Justia Insurance Law Opinion Summaries

The district court granted summary judgment to Darwin, concluding that plaintiff was judicially estopped from claiming defense costs in excess of $668,068.38. The district court further found that Darwin was entitled to recover "overpayments" on an equitable "money had and received" theory. Both parties appealed. The court concluded, after thorough review, that plaintiff never took the position that her defense costs in the underlying suit were limited to $668,068.31 and that the prior court never accepted such a position. Therefore, the district court's contrary determination represented an abuse of discretion and the application of judicial estoppel was inappropriate. The court further concluded that summary judgment should not have been granted against plaintiff on the breach of contract claim where the district court relied in part on the judicial estoppel ruling; the proper measure of covered defense costs remains an unsettled question of fact and plaintiff was not entitled to a declaratory judgment; and the court rejected plaintiff's remaining claims. In light of the court's judicial estoppel ruling, the court concluded that the district court's grant of summary judgment on Darwin's claim for money had and received cannot stand. Finally, the court rejected Darwin's breach of contract claim. Accordingly, the court reversed and remanded for further proceedings. View "Aldous v. Darwin National Assurance Co." on Justia Law

Whiteside represented the County of Camden in a lawsuit brought by Anderson, which resulted in a jury award paid, in part, by the County’s excess insurer, National. According to National, the County did not notify it of the lawsuit until several months after it was filed. Whiteside initially informed National that the case was meritless and valued it at $50,000. During trial, Whiteside changed her valuation and requested the full $10 million policy limit to settle Anderson’s claims. National conducted an independent review and denied that request. The jury awarded Anderson $31 million, which was remitted to $19 million. Days later, National sought a declaratory judgment that it was not obligated to provide coverage because the County had breached the policy contract by failing to timely notify National of the case and by failing to mount an adequate investigation and defense. National also asserted claims against Whiteside for legal malpractice, breach of fiduciary duty, and breach of contract. The court dismissed those claims because National could not demonstrate that Whiteside’s actions proximately caused it to suffer any damages. The Third Circuit dismissed and appeal for lack of jurisdiction, finding National’s notice of appeal untimely under Federal Rule of Appellate Procedure 4(a)(1), View "State Nat'l Ins. Co v. County of Camden" on Justia Law

Attorney Fleisher worked for two affiliated law firms. In 2013 Fleisher filed a written demand with the firms, claiming that when he retired, in 2011, he had accrued more than 90 weeks of unused vacation time and more than 322 days of unused sick leave, and that the firms were required by contract and by the Illinois Wage Payment and Collection Act, to pay him for those accruals. He estimated that he was owed about $950,000. The defendants sent a copy of Fleisher’s complaint to Hartford, seeking coverage under the “Employee Benefits Liability Provision” of their Business Owners Policy. It took five months for Hartford to reply that the matter was under consideration. Two months later Hartford denied coverage and sought a declaration that the insurance policy did not cover Fleisher’s claim, alleging that the failure to pay Fleisher was not the result of any negligent act, error, or omission in the administration of the employee benefits program, which was all that the policy covered. The district judge ruled that Hartford had no duty to defend under Illinois law and granted summary judgment. The Seventh Circuit affirmed, holding that delay was not a valid ground for estopping Hartford to deny coverage or a duty to defend. View "Hartford Cas. Ins. Co v. Karlin, Fleisher & Falkenberg" on Justia Law

The Joyce law firm purchased professional liability insurance from Professionals Direct. In 2007 the firm won a large damages award for a class of securities-fraud plaintiffs and hired another law firm to sue to collect the money from the defendant’s insurers. Some class members thought the Joyce firm should have handled enforcement of the judgment itself under the terms of its contingency-fee agreement. They took the firm to arbitration over the extra fees incurred. Professionals Direct paid for the firm’s defense in the arbitration. After the arbitrator found for the clients and ordered the firm to reimburse some of the fees they had paid, the insurer refused a demand for indemnification. The district judge sided with the insurer, concluding that the award was a “sanction” under the policy’s exclusion for “fines, sanctions, penalties, punitive damages or any damages resulting from the multiplication of compensatory damages.” The Seventh Circuit affirmed. While the arbitration award was not functionally a sanction, another provision in the policy excludes “claim[s] for legal fees, costs or disbursements paid or owed to you.” Because the arbitration award adjusted the attorney’s fees owed to the firm in the underlying securities-fraud class action, the “legal fees” exclusion applies. View "Edward T. Joyce & Assocs. v. Prof'ls Direct Ins. Co." on Justia Law

Georgia citizen George Skipper was involved in a motor vehicle accident with a logging truck that was driven by Harold Moors and owned by Specialty Logging, LLC. Specialty had a commercial automobile insurance policy with a $1,000,000 per occurrence limit, which was issued by ACE Property and Casualty Insurance Company (ACE). Following the accident, Skipper retained an attorney who wrote a demand letter to ACE offering to settle the case for the limits of the Policy. ACE retained two lawyers from Atlanta, Brantley Rowlen and Erin Coia, to represent Specialty and Moors. Specialty and Moors offered Skipper $50,000. Not satisfied with that offer, Skipper and his wife filed a lawsuit in the Allendale County Court of Common Pleas against Specialty and Moors. Unbeknownst to ACE or its attorneys, the Skippers entered into a settlement with Specialty and Moors, agreeing to execute a Confession of Judgment for $4,500,000, in which they admitted liability for the Skippers' injuries and losses. The Specialty Parties also agreed to pursue a legal malpractice claim against ACE and its attorneys Rowlen and Coia, and assigned the predominant interest in that claim to the Skippers.1 In exchange for the Specialty Parties' admission of liability, the Skippers agreed not to execute the judgment as long as the Specialty Parties cooperated in the legal malpractice litigation against Defendants. Armed with the assignment, the Skippers and Specialty Parties filed a legal malpractice action against the attorneys, also with the Allendale County court. The case was removed to the United States District Court for the District of South Carolina. In federal court, ACE and its attorneys argued that the assignment of the malpractice claim was invalid and that the Skippers had no valid claims to assert. Because the question of whether a legal malpractice claim could be assigned between adversaries in litigation in which the alleged malpractice arose was a novel question in South Carolina, the South Carolina Supreme Court accepted a certified question South Carolina law from the federal district court. After review, the South Carolina Court held that in South Carolina, the assignment of a legal malpractice claim between adversaries in litigation in which the alleged malpractice arose was prohibited. View "Skipper v. ACE Property" on Justia Law

Plaintiffs (a class of 1,593) alleged that Visteon failed to deliver timely notice to ex-employees, offering them an opportunity to continue health insurance at their own expense, under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). An employer has 44 days after the end of a person’s employment to provide notice and essential details, 29 U.S.C. 1166(a)(2). The court found that Visteon had provided untimely notice to 741 former employees, and that the notice averaged 376 days late for those persons. The court awarded $2,500 to each class member who had received untimely notice (a total of about $1.85 million), a sum that does not depend on how long the delay was for any given person. While the suit was pending, Visteon was reorganized in bankruptcy. The plan provides that debts of this kind will be paid 50¢ on the dollar, so each of the 741 will receive $1,250. The court also ordered Visteon to pay class counsel $302,780 as attorneys’ fees plus costs of about $11,000. The Seventh Circuit affirmed the award of attorneys’ fees, but otherwise dismissed plaintiffs’ challenge to the penalty as untimely, having been filed several months after the district court’s delayed entry of judgment. View "Pierce v. Visteon Corp." on Justia Law

Insurance companies allegedly refused to honor claims for payment of blood-clotting-factor products. After they paid the claims in full, the district court dismissed a complaint under the Employees Retirement Income Security Act (ERISA) and state law. Following dismissal, both the plaintiffs and defendants sought attorney’s fees and costs. The Third Circuit affirmed denial, but remanded one issue: whether the plaintiffs were entitled to interest on the delayed payment of benefits. On remand, they sought interest of $1.5 to $1.8 million, primarily under the Maryland Code, with $68,000 based on the federal Treasury bill rate. The companies agreed to pay $68,000.00 in interest and the district court dismissed the case. Plaintiffs then sought attorney’s fees and costs of $349,385.15. The district court denied the motion, finding that plaintiffs had failed to achieve “some degree of success on the merits” as required for an award of fees under ERISA. The Third Circuit reversed, holding that the court used an incorrect legal standard to evaluate eligibility for attorney’s fees and misapplied the “Ursic” factors. The “catalyst theory” of recovery is available to the plaintiffs and judicial action is not required under that theory in order to establish some degree of success. View "Templin v. Independence Blue Cross" on Justia Law

In 2010, Debra Hackett was seriously injured in an accident in Sacramento County in which a tractor and trailer owned by Silva Trucking, Inc. and driven by Elaine McDonold jackknifed and collided with the vehicle being driven by Hackett. In 2012, the Hacketts filed a personal injury action in Sacramento County against Silva Trucking and McDonold. The jury awarded the Hacketts $34.9 million in damages. Silva Trucking was insured by Carolina Casualty Insurance Company (CCIC), who retained the law firm Cholakian & Associates to provide a defense. Silva Trucking had an excess liability insurance policy with Lexington Insurance Company (LIC), who retained the law firm Lewis, Brisbois, Bisgaard & Smith, LLP (Lewis Brisbois) as counsel. In 2014, Silva Trucking and McDonold brought suit in Sacramento County against LIC, CCIC, Cholakian & Associates and individual attorneys Kevin Cholakian and Jennifer Kung (collectively Cholakian), and Lewis Brisbois and individual attorney Ralph Zappala (collectively Lewis Brisbois). As to LIC and CCIC, the complaint alleged bad faith and breach of contract. As to the law firms and attorneys, the complaint alleged legal malpractice. The gravamen of the complaint was that the insurers unreasonably refused to accept the policy limit demand when the insured’s liability was clear and damages were known to be in excess of the policy limit. The attorneys failed to advise their insurer clients to accept the demand and the consequences of failing to do so, and failed to advise Silva Trucking and McDonold of their need for personal counsel. LIC and CCIC responded with demurrers. Lewis Brisbois answered with a general denial and asserted 22 affirmative defenses. Under Code of Civil Procedure section 396b, subdivision (a), where an action has been filed in the “wrong venue,” a defendant may move to transfer the case to the “proper court for the trial thereof.” In such a case, “if an answer is filed,” the court may consider opposition to the motion to transfer and may retain the action in the county where filed to promote the convenience of witnesses or the ends of justice. The question this case presented for the Court of Appeal's review was whether, in a multi-defendant case, an answer must be filed by all defendants before the court may consider opposition to the motion to transfer venue. The Court concluded the answer was yes. In this case, the trial court considered opposition to the motion before all defendants had answered the complaint. Accordingly, the Court issued a preemptory writ of mandate directing the trial court to vacate its order denying the motion to transfer and to issue a new order granting the motion. View "Cholakian & Assoc. v. Super. Ct." on Justia Law

In 2004 the law firm was engaged to bring a medical malpractice action on behalf of a 14-year-old girl who had become paralyzed after surgery. The firm filed two complaints in Virginia state court. Each was dismissed: the first without prejudice for failure to correctly caption a pleading; the second with prejudice for filing outside the statute of limitations. Shortly thereafter, the firm applied for and obtained a new professional liability insurance policy. Asked whether there were “any circumstances which may result in a claim being made,” the firm responded “no.” The firm informed the insurer of the incident in 2009, but represented that it had occurred in 2008. In 2011, the insurance company noticed that the firm had made the caption error in 2006, before the policy period. In 2012, it notified the firm that it reserved its rights to deny coverage under the known risk exclusion. The girl filed a legal malpractice action in 2012, and was awarded $1,750,000 in 2013. The court found, as a matter of law and without expert testimony, that the firm was on notice of the potential malpractice claim and rejected arguments that the insurer had forfeited or waived its right to deny coverage. The D.C. Circuit affirmed. View "Chicago Ins. Co. v. Paulson & Nace, PLLC" on Justia Law

Tuzzolino and his law firm represented Coletta. Coletta alleged that, in litigation, Tuzzolino failed to timely disclose expert witnesses; failed to retain needed expert witnesses; advised Coletta to settle for an amount far less than Coletta’s losses; told Coletta that negotiations were continuing after dismissal; and signed settlement documents without informing Coletta. According to Coletta, Tuzzolino offered to pay $670,000 to settle any potential malpractice claim, but never paid. Three months later, shortly before the expiration of the firm’s 2007-08 malpractice policy with ISBA Mutual, Tuzzolino completed a renewal application. In response to: “Has any member of the firm become aware of a past or present circumstance(s), act(s), error(s) or omission(s), which may give rise to a claim that has not been reported?” Tuzzolino checked “no.” Mutual issued the policy. Tuzzolino’s partner, Terpinas, learned of Tuzzolino’s malfeasance a month later, when he received a lien letter from Coletta’s attorney. Terpinas reported the claim to Mutual, which sought rescission and other relief. The circuit court entered summary judgment against Tuzzolino and rescinded the policy, finding that Mutual had no duty to defend Terpinas or the firm against Coletta’s action. The appellate court reversed as to Terpinas, citing the common law “innocent insured doctrine.” The Illinois Supreme Court reinstated the rescission, citing 215 ILCS 5/154, which allows rescission in cases involving misrepresentations “made by the insured or in his behalf,” with an actual intent to deceive or that “materially affect the acceptance of the risk or hazard assumed by the insurer.” View "Ill. State Bar Ass'n Mut. Ins. Co. v. Law Office of Tuzzolino & Terpinas" on Justia Law