Justia Insurance Law Opinion Summaries

Fire-Dex, a manufacturer of personal protective equipment for firefighters, faced lawsuits from firefighters and their spouses alleging exposure to carcinogens from Fire-Dex's products. These lawsuits were consolidated in multidistrict litigation in South Carolina. Fire-Dex had general commercial liability insurance policies with Admiral Insurance Company and requested Admiral to defend and indemnify it against the lawsuits. Admiral refused, leading to a declaratory judgment action in federal court in Ohio, where the district court declined to exercise jurisdiction.The United States District Court for the Northern District of Ohio initially had diversity jurisdiction over Admiral's declaratory judgment action but chose to abstain from exercising it, a decision affirmed by the Sixth Circuit. Subsequently, Fire-Dex filed a lawsuit in Ohio state court seeking a declaration that Admiral must defend and indemnify it, along with compensatory and punitive damages for breach of contract and bad faith. Admiral removed the case to federal court and filed counterclaims for declaratory judgment. Fire-Dex moved to remand the case to state court.The United States Court of Appeals for the Sixth Circuit reviewed the district court's decision to remand the declaratory claims and stay the damages claims. The Sixth Circuit held that the district court erred in abstaining from the declaratory claims under Thibodaux abstention, as the case did not involve unsettled questions of state law intimately involved with state sovereignty. The court also found that abstaining from the declaratory claims was an abuse of discretion because the declaratory and damages claims were closely intertwined, and no traditional abstention doctrine applied to the damages claims. The Sixth Circuit vacated the district court's order and remanded for further proceedings. View "Fire-Dex, LLC v. Admiral Insurance Co." on Justia Law

Daniel Jones signed a blank application for a homeowner’s insurance policy, trusting his agent, J. Kim Hatcher Insurance Agencies, Inc. (Hatcher), to complete it accurately. Jones relied on Hatcher’s assurance based on their prior dealings and the commission Hatcher would earn. After Hurricane Florence destroyed Jones’s home, his insurer refused to cover the losses, citing material misrepresentations in the application. Jones discovered that Hatcher had omitted the existence of a pond and understated the property size.Jones sued Hatcher for negligence and gross negligence, among other claims. Hatcher moved to dismiss the ordinary negligence claim under Rule 12(b)(6), arguing contributory negligence. The trial court granted Hatcher’s motion, but the Court of Appeals reversed, finding that dismissal was not warranted as the complaint did not necessarily defeat Jones’s claim for ordinary negligence. The Court of Appeals also affirmed the dismissal of Jones’s claim for punitive damages.The Supreme Court of North Carolina reviewed the case. It agreed with the Court of Appeals that Jones’s complaint did not show contributory negligence as a matter of law, as the factual circumstances could support that Jones acted with ordinary prudence in trusting Hatcher. The court also found that Jones’s complaint sufficiently alleged a claim for punitive damages based on Hatcher’s willful and wanton conduct, giving Hatcher adequate notice of the claims. Therefore, the Supreme Court affirmed the Court of Appeals’ decision on the contributory negligence issue and reversed its decision on the punitive damages issue. View "Jones v. J. Kim Hatcher Ins. Agencies, Inc" on Justia Law

Several estates filed a lawsuit against Tyson Foods Inc. and several of its corporate executives and plant supervisors, alleging gross negligence and fraud after four former workers at Tyson Foods’ pork processing plant in Waterloo died from COVID-19. The plaintiffs claimed that Tyson failed to implement adequate safety measures and misled workers about the risks of COVID-19, leading to the workers' deaths.The Iowa District Court for Black Hawk County dismissed the case, concluding that Iowa’s Workers’ Compensation Act (IWCA) provided the exclusive remedy for the estates’ claims, thus lacking subject matter jurisdiction. The court found that the plaintiffs did not sufficiently plead gross negligence to fall within an exception to the IWCA and that the claims were improperly "lumped" together without specifying each defendant's duty or claim.The Iowa Supreme Court reviewed the case and held that the plaintiffs had sufficiently pleaded gross negligence against the executive and supervisor defendants, thus falling within the IWCA’s exception. The court found that the petition provided fair notice of the claims and that the allegations met the elements of gross negligence: knowledge of the peril, knowledge that injury was probable, and a conscious failure to avoid the peril. The court also held that the fraudulent misrepresentation claims against the supervisor defendants were not preempted by the IWCA, as intentional torts fall outside its scope.However, the court affirmed the dismissal of the claims against the corporate defendants, Tyson Foods and Tyson Fresh Meats, as the IWCA’s exclusivity provisions barred any direct tort claims against employers. The court also affirmed the dismissal of the breach-of-duty claims against Adams and Jones due to waiver. The case was remanded for further proceedings consistent with the court’s opinion. View "Mehmedovic v. Tyson Foods Inc." on Justia Law

Melvin G. Welch died in 2023 from mesothelioma caused by asbestos exposure. His widow, Donna B. Welch, sued Atlas Turner, Inc. and other defendants, alleging their products caused his death. Atlas Turner, a Canadian company, produced and sold asbestos insulation, which was shipped to South Carolina. Welch was likely exposed to these products while working in Greenwood, South Carolina. The case was brought in Richland County and assigned to Judge Jean H. Toal, who oversees the South Carolina asbestos docket.Atlas Turner moved to dismiss the claims for lack of personal jurisdiction, but the trial court denied the motion and ordered Atlas Turner to participate in discovery. Atlas Turner ignored deposition notices and refused to comply with discovery orders, claiming it had no knowledgeable witnesses and that the Québec Business Concerns Records Act (QBCRA) prohibited it from disclosing information. The trial court held Atlas Turner in contempt, struck its answer, and placed it in default. The court also appointed a Receiver over Atlas Turner's Insurance Assets.The South Carolina Supreme Court reviewed the case and affirmed the trial court's sanctions and the appointment of the Receiver over Atlas Turner's Insurance Assets. The court found that Atlas Turner's refusal to comply with discovery was willful and that the QBCRA did not excuse its non-compliance. The court also held that the trial court had the authority to appoint a Receiver before judgment due to Atlas Turner's conduct, which indicated an intent to evade responsibility. However, the Supreme Court reversed the portion of the Receivership order that granted the Receiver authority beyond investigating and collecting Atlas Turner's Insurance Assets. View "Welch v. Atlas Turner, Inc." on Justia Law

Casey Cotton was involved in a car collision with Caleb and Adriane Crabtree, resulting in severe injuries to Caleb. The Crabtrees filed a lawsuit against Cotton and his insurer, Allstate, alleging that Allstate refused early settlement offers and failed to inform Cotton of these offers. While the claims against Allstate were dismissed, the claims against Cotton proceeded in the Lamar County Circuit Court. During the personal injury suit, Cotton declared bankruptcy, and his bankruptcy estate included a potential bad faith claim against Allstate. The Crabtrees, as unsecured creditors, petitioned the bankruptcy court to allow the personal injury suit to proceed to trial.The bankruptcy court directed that the suit against Cotton be liquidated by jury trial to pursue claims against Allstate for any resulting excess judgment. The Crabtrees sought an assignment of Cotton’s bad faith claim as a settlement of their unsecured claims in Cotton’s bankruptcy estate. Unable to afford the $10,000 up-front cost, they engaged Court Properties, LLC, to assist with financing. Court Properties paid the trustee $10,000 to acquire the bad faith claim, then assigned it to the Crabtrees in exchange for $10,000 plus interest, contingent on successful recovery from Allstate. Cotton was discharged from bankruptcy, and a jury verdict awarded the Crabtrees $4,605,000 in the personal injury suit.The Crabtrees filed an action in the United States District Court for the Southern District of Mississippi, which dismissed the case for lack of subject matter jurisdiction, finding the assignments champertous and void under Mississippi Code Section 97-9-11. The Crabtrees appealed to the United States Court of Appeals for the Fifth Circuit, which certified a question to the Supreme Court of Mississippi.The Supreme Court of Mississippi held that Mississippi Code Section 97-9-11 prohibits a creditor in bankruptcy from engaging a disinterested third party to purchase a cause of action from a debtor. The court clarified that solicitation of a disinterested third party to prosecute a case in which it has no legitimate interest violates the statute. View "Crabtree v. Allstate Property and Casualty Insurance Company" on Justia Law

PorterCare Adventist Health Systems had inadequate surgical-sterilization procedures for about two years, leading to over $40 million in liability from thousands of patients' claims. PorterCare sought coverage from AdHealth, its excess-liability insurer, for the full $40 million policy limit, arguing that the claims arose from one medical incident. AdHealth refused coverage, asserting that a medical incident covers injuries to a single person, not multiple people, and filed a complaint seeking a declaratory judgment. PorterCare counterclaimed for declaratory judgment and breach of contract.The United States District Court for the District of Colorado granted summary judgment to AdHealth, agreeing with its interpretation that a medical incident is limited to the acts or omissions causing injury to one person. The court found that AdHealth owed coverage only for the claims of a single patient that trigger the excess policy’s liability threshold, not for multiple patients' claims grouped together.The United States Court of Appeals for the Tenth Circuit reviewed the case and affirmed the district court's decision. The appellate court held that the policy’s definition of “medical incident” unambiguously applies to the injuries of a single person. Therefore, AdHealth is liable only for individual claims exceeding PorterCare’s $2 million self-insurance retention, not for the aggregated claims of multiple patients. View "Adhealth, Limited v. PorterCare Adventist Health Systems" on Justia Law

Martin Montano Jr., an employee of Casas Custom Floor Care, LLC, was involved in a fatal car accident while driving his mother's truck to correct his timesheet at the company's main yard. Michael Cravens, the surviving spouse of the deceased, sued Montano and Casas, alleging negligence and vicarious liability. Cincinnati Indemnity Company, which insured Casas, issued a reservation of rights letter to Montano, disputing its obligation to defend or insure him under the policy.The Superior Court in Pima County granted summary judgment in favor of Cravens, ruling that Montano was using the vehicle "in connection with" Casas's business at the time of the accident, thus obligating Cincinnati to indemnify Montano. The court also upheld the enforceability of a Morris Agreement between Montano and Cravens, which stipulated Montano's liability and assigned his rights under the policy to Cravens. The court of appeals affirmed the superior court's rulings on both coverage and the agreement.The Supreme Court of Arizona reviewed the case and held that an employee operates a non-owned auto "in connection with your business" when using the vehicle while engaged in the employer's business. This does not include a routine commute. The court also held that a contingent Morris agreement is enforceable if it meets the substantive requirements to ensure against fraud, collusion, unfairness, or unreasonableness. The court vacated the court of appeals' coverage ruling, affirmed the ruling on the Morris Agreement, reversed the superior court's judgment, and remanded for further proceedings consistent with its opinion. View "CRAVENS v MONTANO" on Justia Law

Mara Lindsey was involved in a car accident where she was rear-ended by Carlos Pantoja, resulting in personal injuries. Lindsey sought compensation for her medical expenses and, after settling with Pantoja’s insurer for his policy limit of $50,000, she filed a claim with her own insurer, State Farm, under her underinsured motorist (UIM) policy. Dissatisfied with State Farm’s settlement offer of $689.58, Lindsey sued State Farm under the Uniform Declaratory Judgments Act (UDJA) for declarations regarding Pantoja’s liability, her damages, and her entitlement to UIM benefits. She also sued State Farm and its claims adjuster for Insurance Code violations, alleging bad faith in handling her claim.The trial court denied State Farm’s motions to abate the extracontractual claims and to quash the deposition notice of its corporate representative. The court of appeals denied State Farm’s mandamus petitions without substantive explanation. State Farm then petitioned the Supreme Court of Texas for mandamus relief.The Supreme Court of Texas held that the trial court abused its discretion by denying State Farm’s motions. The court ruled that extracontractual claims must be abated until the insured obtains a favorable judgment on the UIM coverage, as these claims are dependent on the right to receive UIM benefits. The court also held that discovery on extracontractual matters is improper before establishing entitlement to UIM benefits. Additionally, the court found that State Farm had demonstrated that the deposition of its corporate representative was not proportional to the needs of the case, given the lack of personal knowledge and the burden of the proposed discovery.The Supreme Court of Texas conditionally granted State Farm’s petition for writ of mandamus, ordering the trial court to vacate its previous orders and grant State Farm’s motions to abate the extracontractual claims and to quash the deposition notice. View "IN RE STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY" on Justia Law

In 2018, a $200 million mixed-use development project at Louisiana State University experienced issues with its fire-protection sprinkler systems, which began to crack and leak. Allied World National Assurance Company, which paid over $10 million for system replacements, sued Nisus Corporation in 2021, alleging that Nisus falsely represented its product's compatibility with the pipe material, leading to the damage.The United States District Court for the Middle District of Louisiana granted summary judgment in favor of Nisus, concluding that Allied's claims were time-barred under Louisiana law. The court found that while Provident, the insured party, did not have actual or constructive knowledge of the cause of the damage, RISE Residential, Provident's agent, had constructive knowledge of the cause by November 2019. This knowledge was imputed to Provident, starting the prescription period.The United States Court of Appeals for the Fifth Circuit reviewed the case de novo and affirmed the district court's decision. The court held that RISE Residential's constructive knowledge of the sprinkler system issues, which was imputed to Provident, triggered the running of the prescription period well before July 23, 2020. The court also found that Nisus did not prevent Allied from timely availing itself of its causes of action, as a reasonable inquiry by RISE Residential would have uncovered the necessary information. Therefore, Allied's claims were prescribed, and the summary judgment in favor of Nisus was affirmed. View "Allied World National v. Nisus" on Justia Law

The case involves a shooting incident at the Pride of St. Lucie Lodge 1189, Inc. (the "Lodge") on March 2, 2015, where Tanya Oliver was shot in the forehead and later died from her injuries. The Lodge was insured by Kinsale Insurance Company ("Kinsale"), which had a $50,000 policy sublimit for claims arising out of assault and battery. The Estate of Tanya Oliver sued the Lodge for negligent security, and a jury awarded damages exceeding $3.348 million.The Lodge and the Estate then sued Kinsale for common law bad faith under Florida law, claiming Kinsale breached its duty of good faith by failing to make a settlement offer within the policy limits before the Estate’s claim was filed. The United States District Court for the Southern District of Florida granted summary judgment to Kinsale, concluding that Kinsale had no duty to initiate settlement negotiations because no reasonable jury could find that this was a case of "clear liability."The United States Court of Appeals for the Eleventh Circuit reviewed the case and found that, viewing the evidence in the light most favorable to the Lodge and the Estate, a jury could reasonably find that Kinsale knew or should have known that liability was clear. The court noted that the Lodge's security guards had failed to prevent a second fight in the parking lot, which led to the shooting, and that Kinsale was aware of the severity of Oliver's injuries and the potential for damages far exceeding the policy limit.The Eleventh Circuit reversed the district court's grant of summary judgment and remanded the case for trial by jury, holding that a jury could reasonably find that Kinsale acted in bad faith by failing to tender its policy limit before the Estate filed suit. View "Kinsale Insurance Company v. Pride of St. Lucie Lodge 1189, Inc." on Justia Law