Justia Insurance Law Opinion Summaries

This case involves a dispute between Sentry Insurance and James J. Morgan, who operates a business. Morgan's properties, insured by Sentry, suffered wind and hail damage from a storm. Sentry estimated the damages at $190,768.33 and paid Morgan $61,026.93 after deductions. However, Morgan estimated his loss at $540,426.05 and demanded Sentry pay an additional $349,657.22. When the parties couldn't agree on the loss amount, they turned to an appraisal process outlined in their insurance policy. Both parties appointed an appraiser, but the appraisers couldn't agree on an umpire. Consequently, Sentry filed a petition for the district court to appoint an umpire.The district court dismissed Sentry's petition, ruling that it lacked subject matter jurisdiction because the petition didn't meet the amount-in-controversy requirement for diversity jurisdiction under 28 U.S.C. § 1332. The court reasoned that it couldn't assess the value of the parties' contractual right to have an umpire examine the difference between two appraisers' estimates and determine the loss amount because the appraisers hadn't yet made their estimates.The United States Court of Appeals for the Fifth Circuit reversed the district court's decision. The appellate court disagreed with the district court's narrow interpretation of the right to be protected. It held that in an action seeking the appointment of an umpire for appraisal, the right to be protected is the right to continue with the appraisal process, and the value of this right is the disputed amount set to be resolved through appraisal. The court found that Sentry's petition established an amount in controversy over $75,000, as Morgan had demanded an additional $349,657.22 under the policy. The case was remanded to the district court to consider Morgan's additional jurisdictional arguments. View "Sentry Insurance v. Morgan" on Justia Law

The case involves George and Sheila Byers, who filed a lawsuit against their homeowners' insurance provider, USAA General Indemnity Company (USAA), and other defendants. The Byerses alleged that USAA breached their contract and the covenant of good faith and fair dealing in relation to the installation of hardwood flooring at their home. They sought attorneys' fees as damages under the Brandt v. Superior Court (1985) principle, which allows for the recovery of attorney fees when an insurer's tortious conduct compels the insured to hire an attorney to obtain policy benefits.USAA sought to compel the Byerses to produce documents related to their attorney fees, arguing that by seeking Brandt fees, the Byerses had waived their attorney-client privilege regarding these documents. The Byerses objected, arguing that the requests were ambiguous, overbroad, and violated attorney-client privilege. The trial court granted USAA's motion to compel, allowing the Byerses to redact any references they believed reflected attorney work product.The Byerses then petitioned the Court of Appeal of the State of California, First Appellate District, Division Five, challenging the trial court's order. They argued that the trial court had forced them to waive their attorney-client privilege and had abused its discretion by ordering the production of all invoices, fee agreements, and payment history.The appellate court denied the Byerses' petition. It found that by seeking Brandt fees, the Byerses had impliedly waived their attorney-client privilege regarding the attorney fees documents. The court also found no abuse of discretion in the trial court's order allowing the Byerses to redact references they believed reflected attorney work product. The court concluded that USAA had a right to learn about the attorney fees aspect of the Byerses' alleged damages during discovery. View "Byers v. Super. Ct." on Justia Law

The case involves the Government Employees Insurance Company (GEICO) and its affiliates, who sued several medical practices in separate actions in the District of New Jersey. GEICO alleged that the practices defrauded them of more than $10 million by abusing the personal injury protection (PIP) benefits offered by its auto policies. The practices allegedly filed exaggerated claims for medical services, billed medically unnecessary care, and engaged in illegal kickback schemes. GEICO's suits against the practices each included a claim under the New Jersey’s Insurance Fraud Prevention Act (IFPA).The practices sought arbitration of GEICO’s IFPA claim, arguing that a valid arbitration agreement covered the claim and that a different New Jersey insurance law allowed them to compel arbitration. However, each District Court disagreed, ruling instead that IFPA claims cannot be arbitrated. The practices appealed to the United States Court of Appeals for the Third Circuit.The Third Circuit Court of Appeals reversed the lower courts' decisions, holding that claims under the IFPA are arbitrable. The court found that GEICO's argument that the IFPA implicitly prohibits arbitration was not persuasive. The court also concluded that GEICO’s IFPA claims must be compelled to arbitration under the Federal Arbitration Act (FAA), as the claims fell under the scope of the arbitration agreement in GEICO's Precertification and Decision Point Review Plan. The court remanded the case with instructions to compel arbitration of GEICO’s IFPA claims against the practices. View "GEICO v. Caring Pain Management PC" on Justia Law

The case involves Maria and Jose Jimenez, who were involved in an auto accident with Stephen Kiefer. After the accident, the Jimenezes requested $100,000 from Kiefer's auto insurer, Travelers Commercial Insurance Company, to settle their claim against Kiefer. Travelers refused the offer, leading the Jimenezes to sue Kiefer in Illinois court. The Jimenezes and Kiefer entered into an agreement where Kiefer stipulated to a judgment against himself and assigned his rights and claims against Travelers to the Jimenezes. In exchange, the Jimenezes agreed not to execute the judgment against Kiefer personally. The Jimenezes then initiated a citation proceeding against Travelers, seeking to discover whether it held any of Kiefer’s assets.Travelers removed the action to federal court and filed for summary judgment. The district court granted summary judgment for Travelers, finding that Kiefer and the Jimenezes (as his assignees) were entitled to nothing under the insurance policy and had no claim for breach of any duties Travelers owed Kiefer. The Jimenezes appealed this decision.The United States Court of Appeals for the Seventh Circuit affirmed the district court's decision. The court found that the citation proceeding was an independent, removable action. It also agreed with the district court that the Jimenezes, as Kiefer’s assignees, could not recover under the policy in light of the legally responsible provision. The court concluded that Travelers could hold Kiefer to the terms of the policy, and under a strict construction of those terms, Kiefer was not legally responsible for the judgment because the covenant not to execute precluded its enforcement. Therefore, the legally responsible provision bars the Jimenezes’ recovery as Kiefer’s assignees. View "Jimenez v. Travelers Commercial Insurance Company" on Justia Law

The case involves an insurance claim filed by Christine and Roy Cosme after their insurer, Erie Insurance Exchange, cancelled their automobile insurance policy. The policy listed their son, Broyce Cosme, as a driver. The cancellation was due to a misunderstanding between Broyce and the Indiana Bureau of Motor Vehicles, which led to the suspension of Broyce's license. The Cosmes were informed that their policy would be cancelled unless they submitted a coverage-exclusion form removing Broyce from the policy. However, due to conflicting advice from their insurance agent at Churilla Insurance, the Cosmes did not submit the form before the deadline. The policy was cancelled, and shortly after, the Cosmes were involved in an accident with an uninsured motorist. Erie denied their claim, stating that their policy was no longer in effect at the time of the accident.The trial court granted a directed verdict in favor of Erie and Churilla, reasoning that the Cosmes brought about their own lack-of-coverage injuries when they failed to sign the exclusion form before the deadline. The court of appeals affirmed this decision, holding that the Cosmes failed to present sufficient evidence to support their claims against Erie and Churilla.The Indiana Supreme Court reversed the trial court's directed verdict for Erie, affirming as to Churilla, and remanded for further proceedings. The court held that at the directed-verdict stage, the court can review whether inferences from the evidence are reasonable, but it cannot weigh conflicting evidence or assess witness credibility. Applying this standard, the court found that the trial court erred in directing the verdict for Erie as the Cosmes’ case-in-chief presented sufficient (though conflicting) evidence to prove Erie breached its contract and violated its duty of good faith. However, the court correctly granted judgment to Churilla because the evidence showed Churilla owed no special duty to the Cosmes to procure insurance or advise on the insurance policy. View "Cosme v. Warfield" on Justia Law

Donald Artz, an electric distribution controller at WEC Energy Group, retired due to multiple sclerosis (MS) and sought long-term disability benefits from a plan administered by Hartford Life and Accident Insurance Company. Hartford denied his claim, asserting that Artz was not "disabled" within the plan's definition. Artz filed a lawsuit under the Employee Retirement Income Security Act, alleging that Hartford's disability determination was arbitrary and capricious because it misconstrued the plan's terms and failed to provide a reasonable explanation for its decision.The case was initially heard in the United States District Court for the Eastern District of Wisconsin. The district court upheld the denial of benefits at summary judgment, concluding that Artz had placed too much emphasis on the duties of his specific position at WEC rather than the "essential duties" of his job in the general workplace as required by the company’s plan. The court also underscored the independent medical reviews commissioned by Hartford and found the medical evidence supported the conclusion that Artz’s MS did not prevent him from working a standard 40-hour week as a power-distribution engineer.The case was then appealed to the United States Court of Appeals for the Seventh Circuit. The appellate court affirmed the district court's decision, finding that Hartford had communicated rational reasons for its decision based on a fair reading of the plan and Artz’s medical records. The court concluded that the plan administrator provided sufficient process and that the Employee Retirement Income Security Act requires no more. The court noted that while Artz's condition was serious, the evidence did not show that the severity and persistency of his symptoms resulted in functional impairment as defined by the policy. View "Artz v. Hartford Life & Accident Insurance Company" on Justia Law

In September 2016, Sanford Sachtleben and Luciann Hruza (the Buyers) purchased a property in Missouri from Perry and Joanie Sullivan (the Sellers). Prior to the sale, the city of New Melle had sued the Sellers over a barn they had built on the property, alleging it violated city zoning ordinances. The Buyers were added as defendants to this lawsuit after they purchased the property. The Buyers demanded coverage from their title insurance company, Alliant National Title Insurance Co. (Alliant), but Alliant refused. The Buyers then sued Alliant, claiming it had breached the title insurance policy by refusing to defend them in the New Melle lawsuit.The case was first heard in the Circuit Court of St. Louis County, where Alliant moved for summary judgment. The circuit court granted Alliant's motion, concluding that the unambiguous language of the title insurance policy provided no coverage for the Buyers. The Buyers appealed this decision.The Supreme Court of Missouri affirmed the lower court's decision. The court found that the title insurance policy was unambiguous and did not provide coverage for the Buyers. The court noted that the policy provided coverage only if a notice, describing any part of the land, was recorded in the public records setting forth the violation or intention to enforce. Since no such notice was recorded, the court concluded that the policy did not provide coverage. The court also rejected the Buyers' arguments that other provisions of the policy provided coverage, finding that these arguments were precluded by an exclusion in the policy. View "Sachtleben vs. Alliant National Title Insurance Co." on Justia Law

The case involves Karen Frohn, who applied for and received a life insurance policy from Globe Life and Accident Insurance Company on behalf of her husband, Greg Frohn. After Greg's death, Karen submitted a claim for death benefits, which Globe denied. Karen then sued Globe, both individually and on behalf of a putative class of beneficiaries, challenging the denial of her claim.Globe moved for summary judgment, arguing that it was entitled to rescind the life insurance policy because Karen was not truthful in her application for insurance. The district court granted Globe’s motion, barring Karen from recovery on her claims against Globe. Karen also asked the court to redact certain portions of that order, but the district court published it without any redactions. Karen appealed these decisions.The United States Court of Appeals for the Sixth Circuit affirmed the district court's decision. The court found that Karen had voluntarily waived her husband's physician-patient privilege by signing an Authorization for Release, allowing Globe to access Greg's medical records. The court also found that Globe was entitled to rescind the policy under Ohio law because Karen had made material misrepresentations in the insurance application. The court concluded that Globe's defense barred Karen's breach-of-contract and bad-faith claims. View "Frohn v. Globe Life and Accident Ins Co" on Justia Law

In 2003, the City of Chicago contracted with Walsh Construction Company to manage the construction of a canopy and curtain wall system at O’Hare International Airport. Walsh subcontracted with LB Steel, LLC to fabricate and install steel columns to support the wall and canopy. Several years into the project, the City discovered cracks in the welds of the steel columns and sued Walsh for breaching its contract. Walsh, in turn, sued LB Steel under its subcontract. Walsh also asked LB Steel’s insurers to defend it in the City’s lawsuit, but they never did. Walsh eventually secured a judgment against LB Steel, which led it to declare bankruptcy. Walsh then sued LB Steel’s insurers to recover the costs of defending against the City’s suit and indemnification for any resulting losses.The district court granted summary judgment in favor of the plaintiff insurers on both issues. The court reasoned that, because the physical damage at issue was limited to LB Steel’s own products, it did not constitute “property damage” as that term appears in the policies, thereby precluding coverage. As for the duty to defend, the court determined that the Insurers had none, because the City’s underlying claims did not implicate potential coverage under LB Steel’s policies.The United States Court of Appeals for the Seventh Circuit affirmed the district court's decision. The court concluded that the defects in the welds and columns do not constitute “property damage” under LB Steel’s commercial general liability (CGL) policies. The court also found that the insurers had no duty to defend Walsh in the City’s underlying suit. The court further affirmed the district court's denial of Walsh’s request for sanctions under § 155. View "St. Paul Guardian Insurance Company v. Walsh Construction Company" on Justia Law

A car accident occurred during Race Wars 2, an amateur drag racing event organized by Flyin’ Diesel Performance & Offroad, L.L.C. The accident resulted in injuries and deaths among spectators. The injured parties and representatives of the deceased sued Flyin’ Diesel, who turned to their insurer, Kinsale Insurance Company, for legal defense. The dispute centered on whether Kinsale owed a duty to defend Flyin’ Diesel under their commercial general liability insurance policy.The case was first heard in the United States District Court for the Western District of Texas. The district court found the insurance policy ambiguous and ruled that Kinsale owed Flyin’ Diesel a duty to defend. Flyin’ Diesel was granted partial summary judgment, and Kinsale's motion was denied. Kinsale appealed this decision.The case was then reviewed by the United States Court of Appeals for the Fifth Circuit. The appellate court disagreed with the district court's finding of ambiguity in the insurance policy. The court determined that the policy unambiguously excluded the claims made by the injured parties from coverage. Therefore, the court concluded that Kinsale was not obligated to defend Flyin’ Diesel in the lawsuit. The court reversed the district court's partial summary judgment for Flyin’ Diesel and remanded the case with instructions to grant summary judgment to Kinsale. View "Kinsale Ins v. Flyin' Diesel Performance" on Justia Law