Justia Insurance Law Opinion Summaries

New Jersey Transit Corporation (New Jersey Transit) sought to recover workers’ compensation benefits paid to an employee, David Mercogliano, who sustained injuries in a work-related motor vehicle accident. It sued the individuals allegedly at fault in the accident, defendants Sandra Sanchez and Chad Smith, pursuant to N.J.S.A. 34:15-40, a provision of the Workers’ Compensation Act that authorized employers and workers’ compensation carriers that have paid workers’ compensation benefits to injured employees to assert subrogation claims. The issue this case presented for the New Jersey Supreme Court's review was whether that subrogation action was barred by the Auto Insurance Cost Recovery Act (AICRA). The trial court granted defendants’ motion, ruling that New Jersey Transit could not assert a claim based on economic loss. It noted that N.J.S.A. 39:6A-2(k) defined economic loss for purposes of AICRA to mean “uncompensated loss of income or property, or other uncompensated expenses, including, but not limited to, medical expenses.” In the trial court’s view, because New Jersey Transit’s workers’ compensation carrier paid benefits for all of Mercogliano’s medical expenses and lost income, he had no “uncompensated loss of income or property,” and thus sustained no economic loss for purposes of AICRA. The trial court relied on Continental Insurance Co. v. McClelland, 288 N.J. Super. 185 (App. Div. 1996), and policy considerations in reaching its decision. The Appellate Division reversed that judgment, agreeing with New Jersey Transit that its subrogation action arose entirely from “economic loss comprised of medical expenses and wage loss, not noneconomic loss.” However, it rejected the trial court’s view that an employer’s or workers’ compensation carrier’s subrogation claim based on benefits paid for economic loss contravened AICRA’s legislative intent. Finding no error in the appellate court's judgment, the New Jersey Supreme Court affirmed. View "New Jersey Transit Corporation v. Sanchez" on Justia Law

In this case involving the collusive fraud of an insured and the driver of the other car involved in a car crash the Supreme Court adopted an exception to the eight-corners rule to determine the liability insurer's duty to defend, holding that courts may consider extrinsic evidence regarding whether the insured and a third party suing the insured colluded to make false representations of fact for the purpose of securing a defense and coverage.Osbaldo Hurtado Avalos and Antonio Hurtado (collectively, the Hurtados) sued Karla Guevara after the car accident and sought coverage from Loya Insurance Company (Insurer). Insurer furnished an attorney to defend Guevara, but when Insurer discovered that Guevara and the Hurtados had lied to secure coverage Insurer denied both a defense and coverage. The trial court rendered judgment against Guevara, who assigned to the Hurtados her rights against Insurer. Hurtados then filed suit against Insurer. The trial court granted summary judgment for Insurer. The court of appeals reversed, holding that Insurer had duty to defend under the eight-corners rule. The Supreme Court reversed, holding that the trial court (1) correctly considered extrinsic evidence regarding whether Guevara and the Hurtados colluded to secure a defense and coverage; and (2) correctly determined that the evidence conclusively showed collusive fraud. View "Loya Insurance Co. v. Avalos" on Justia Law

The Supreme Court granted Petitioners' petitions for extraordinary relief in part and denied the petitions in part, holding that intervention after final judgment is impermissible under Nev. Rev. Stat. 12.130 and that an action that reached final judgment has no pending issues and, therefore, consolidation is improper.In 2007, Gary Lewis struck Cheyenne Nadler in an automobile accident. When Lewis and his insurer, United Automobile Insurance Company (UAIC), failed to defend Nalder's tort action, a default judgment was entered. In 2018, Nadler attempted to collect on the judgment through a new action. UAIC moved to intervene in and consolidate the 2007 case and the 2018 action. The district court granted the motions. The Supreme Court held (1) the district court erred in granting intervention in the 2007 action because a default judgment had been entered, but the court properly granted intervention in the 2018 action because a final judgment had not yet been entered; (2) the district court improperly consolidated the two cases; and (3) the district court properly vacated a judgment erroneously entered by the district court clerk when a stay was in effect. View "Nalder v. Eighth Judicial District Court" on Justia Law

Progressive Northwestern Insurance filed suit to obtain a declaratory judgment that it had not violated any duty to its insureds in the defense of a wrongful-death suit. The underlying suit had been brought in 2013 by Gabriel Gant against Justin Birk; his parents, Edward and Linda; and the Birks’ family company, Birk Oil. The suit alleged that Justin had negligently killed Kathyrn Gant (Gabriel’s wife) in a car accident; that his parents were liable because they had negligently entrusted the vehicle to him; and that Birk Oil was liable under the doctrine of respondeat superior because Justin was driving the vehicle incidental to his employment by the company. Gant’s attorneys estimated damages of many million dollars, which far exceeded defendants’ insurance coverage. Defendants had assets from which Gant could have collected additional money on a judgment against them, but his attorneys apparently thought that a better way to collect a large judgment would be if defendants had a claim against Progressive for not representing them properly and exposing them to a judgment far exceeding their insurance coverage. Accordingly, shortly before trial Gant entered into an agreement with the Birks in which Gant promised not to execute any judgment against the Birks, and in exchange the Birks assigned to Gant their rights to the policy limits under the Progressive and corporate insurance policies, and any claims the Birks had against Progressive for breach of contract, negligence, or bad faith. After a bench trial, Gant was awarded $6.7 million in damages. Progressive then brought this declaratory-judgment action and Gant counterclaimed, arguing that Progressive: (1) breached its duty to discover and disclose the corporate insurance policy; (2) was negligent in hiring attorney Kevin McMaster to defend the suit; and (3) was vicariously liable for McMaster’s conduct. The district court granted summary judgment in favor of Progressive on its claim and the counterclaims. Finding no reversible error, the Tenth Circuit affirmed the district court. View "Progressive Northwestern Ins v. Gant" on Justia Law

In 2005, a van containing six family members van slipped off the edge of an Illinois roadway. In the ensuing rollover crash, everyone was hurt; one passenger died. The crash occurred in a construction zone; a guardrail had been removed and not replaced. All lines had not been repainted on the repaved road, and pieces of asphalt lay on the shoulder. In a suit against the construction companies, the defense attorney told the plaintiffs that the two companies were operating as a joint venture with a $1 million liability insurance policy. The parties settled for $1 million. Plaintiffs signed a release of all claims that stated the plaintiffs agreed they were not relying on any statements by any parties’ attorneys. Four years later, the plaintiffs discovered that the companies carried separate liability policies.The district court ruled as a matter of law that the failure to identify the individual policies violated FRCP 26; that the undisclosed policies would have covered plaintiffs’ claims; and no joint venture agreement existed under Illinois law, so joint venture exclusions in the individual policies were inapplicable. A jury awarded damages of $8,169,512.84 for negligent misrepresentation. The Seventh Circuit reversed. The district court erred in allowing plaintiffs to rely on a Federal Rule of Civil Procedure for a duty of care; in deciding, before trial, that plaintiffs reasonably relied on the insurance disclosures; and in excluding the defense’s expert testimony on liability and settlement value. View "Turubchuk v. Southern Illinois Asphalt Co., Inc." on Justia Law

At issue in this appeal was whether the alleged conduct of an insured, Harold McCutcheon, Jr. (McCutcheon), as described in a personal injury lawsuit filed against his estate by Richard Carly, obligated McCutcheon’s insurer, appellant Erie Insurance Exchange (Erie) to defend the estate against Carly’s complaint. In 2013, McCutcheon broke into the home of his ex-wife, Terry McCutcheon, in order to shoot and kill her, and then kill himself. He communicated these intentions in a note he left for his adult children. McCutcheon succeeded in executing this plan, first shooting and killing Terry and, eventually, shooting and killing himself. However, after McCutcheon killed Terry but before he killed himself, Carly arrived on the scene. Carly, who had been dating Terry, approached the front door of her home, rang the doorbell and received no answer. Carly became concerned, placed his hand on the doorknob “in order to enter and the door was suddenly pulled inward by [McCutcheon] who grabbed [Carly] by his shirt and pulled him into the home.” McCutcheon was “screaming, swearing, incoherent, and acting ‘crazy.’” Then, “a fight ensued between the two and at the time, [McCutcheon] continued to have the gun in his hand” which he apparently had used to kill Terry. During this “struggle” between the two men, McCutcheon was “knocking things around, and in the process [he] negligently, carelessly, and recklessly caused the weapon to be fired which struck [Carly] in the face,” causing severe injuries. In addition, “other shots were carelessly, negligently and recklessly fired” by McCutcheon, “striking various parts of the interior of the residence and exiting therefrom.” Carly filed suit against McCutcheon’s estate, and the estate — administered by McCutcheon’s adult children — sought coverage of the lawsuit under two insurance policies issued by Erie to McCutcheon: the Erie Insurance Home Protector Policy (homeowner’s policy) and the Erie Insurance Personal Catastrophe Liability Policy (personal catastrophe policy). The Pennsylvania Supreme Court held Carly’s allegations were sufficient to trigger Erie’s duty to defend, and accordingly, affirmed the superior court's order. View "Erie Ins. v. Moore, et al" on Justia Law

United owns a fleet of ambulances. In 2016, Stofko was driving his car when a United ambulance crashed into it; Stofko’s injuries were fatal. United was insured by Markel but the particular ambulance that crashed was not listed on the policy. Rau, the representative of Stofko’s estate, argued that it was nevertheless covered by the policy because before the crash United sent Markel’s agent, Insurance Service Center, an email requesting that the vehicle be added to the policy. The Center denied seeing the email and United acknowledged that it had not received a response as was customary. Markel argued that even if United had sent an email, it never endorsed the change, which the policy requires, and has no duty to indemnify United or the driver and no duty to defend in Rau’s suit. The Seventh Circuit affirmed summary judgment in favor of Markel. It is not necessary to resolve what happened to the email request to add the vehicle to the policy; under Indiana law courts may not rewrite an insurance contract. Neither Center nor Markel accepted or responded in any way to United’s request, so the ambulance was not covered. View "Markel Insurance Co. v. Rau" on Justia Law

The Supreme Court affirmed the judgment of the circuit court concluding that coverage did not exist under an automobile insurance policy issued to Shelby Olsons' parents or an automobile policy issued to the shooter for injuries sustained by Shelby when she was struck by a bullet while riding in the backseat of her parents' vehicle, holding that the circuit court did not err.Shelby was struck by a bullet when the driver of another vehicle fired a handgun at the Olsons' vehicle. At issue was whether coverage for Shelby's injuries existed under the automobile policy issued to her parents or under the automobile policy issued to the shooter. The circuit court concluded that coverage did not exist under either policy because the injuries did not arise out of the use of a vehicle and, alternatively, were not caused by an accident. The Supreme Court affirmed, holding that the circuit court did not err in granting summary judgment in favor of the insurance companies. View "Olson v. Slattery" on Justia Law

The Supreme Court affirmed the judgment of the trial court declaring that the School the City of Richmond's School Board's UM/UIM motorist coverage was $1 million, as provided in the contract between the School Board and the Virginia Association of Counties Group Self-Insurance Risk Pool (VACORP), holding that the $1 million in UM/UIM coverage the School Board contracted for was the amount of available UM/UIM coverage.Maisia Young was injured while riding a school bus. Young filed suit against the School Board seeking damages for her personal injuries. The School Board was self-insured through a self-insurance risk pool managed by VACORP. Young filed a declaratory judgment action to determine the extent of the coverage available to the School Board under the UM/UIM provisions of its contract. VACORP argued that $50,000 was the maximum amount of coverage available, as set by statute. In response, Young argued that the statutes set a minimum, not a cap, and that the maximum available was what was specified in the contract. The circuit court agreed with Young. The Supreme Court affirmed, holding that the School Board's UM/UIM coverage was $1 million, as provided in the contract between the School Board and VACORP. View "VACORP v. Young" on Justia Law

In this case concerning the sequence in which Montrose Chemical Corporation, which was sued by causing environmental damage in the Los Angeles area, may access its excess insurance policies covering the period from 1961 to 1985, the Supreme Court held that Montrose may seek indemnification under any excess policy once it has exhausted the underlying excess policies in the same policy period.Montrose purchased primary and excess comprehensive general liability insurance to cover its operations at its Torrance facility from defendant insurers between 1961 and 1985. Montrose's primary insurance was exhausted in litigation due to environmental contamination allegedly caused by Montrose's operation of this facility. At issue was whether Montrose was required to exhaust other insurance coverage from other policy periods. The Supreme Court held (1) Montrose was entitled to access otherwise available coverage under any excess policy once it has exhausted directly underlying excess policies for the same policy period; and (2) an insurer called on to provide indemnification may seek reimbursement from other insurers that would have been liable to provide coverage under excess policies for any period in which the injury occurred. View "Montrose Chemical Corp. of California v. Superior Court" on Justia Law