Justia Insurance Law Opinion Summaries

Sagome, Inc.’s restaurant, L’Hostaria, suffered significant financial losses from reduced customer traffic and government lockdowns and restrictions relating to the COVID-19 pandemic. It sought to recover under its comprehensive general insurance policy. And like many insurers, The Cincinnati Insurance Company denied coverage because the virus did not impose physical loss or damage as required by the policy. Sagome sued, but the district court concluded its financial losses were not covered. Addressing Sagome’s coverage under Colorado law, the Tenth Circuit Court of Appeals agreed and affirmed: COVID-19 did not cause Sagome to suffer a qualifying loss because there was never any direct physical loss or damage to L’Hostaria. View "Sagome v. Cincinnati Insurance Company" on Justia Law

The First Circuit affirmed the judgments of the district court dismissing part of Plaintiff's putative class action for failure to state a claim and entering summary judgment disposing of the remainder of his claims, holding that there was no error in the proceedings below.In his complaint, Plaintiff argued that an increased coverage limit on his house and premium violated the terms of his contract with Amica Mutual Insurance Company and that he and other Amica insureds paid too much to insure their homes. The district court dismissed the breach of contract and implied covenant of good faith and fair dealing claims and then granted summary judgment for Amica on the unjust enrichment, money had and received, and Mass. Gen. Laws ch. 93A claims. The First Circuit affirmed, holding that there was no reversible error in the proceedings below. View "Gottlieb v. Amica Mutual Insurance Co." on Justia Law

Evanston Insurance Company appealed the judgment following a bench trial on an insurance-coverage dispute. After determining that Evanston failed to timely rescind the policy and that a policy exclusion did not apply, the district court required Evanston to continue defending Desert State Life Management against a class action arising from its former CEO’s embezzlement scheme. Though the Tenth Circuit agreed with the district court that rescission was untimely, it disagreed about the likely application of New Mexico law on applying policy exclusions. Judgment was thus affirmed in part and reversed in part. View "Evanston Insurance Company v. Desert State Life Management, et al." on Justia Law

Plaintiff brought a lawsuit against Allianz Life Insurance Company of North America (“Allianz”) in Plaintiff’s capacity as a trustee of the Zupnick Family Trust 2008A (“Trust”). Plaintiff sought a declaratory judgment that an Allianz life insurance policy (“Zupnick Policy”), which Plaintiff contends is owned by the Trust, remains in effect. The district court concluded that the Trust was not the actual owner of the Zupnick Policy under New York law because any assignment of the policy to the Trust failed to comply with the Zupnick Policy’s provision that assignment would be effective upon Allianz’s receipt of written notice of the assignment. The district court held that the Trust lacked contractual standing to sue on the Zupnick Policy, and granted Allianz’s motion to dismiss. On appeal, Plaintiff argued that failure to comply with the provisions of a life insurance policy requiring written notice of assignment cannot, under New York law, render an assignment ineffective.   The Second Circuit certified the question to the Court of Appeals because the argument turns on a question of state law for which no controlling decision of the New York Court of Appeals exists. The court certified the following question: Where a life insurance policy provides that “assignment will be effective upon Notice” in writing to the insurer, does the failure to provide such written notice void the assignment so that the purported assignee does not have contractual standing to bring a claim under the Policy? View "Brettler v. Allianz Life Insurance Company of North America" on Justia Law

Plaintiff-appellant Chris LaBarbera hired Richard Knight dba Knight Construction (Knight) to remodel a house pursuant to a contract that provided Knight would defend and indemnify LaBarbera for all claims arising out of the work. Knight obtained a general liability insurance policy from defendant-respondent Security National Insurance Company (Security National) that covered damages Knight was obligated to pay due to bodily injury to a third party. As relevant here, the policy also covered Knight’s “liability for damages . . . [a]ssumed in a contract or agreement that is an ‘insured contract.’ ” Security National acknowledged the indemnity provision in Knight’s contract with LaBarbera was an “insured contract” within the meaning of the policy. The policy also provided, “If we defend an insured [i.e., Knight] against a suit and an indemnitee of the insured [i.e., LaBarbera] is also named as a party to the suit, we will defend that indemnitee” if certain conditions were met. During the remodeling work, a subcontractor suffered catastrophic injuries, and sued both LaBarbera and Knight. LaBarbera’s liability insurer (plaintiff-appellant Lloyd's of London Underwriters) defended him in that lawsuit, and Security National defended Knight. LaBarbera also tendered his defense to Knight and to Security National, but they either ignored or rejected the tender. After settling the underlying lawsuit for $465,000, LaBarbera and Underwriters sued Knight and Security National, seeking to recover the full $465,000 settlement amount and over $100,000 in expenses and attorney fees incurred defending LaBarbera in that lawsuit. Security National moved for summary judgment on the ground that all claims against it were barred because the undisputed facts established it did not have an obligation to defend or indemnify LaBarbera. The trial court granted the motion and entered judgment in favor of Security National. LaBarbera and Underwriters appealed, but the Court of Appeal affirmed, adopting different reasoning than the trial court. The Court agreed with Security National that the indemnitee defense clause in Knight’s general liability insurance policy did not bestow third party beneficiary rights on the indemnitee, LaBarbera, who benefitted only incidentally from the clause. Because LaBarbera was not a third party beneficiary under Knight’s policy, he was precluded from bringing a direct action against Security National. View "LaBarbera, et al. v. Security Nat. Ins. Co." on Justia Law

This case involves an insured who sued for breach of contract, bad faith, and fraud when its insurer denied coverage for business income losses that the insured incurred following government closure orders issued during the COVID-19 pandemic. The insured alleged that the COVID-19 virus was present on its premises before the orders were issued, or would have been present had the insured not closed its venues in compliance with the orders, and it sought coverage under several provisions of its commercial property insurance policy that require “direct physical loss or damage to property” to trigger coverage. The district court dismissed the insured’s suit for failure to state a claim.   The Ninth Circuit certified the following question to the California Supreme Court: Can the actual or potential presence of the COVID-19 virus on an insured’s premises constitute “direct physical loss or damage to property” for purposes of coverage under a commercial property insurance policy? View "ANOTHER PLANET ENTERTAINMENT V. VIGILANT INSURANCE COMPANY" on Justia Law

John’s Grill in San Francisco was closed or operating at limited capacity during the pandemic. The restaurant was covered by Sentinel’s “Spectrum Business Owner’s Policy,” providing first-party property coverage, third-party liability coverage, and umbrella liability coverage. Sentinel denied the Grill’s claim for business interruption coverage. The trial court upheld the denial.The court of appeal reversed. A nearly uniform line of cases has held that temporary loss of use of property due to the COVID-19 pandemic does not constitute “direct physical loss of or damage to” property for purposes of first-party insurance coverage; nearly all of these cases involved standard form language that was not customized in any material way. Sentinel’s policy, however, has customized language. Other cases have analyzed the undefined term “direct physical loss of or damage to” property. Sentinel’s policy, by endorsement, affirmatively grants coverage for “loss or damage” caused by a virus; a special definition of “loss or damage” is broad enough to encompass pervasive infiltration of virus particulates onto the surfaces of covered property. The coverage is expressly limited to situations in which the virus is the “result of” a listed cause, none of which John’s Grill has alleged. The court rejected Sentinel’s proposed broad reading, citing the illusory coverage doctrine. Insuring agreements should be read broadly in favor of coverage, View "John's Grill, Inc. v. Hartford Financial Services Group, Inc." on Justia Law

The Supreme Court reversed the judgment of the court of appeals and reinstated the trial court's grant of summary judgment in favor of Owners Insurance Co. on EMOI Services, LLC's claim of breach of contract and bad-faith denial of insurance coverage after a ransomware attack on EMOI's computer-software systems, holding that Owners was not responsible for covering the loss at issue.At issue was whether the businessowners insurance policy issued by Appellant to EMOI covered losses suffered by EMOI when it became the target of a ransomware attack. The trial court granted summary judgment to Owners. The court of appeals reversed, concluding that genuine issues of material fact precluded summary judgment. The Supreme Court reversed, holding that Owners did not breach its contract with EMOI because the pertinent insurance policy did not cover the type of loss EMOI experienced. View "EMOI Services LLC v. Owners Insurance Co." on Justia Law

This insurance coverage dispute arises from underlying litigation in a single-vehicle accident that led to a lawsuit by J.O. against his employer, Riata Cattle Company, Inc. (“Riata”). J.O. sued Riata in Texas state court, alleging that he suffered bodily injury when Riata’s truck, which he was driving, malfunctioned and crashed due to Riata’s failure to repair and maintain it. J.O. also alleged that Riata committed negligence and gross negligence by failing to provide him with safety equipment, failing to warn him of any dangers, failing to inspect or repair the equipment, and other negligence theories. Riata sought coverage defense from its auto liability insurer, National Liability & Fire Insurance Company (“National Liability”), which is currently defending Riata in the underlying litigation under a reservation of rights letter. National Liability subsequently filed a declaratory judgment action in federal court, seeking a determination that it owes Riata neither a defense nor indemnity under the insurance policy (the “Policy”). National Liability contends it is entitled to a declaratory judgment because the Policy excludes coverage for employees of Riata. Riata seems to concede this argument but contends that the “Form F” endorsement on the Policy compels National Liability to defend and indemnify Riata.The Fifth Circuit affirmed. The court explained that J.O. is an employee of Riata, and according to the applicable Policy, National Liability is excluded from providing insurance coverage to Riata for the underlying litigation. And Form F does not change the employee exclusion in the Policy. View "Ntl L & Fire Ins Co v. Riata Cattle Co" on Justia Law

Reliance Standard Life Insurance Company denied Plaintiff’s claim for long-term disability benefits after concluding that she was not “Totally Disabled” as defined by her disability insurance plan. Plaintiff brought an under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. Section 1132(a)(1)(B), arguing that the denial of benefits violated that Act. After conducting a bench trial under Federal Rule of Civil Procedure 52, the district court awarded judgment to Plaintiff. Reliance appealed, arguing that courts in the Fourth Circuit are required to resolve ERISA denial-of-benefits cases via summary judgment and that the district court erred in dispensing with this case through a bench trial. Reliance also argued that this Court must review the district court’s legal conclusions.   The Fourth Circuit affirmed. The court first held that because the plan at issue here did not require objective proof of disability, the court rejected Reliance’s contention that Plaintiff’s claim fails for the lack of such evidence. Further, the court wrote that the record supports the district court’s determination that Plaintiff’s disability was not limited to a “specific locale.” Accordingly, the court agreed that Plaintiff was “totally disabled” under the terms of the plan. View "Anita Tekmen v. Reliance Standard Life Ins." on Justia Law