Justia Insurance Law Opinion Summaries

A construction worker employed by a subcontractor was injured when a scaffold collapsed at a Manhattan worksite. The worker sued the property owner and general contractor in New York Supreme Court, alleging negligence and violations of state labor laws. The owner’s insurer, Liberty Insurance Corporation, sought a declaration in federal court that the subcontractor’s insurer, Hudson Excess Insurance Company, was obligated to defend and indemnify the owner as an additional insured under the subcontractor’s commercial general liability policy. The subcontract between the general contractor and the subcontractor required the latter to provide insurance coverage for the owner and general contractor.In the New York Supreme Court, summary judgment was granted to the injured worker on some claims, while other claims remained pending. The court denied summary judgment to the owner on its contractual indemnification claim against the subcontractor, finding factual questions about the scope of the subcontractor’s work. Later, after the federal district court’s decision, the state court dismissed all third-party claims against the subcontractor, finding the indemnity provision in the subcontract invalid due to lack of a meeting of the minds.The United States Court of Appeals for the Second Circuit reviewed the case. It affirmed the district court’s finding, after a bench trial on stipulated facts, that the subcontractor’s actions proximately caused the worker’s injuries and that Hudson owed a duty to indemnify the owner under the policy. The Second Circuit held that the later state court decision did not alter this result. However, the Second Circuit reversed the district court’s award of attorney’s fees to Liberty, holding that Hudson was entitled to a statutory safe harbor under New York Insurance Law, and thus was not required to pay Liberty’s attorney’s fees for the federal action. View "Liberty Insurance Corp. v. Hudson Excess Insurance Co." on Justia Law

Two drivers, McGee and Hudgins, were involved in a road-rage incident that ended with McGee crashing into Green’s vehicle, causing her injuries. Green and her husband sued both drivers. Before filing suit, Green received $100,000 from McGee’s insurer in exchange for a covenant not to execute judgment against McGee. Green’s underinsured motorist (UIM) carrier, Progressive, defended the suit in McGee’s name. The jury found McGee 60% at fault and Hudgins 40% at fault, and determined both acted recklessly, willfully, and wantonly. The jury awarded Green $88,546.78 in actual damages and $35,000 in punitive damages against each defendant.The Circuit Court for Spartanburg County combined the actual and punitive damages for a total of $158,546.78, subtracted the $100,000 payment from McGee’s insurer, and allocated the remaining $58,546.78 between McGee and Hudgins based on their respective percentages of fault. On appeal, the South Carolina Court of Appeals altered the setoff calculation, allocating the $100,000 payment first to McGee’s share, then applying any remainder to Hudgins’ share, resulting in a net judgment of $58,546.78 against Hudgins and $0 against McGee.The Supreme Court of South Carolina reviewed the setoff calculation. It held that, because the jury found both defendants acted recklessly, willfully, and wantonly, joint and several liability applied to the actual damages, making the percentage allocation of fault irrelevant. The court further held that the $100,000 payment could only be set off against the actual damages, not the punitive damages, as punitive damages are not for the “same injury.” The court reversed the Court of Appeals, holding Green is entitled to a net judgment of $23,546.78 against McGee and $35,000 against Hudgins, and remanded for entry of judgment in those amounts. View "Green v. McGee" on Justia Law

Jose Cruz-Muniz and Sandra Cruz were injured in a car accident in 2018 and received treatment from C-Spine Orthopedics, PLLC. They assigned their rights to seek personal protection insurance (PIP) benefits from Progressive Michigan Insurance Company to C-Spine. C-Spine then assigned its accounts receivable, including the claims for unpaid benefits, to several factoring companies. Progressive argued that C-Spine lacked standing to seek payment because it had assigned its rights to the factoring companies. C-Spine countered with signed counter-assignments from the factoring companies, purportedly restoring its right to bring suits. The trial court initially denied Progressive's motion but later granted it, concluding that C-Spine lacked standing when the complaints were filed.In a separate case, Parie Wallace was injured in a bus accident and received treatment from several providers, including C-Spine. Wallace assigned her rights to seek PIP benefits to these providers. She later filed a lawsuit against Suburban Mobility Authority for Regional Transportation (SMART) seeking payment of PIP benefits. SMART argued that Wallace could not bring the action because she had assigned her rights to the providers. The trial court allowed Wallace to obtain revocations of the assignments, which she did, and then denied SMART's motion for summary disposition. The Court of Appeals reversed, holding that Wallace was not the real party in interest when she filed her complaint and that her claims were barred by the one-year-back rule.The Michigan Supreme Court held that both C-Spine and Wallace had standing to file their lawsuits but were not the real parties in interest at the time they filed suit because they had assigned their claims. The Court ruled that defects in real party in interest status could be cured after filing a lawsuit. In C-Spine's case, the Court of Appeals' judgment was affirmed on alternate grounds, and the case was remanded to the trial court for further proceedings. In Wallace's case, the Court of Appeals' judgment was affirmed in part, reversed in part, and vacated in part, and the case was remanded for the trial court to consider whether equitable rescission was warranted and whether the real party in interest defect could be cured. View "C-Spine Orthopedics PLLC v. Progressive Michigan Insurance Company" on Justia Law

Casey Cotton rear-ended Caleb Crabtree, causing significant injuries. Cotton, insured by Allstate, faced potential liability exceeding his policy limit. Allstate allegedly refused to settle with Crabtree and failed to inform Cotton of the settlement negotiations or his potential liability, giving Cotton a potential bad-faith claim against Allstate. The Crabtrees sued Cotton, who declared bankruptcy. The bankruptcy court allowed the personal-injury action to proceed, resulting in a $4 million judgment for the Crabtrees, making them judgment creditors in the bankruptcy proceeding. Cotton’s bad-faith claim was classified as an asset of the bankruptcy estate. The bankruptcy court allowed the Crabtrees to purchase Cotton’s bad-faith claim for $10,000, which they financed through Court Properties, Inc.The Crabtrees sued Allstate, asserting Cotton’s bad-faith claim. The United States District Court for the Southern District of Mississippi dismissed the action for lack of subject matter jurisdiction, holding that the assignments of Cotton’s claim to Court Properties and then to the Crabtrees were champertous and void under Mississippi law. Consequently, the court found that the Crabtrees lacked Article III standing as they had not suffered any injury from Allstate.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court certified a question to the Supreme Court of Mississippi regarding the validity of the assignments under Mississippi’s champerty statute. The Supreme Court of Mississippi held that the statute prohibits a disinterested third party engaged by a bankruptcy creditor from purchasing a cause of action from a debtor’s estate. Based on this ruling, the Fifth Circuit held that the assignment of Cotton’s claim to Court Properties was void, and thus, the Crabtrees did not possess Cotton’s bad-faith claim. Therefore, the Crabtrees lacked standing to sue Allstate, and the district court’s dismissal was affirmed. View "Crabtree v. Allstate Property" on Justia Law

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