Justia Insurance Law Opinion Summaries

In the underlying litigation, the attorney represented a contractor being sued for job-site injuries and was later sued by the contractor’s insurance company for signing settlement agreements without authority. Section 13-214.3 of the Code of Civil Procedure, 735 ILCS 5/13-214.3, sets forth a six-year statute of repose for “action[s] for damages based on tort, contract, or otherwise … against an attorney arising out of an act or omission in the performance of professional services.” The trial court held that the provision barred claims for breach of implied warranty of authority, fraudulent misrepresentation, and negligent misrepresentation against the attorney. The appellate court reversed, finding that the statute of repose did not apply to an action brought by a non-client of the defendant-lawyer for a cause of action other than legal malpractice. The Illinois Supreme Court reversed and reinstated the dismissal, stating that under the plain, unambiguous language of the statute, the claims “arose out of” the attorney’s actions “in the performance of professional services.” View "Evanston Ins. Co. v. Riseborough" on Justia Law

Plaintiffs brought legal malpractice claims against Jeffrey Daniels, American Guarantee & Liability Insurance Company’s insured. American Guarantee wrongly refused to defend the claims. A default judgment was entered against Daniels, who assigned his rights against American Guarantee to Plaintiffs. Plaintiffs then brought the present action seeking to enforce American Guarantee’s duty to indemnify Daniels for the judgment. Summary judgment was awarded in favor of Plaintiffs. The Appellate Division affirmed. The Court of Appeals affirmed, concluding that American Guarantee’s breach of its duty to defend barred it from relying on policy exclusions as a defense to the present lawsuit. The Court later granted reargument, vacated its prior decision, and reversed the Appellate Division’s order, holding (1) under controlling precedent, American Guarantee was not barred from relying on policy exclusions as a defense; and (2) the applicability of the exclusions American Guarantee relied on presented an issue of fact sufficient to defeat summary judgment. View "K2 Inv. Group, LLC v. Am. Guar. & Liab. Ins. Co." on Justia Law

Plambeck owned two Kentucky chiropractic clinics that treated patients injured in car accidents, including some State Farm customers. All of the treating chiropractors were licensed to practice in Kentucky. Plambeck was not, although he was licensed elsewhere, and did not treat any patients in Kentucky. State Farm assumed that Plambeck had a license because Kentucky law requires chiropractic practitioners and owners of chiropractic clinics to hold one. When State Farm discovered that Plambeck lacked a state license, it stopped paying the clinics and sued Plambeck to recover all payments since 2000. The district court granted summary judgment to State Farm and awarded $557,124.78 in damages. The Sixth Circuit reversed. Kentucky common law claims for recovery of funds mistakenly paid are based on unjust enrichment. Because State Farm and the clinics never had a contractual relationship, the only applicable theory would require State Farm to show that it paid money to the clinics not due “either in law or conscience.” State Farm did not offer such proof. View "State Farm Auto. Ins. Co. v. Newburg Chiropractic" on Justia Law

Steidl and Whitlock were convicted of 1987 murders, largely based on testimony by two supposed eyewitnesses. Long after the convictions, an investigation revealed that much of the testimony was perjured and that exculpatory evidence had been withheld. The revelations led to the release of the men and dismissal of all charges. Steidl had spent almost 17 years in prison; Whitlock had spent close to 21 years. They sued. By 2013, both had settled with all defendants. Because the defendants were public officials and public entities, disputes arose over responsibility for defense costs. National Casualty sought a declaratory judgment that it was not liable for the defense of former State’s Attorney, McFatridge, or Edgar County, agreeing to pay their costs under a reservation of rights until the issue was resolved. The Seventh Circuit ruled in favor of National Casualty. In another case McFatridge sought a state court order that the Illinois Attorney General approve his reasonable expenses and fees; the Illinois Supreme Court rejected the claim. In a third case, National Casualty sought a declaratory judgment that another insurer was liable for costs it had advanced. The Seventh Circuit affirmed that the other company is liable. It would be inequitable for that company to benefit from National’s attempt to do the right thing, especially since it did not do the right thing and contribute to the defense costs under a reservation of rights. View "Nat'l Cas. Co. v. White Mountains Reinsurance Co." on Justia Law

Paul Dyer held licenses as an insurance producer and consultant. Because of Dyer's alleged misconduct, the Bureau of Insurance filed a petition for enforcement against Dyer alleging that Dyer violated the Maine Insurance Code and seeking the revocation of his licenses and requesting civil penalties and restitution. After a hearing, the Superintendent of Insurance concluded that Dyer violated the identified provisions of the Insurance Code, revoked Dyer's licenses, and ordered him to pay civil penalties and restitution. Dyer appealed the judgment entered in the business and consumer docket affirming the Superintendent's decision. The Supreme Court affirmed, holding that the Superintendent did not err in interpreting the Insurance Code or in making factual findings and did not abuse his discretion by imposing penalties permitted in the statute. View "Dyer v. Superintendent of Ins." on Justia Law

The law firm represented a potential buyer in the purchase of a drugstore. Buyer and Seller executed the sales contract separately. The firm misfiled the contract executed by Buyer, however, and Seller subsequently attempted to rescind the contract, which it characterized as an offer, because it had not timely received a copy of the contract executed by Buyer. When Seller’s efforts to avoid the purported contract were successful, Buyer sent a “formal notice of claim” to the firm, which sought coverage from its professional liability insurer. That insurer concluded that the firm was not entitled to coverage because it failed to properly notify the insurer of the mistake that ultimately led to the malpractice claim. The firm sought a declaratory judgment. The district court granted the insurer summary judgment. The Seventh Circuit affirmed, finding that the firm’s knowledge of the email exchange with Seller’s counsel and of an Alabama declaratory-judgment action constituted knowledge of “any circumstance, act or omission that might reasonably be expected to be the basis of” a malpractice claim. View "Koransky, Bouwer & Poracky, P. C. v. Bar Plan Mut. Ins. Co." on Justia Law

Pagliara, a licensed securities broker for more than 25 years, maintained a spotless record with the Financial Industry Regulatory Authority (FINRA) except for this case. Under a 2002 licensing agreement, Pagliara served both Capital Trust and NBC until 2008. During that time, Butler followed Pagliara’s recommendation to invest $100,000 in bank stocks that later lost value. Butler’s attorney threatened to sue NBC and Pagliara. NBC retained JBPR for defense. Unbeknownst to NBC and JBPR, Pagliara offered to settle the claim for $14,900, $100 below FINRA’s mandatory reporting threshold. Butler refused. Pagliara then informed NBC of his intent to defend the claim in FINRA Arbitration and objected to any settlement of the “frivolous claim.” NBC insisted that Pagliara not have any contact with Butler, based on the License Agreement signed by the parties, which stated that: “NBCS, at its sole option and without the prior approval of either [Capital Trust] or the applicable Representative, may settle or compromise any claim at any time.” JBPR finalized a $30,000 settlement without obtaining a release for Pagliara. Pagliara sued, alleging breach of fiduciary duty, violation of the Tennessee Consumer Protection Act, and intentional infliction of harm. The district court rejected the claims. The Sixth Circuit affirmed. View "Pagliara v. Johnston Barton Proctor & Rose, LLP" on Justia Law

In 2009 Universal demanded payment from Allstate for medical services that Universal allegedly rendered to 36 persons claiming coverage under Allstate insurance policies. Allstate denied payment, contending that Universal had not, in fact, rendered any services to those persons. Universal filed suit asserting claims for reimbursement, for defamation, and for tortious interference with business relationships. In November 2009, Allstate served Universal with interrogatories and document requests. Universal failed to respond for more than two months, so Allstate filed a motion to compel. In May 2010, the magistrate judge granted Allstate’s motion and ordered Universal to “provide full and complete responses” no later than June 7, 2010. Again Universal did not respond by the deadline or by an extended deadline. Universal finally responded on October 6, but its responses were incomplete. After Universal failed to supplement or to Allstate’s efforts to depose employees, Allstate filed a second motion to dismiss, which was granted. The Sixth Circuit affirmed, noting that Allstate’s repeated motions, and the court’s own orders, were not enough to compel Universal to do what the Rules required. “Universal’s conduct violated the rules of civil procedure and common courtesy alike” View "Universal Health Grp. v. Allstate Ins. Co." on Justia Law

Defendants Robert Christy, Christy & Tessier, P.A., Debra Johnson, and Kathy Tremblay, appealed a superior court decision that rescinded a professional liability policy issued by Plaintiff Great American Insurance Company (GAIC), to the law firm of Christy & Tessier, P.A. Robert Christy (Christy) and Thomas Tessier (Tessier) were partners in the firm, practicing together for over forty-five years. In 1987, Frederick Jakobiec, M.D. (Jakobiec) retained Tessier to draft a will for him. In 2001, Jakobiec's mother, Beatrice Jakobiec (Beatrice), died intestate. Her two heirs were Jakobiec and his brother, Thaddeus Jakobiec (Thaddeus). Jakobiec asked Tessier, who was Beatrice's nephew, to handle the probate administration for his mother's estate. From 2002 through 2005, Tessier created false affidavits and powers of attorney, which he used to gain unauthorized access to estate accounts and assets belonging to Jakobiec and Thaddeus. Litigation ensued; two months after Tessier and Jakobiec entered into the settlement agreement, Christy executed a renewal application for professional liability coverage on behalf of the law firm. Question 6(a) on the renewal application asked: "After inquiry, is any lawyer aware of any claim, incident, act, error or omission in the last year that could result in a professional liability claim against any attorney of the Firm or a predecessor firm?" Christy's answer on behalf of the firm was "No." The trial court found that Christy's negative answer to the question in the renewal application was false "since Tessier at least knew of Dr. Jakobiec's claim against him in 2006." On appeal, the defendants argued that rescission was improper because: (1) Christy's answer to question 6(a) on the renewal application was objectively true; (2) rescission of the policy or denial of coverage would be substantially unfair to Christy and the other innocent insureds who neither knew nor could have known of Tessier's fraud; and (3) the alleged misrepresentation was made on a renewal application as opposed to an initial policy application. GAIC argued that rescission as to all insureds is the sole appropriate remedy given the material misrepresentations in the law firm's renewal application. Upon review, the Supreme Court held that the trial court erred as a matter of law in ruling that Tessier's knowledge is imputed to Christy and the other defendants thereby voiding the policy ab initio. The Court made no ruling, however, as to whether any of the defendants' conduct would result in non-coverage under the policy and remanded for further proceedings. View "Great American Insurance Company v. Christy" on Justia Law

After its property sustained wind damage during Hurricane Katrina, a real-estate developer sued its insurance provider for coverage, and, in the alternative, its insurance agent for professional negligence. The district court decided that the insurance policy covered wind damage, and a jury decided that there had been no "mutual mistake" between the agent and the provider concerning wind coverage. As a consequence, the district court dismissed with prejudice the developer's negligence claim against its agent. The insurance provider appealed, and the Fifth Circuit Court of Appeals reversed, deciding that the policy did not cover wind damage. On remand, the developer moved under Fed. R. Civ. P. 60(b) to set aside the dismissal of its professional negligence claim against the agent in light of the reversal. The district court granted the motion and resurrected the negligence claim against the agent. The Fifth Circuit affirmed, holding that the district court did not abuse its discretion in granting the developer Rule 60(b) relief. View "Lowry Dev., LLC v. Groves & Assocs. Ins., Inc." on Justia Law