Justia Insurance Law Opinion Summaries

After a fatal truck accident claimed the lives of members of two families, the victims' families filed a personal injury action against the trucking company. The trucking company's insurer ultimately transferred $1 million to the law firm representing one of the families. The insurer then notified the other family that the policy limits had been exhausted. That same day, the insurer submitted two checks: one to the victim's family and one to the law firm.The family that was not party to the settlement filed an involuntary bankruptcy petition against the trucking company. The trustee brought an adversary proceeding against the other victim's family and their law firm, seeking to avoid and recover the transfer of the policy proceeds pursuant to 11 U.S.C. Secs. 547 and 550 of the Bankruptcy Code. The bankruptcy court denied the law firm's motion to dismiss.On appeal, the family that settled and the law firm argued that the district court erred in determining that the trucking company held an equitable property interest in the policy proceeds. The Fifth Circuit affirmed, finding that these facts fit the "limited circumstances" under which the policy proceed are considered the property of the estate. View "Law Office of Rogelio Solis v. Curtis" on Justia Law

The Supreme Court affirmed the order of the district court granting summary judgment after determining that Plaintiff's claim for underinsured motorist benefits against American Family Insurance Company was time-barred, holding that Plaintiff's action was untimely.Plaintiff sought underinsured motorist benefits against American Family Insurance Policy, but the district court determined that the action was barred by a two-year limitation provision in the insurance policy. The district court granted summary judgment in favor of American Family. The Supreme Court affirmed, holding that the district court correctly found that Plaintiff's action was untimely. View "Rose v. American Family Insurance Co." on Justia Law

CSX Transportation, Inc. is a freight railroad company. General Mills, Inc. operates a cereal processing plant in Georgia near one of CSX’s rail lines. A small connecting railroad connects CSX’s main rail line to General Mills’s plant. A contract between CSX and General Mills governs the use of the sidetrack.A General Mills employee suffered severe injuries while working on the sidetrack and then sued CSX for negligence. A jury found CSX liable, and CSX sought indemnification from General Mills, citing a contractual provision providing General Mills was required to indemnify CSX—regardless of whether CSX alone was responsible. The district court dismissed one of CSX’s breach-of-contract claims and granted General Mills summary judgment on the other.The Eleventh Circuit found that, under the parties’ agreement, General Mills was not required to indemnify CSX if CSX was solely negligent. However, the court disagreed with the district court that Georgia's vouchment doctrine barred CSX from litigating the issue of General Mills’s negligence. Thus, the Eleventh Circuit remanded for the district court to determine if General Mills was at least partially at fault for the injury. If so, then General Mills must indemnify CSX for at least a portion of the settlement and related expenses. View "CSX Transportation, Inc. v. General Mills, Inc." on Justia Law

Plaintiff planned on hosting a music festival in Austin, Texas. However, Austin canceled the event due to concerns related to COVID-19. In turn, ticket holders who were refused a refund sued, resulting in a judgment against PLaintiff of over $1 million. Plaintiff sued its insurer for failure to defend against the class action. The district court denied Plaintiff's motion for summary judgment and granted the insurer's motion for summary judgment. Plaintiff appealed.On appeal. the parties agreed that the district court had jurisdiction under 28 U.S.C. 1332(a)(1) and Plaintiff claimed the Fifth Circuit had jurisdiction pursuant to 28 U.S.C. 1291.Exercising its independent judgment, the Fifth Circuit could not find proper allegations or evidence of Plaintiff's citizenship, giving the parties an opportunity to respond. However, the Fifth Circuit found the proffered evidence of Plaintiff's citizenship insufficient, remanding the case for the limited purpose of determining whether jurisdiction exists. View "SXSW v. Federal Insurance" on Justia Law

JRK Property Holdings, Inc. appealed from the order of dismissal entered after the trial court granted a motion for judgment on the pleadings filed by primary insurer Ironshore Specialty Insurance Company (Ironshore) and excess insurers RSUI Indemnity Company (RSUI), Evanston Insurance Company (Evanston), and others (collectively, Insurers). JRK sued Insurers for breach of contract and declaratory judgment after Insurers denied coverage for JRK’s lost business income that resulted from the  COVID-19 pandemic and associated government orders. The trial court entered an order of dismissal in favor of Insurers. JRK appealed.   The Second Appellate District reversed the trial court’s order of dismissal except as to RSUI and Evanston. The court remanded for the trial court to vacate its order granting the motion for judgment on the pleadings and to enter a new order granting the motion without leave to amend as to RSUI and Evanston and denying the motion as to all other defendants. The court explained that under MacKinnon v. Truck Ins. Exchange (2003), the historical background of the pollution exclusion shows its inclusion in insurance policies was intended to address only traditional sources of environmental pollution. The court rejected Insurers’ argument that inclusion of the term “virus” in the definition of a contaminant transforms an exclusion that applies to “pollution” into one that encompasses the spread of a virus due to the normal human activities of breathing and touching surfaces. The court further concluded that the RSUI pathogen exclusion applies because it bars coverage for “losses or damage” caused by the discharge or dispersal of “pathogenic” material. The Evanston pathogen exclusion specifically bars loss or damage caused by the spread of an organic pathogen, defined to include a virus. View "JRK Property Holdings, Inc. v. Colony Ins. Co." on Justia Law

Current and former policyholders filed a class action lawsuit in Illinois against Country Mutual and 46 of its current and former officers and directors. Every member of the proposed class is an Illinois citizen under the Class Action Fairness Act, CAFA, 28 U.S.C. 1332(d)(2), as are Country Mutual and 45 of the individuals. The 46th defendant, Bateman, is a citizen of Massachusetts. The plaintiffs alleged that the firm accumulated and retained excess surplus of over $3.5 billion from premium revenues exceeding the cost of claims and thereby failed to supply those policies at cost. They claimed breach of contract, violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, unjust enrichment, and breach of fiduciary duty.Based on putative class size, the amount in controversy, and the minimal diversity created by Bateman, Country Mutual removed this case to federal district court, 28 U.S.C. 1332(d); 1453(b). The Seventh Circuit remanded to state court. Under CAFA’s internal affairs exception, each claim sounds in allegations of corporate mismanagement that cannot be adjudicated without immersion into the boundaries of the discretion afforded by Illinois law to officers and directors of a mutual insurance company to set capital levels and make related decisions about surplus distributions to policyholder members. The case is also within CAFA’s home-state controversy exception, 28 U.S.C. 1332(d)(4)(B), as Bateman, who creates minimal diversity, is not a “primary defendant.” View "Sudholt v. Country Mutual Insurance Co." on Justia Law

The Supreme Court affirmed the judgment of the court of appeals reversing the decision of the circuit court concluding that the notice-prejudice rule adopted in Jones v. Bituminous Casualty Corp., 821 S.W.2d 798 (Ky. 1991), applied in the underlying case, holding that there was no error.At issue was whether the claims-made-and-reported management liability policy issued by Allied World Specialty Insurance Company to Kentucky State University (KSU) provided coverage when KSU did not comply with the policy's notice provisions. The circuit court granted summary judgment for KSU after applying the notice-prejudice rule. The court of appeals reversed, determining that the notice-prejudice rule did not apply. The Supreme Court affirmed, holding (1) the policy's notice provisions were clear and unambiguous and that Allied World was entitled to deny coverage to KSU because KSU did not comply with the notice requirements; and (2) generally, the notice-prejudice rule shall not apply to a claims-made-and-reported policy that contains unambiguous notice requirements as condition precedent to coverage. View "Ky. State University v. Darwin Nat'l Assurance Co." on Justia Law

Endeavor Operating Company, LLC (Endeavor) is a “holding company” that owns “various subsidiaries in the entertainment, sports, and fashion business sectors.” Endeavor sued the insurers for (1) declaratory relief and (2) breach of contract related to COVID-19 closures. The insurers demurred to the complaint. The trial court issued a ruling (1) sustaining the demurrer without leave to amend and (2) denying Endeavor’s motion for a new trial. The court modified its initial ruling to find that the “actual” or “threatened presence” of COVID-19 or the SARS-CoV-2 virus “does not constitute a physical loss or damage required to trigger coverage for property insurance coverage” but reaffirmed its initial ruling that the contamination/pollution exclusion applied, which in the court’s view obviated its need to address the argument Endeavor raised for the first time in its new trial motion. Endeavor appealed.   The Second Appellate District affirmed. The court concluded that the insurance policy unambiguously requires “direct physical loss or damage to property” before Endeavor may recover under the business interruption clauses. The court held that Endeavor failed as a matter of law to plead “direct physical loss or damage to property.” The court explained that California courts are in accord that the phrase “direct physical loss or damage to property” means a “‘distinct, demonstrable, physical alteration’” of the insured property. This is the default definition to be applied where a policy does not provide a different definition of “direct physical loss or damage.” The policy here provides no different definition. View "Endeavor Operating Co., LLC v. HDI Global Ins. Co." on Justia Law

In this case, the parties consented to have their commercial dispute tried before a United States magistrate judge. But, allegedly unbeknownst to Defendant, the judge was longtime family friends with the lead trial lawyer for the plaintiff. Specifically, the lawyer had been a groomsman in the judge’s own wedding, and the judge officiated the wedding of the lawyer’s daughter three months before this lawsuit was filed. None of this information was disclosed to Defendant. After a twenty-day bench trial, the magistrate judge rendered judgment for the Plaintiff, awarding $124.5 million, including over $100 million in trebled damages. After the issuance of the judgment and award, Defendant learned about the undisclosed longstanding friendship and sought to have the magistrate-judge referral vacated. The district judge denied the request and denied discovery on the issue. Defendant appealed.   The Fifth Circuit vacated. The court concluded that the facts asserted here, if true, raise serious doubts about the validity of Defendant’s constitutionally essential consent to have its case tried by this magistrate judge. Further, the court explained remand was necessary because the facts were not sufficiently developed for the court to decide whether Defendant’s consent was validly given or whether vacatur of the referral was otherwise warranted. Accordingly, the court remanded for an evidentiary inquiry. View "I F G Port Hold v. Lake Charles Harbor" on Justia Law

Appellant, a former employee of the City of La Habra Heights (City), pled no contest to a felony that arose out of the performance of her official duties. Under the terms of Appellant’s plea agreement, the conviction was later reduced to a misdemeanor under Penal Code section 17 and then dismissed under Penal Code section 1203.4. After Respondent California Public Employees’ Retirement System (CalPERS) determined that Appellant forfeited a portion of her retirement benefits as a result of her felony conviction, she filed a petition for writ of administrative mandate. The trial court denied her petition.   The Second Appellate District affirmed. The court concluded the trial court did not err in denying the petition because, consistent with the language and purpose of section 7522.72, Appellant’s retirement benefits were subject to forfeiture upon her no-contest plea to a job-related felony, notwithstanding the subsequent reduction to a misdemeanor and dismissal of the charge. Further, the court explained that Appellant asserts that section 7522.72 is unconstitutional, but she fails to present any cognizable argument or legal authority to support her claim. View "Estrada v. Public Employees' Retirement System" on Justia Law