Justia Insurance Law Opinion Summaries

VT Halter Marine (VTHM), a shipbuilder, contracted to build a barge and a tug for a client. During construction, over a thousand steel flange plates were incorrectly bent due to the use of an improperly sized die, leading to thinning and cracking of the plates. The faulty plates were installed onto the vessels, and the cracking was discovered later. The cost of replacing and repairing the cracked flange plates amounted to approximately $3,300,000. VTHM submitted a claim to their insurer, Certain Underwriters of Lloyd’s of London (Underwriters), for the cracked flange plates.The Underwriters denied VTHM's claim, asserting that the policy excluded coverage for faulty workmanship and the cost of replacing or repairing improper or defective materials. VTHM contested the denial, leading to a lawsuit for breach of contract. Both parties filed motions for summary judgment in the trial court. The trial court granted Underwriters' motion for summary judgment, ruling that the policy unambiguously excluded coverage for faulty workmanship and the cost of repairing, replacing, or renewing any improper or defective materials.In the Supreme Court of Mississippi, VTHM appealed the trial court's decision, arguing that the flanges were part of the vessel and coverage for faulty workmanship exists if it results in cracking of the vessel. The Supreme Court, however, affirmed the trial court's judgment. The court found that the insurance policy unambiguously excluded the cost of replacing or repairing improper or defective materials. The court concluded that the faulty workmanship directly resulted in improper materials being installed, and the only resulting damage was to the improper materials themselves. Therefore, VTHM's claim for the costs of repairing and/or replacing the improper materials installed was not covered under the policy. View "VT Halter Marine, Inc. v. Certain Underwriters of Lloyd's of London" on Justia Law

James and Levi Garrett, a father and son farming duo in South Dakota, were found guilty by a jury of making false statements in connection with federal crop insurance. The Garretts had participated in a federal crop insurance program, administrated by Crop Risk Services (CRS) and backed by the Risk Management Agency of the United States Department of Agriculture (USDA). They had obtained insurance for sunflower crops in 2018, and James had obtained insurance for a corn crop in 2019. The Garretts were accused of falsely certifying the number of acres of sunflowers and corn they planted in 2018 and 2019 respectively, and subsequently reporting harvest losses to CRS.The case went to trial in October 2022. The jury heard from several witnesses and examined dozens of exhibits. At the conclusion of the trial, James was convicted on two counts of making a false statement in connection with insurance for sunflower and corn crops, and Levi was convicted on one count of making a false statement in connection with insurance for a sunflower crop. The Garretts moved for judgment of acquittal, and in the alternative, a new trial, arguing there was insufficient evidence to support their convictions. The district court denied their motion.The Garretts appealed to the United States Court of Appeals for the Eighth Circuit, challenging the district court’s evidentiary rulings and its denial of their post-trial motions. They argued that the district court erred in admitting certain evidence and excluding others, and that there was insufficient evidence to support their convictions. The Court of Appeals affirmed the judgment of the district court, concluding that the trial record supported the jury verdict and that the district court did not err in its evidentiary rulings or in denying the Garretts' post-trial motions. View "United States v. Garrett" on Justia Law

This case involves a dispute between Darren Findling, a professional guardian, and Auto-Owners Insurance Company. Findling was appointed as the guardian for two individuals, Mary Ann Malloy and Dana Jenkins, who were incapacitated due to automobile accidents. Findling, along with employees of his law firm, provided various guardianship services to Malloy and Jenkins, and sought reimbursement from Auto-Owners for these services under the no-fault act. Auto-Owners declined to reimburse for the services performed by the employees of Findling’s law firm, arguing that the services were not lawfully rendered.The Oakland County Probate Court granted Findling’s motions for partial summary disposition, ruling in favor of Findling. Auto-Owners appealed, but the Court of Appeals initially denied the appeal. The Supreme Court then remanded the cases to the Court of Appeals for consideration. On remand, the Court of Appeals affirmed in part and reversed in part, holding that a guardian is only required to comply with certain statutory provisions to lawfully delegate guardianship powers, but not duties, to employees.The Supreme Court of Michigan, in a unanimous opinion, held that a professional guardian cannot, without executing a power of attorney complying with certain statutory provisions, lawfully delegate to employees their final decision-making authority over a guardianship “power” that is explicitly listed in the statute or over any guardianship task that alters or impairs the incapacitated individual’s rights, duties, liabilities, or legal relations. However, a professional guardian may lawfully have employees assist in exercising a guardianship power and may have employees perform any other guardianship task on behalf of the professional guardian. The Supreme Court vacated the decisions of the lower courts and remanded the cases for further proceedings. View "In Re Guardianship Of Mary Ann Malloy" on Justia Law

The case involves a dispute between James Snell, a landscaper, and his insurer, United Specialty Insurance Company. Snell was sued for negligence after a child was injured on a trampoline he had installed at a client's home. United refused to defend Snell in the lawsuit, arguing that the accident did not arise from Snell’s landscaping work as defined in his commercial general liability policy. Snell sued United, alleging breach of contract and bad faith denial of coverage.The United States District Court for the Southern District of Alabama granted summary judgment in favor of United. The court held that the accident did not arise from Snell's landscaping work within the meaning of his insurance policy. The court also found that Snell's bad faith claim failed because United had a lawful basis to deny the claim.On appeal, the United States Court of Appeals for the Eleventh Circuit affirmed the district court's decision. The appellate court agreed that the allegations in the complaint did not trigger United’s duty to defend. The court also found that Snell's insurance application, which expressly stated that he did not do any recreational or playground equipment construction or erection, made clear that the policy did not cover his work in this case. The court further held that Alabama law does not preclude a decision on the duty to indemnify before judgment in the underlying case. Finally, the court concluded that Snell’s bad faith claim failed because he did not show that United wholly failed to investigate any part of his claim. View "Snell v. United Specialty Insurance Company" on Justia Law

The case involves a dispute over workers' compensation coverage for an employee, Braden Nanez, who was injured in a car accident while off work and away from his job at a remote fire base camp. The employer, Stonedeggs, Inc., expected employees not to leave the job site and to notify a manager if they did. Nanez did not notify a manager he was leaving camp. The Workers’ Compensation Appeals Board (the Board) found that Nanez’s use of his own car while off work to drive approximately 70 miles away from camp purportedly to obtain cellular service was conduct reasonably expected by his employer to be incident to its requirement that Nanez spend time away from home where cellular service was not adequately provided at the camp. The Board concluded that Nanez’s travel was for comfort and leisure and was not a distinct departure from his employment.The employer, Stonedeggs, Inc., and its insurer, Technology Insurance Company, Inc., administered by Amtrust North America, appealed the Board's decision, arguing that the Board acted in excess of its authority and that substantial evidence does not support the Board’s findings. They argued that Nanez was injured during a material deviation from his employment; he left the camp without employer approval on a personal activity that, under the unique circumstances of working at this remote fire camp, was not contemplated by the employer.The Court of Appeal of the State of California Third Appellate District affirmed the decision of the Workers’ Compensation Appeals Board. The court found that substantial evidence supported the Board’s findings that Nanez was a commercial traveler and that his departure from camp was a leisure activity that the employer may reasonably have expected to be incident to its requirement that Nanez spend time away from home. The court denied the petition for writ of review filed by Stonedeggs, Inc. and Technology Insurance Company, Inc. View "3 Stonedeggs, Inc. v. Workers' Comp. Appeals Bd." on Justia Law

A teacher, who was involved in a car accident caused by a third party, sustained serious injuries. The teacher was covered under his employer’s self-insured healthcare plan, which stipulates that the employer has a right of reimbursement for medical expenses if a covered person receives a separate settlement. The employer paid for the teacher’s medical expenses and the teacher also received $500,000 in settlements from two separate insurers. The teacher requested that the employer waive its right to reimbursement twice, but the employer never agreed. Two years after the teacher notified the employer of his insurance settlements, the employer requested reimbursement and later sued him for breach of contract.The Superior Court of the State of Alaska granted summary judgment to the employer on the issue of whether the teacher breached the contract to reimburse the employer. The employer then moved for summary judgment on the amount of damages, providing an affidavit from its Plan Administrator and a claims ledger. The teacher opposed the motion, providing his own affidavit and a self-created spreadsheet in support of his argument that some of the medical costs paid by the employer were not associated with the accident. The court granted the employer’s motion for summary judgment on contract damages.The Supreme Court of the State of Alaska affirmed the lower court’s summary judgment order regarding breach of contract, but held that the teacher raised a genuine dispute of material fact regarding damages. Therefore, the Supreme Court reversed and remanded the lower court’s summary judgment order regarding contract damages. View "Fischer v. Kenai Peninsula Borough School District" on Justia Law

The case involves Sunny Letot, who owned a vintage Mercedes-Benz sedan that was rear-ended by a driver insured by USAA Casualty Insurance Company. USAA determined that the cost of repair exceeded the car's pre-collision value and deemed it a "total loss" or "salvage." USAA sent Letot checks to cover the car’s pre-collision value and eight days of lost use. Without waiting for Letot to accept its offer, USAA reported to the Texas Department of Transportation (TxDOT) that Letot’s car was salvage. Letot disagreed with USAA’s determinations and never cashed its proffered checks. She claims that USAA’s premature filing led TxDOT to invalidate her vehicle’s regular title, which prevented her from using or selling her sedan. Letot argued that USAA’s actions constituted conversion of her car.The district court certified a class of claimants whose cars USAA had deemed salvage and about whom USAA filed a report within three days of sending the claimant a check for the salvage vehicle. The class sought injunctive relief and damages. The court of appeals affirmed the class certification.The Supreme Court of Texas concluded that class certification was impermissible in this case. The court found that neither Letot nor any class member had standing to pursue injunctive relief, so Letot could not litigate an individual claim for an injunction, much less represent a class. Letot did, however, have standing to seek damages. But as to damages, the certified class did not satisfy the requirements of predominance or typicality. The court reversed the court of appeals’ judgment and remanded the case to the trial court to resolve Letot’s individual claim. View "USAA CASUALTY INSURANCE COMPANY v. LETOT" on Justia Law

The case involves National Trust Insurance Company ("National Trust") and Whaley Construction Company, Inc. ("Whaley"). Whaley was a general contractor on a project at a Lockheed Martin facility. Smith's Inc. of Dothan ("Smith's of Dothan") was a subcontractor hired to install an HVAC system on the project, and Phoenix II Contracting, LLC ("Phoenix II"), was a subcontractor hired to install the roofing. Smith's of Dothan's subcontract with Whaley provided that Smith's of Dothan would name Whaley and Lockheed Martin as additional insureds on its liability policies. National Trust issued Smith's of Dothan a commercial-package policy and a commercial-liability umbrella policy ("the subject policies") through Harmon-DennisBradshaw, Inc. ("HDB"). Whaley and Lockheed Martin were additional insureds under the subject policies. Timothy L. Bozeman was working as a roof laborer on the Lockheed Martin project when he fell through an opening in the roof and was seriously injured. Bozeman sued Phoenix II and various fictitiously named defendants in the circuit court ("the state-court action").National Trust commenced a declaratory-judgment action in the Northern Division of the United States District Court for the Middle District of Alabama ("the federal-court action"). The complaint in the federal-court action named Smith's of Dothan, Whaley, Lockheed Martin, and the estate as respondents and included the following factual allegations: "25. A dispute has arisen as to whether Respondents Smith's [of Dothan], Whaley, and Lockheed [Martin] are entitled to a defense and indemnification as to the claims asserted in the Underlying Lawsuit. National Trust asserts that, based on the terms, conditions, and exclusions contained in the [subject] policies, Respondents Smith's [of Dothan], Whaley, and Lockheed [Martin] are not entitled to a defense in the underlying lawsuit or indemnification against settlement, award, or judgment therefrom.On April 14, 2023, Whaley filed a third-party complaint against National Trust and Continental Insurance Company ("Continental") in the state-court action. The third-party complaint alleged claims of breach of contract and bad-faith refusal to pay against National Trust and Continental. On May 4, 2023, National Trust filed a motion to dismiss in the state-court action. In the motion, National Trust asked the circuit court "to reconsider its previous Order … dated April 21, 2023, granting Whaley's motion for leave to file a third-party complaint against [National Trust] and further move[d] pursuant to Rule 12(b)(6) of the Alabama Rules of Civil Procedure to dismiss both of Whaley's claims asserted against [National Trust] in the Third-Party Complaint." In its motion, National Trust asserted that Whaley's claims against it were due to be dismissed "because they were compulsory counterclaims that Whaley was required to file in the federal[-court] action pursuant to § 65-440, Ala. Code 1975." On June 7, 2023, the circuit court entered an order denying National Trust's motion to dismiss the third-party complaint. National Trust subsequently filed a petition for a writ of mandamus asking this Court to direct the circuit court to enter an order dismissing National Trust from the state-court action.The Supreme Court of Alabama granted National Trust's mandamus petition in part and issued a writ directing the circuit court to enter an order dismissing Whaley's breach-of-contract and bad-faith claims in the state-court action that were based on National Trust's refusal to indemnify Whaley for the amount it had paid to settle Lockheed Martin's indemnity claim against it. However, the court denied the petition as to Whaley's contingent claims for a defense and indemnification. View "Ex parte National Trust Insurance Company" on Justia Law

In the case before the Supreme Court of California, Another Planet Entertainment, LLC, a live entertainment venue operator, sued its insurer, Vigilant Insurance Company, for denying its claim for coverage of pandemic-related business losses. The plaintiff argued that the actual or potential presence of the COVID-19 virus at its venues constituted "direct physical loss or damage to property," triggering coverage under its insurance policy. The district court dismissed the case, and the plaintiff appealed. The Ninth Circuit Court of Appeals then asked the Supreme Court of California to clarify whether the presence of the COVID-19 virus could constitute "direct physical loss or damage to property" under California law.The Supreme Court of California concluded that allegations of the actual or potential presence of COVID-19 on an insured’s premises do not, without more, establish direct physical loss or damage to property within the meaning of a commercial property insurance policy. Under California law, direct physical loss or damage to property requires a distinct, demonstrable, physical alteration to property. The physical alteration need not be visible to the naked eye, nor must it be structural, but it must result in some injury to or impairment of the property as property. The court found that Another Planet’s allegations did not satisfy this standard. While Another Planet alleges that the COVID-19 virus alters property by bonding or interacting with it on a microscopic level, Another Planet does not allege that any such alteration results in injury to or impairment of the property itself. Its relevant physical characteristics are unaffected by the presence of the COVID-19 virus. View "Another Planet Entertainment, LLC v. Vigilant Insurance Co." on Justia Law

The case involves a dispute over the interpretation of a multi-vehicle insurance policy. The appellants, Mark and Karen Kuhn, were involved in a fatal accident with a semi-truck insured by the appellee, Owners Insurance Company. The Kuhns sought a declaration that the $1 million liability limits for each of the seven vehicles covered under the policy could be aggregated or "stacked" for a total of $7 million in coverage for the accident, despite an "anti-stacking" provision in the policy.The trial court ruled in favor of the Kuhns, finding the policy ambiguous and thus allowing for the stacking of the liability limits. However, the appellate court reversed this decision, holding that the policy's anti-stacking clause was unambiguous and should be enforced as written.The Supreme Court of the State of Illinois affirmed the appellate court's judgment. The court found that the insurance policy, when read as a whole, unambiguously provided a $1 million per accident liability limit and prohibited stacking the liability limits of each insured vehicle. The court rejected the Kuhns' argument that the policy was ambiguous due to the separate listing of liability limits for each vehicle insured. The court held that the policy's anti-stacking provision, in conjunction with the declarations pages, clearly indicated that the limits could not be aggregated. View "Kuhn v. Owners Insurance Co." on Justia Law