall outside HIPAA. Rejecting arguments concerning the requirements of the Illinois Insurance Code, the court stated that no Illinois law requires State Farm to use or disclose plaintiffs’ PHI after the conclusion of the litigation. The Cook County standard protective order is preempted by the Privacy Rule and the McCarran-Ferguson Act, 15 U.S.C. 1011, does not apply to shield that order from traditional preemption. View "Haage v. Zavala" on Justia Law

Sproull filed a putative class action against State Farm, alleging breach of contract. State Farm allegedly depreciated labor costs in determining “actual cash value” (ACV) of a covered loss and concealed this practice from its policyholders. The policy does not define ACV. State Farm agreed to certify a question for interlocutory review: “Where Illinois’ insurance regulations provide that the ‘actual cash value’ or ‘ACV’ of an insured, damaged structure is determined as ‘replacement cost of property at time of loss less depreciation if any,’ and the policy does not itself define actual cash value, may the insurer depreciate all components of replacement cost (including labor) in calculating ACV?”The Appellate Court reformulated the question to address solely labor costs, rather than all components of replacement cost and answered the question in the negative. The Illinois Supreme Court affirmed, finding the policy ambiguous and construing it against the insurer. Illinois’s insurance regulations provide that the ACV of an insured, damaged structure is determined as the replacement cost of the property at time of loss less depreciation if any; only the property structure and materials are subject to a reasonable deduction for depreciation, and depreciation may not be applied to the intangible labor component. View "Sproull v. State Farm Fire and Casualty Co." on Justia Law

In March 2020, the Governor of Ohio declared a state of emergency in connection with the COVID-19 pandemic. A few days later, the Director of the Ohio Department of Health ordered restaurants across the state to close their doors to in-person diners, forcing Santosuossos restaurant in Medina to halt ordinary operations. Although the closure order permitted restaurants to offer takeout services, in-person dining generates the substantial majority of Santosuossos’s revenue.” The restaurant sustained significant losses and laid-off employees. The restaurant filed a claim with Acuity, seeking recovery under its commercial property insurance policy. After Acuity denied coverage, the owner filed suit.The Sixth Circuit affirmed the dismissal of the suit. The policy covers business interruption “caused by direct physical loss of or damage to property.” The cause of the suspension of operations—the prohibition on in-person dining—did not arise from a physical loss of property or physical damage to it. The court also noted policy exclusions for “loss or damage caused directly or indirectly by . . . [a]ny virus . . . capable of inducing physical distress, illness or disease” and for “loss or damage caused directly or indirectly by [ordinance or law] . . . [r]egulating the construction, use or repair of any property.” View "Santo's Italian Cafe LLC v. Acuity Insurance Co." on Justia Law

In the underlying action, the insureds were sued by victims of a fire that occurred at the insureds' property. The insurer, Aspen, and managing underwriter, D&H, defended the action, which ultimately settled without any out-of-pocket payment from the insureds. The insureds then filed this action against Aspen and D&H, seeking a declaration that a conflict of interest existed in the underlying case between them and Aspen and D&H, so they were entitled to so-called "Cumis" counsel under Civil Code section 2860. The trial court sustained a demurrer without leave to amend and entered judgment for Aspen and D&H.The Court of Appeal concluded that the demurrer was the incorrect procedural vehicle to resolve the insureds' declaratory judgment claim against Aspen and D&H. However, the insureds' family suffered no prejudice because the second amended complaint (SAC) did not allege a conflict of interest entitling them to independent counsel pursuant to section 2860 as a matter of law. Accordingly, the court modified the judgment to declare the rights adverse to the insureds and affirmed the trial court's judgment. View "Nede Management, Inc. v. Aspen American Insurance Co." on Justia Law

The Eleventh Circuit affirmed the district court's grant of summary judgment in favor of GEICO and its rejection of claimant's attempt to obtain a $14,900,000 bad faith judgment from the insurer. The court concluded that, under the totality of the circumstances, no reasonable jury could conclude that GEICO acted in bad faith before, during, or after sending the proposed release to claimant. The court noted that it was not allowing GEICO to escape liability merely because claimant and his attorney's actions could have contributed to the failure to settle. Rather, the court discussed claimant and his attorney's actions because they show how, in the totality of these circumstances, GEICO did fulfill its good faith duty to the driver and his mother. The court explained that they show how the failure to settle the lawsuit against the insureds did not result from bad faith of the insurer. View "Pelaez v. Government Employees Insurance Co." on Justia Law

Consolidated cases presented a certified question from the United States District Court for the District of Oregon. The Oregon Supreme Court was asked to determine whether Oregon law precluded an insurer from limiting its liability for uninsured/underinsured motorist (UM/UIM) benefits on the basis that another policy also covered the insured’s losses. Each plaintiff suffered injuries caused by an uninsured or underinsured motorist, and each plaintiff incurred resulting damages that qualify as covered losses under multiple motor vehicle insurance policies issued by defendant State Farm Mutual Automobile Insurance Company (State Farm). Each plaintiff alleged a loss that exceeded the declared liability limits of any single applicable policy and sought to recover the excess under additional applicable policies, up to the combined total of the limits of liability. In each case, however, State Farm refused to cover the excess loss, citing a term in the policies that allowed State Farm to limit its liability to the amount that it agreed to pay under the single policy with the highest applicable limit of liability. The Oregon Supreme Court concluded that that term made State Farm’s uninsured motorist coverage less favorable to its insureds than the model coverage that the legislature has required and, thus, was unenforceable. View "Batten v. State Farm Mutual Automobile Ins. Co." on Justia Law