Justia Insurance Law Opinion Summaries

Two former police officers, Mark Zukowski and Joshua Ruggiero, were injured in the line of duty and subsequently awarded both accidental disability retirement (ADR) benefits and workers' compensation benefits under Maryland's Workers' Compensation Act. The ADR benefits exceeded the workers' compensation benefits, resulting in an offset that left the officers with only a small portion of the workers' compensation benefits. The officers' attorney sought fees based on the total workers' compensation award before the offset was applied.The Maryland Workers' Compensation Commission awarded attorney's fees based on the reduced amount of workers' compensation benefits after applying the statutory offset. The Circuit Court for Anne Arundel County affirmed the Commission's decision, holding that attorney's fees should be calculated after the offset.The Supreme Court of Maryland reviewed the case and affirmed the lower courts' decisions. The Court held that the terms "benefits" and "compensation" are interchangeable in this context, meaning that attorney's fees should be calculated based on the amount of compensation actually payable to the claimant after applying the statutory offset. The Court emphasized that the attorney's fees are a lien on the compensation awarded, which is defined as the money payable to the injured employee. Therefore, the offset must be applied before calculating the attorney's fees. The Court also rejected the argument that this interpretation was unconstitutional, stating that the attorney voluntarily agreed to the fee arrangement and was aware of the statutory provisions governing attorney's fees. View "Zukowski v. Anne Arundel Cnty." on Justia Law

State Farm Mutual Automobile Insurance Company and others filed a lawsuit against Michael LaRocca and his associated chiropractic clinics, alleging that the clinics submitted fraudulent insurance claims for services that were not medically necessary. The clinics, owned by LaRocca, were operating under an exemption from Florida's Health Care Clinic Act, which requires clinics to be licensed unless they are wholly owned by licensed health care practitioners who are legally responsible for compliance with all federal and state laws.The United States District Court for the Middle District of Florida denied State Farm's motion for partial summary judgment, rejecting the argument that LaRocca's failure to ensure compliance with all laws invalidated the clinics' exemption and rendered their charges noncompensable. The court found that the term "legally responsible" did not impose an affirmative duty on LaRocca to ensure compliance with all laws but rather indicated accountability for violations.The United States Court of Appeals for the Eleventh Circuit reviewed the case and determined that the interpretation of "legally responsible" within the context of Florida's Health Care Clinic Act was a matter best decided by the Florida Supreme Court. The Eleventh Circuit certified the question to the Florida Supreme Court, seeking clarification on whether the term imposes an affirmative duty on clinic owners to ensure compliance with all federal and state laws to maintain their exemption status. The Eleventh Circuit deferred its decision pending the Florida Supreme Court's interpretation. View "State Farm Mutual Automobile Insurance Company v. LaRocca" on Justia Law

In 2005, Island Pointe, LLC contracted Complete Building Corporation (CBC) to construct a condominium project, Palmetto Pointe at Peas Island. CBC subcontracted Tri-County Roofing (TCR) for roofing and related work. In 2014-2015, Palmetto discovered construction defects and sued CBC, TCR, and others for negligence and breach of warranty. Palmetto received $6,800,000 in settlements, including $1,000,000 from CBC's insurer for a covenant-not-to-execute and $1,975,000 from four other defendants.The trial began in May 2019, and the jury found CBC and TCR liable for $6,500,000 in actual damages and $500,000 each in punitive damages. The trial court apportioned 5% liability to two other defendants, making CBC and TCR jointly and severally liable for the remaining 90% of actual damages. TCR sought setoff for the $1,000,000 payment and the settlements from the four other defendants. The trial court denied TCR's motion for setoff, except for partial amounts conceded by Palmetto.The South Carolina Supreme Court reviewed the case. It reversed the court of appeals' decision, holding that TCR is entitled to set off the full $1,000,000 paid by CBC's insurer. The court affirmed the lower court's decision regarding the settlements from Novus, Atlantic, H and A, and Cohen's, agreeing that the trial court reasonably allocated the settlement amounts. The case was remanded to the trial court for the calculation of the judgment against TCR. View "Palmetto Pointe v. Tri-County Roofing" on Justia Law

James Cooper was injured in a car accident while riding as a passenger in a car owned by Rick Huffman. Both Cooper and Huffman were employees of Pison Management, LLC, and were driving to a jobsite during their employment. Cooper's injuries exceeded the at-fault driver's insurance limits, so he sought underinsured motorist (UIM) coverage under Pison’s commercial automobile policy issued by Erie Insurance Property & Casualty Company. The policy provided liability coverage for two vehicles owned by Pison and a class of non-owned vehicles, but UIM coverage was only provided for the owned vehicles. Erie denied Cooper’s claim for UIM coverage.Erie filed a suit in federal district court seeking a declaration that the policy did not provide the UIM coverage Cooper sought. Cooper counterclaimed, arguing that West Virginia Code § 33-6-31 required Erie to offer UIM coverage for the class of non-owned vehicles. The district court ruled in favor of Cooper, holding that the statute required Erie to make a commercially reasonable offer of UIM coverage for all vehicles covered by the liability policy, including non-owned vehicles. Erie appealed this decision to the United States Court of Appeals for the Fourth Circuit.The Supreme Court of Appeals of West Virginia reviewed the case. The court held that West Virginia Code § 33-6-31 does not require an insurer to offer UIM coverage for a class of non-owned vehicles when a commercial automobile insurance policy insures certain owned vehicles and a class of non-owned vehicles for liability protection. The court reasoned that UIM coverage is intended to protect the named insured and permissive users of the named insured’s vehicle, not to extend to non-owned vehicles. Therefore, the court answered the certified question in the negative and dismissed the case from its docket, returning the matter to the Fourth Circuit for further proceedings consistent with this opinion. View "Erie Insurance Property & Casualty Company v. Cooper" on Justia Law

Martin Montano Jr., an employee of Casas Custom Floor Care, LLC, was involved in a fatal car accident while driving his mother's truck to correct his timesheet at the company's main yard. Michael Cravens, the surviving spouse of the deceased, sued Montano and Casas, alleging negligence and vicarious liability. Cincinnati Indemnity Company, which insured Casas, issued a reservation of rights letter to Montano, disputing its obligation to defend or insure him under the policy.The Superior Court in Pima County granted summary judgment in favor of Cravens, ruling that Montano was using the vehicle "in connection with" Casas's business at the time of the accident, thus obligating Cincinnati to indemnify Montano. The court also upheld the enforceability of a Morris Agreement between Montano and Cravens, which stipulated Montano's liability and assigned his rights under the policy to Cravens. The court of appeals affirmed the superior court's rulings on both coverage and the agreement.The Supreme Court of Arizona reviewed the case and held that an employee operates a non-owned auto "in connection with your business" when using the vehicle while engaged in the employer's business. This does not include a routine commute. The court also held that a contingent Morris agreement is enforceable if it meets the substantive requirements to ensure against fraud, collusion, unfairness, or unreasonableness. The court vacated the court of appeals' coverage ruling, affirmed the ruling on the Morris Agreement, reversed the superior court's judgment, and remanded for further proceedings consistent with its opinion. View "CRAVENS v MONTANO" on Justia Law

Mara Lindsey was involved in a car accident where she was rear-ended by Carlos Pantoja, resulting in personal injuries. Lindsey sought compensation for her medical expenses and, after settling with Pantoja’s insurer for his policy limit of $50,000, she filed a claim with her own insurer, State Farm, under her underinsured motorist (UIM) policy. Dissatisfied with State Farm’s settlement offer of $689.58, Lindsey sued State Farm under the Uniform Declaratory Judgments Act (UDJA) for declarations regarding Pantoja’s liability, her damages, and her entitlement to UIM benefits. She also sued State Farm and its claims adjuster for Insurance Code violations, alleging bad faith in handling her claim.The trial court denied State Farm’s motions to abate the extracontractual claims and to quash the deposition notice of its corporate representative. The court of appeals denied State Farm’s mandamus petitions without substantive explanation. State Farm then petitioned the Supreme Court of Texas for mandamus relief.The Supreme Court of Texas held that the trial court abused its discretion by denying State Farm’s motions. The court ruled that extracontractual claims must be abated until the insured obtains a favorable judgment on the UIM coverage, as these claims are dependent on the right to receive UIM benefits. The court also held that discovery on extracontractual matters is improper before establishing entitlement to UIM benefits. Additionally, the court found that State Farm had demonstrated that the deposition of its corporate representative was not proportional to the needs of the case, given the lack of personal knowledge and the burden of the proposed discovery.The Supreme Court of Texas conditionally granted State Farm’s petition for writ of mandamus, ordering the trial court to vacate its previous orders and grant State Farm’s motions to abate the extracontractual claims and to quash the deposition notice. View "IN RE STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY" on Justia Law

Edward Joseph Walsh, III was riding his lawn mower when he was struck and killed by an underinsured motorist. Walsh had underinsured motorist (UIM) coverage on two personal automobiles insured by Owners Insurance Company. After Owners paid benefits equal to the UIM coverage limits for a single covered automobile, Walsh’s estate sought to stack the UIM coverage from the other. Owners asserted that stacking was unavailable and, in the declaratory judgment action that followed, the district court agreed. The court found that neither South Carolina law nor the terms of the policy entitled the insured to stack coverage under these circumstances.The United States District Court for the District of South Carolina evaluated the parties’ cross-motions for summary judgment. The district court determined that the policy terms disallowed stacking and that this limitation was consistent with South Carolina law. Consequently, the court granted summary judgment to Owners Insurance Company and dismissed the case.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s grant of summary judgment de novo. The appellate court considered whether Walsh’s estate was entitled to stack UIM benefits from both scheduled automobiles under South Carolina law and the terms of the policy. The court concluded that the policy provisions clearly limited stacking to specific circumstances not applicable in this case. Additionally, the court found that the lawn mower involved in the accident was not an insured vehicle, and thus, the estate was not entitled to stack UIM coverage. The Fourth Circuit affirmed the district court’s judgment, holding that the estate was not entitled to collect additional UIM benefits beyond what had already been paid by Owners Insurance Company. View "Owners Insurance Co. v. Walsh" on Justia Law

HIVE Construction, Inc. served as the general contractor for the construction of Masterpiece Kitchen, a restaurant. The contract required HIVE to follow specific architectural plans, including installing two layers of drywall on a wall separating the kitchen and dining area. Instead, HIVE installed one layer of drywall and one layer of combustible plywood without approval. A fire started within the wall, causing significant damage and forcing the restaurant to close. Mid-Century Insurance Company, as the property insurer and subrogee of Masterpiece Kitchen, paid for the damages and then sued HIVE for negligence, alleging willful and wanton conduct.The district court initially allowed Mid-Century to amend its complaint to include a breach of contract claim but later reversed this decision, requiring Mid-Century to proceed with the negligence claim. At trial, the jury found HIVE's conduct to be willful and wanton, awarding damages to Mid-Century. HIVE appealed, arguing that the economic loss rule barred the negligence claim. The Colorado Court of Appeals agreed, reversing the district court's decision and instructing a verdict in HIVE's favor.The Supreme Court of Colorado reviewed the case and concluded that the economic loss rule does not provide an exception for willful and wanton conduct. The court held that the rule barred Mid-Century's negligence claim because the duty HIVE allegedly breached was not independent of its contractual obligations. Consequently, the court affirmed the judgment of the Colorado Court of Appeals, upholding the application of the economic loss rule to bar the negligence claim. View "Mid-Century Ins. Co. v. HIVE Construction" on Justia Law

In 2018, a $200 million mixed-use development project at Louisiana State University experienced issues with its fire-protection sprinkler systems, which began to crack and leak. Allied World National Assurance Company, which paid over $10 million for system replacements, sued Nisus Corporation in 2021, alleging that Nisus falsely represented its product's compatibility with the pipe material, leading to the damage.The United States District Court for the Middle District of Louisiana granted summary judgment in favor of Nisus, concluding that Allied's claims were time-barred under Louisiana law. The court found that while Provident, the insured party, did not have actual or constructive knowledge of the cause of the damage, RISE Residential, Provident's agent, had constructive knowledge of the cause by November 2019. This knowledge was imputed to Provident, starting the prescription period.The United States Court of Appeals for the Fifth Circuit reviewed the case de novo and affirmed the district court's decision. The court held that RISE Residential's constructive knowledge of the sprinkler system issues, which was imputed to Provident, triggered the running of the prescription period well before July 23, 2020. The court also found that Nisus did not prevent Allied from timely availing itself of its causes of action, as a reasonable inquiry by RISE Residential would have uncovered the necessary information. Therefore, Allied's claims were prescribed, and the summary judgment in favor of Nisus was affirmed. View "Allied World National v. Nisus" on Justia Law

Wehr Constructors, Inc. (Wehr) entered into a contract with St. Claire Medical Center (St. Claire) to build an addition to the hospital. Wehr's performance was allegedly deficient, leading to significant construction defects. St. Claire terminated the contract and sought damages from Wehr's performance-bond carrier, Travelers Casualty and Surety Company (Travelers Surety). Travelers Surety then involved Wehr in the litigation. Wehr sought defense coverage from its insurers: Phoenix Insurance Company (Phoenix), St. Paul Surplus Lines Insurance Company (St. Paul), and Travelers Property Casualty Company of America (Travelers Property).The United States District Court for the Eastern District of Kentucky ruled that none of Wehr’s insurers had a duty to defend Wehr in the lawsuit initiated by St. Claire. The court held that Phoenix’s duty to defend was not triggered because St. Claire did not assert claims directly against Wehr. It also found that St. Paul had no duty to defend because Wehr did not specifically agree to perform as a construction manager, a requirement under the St. Paul policy. Although Wehr did not seek summary judgment against Travelers Property, the court noted that Travelers Property also had no duty to defend for the same reasons as Phoenix.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court affirmed the district court’s decision regarding St. Paul, agreeing that Wehr did not specifically agree to serve as a construction manager. However, it reversed the decision regarding Phoenix, holding that Phoenix had a duty to defend Wehr because the damages alleged by St. Claire potentially fell within the policy coverage, and Wehr was a party to the suit. The court vacated the decision regarding Travelers Property and remanded for further proceedings to determine whether Travelers Property had a duty to defend, given the ambiguity in the district court’s ruling and the stipulation by the parties. View "Phoenix Insurance Co. v. Wehr Constructors, Inc." on Justia Law