Justia Insurance Law Opinion Summaries

The federal district court in Washington State certified a question of law to the Washington Supreme Court. Washington law required group life insurance policies to have an incontestability clause providing that “the validity of the policy shall not be contested, except for nonpayment of premiums, after it has been in force for two years from its date of issue.” The certified question in this case asked whether an insurer could invalidate a life insurance policy after this two-year period on grounds that the policies were void ab initio or never “in force.” New York Life Insurance (NY Life) issued two life insurance policies to Lorenzo Mitchell, naming his nephew, Simon Mitchell, as the sole beneficiary. Lorenzo died more than two years after the policies were issued, and Simon sought to collect on the policies. NY Life became aware that Lorenzo had Down syndrome and lived with significant intellectual disabilities. These facts raised questions about the circumstances under which the policies were issued. NY Life sued Simon in federal district court seeking declaratory relief that the policies were void ab initio under three possible theories: imposter fraud, incapacity, and lack of an insurable interest. The Washington Supreme Court concluded NY Life’s first and third claims were not barred by that provision. “In contrast, lack of capacity does not, on its own, render an insurance contract void; it renders it at most voidable. Because a voidable contract is not void ab initio, we hold the incontestability provision bars NY Life’s second claim.” View "New York Life Ins. Co. v. Mitchell" on Justia Law

In an interlocutory appeal, multiple hotel operators challenged a superior court’s orders in a suit against defendants, multiple insurance underwriters, all relating to the denial of coverage during the COVID-19 world health pandemic. Plaintiffs owned and operated twenty-three hotels: four in New Hampshire, eighteen in Massachusetts, and one in New Jersey. Plaintiffs purchased $600 million of insurance coverage from defendants for the policy period from November 1, 2019 to November 1, 2020. With the exception of certain addenda, the relevant language of the policies was identical, stating in part that it “insures against risks of direct physical loss of or damage to property described herein . . . except as hereinafter excluded.” For periods of time, pursuant to governors’ orders, hotels in each of the three states were permitted to provide lodging only to vulnerable populations and to essential workers. These essential workers included healthcare workers, the COVID-19 essential workforce, and other workers responding to the COVID-19 public health emergency. Beginning in June 2020, plaintiffs’ hotels were permitted to reopen with a number of restrictions on their business operations. Plaintiffs, through their insurance broker, provided notice to defendants they were submitting claims in connection with losses stemming from COVID-19. Plaintiffs sued when these claims denied, arguing that the potential presence of the virus triggered business loss provisions in their respective policies. To this, the New Hampshire Supreme Court disagreed, finding that “[w]hile the presence of the virus might affect how people interact with one another, and interact with the property, it does not render the property useless or uninhabitable, nor distinctly and demonstrably altered.” View "Schleicher & Stebbins Hotels, LLC, et al. v. Starr Surplus Lines Insurance Co., et al." on Justia Law

Allied World Specialty Insurance Company issued a WaterPlus Package Insurance Policy to the Windermere Oaks Water Supply Corporation. That policy includes coverage for Public Officials and Management Liability. But it also includes various exclusions from coverage. At issue in this appeal is the exclusion of contractual liability.   The Fifth Circuit affirmed the district court’s judgment granting summary judgment in favor of the insured. The court held that a claim for breach of fiduciary duty is not a claim for breach of contract and is, therefore, not subject to exclusion from coverage under a contractual liability exclusion. The court explained that under the Texas Prompt Payment of Claims Act, Tex. Ins. Code Section 542.060, an insurer’s breach of the duty to defend constitutes a per se violation View "Windermere Oaks v. Allied World" on Justia Law

Farm Family Casualty Insurance Company (“Farm Family”) appealed after the district court granted summary judgment to Nodak Insurance Company (“Nodak”) and denied, in part, summary judgment to Farm Family. This case arose from an April 6, 2019 motor vehicle accident. Samuel Hamilton was the son of Bruce and Diana Hamilton. At the time of the April 2019 accident at issue, Samuel was a resident of North Dakota, and his parents were residents of Montana. Before the accident, Farm Family issued an automobile insurance policy to Bruce and Diana with an effective policy period of October 19, 2018 to April 19, 2019. The policy insured a 2011 pickup truck. After moving to Montana, the Hamiltons obtained an insurance policy from Mountain West Farm Bureau Mutual Insurance Company (“Mountain West”) that also insured the 2011 pickup truck with a term running from December 2, 2018 to June 2, 2019. In April 2019, Samuel was driving the insured 2011 pickup truck in Williams County, North Dakota. Samuel reportedly ran a stop sign while intoxicated and struck another vehicle; H.W. was seriously injured and A.M. was killed. Nodak insured the vehicle H.W. and A M. occupied at the time of the accident. Nodak filed suit seeking a declaration Farm Family’s automobile policy was in effect at the time of the April 2019 accident, Farm Family’s policy could not be retroactively cancelled, and the vehicle driven by the insureds’ son was not an “underinsured motor vehicle” under North Dakota law. The North Dakota Supreme Court concluded the automobile policy Farm Family issued to its insureds had not “ceased” under the policy language and remained in effect at the time of the April 2019 motor vehicle accident. View "Nodak Ins. Co. v. Farm Family Casualty Ins. Co., et al." on Justia Law

In this insurance coverage action, Defendant Stillwater Insurance Company (Stillwater) contends that an animal liability exclusion in the insured’s homeowner’s insurance policy (the policy) precludes any duty to defend because the third parties sued the insured for injuries they and their dogs sustained when their dogs were bitten by two pit bulls on a public street. The insurer determined that the exclusion applied because the underlying complaint alleged that the pit bulls lived at the insured’s home and, therefore, it had no obligation to indemnify an excluded claim. The insured denied any ownership or control of the pit bulls, which were owned by her boyfriend, who did not live at her home. The insurer did not conduct any further investigation. Plaintiff argued that the trial court erred in granting summary judgment in favor of Stillwater on her claims based on Stillwater’s refusal to defend Plaintiff in the third-party lawsuit.   The Second Circuit reversed. The court concluded that the trial court erred in granting summary judgment to Stillwater because there is evidence that Stillwater breached its duty to defend. The court also reversed the trial court’s grant of summary judgment in favor of Stillwater on Plaintiff’s claim for breach of the duty of good faith and fair dealing. The court explained that even if the insured was correct and the pit bulls were not under her ownership, the third party still might have raised a claim potentially covered by the policy. An insurer can be excused from the duty to defend only if the third-party complaint can by no conceivable theory raise an issue within the policy’s coverage. View "Dua v. Stillwater Insurance Company" on Justia Law

The 2005 Medicare amendment, launching prescription drug coverage, raised concerns that patient assistance plans could violate the Anti-Kickback Statute, 42 U.S.C. 1320a-7b, and the False Claims Act, 31 U.S.C. 3729, by effectively rewarding doctors and patients for choosing particular drugs. Astellas subsequently launched Xtandi, used to treat metastatic prostate cancer. Priced at $7,800 per month, Xtandi prescriptions were covered by Medicare up to about $6,000 per month. Astellas made contributions to two patient assistance plans. An Astellas marketing executive encouraged both plans to create special funds to provide co-pay assistance for only androgen receptor inhibitors like Xtandi and a few other medications. Astellas donated to the new funds but stopped after contributing about $27 million. Astellas continued contributing to broader prostate cancer funds.The Department of Justice began investigating; the Astellas marketing executive acknowledged that he had “hoped” and “expected” that the contributions would produce financial benefits for Astellas but that Astellas had made no efforts to calculate “a return on investment.” Astellas settled with the government for $100 million--$50 million for “restitution” to the government. Astellas sought indemnification from liability insurers, including Federal, which denied coverage.The Seventh Circuit affirmed summary judgment for Astellas. Under Illinois law, a party may not obtain liability insurance for genuine restitution it owes the victim of its intentional wrongdoing, but a party may obtain insurance for compensatory damages. In cases of ambiguity, Illinois favors settlements and freedom of contract. Federal wrote its insurance policy to try to extend coverage to the limit of what Illinois law would allow. Federal did not carry its burden of showing that the portion of the settlement payment for which Astellas seeks coverage is uninsurable restitution. View "Astellas US Holding, Inc. v. Federal Insurance Co." on Justia Law

The Supreme Court vacated the judgment of the superior court entered favor of Allstate Property and Casualty Insurance Company in this breach of contract action, holding that, under the circumstances, the court erred in granting Allstate's motion for summary judgment.Plaintiff made a claim for loss under its homeowners policy with Allstate after a water loss Plaintiff's property suffered. While Plaintiff sought to invoke a provision in the policy that either party could seek appraisal in the event of a dispute as to the amount of the loss Allstate refused to proceed to appraisal. Plaintiff filed suit for breach of contract in his first action. Allstate counterclaimed seeking a declaration that the parties were required to submit the matter to appraisal. The trial justice granted summary judgment for Allstate without prejudice. Thereafter, Plaintiff demanded that Allstate move forward with the appraisal process. Allstate refused, asserting that Plaintiff's demand was untimely under the policy. Plaintiff then commenced the instant action seeking relief in the form of a judgment ordering Allstate to designate an appraiser and to complete the appraisal process. Final judgment entered for Allstate. The Supreme Court vacated the judgment below, holding that Plaintiff's initial demand for appraisal was not time-barred, and therefore, the trial court erroneously granted summary judgment for Allstate. View "Romeo v. Allstate Property & Casualty Insurance Co." on Justia Law

Thirteen’s building suffered fire damages covered by Foremost’s policy. Thirteen retained Paramount as its public adjuster and general contractor for repairs. Paramount was “to be [Thirteen’s] agent and representative to assist in the preparation, presentation, negotiation, adjustment, and settlement” of the fire loss. Thirteen also “direct[ed] any insurance companies to include Paramount … on all payments on” the fire loss claim. Paramount negotiated the fire loss. Foremost delivered settlement checks to Paramount. The checks named Thirteen, its mortgagee, and Paramount as co-payees. Paramount endorsed the names of all co-payees, cashed the checks, and kept the proceeds. Paramount performed some repair work on the building before Thirteen sought a declaratory judgment that the insurer had breached its policy by not paying the claim.The Seventh Circuit affirmed summary judgment for Foremost. Paramount received and cashed the checks, discharging the insurer’s performance obligation under the policy. The court rejected Thirteen’s arguments that Foremost waived payment as an affirmative defense by failing to plead it in its answer; that, under controlling Illinois law, Foremost’s policy obligation was not discharged when it delivered the checks to Paramount, which cashed the checks; and that Foremost agreed to make claim payments to Thirteen in installments after Foremost had inspected repair work performed. View "Thirteen Investment Co., Inc. v. Foremost Insurance Co. Grand Rapids Michigan" on Justia Law

In these actions to recover underinsured motorist benefits allegedly due under certain automobile insurance coverage provided by the State pursuant to a collective bargaining agreement the Supreme Court held that the appellate court incorrectly concluded that the trial court should have reduced one appellant's award by the sums received in settlement of a claim under Connecticut's Dram Shop Act, Conn. Gen. Stat. 30-102.The trial court found for Appellants on liability but awarded only a fraction of the damages sought, due in part to the court's rejection of Appellants' PTSD claim. The appellate court reversed in part, concluding that the trial court's failure to reduce Appellants' damages by their dram shop recovery violated the common-law rule against double recovery. The Supreme Court reversed in part, holding that the appellate court (1) properly affirmed the trial court's conclusion that Appellants were not entitled to recover underinsured motorist benefits for alleged PTSD; and (2) improperly reversed the judgments insofar as the trial court determined that the State was not entitled to a reduction in the awards for sums received by Appellants in settlement of a dram shop claim. View "Menard v. State" on Justia Law

Plaintiff Noble House, L.L.C. (“Noble House”) appealed a judgment of dismissal, without prejudice, based on forum non conveniens, granted in favor of Defendant Certain Underwriters at Lloyd’s, London (“Underwriters”). The district court ruled that the parties’ insurance policy contained an enforceable forum-selection clause requiring litigation in the courts of England and Wales and that a return-jurisdiction clause was not required.   The Fifth Circuit affirmed. The court held that although there are arguably two forum-selection clauses at play, one foreign and one domestic, the district court concluded that the forum-election clause selecting the courts of England and Wales controls. Noble House does not dispute this conclusion in its opening brief. Nor does Noble House dispute that the foreign forum-selection clause is mandatory. Only the foreign forum-selection clause’s enforceability is contested, which is addressed under the “unreasonable under the circumstances” framework – not the usual “available and adequate” framework. Further, the court held that Noble House does not carry its “heavy burden of proof” to show that the clause selecting the courts of England and Wales is unreasonable under the circumstances. Moreover, Noble House offers no compelling reason justifying its filing in Texas or why its action could not be filed timely in the foreign fora. Accordingly, the court held that the district court did not err when it: (1) concluded that the foreign forum-selection clause is enforceable, or (2) failed to include a return-jurisdiction clause and total waiver of any statute-of-limitations defenses. View "Noble House v. Certain Underwriters" on Justia Law