Justia Insurance Law Opinion Summaries

Consolidated cases presented a certified question from the United States District Court for the District of Oregon. The Oregon Supreme Court was asked to determine whether Oregon law precluded an insurer from limiting its liability for uninsured/underinsured motorist (UM/UIM) benefits on the basis that another policy also covered the insured’s losses. Each plaintiff suffered injuries caused by an uninsured or underinsured motorist, and each plaintiff incurred resulting damages that qualify as covered losses under multiple motor vehicle insurance policies issued by defendant State Farm Mutual Automobile Insurance Company (State Farm). Each plaintiff alleged a loss that exceeded the declared liability limits of any single applicable policy and sought to recover the excess under additional applicable policies, up to the combined total of the limits of liability. In each case, however, State Farm refused to cover the excess loss, citing a term in the policies that allowed State Farm to limit its liability to the amount that it agreed to pay under the single policy with the highest applicable limit of liability. The Oregon Supreme Court concluded that that term made State Farm’s uninsured motorist coverage less favorable to its insureds than the model coverage that the legislature has required and, thus, was unenforceable. View "Batten v. State Farm Mutual Automobile Ins. Co." on Justia Law

A minor was severely injured in an all-terrain vehicle collision in which the other driver was at fault. The minor had medical benefits coverage through a health care plan provided by her father’s employer, the Fairbanks North Star Borough. As allowed by the terms of the plan, the Borough refused to pay the minor’s medical bills until she signed an agreement that included a waiver of certain defenses to the Borough’s subrogation rights, such as the common fund and made-whole doctrines. The minor refused to sign the agreement without reservation and filed suit, seeking a declaration that the Borough could not condition payment of her medical bills on her signature. The superior court decided on summary judgment that the Borough’s health care plan was not a true insurance plan and that, regardless of whether it was interpreted as an insurance policy or an ordinary contract, the parties could lawfully reject subrogation defenses. The minor appealed. The Alaska Supreme Court held that the health care plan was a bargained-for employee benefit rather than a true insurance policy, and that the superior court’s interpretation of it was correct. The Court therefore affirmed the superior court's judgment. View "Best v. Fairbanks North Star Borough" on Justia Law

Dwayne Harris appealed a circuit court order dismissing his counterclaim against Dubai Truck Lines, Inc., pursuant to Rule 12(b)(6), Ala. R. Civ. P. On February 18, 2018, three vehicles were involved in an accident in Jefferson County, Alabama: a vehicle owned by Dubai and driven by Jose Martinez, one of Dubai's employees; a vehicle driven by Harris; and a vehicle driven by Annika Schaefer. Schaefer's vehicle was insured by State Farm Mutual Automobile Insurance Company. On February 28, 2019, Schaefer and State Farm, as subrogee of Schaefer sued Dubai and Martinez. According to Dubai, it was not served with the complaint until June 2020, after the expiration of the applicable two-year statute-of- limitations period. On August 7, 2020, Dubai filed an answer denying all liability for the accident and adding Harris as a third-party defendant pursuant to Rule 14, Ala. R. Civ. P. Dubai specifically impleaded Harris to allege that Harris's negligence was the proximate cause of the accident. On November 13, 2020, Harris filed a counterclaim against Dubai, alleging that Martinez, Dubai's employee, had been negligent and/or wanton in causing the accident, that Harris had suffered injuries as a result of the accident and that Dubai was vicariously liable for those injuries. Dubai then moved to dismiss the counterclaim, alleging Harris' counterclaim was barred by the applicable statute of limitations. The Alabama Supreme Court found Harris's counterclaim was compulsory, and not subject to a statute-of-limitations defense. Thus, there was no basis for the circuit court to dismiss Harris's counterclaim pursuant to Rule 12(b)(6). View "Harris v. Dubai Truck Lines, Inc." on Justia Law

Melvin James appealed a circuit court's grant of summary judgment in favor of Assurance America Insurance Company ("Assurance") on its complaint for a declaratory judgment. In February 2019, Bernardino Mejia and James were involved in a motor-vehicle accident in Montgomery, Alabama. Mejia was driving a 2003 Chrysler Town and Country minivan, and James was driving a 2004 Toyota Camry automobile. As a result of the accident, Mejia's three children were ejected from the Town and Country. One of Mejia's children died, and the other two were seriously injured. James was also injured as a result of the accident. Mejia was arrested, and, on September 23, 2019, he was indicted for one count of reckless murder and four counts of first- degree assault as a result of the accident. He was incarcerated on those charges. In April 2019, James sued Mejia, ALFA Insurance Corporation, USAA Casualty Insurance Company, and various fictitiously named defendants for negligence, negligence per se, wantonness, and breach of contract. Mejia moved to stay the civil proceeding until the accident-related criminal proceedings against him were concluded; this motion was granted. Assurance sought the summary judgment motion at issue here, against Mejia and James. Assurance contended Mejia was not the named insured under the Assurance policy that covered the Town & Country he was driving, and that policy excluded coverage for injury or damage caused by an insured vehicle when driven by a person who was not listed as a driver on the declarations page of the policy and who did not have a valid driver's license. The Alabama Supreme Court reversed and remanded, finding Assurance did not produce substantial, admissible evidence to establish Mejia did not have a valid driver's license at the time of the accident and therefore did not shift the burden of proof to James. Accordingly, the trial court erred in granting Assurance's motion for a summary judgment. View "James v. Assurance America Insurance Company" on Justia Law

The United States Third Circuit Court of Appeals certified a question of law to the Pennsylvania Supreme Court involving the state's Motor Vehicle Financial Responsibility Law (“MVFRL”). In July 2015, Corey Donovan (“Corey”) suffered significant injuries due to a collision between a motorcycle, which he owned and was operating, and an underinsured vehicle. He recovered the $25,000 limit of coverage available under the policy insuring the underinsured vehicle as well as the $50,000 per person limit of UIM coverage available under Corey’s policy insuring the motorcycle, issued by State Farm Automobile Insurance Company. Corey then sought coverage under a policy issued by State Farm to his mother, Linda Donovan (“Linda”), under which he was insured as a resident relative. Linda’s Auto Policy insured three automobiles but not Corey’s motorcycle. Linda’s policy had a UIM coverage limit of $100,000 per person, and Linda signed a waiver of stacked UIM coverage on her policy which complied with the waiver form mandated by Section 1738(d) of the MVFRL. First, the Pennsylvania Court considered whether an insured’s signature on the waiver form mandated by 75 Pa.C.S. 1738(d) resulted in the insured’s waiver of inter-policy stacking of UIM coverage where the relevant policy insured multiple vehicles. To this, the Supreme Court held the waiver invalid as applied to inter-policy stacking for multi-vehicle policies in light of its decision in Craley v. State Farm Fire and Casualty Co., 895 A.2d 530 (Pa. 2006). The Court then determined whether the policy’s household vehicle exclusion was enforceable following its decision in Gallagher v. GEICO Indemnity Company, 201 A.3d 131 (Pa. 2019). Finally, after concluding that the household vehicle exclusion was unenforceable absent a valid waiver of inter-policy stacking, the Court addressed the third question posed by the Court of Appeals regarding the applicability of the policy’s coordination of benefits provision for unstacked UIM coverage. After review, the Supreme Court held that the policy’s coordination of benefits provision for unstacked UIM coverage did not apply absent a valid waiver of inter-policy stacking. Having answered these questions of law, the matter was returned to the Third Circuit. View "Donovan, et al. v. State Farm Mutual Ins. Co." on Justia Law

The Supreme Court reversed the decision of the court of appeals affirming the order and declaratory judgment of the superior court in favor of Defendant in this personal injury action, holding that, under the circumstances, Defendant was not entitled to collect underinsured benefits.Defendant was a North Carolina resident who sought to collect underinsured motor vehicle coverage benefits from Plaintiff, her North Carolina insurer, after she was injured while traveling in Alabama in a car owned and operated by a Tennessee resident and insured by a Tennessee insurer. Plaintiff denied the claim and initiated a declaratory judgment action seeking a ruling establishing that the UIM coverage of its politics did not apply to Defendant's injuries. The trial court concluded that Defendant was not entitled to coverage under the UIM provision of her insurance contract. The court of appeals affirmed. The Supreme Court reversed, holding that because the amount of the stacked UIM coverage limits exceeded the sum of the applicable bodily injury coverage limits, the Tennessee driver's car was an "underinsured motor vehicle" as defined under North Carolina's Financial Responsibility Act for the purposes of giving effect to Defendant's contract with Plaintiff. View "N.C. Farm Bureau Mutual Insurance Co. v. Lunsford" on Justia Law

At issue before the Mississippi Supreme Court in this interlocutory appeal was whether the trial court erred by finding cause to grant a 120-day extension of time to serve process on Progressive Gulf Insurance Company. Plaintiffs, Jaswinder Kaur, Harvinder Singh, Karanveer Kamboj, and Gurdev Kamboj, were occupants of a vehicle that was involved in a collision with a vehicle operated by Mary Orebo and owned by Cassandra Mann. Plaintiffs’ vehicle had uninsured-motorist coverage provided by Progressive Gulf Insurance Company. Each Plaintiff filed a separate suit against all three Defendants on the eve of the expiration of the three-year statute of limitations. Progressive contended that difficulty locating other Defendants, the owner and driver of the vehicle, was not adequate cause. After review, the Supreme Court concluded the circuit court did not abuse its discretion in that decision. However, all parties agreed that the circuit court erred by refusing to dismiss the suits of three of the Plaintiffs who failed to seek extensions of time to serve process on Progressive before the end of the original 120-day period. View "Progressive Gulf Insurance Company v. Kaur, et al." on Justia Law

Maryam Hedayati appealed the grant of summary judgment in favor of Interinsurance Exchange of the Automobile Club (Auto Club or the Club) on Hedayati’s breach of good faith and fair dealing claim. Hedayati suffered catastrophic injuries in October 2012 when Auto Club’s insured ran a red light and struck her in a pedestrian crosswalk. The insured driver immediately notified Auto Club of the accident and authorized the Club to disclose his policy limits ($25,000); he also informed Auto Club he had no other insurance or assets. Auto Club’s policy with its insured required him to relinquish to the Club his right to negotiate settlement of potential tort claims falling within the policy. When he inquired about a release, Auto Club inaccurately told its insured driver Hedayati was not willing to sign one. Despite repeated requests during settlement negotiations from Hedayati’s attorney, Auto Club initially declined to disclose the insured’s policy limits; eventually it acquiesced, but Auto Club still declined to provide written proof of those limits, which the Club knew was common practice to facilitate a settlement. Auto Club then withheld from Hedayati’s counsel the insured’s written declaration which indicated he had no other insurance, which the Club had confirmed, and the insured’s statements that he had no assets. Auto Club also, despite multiple requests from Hedayati’s lawyer, failed to provide a copy of its insured’s policy which Hedayati’s lawyer needed to verify its terms. Hedayati’s counsel had demanded a hard copy of the policy as a settlement condition. Auto Club ultimately failed to settle the matter within its $25,000 policy limits. Hedayati subsequently obtained a $26 million judgment against the insured driver, along with assignment of the insured’s claim against the Club for breach of the covenant of good faith and fair dealing implicit in its policy with him. The trial court concluded the evidence presented by Hedayati was insufficient as a matter of law. After its de novo review, the Court of Appeal disagreed with the trial court’s evaluation of the evidence. It therefore reversed the summary judgment ruling and remanded for further proceedings. View "Hedayati v. Interinsurance Exchange of the Auto. Club" on Justia Law

All Seasons inspected SparrowHawk's warehouse roofs and discovered hail damage. Because All Seasons did not hold an Illinois roofing license, it arranged for Prate to serve as general contractor with All Seasons as subcontractor. All Seasons was to provide materials and labor, maintain safety, and supervise the project. All Seasons purchased a commercial general liability policy and general liability extension endorsement from United, listing Prate as an “additional insured” in a “vicarious liability endorsement.” All Seasons then subcontracted with Century. Ayala, a Century employee was working on a SparrowHawk warehouse when he fell to his death.The Illinois workers’ compensation system provided limited death benefits but precluded tort remedies against his direct employer, Century. Ayala’s estate sued Prate, All Seasons, and SparrowHawk. Prate tendered the defense to United, which declined to defend and sought a declaratory judgment. All Seasons and United reached a settlement with the estate, paying the policy limits.The district court granted Prate summary judgment. The Seventh Circuit affirmed, rejecting United’s argument that because its named insured was an independent contractor, Illinois law would not impose any liability on the additional insured and there was no risk of covered liability. The duty to defend depends on the claims the plaintiff asserts, not on their prospects for success. The settlement of the underlying claims against the named insured, however, removed any possibility that the additional insured might be held vicariously liable for actions of the named insured; the duty to defend ended when that settlement was consummated. View "United Fire & Casualty Co. v. Prate Roofing & Installations LLC" on Justia Law

Plaintiff Esurance Property & Casualty Insurance Company (Esurance) paid personal injury protection (PIP) benefits to claimant, Roshaun Edwards (Edwards), pursuant to a no-fault automobile insurance policy, issued to another person, that was later declared void ab initio. Thereafter, Esurance filed this suit against defendants, the Michigan Assigned Claims Plan (MACP) and the Michigan Automobile Insurance Placement Facility (MAIPF), seeking reimbursement under a theory of equitable subrogation for the PIP benefits that Esurance had paid to Edwards under Michigan’s no-fault act before the policy was rescinded. The Michigan Supreme Court held that an insurer who erroneously pays PIP benefits could be reimbursed under a theory of equitable subrogation when the insurer was not in the order of priority and the payments were made pursuant to its arguable duty to pay to protect its own interests. On the facts alleged in this case, Esurance could stand in Edwards’s shoes and pursue a claim for equitable subrogation because it was not in the order of priority and also was not a “mere volunteer” under Michigan law when it paid Edwards’s PIP benefits. Accordingly, the Supreme Court reversed the decision of the Court of Appeals and remanded this case to that court for further proceedings. View "Esurance Prop. & Casualty Ins. Co. v. Michigan Assigned Claims Plan" on Justia Law