Justia Insurance Law Opinion Summaries

During the covid-19 pandemic, state and local authorities in Louisiana ordered nonessential businesses to close for a time. This required Plaintiff to temporarily shut his jewelry stores and event spaces in New Orleans. To recoup income lost during the closure, Plaintiff claimed reimbursement under his insurance policy’s coverage for “direct physical loss of or damage to” his property. Plaintiff’s insurer, Axis, denied the claim.   Plaintiff sued Axis along with his insurance agent and broker. The district court dismissed Plaintiff’s claims, concluding that Plaintiff suffered no covered loss or damages and that his agent and broker violated no duty to advise Plaintiff about pandemic-related coverage.   The Fifth Circuit affirmed. The court explained that what denied Plaintiff use of his property was the government’s closure orders. Such losses do not involve a “tangible alteration to, injury to, or deprivation of property.” The district court therefore correctly dismissed Plaintiff’s claims against Axis. Further, contrary to Plaintiff’s arguments, what creates a Louisiana insurance agent’s duty to procure particular coverage is not a “close relationship” with the insured but an insured’s “specific” request for “the type of insurance coverage . . . needed.” Here, Plaintiff did not allege he specifically requested pandemic-related coverage from either the wholesale broker or insurance agent, therefore Plaintiff’s claims against those Defendants were properly dismissed. View "Adler & Sons v. Axis Surplus Ins Co" on Justia Law

A fire at the Barclay assisted living facility caused four residents’ deaths. Their estates sued Barclay and Johnson Controls, which maintained and monitored Barclay’s fire-suppression system. After Barclay and its liability insurers settled with the estates, the insurers sued Johnson in federal court, asserting diversity jurisdiction. The insurers alleged that they stood in the shoes of Barclay as its subrogees and were entitled to damages for the settlement payments they made on Barclay’s behalf. The insurers are structured as reciprocal insurance exchanges--distinct legal entities that can sue or be sued but without corporate existence. Each is an unincorporated association whose subscribers exchange contracts and pay premiums for the purpose of insuring themselves and each other. The subscribers are simultaneously both the insureds of and insurers to one another, with the exchanges of insurance between them effected by a common representative.The district court, reasoning that there was no clear Pennsylvania subrogation law prohibition on insurers “asserting tort-based claims against third-party tortfeasors,” denied Johnson’s motion to dismiss. The Third Circuit vacated without reaching the issue of the availability of the tort claims under Pennsylvania law. Before any federal court can decide the merits of such a question, it must have jurisdiction, which may be lacking in this case. For purposes of diversity jurisdiction, the citizenship of reciprocal insurance exchanges turns on the citizenship of their subscribers, who may not be completely diverse from Johnson. Additional fact-finding is needed. View "Peace Church Risk Retention Group v. Johnson Controls Fire Protection LP" on Justia Law

Petitioners Washington State Department of Transportation (WSDOT) and Seattle Tunnel Partners (STP), sought reversal of a Court of Appeals decision affirming the partial summary judgment rulings that an “all risk” insurance policy did not provide coverage for certain losses. At issue in WSDOT’s petition for review was whether the loss of use or functionality of the insured property constituted “physical loss” or “physical damage” that triggered coverage. STP’s petition asked whether the insurance policy excluded coverage for damage to the insured property caused by alleged design defects and whether the policy covers delay losses. This case arose out of a major construction project to replace the Alaskan Way Viaduct in Seattle. In 2011, STP contracted with WSDOT to construct a tunnel to replace the viaduct. The project started in July 2013. A tunnel boring machine (TBM) used in the project stopped working in December 2013, and did not resume until December 2015. The project was unable to continue during the two-year period while the TBM was disassembled, removed, and repaired. STP and WSDOT tendered insurance claims under the Policy. Great Lakes denied coverage, and STP and WSDOT sued the insurers, alleging wrongful denial of their claims. The Washington Supreme Court affirmed the Court of Appeals, finding that even if it interpreted “direct physical loss or damage” to include loss of use, no coverage under Section 1 is triggered because the alleged loss of use was not caused by a physical condition impacting the insured property. View "Seattle Tunnel Partners v. Great Lakes Reinsurance (UK) PLC" on Justia Law

Defendant OneBeacon Insurance Company reinsured one of three excess insurance policies issued by Plaintiff Fireman’s Fund Insurance Company to policyholder ASARCO, Inc. After developing significant potential liability on claims made by asbestos-injured claimants, ASARCO sought coverage from Fireman’s Fund under all of its excess policies. ASARCO and Fireman’s Fund ultimately settled all of the claims under the three policies. Fireman’s Fund allocated a portion of that settlement to the policy reinsured by OneBeacon and sought reinsurance coverage on the allocated sum. OneBeacon rejected Fireman’s Fund’s claim, arguing that the settlement allocation violated the terms of the excess and reinsurance policies. The district court granted summary judgment to Fireman’s Fund, and OneBeacon appealed.   The Second Circuit affirmed. The court agreed with the district court that Fireman’s Fund’s allocation of a portion of the settlement to the excess policy reinsured by OneBeacon was not contrary to that policy’s exhaustion requirement or to the terms of the reinsurance policy. OneBeacon is therefore obligated under the reinsurance policy’s follow-the-settlements clause to provide the requested coverage. View "Fireman's Fund Ins. Co. v. OneBeacon Ins. Co." on Justia Law

Cherokee Nation filed a declaratory judgment action seeking insurance coverage under the business interruption provision of a policy issued by a number of insurers for the economic losses it incurred when it temporarily closed its properties due to the threat of COVID-19. The district court granted Cherokee Nation's motion for partial summary judgment, holding the phrase "direct physical loss" in the business interruption provision of the policy included coverage for losses sustained by property rendered unusable for its intended purpose. The district court also found that none of the exclusions raised by the insurers applied to Cherokee Nation's loss. The insurers appealed, and the Oklahoma Supreme Court retained the appeal, holding that Cherokee Nation's losses were not covered under the business interruption section of the insurance policy at issue. The district court erred in finding business interruption coverage when Cherokee Nation did not sustain immediate, tangible deprivation or destruction of property. View "Cherokee Nation v. Lexington Insurance Co., et al." on Justia Law

In 1985, Messing, an attorney, obtained a long-term disability (LTD) insurance policy through Provident. Beginning in 1994, Messing struggled with depression. In 1997, Messing was hospitalized for his depression for more than three weeks. Provident began paying LTD benefits but later initiated a dispute. Messing's subsequent lawsuit settled in 2000 with Provident resuming payments. In 2018, Provident sought proof, beyond Messing’s own certifications, that he was unable to work as an attorney. Messing’s treating psychiatrist, Dr. Franseen, submitted a report diagnosing Messing with “Major Depressive Disorder, recurrent, minimal to mild,” and noting that Messing had stopped using medications to treat his depression in 2012 “and ha[d] been stable for the most part since then.” Franseen refused to render an opinion as to whether Messing could return to work. Provident had Dr. Lemmen interview Messing. Lemmen concluded, “[t]here is no objective evidence that [Messing] would not be able to practice as an attorney, should he desire to do so.” Messing appealed the termination of his benefits, providing affidavits from attorneys and a report from a third psychiatrist, Callaghan.The Sixth Circuit affirmed the denial of Provident’s claim for reimbursement of benefits it had paid but reversed with respect to the termination of benefits. Messing has proven that he remains unable to return to work as an attorney. Improvements in Messing’s health do not necessarily mean he can return to working as a full-time personal injury attorney. Dr. Callaghan noted Messing’s progress is likely attributable to his abstention from practicing law. View "Messing v. Provident Life & Accident Insurance Co." on Justia Law

Wild Eggs owns and operates restaurants in Indiana, Ohio, and Kentucky. When the COVID-19 pandemic began, those states imposed Stay-at-Home orders for all “non-essential” businesses. Wild Eggs was forced to suspend in-person dining and to restrict restaurant use to curbside pickup and delivery. State Auto has insured Wild Eggs since 2016. Wild Eggs notified State Auto of its claim for business losses under the Restaurant Extension Endorsement, which provides for 30 days of lost business income for the suspension of restaurant operations due to the order of a civil authority that resulted from an actual or alleged exposure of a restaurant to a disease. It also claimed coverage for all lost business income resulting from “direct physical loss of or damage to property” under the “Business Income Coverage” provision. State Auto denied coverage. Wild Eggs filed a breach-of-contract suit.The Sixth Circuit affirmed the dismissal of the suit. The Endorsement did not apply because the closures of Wild Eggs’s restaurants did not result from exposure to COVID-19 at the restaurants themselves. The Business Income Coverage provision did not apply because Wild Eggs did not suffer tangible damage to its property. View "Wild Eggs Holdings, Inc. v. State Auto. Property & Casualty Insurance Co." on Justia Law

Appellant Federal Insurance Company (Federal) was the prevailing party in a lawsuit Cell-Crete Corporation (Cell-Crete) brought seeking to recover against Federal on a payment bond. After dismissal, the trial judge denied Federal’s request for attorney fees and taxed its costs on the ground that Federal did not incur any fees or costs because a third party, Granite Construction Company (Granite), paid the fees and costs of Federal’s defense under an indemnity agreement between Federal and Granite. On appeal, Federal argued it was entitled, as the prevailing party, to recover their reasonable attorney fees and costs anyway: a party represented by counsel in an attorney-client relationship was entitled to an award of fees and costs even if they had been or would be borne by a third party. To this the Court of Appeal agreed and reversed the order denying Federal’s motion for attorney fees and granting Cell-Crete’s motion to tax costs, and remanded for further proceedings. View "Cell-Crete Corp. v. Federal Ins. Co." on Justia Law

The Supreme Court reversed the decision of the court of appeals reversing the judgment of the trial court concluding that Acuity, an insurer, did not owe Masters Pharmaceutical, Inc. a duty to defend it in the several lawsuits brought by cities and counties in three states (the governments) for losses caused by the opioid epidemic, holding that Acuity did not owe Masters a duty to defend.Cities and counties in West Virginia, Michigan, and Nevada brought the underlying lawsuits against Masters, a wholesale distributor of pharmaceutical products, including prescription opioids, alleging that Masters's conduct contributed to the opioid epidemic. Acuity filed an action for a declaratory judgment that it owed no duty to defend or indemnify Masters in the underlying suits. The trial court granted summary judgment for Acuity. The court of appeals reversed. At issue was whether the governments sought damages for their own economic losses and not "damages because of bodily injury." The Supreme Court reversed, holding (1) the governments did not seek "damages because of bodily injury"; and (2) therefore, Acuity did not owe Masters a duty to defend it in the underlying suits. View "Acuity v. Masters Pharmaceuticals, Inc." on Justia Law

Plaintiff suffered serious injuries when his motorcycle collided with a car driven by a negligent motorist. After exhausting its liability limits, he next looked to the underinsured-motorist benefits of a policy covering just his motorcycle. When those benefits fell short too, he turned to a policy underwritten by Standard Fire Insurance Company that covered vehicles other than his motorcycle.   Relying on what the parties call the owned-but-not-insured exclusion, it denied coverage because the accident occurred with a vehicle that Plaintiff had decided to insure elsewhere. On cross-motions for summary judgment, the district court agreed with Standard Fire that it owed nothing. The Eighth Circuit affirmed. The court rejected Plaintiff’s argument that the exclusion is ambiguous. Even if “this coverage” might lend itself to some ambiguity in isolation, the remainder of the policy points to only one reasonable interpretation: the owned-but-not-insured exclusion applies in precisely this situation. View "John Eberlein v. Standard Fire Ins Co" on Justia Law