Justia Insurance Law Opinion Summaries

Liberty National Life Insurance Company petitioned the Alabama Supreme Court for a writ of certiorari to review the Court of Civil Appeals' decision: (1) holding, as a matter of first impression, that 27-14-3(f), Ala. Code 1975, required an insurable interest in a life-insurance policy to exist at a point other than the time at which the policy becomes effective; and (2) reversing the trial court's dismissal of the complaint filed by Misty Ann Barton, as administratrix of the estate of Benjamin H. Miller, Jr, in which Barton alleged that Liberty National was negligent in allowing Leanne Miller, Benjamin Jr.'s stepmother, to substitute herself as beneficiary of an insurance policy insuring the life of Benjamin Jr. The Court granted Liberty National's petition, and, affirmed in part and reversed in part the judgment of the Court of Civil Appeals. Barton alleged that Liberty National was negligent in allowing Leanne to name herself as beneficiary of an insurance policy that was owned by Benjamin Sr. at his death and, pursuant to the terms of the policy, payable to Benjamin Jr.'s estate. The Court found that the policy was not produced or viewed by the trial court, nor had any discovery ensued concerning ownership of the policy, and who exactly had the right to effect a beneficiary change. Accordingly, in viewing the allegations of Barton's complaint most strongly in Barton's favor, it appeared to the Supreme Court that Barton could, under certain circumstances, maintain a cause of action against Liberty National alleging negligence on its part in allowing Leanne, either as personal representative of Benjamin Sr.'s estate or individually, to substitute herself as beneficiary on the policy insuring Benjamin Jr.'s life. The Court affirmed that portion of the Court of Civil Appeals' opinion reversing the trial court's order dismissing Barton's complaint. The Court reversed the Court of Civil Appeals' judgment insofar as it interpreted section 27-14-3(f) to require an insurable interest in personal insurance to exist at any point beyond the time the policy of insurance becomes effective. View "Ex parte Liberty National Life Insurance Company." on Justia Law

In appeal no. 1140870, Southern Cleaning Service, Inc. ("SCSI"), appealed the grant of summary judgment in favor of Essex Insurance Company and Genesee General Agency, Inc. on SCSI's claims stemming from Essex's refusal to provide SCSI coverage under a commercial general-liability policy ("the Essex policy") based on the alleged failure to timely notify Essex of the facts leading to the claim for coverage. In appeal no. 1140918, the insurance defendants cross-appeal the trial court's denial of their requests for costs. In August 2006, Winn-Dixie Montgomery, LLC ("Winn-Dixie"), entered into a contract with SCSI that obligated SCSI to provide floor-care and general janitorial services to multiple Winn-Dixie grocery stores in central Alabama. In 2011, a store customer allegedly slipped and fell on a wet floor, and sued. Winn-Dixie sought indemnification from SCSI. SCSI sought indemnification from Phase II, one of its cleaning subcontractors. Phase II, SCSI, and Winn-Dixie again asked Essex to provide them with a defense and indemnity under the terms of the Essex policy; however, their requests were denied. With regard to appeal no. 1140870, the Supreme Court concluded that the summary judgment entered in favor of the insurance defendants should have been reversed because there was a genuine issue of material fact as to who among the insurance defendants acted under the doctrine of apparent authority to settle the Winn Dixie customer's slip and fall claim. The Court pretermitted all discussion of the other grounds for reversal SCSI offered. Because the insurance defendants would have been entitled to the costs they seek in appeal no. 1140918 only if there was a final judgment in their favor, that appeal was dismissed as moot. View "Essex Insurance Co. v. Southern Cleaning Service, Inc." on Justia Law

In 2006, plaintiff Robert Kyle Morris, a licensed insurance agent, was working for his father's independent insurance agency, the Morris Insurance Agency ("Morris Insurance"). At some point, Morris contacted one of the Farmers entities about becoming a Farmers agent. Morris testified that he initially became interested in working as a Farmers agent because Farmers had a policy whereby a Farmers agent could place insurance with a different company if a customer was not eligible for insurance issued by Farmers or if Farmers refused to underwrite a policy for the customer. He further testified that he had not been looking to disaffiliate himself from his father's insurance agency and that he had told a Farmers recruiter that he did not want to cut off the working relationship he had with his father. Morris also testified that, when he agreed to become a Farmers agent, he signed several different agreements; that nothing in any of those agreements or documents indicated that his relationship with his father's agency constituted a conflict of interest; that the documents given to him did not say anything contrary to what he had been told by any recruiter, or that any representations made to him by the agents of Farmers were false. Despite signing an agent agreement, and having been recruited, Morris' contract was ultimately terminated for conflict of interest. Morris sued Farmers, arguing that Farmers had fraudulently induced him to become a Farmers agent. The trial court ruled in Morris' favor, and Farmers appealed. The Supreme Court affirmed in part and reversed in part. The Court found Morris did not blindly rely on oral representations and ignore the terms of his contract. "The only information contrary to what Morris had been told was buried in a 200-page manual among dozens of other documents provided for training modules, and even longtime Farmers employees were not aware of the existence of the statement." Morris presented sufficient evidence of fraudulent inducement for the matter to be decided by the jury. Farmers' postjudgment motion was denied by operation of law, but the trial court did not make any findings regarding Farmers' request for a remittitur of the punitive-damages award. The Court remanded this case for the trial court to conduct a hearing on the punitive-damages award. View "Farmers Insurance Exchange v. Morris" on Justia Law

State Farm Mutual Automobile Insurance Company petitioned the Alabama Supreme Court for certiorari review of the Court of Civil Appeals' decision affirming the trial court's judgment ordering State Farm to pay an attorney fee based on a common-fund theory for the recovery of the moneys advanced by State Farm to James Ross Pritchard, Jr., pursuant to "Lambert v. State Farm Mutual Automobile Insurance Co.," (576 So. 2d 160 (Ala. 1991)). Pritchard sued Broderick McCants, State Farm (Pritchard's uninsured/underinsured-motorist ("UIM") insurer), and others seeking damages for injuries Pritchard suffered in an automobile accident with a vehicle being operated by McCants. Applying the Court's determination that a UIM insurer does not have a subrogation interest in a "Lambert" advance to the facts of this case, the Court held that State Farm did not have a subrogation interest in the $50,000 it advanced to Pritchard pursuant to "Lambert" and, consequently, that Pritchard's recovery from the tortfeasor of the "Lambert" advance did not create a common fund from which State Farm was required to pay its share of Pritchard's attorney fee. View "Ex parte State Farm Mutual Automobile Insurance Company." on Justia Law

In 2004, Michael Britt purchased a Beneteau brand sailboat. Michael had insured the sailboat with St. Paul pursuant to a Seahorse Underwriters Boat Insurance Policy that provided coverage limits of $85,000 for "accidental direct physical loss of or damage to [the sailboat] ... except as specifically stated or excluded in this policy." From 2004 onward, the sailboat served as Michael's residence in Florida; Michael had no other established residence. In early September 2011, Michael telephoned Willis Britt, "Britt," his father, and told Britt that he had accepted a job driving a commercial truck and that he had to attend orientation for the new job in Oklahoma City, Oklahoma. Michael informed Britt that he planned to sail the sailboat from West Palm Beach, Florida, to Jacksonville, Florida, store the boat in Jacksonville, and rent a car in Jacksonville to drive to Oklahoma City for the orientation. On or around September 11, 2011, Michael set sail for Jacksonville. On September 15, 2011, the United States Coast Guard boarded the sailboat approximately one mile off the coast of Cape Canaveral, Florida, for a "cold hit" inspection. That inspection revealed that the sailboat was seaworthy. There was no evidence of any severe weather in the Cape Canaveral area on September 15, 2011, on which date, Michael was supposed to check in with his father upon arrival in Jacksonville, but never did. In October 2011, Britt contacted St. Paul to report the sailboat as lost. In 2012, Britt was appointed conservator of Michael's estate by the Chilton Probate Court. Shortly thereafter, Britt filed a claim with St. Paul for the lost sailboat. St. Paul sent Britt a letter in which it declined coverage for the sailboat. The Supreme Court found that the "mysterious-disappearance" exclusion in Michael's insurance policy was not ambiguous, nor did it conflict with the 30-day provision; rather, the policy, when read as a whole, could accommodate both provisions (one providing coverage and one excluding coverage). Because the Court held that the mysterious-disappearance exclusion was unambiguous and does not conflict with the 30-day provision, and because there was no genuine issue of material fact concerning the disappearance of the sailboat, the trial court should have entered a summary judgment in St. Paul's favor. View "St. Paul Fire & Marine Insurance Company v. Britt" on Justia Law

Federal Insurance Company appealed a circuit court order denying its motion to compel arbitration of the breach-of-contract claim asserted against it by Kert Reedstrom. In 2008, Reedstrom entered into a written employment agreement with Marshall-Jackson Mental Health Board, Inc., d/b/a Mountain Lakes Behavioral Healthcare ("MLBHC"), to begin serving as its executive director in Guntersville. During the course of Reedstrom's employment with MLBHC, MLBHC held an executive-liability, entity-liability, and employment-practices-liability policy issued by Federal Insurance that generally protected certain MLBHC officers and employees described as "insureds" in the policy from loss for actions committed in the course of their employment with MLBHC. It was undisputed that Reedstrom was an "insured" covered by the Federal Insurance policy. The Federal Insurance policy contained an arbitration provision. A separate endorsement to the Federal Insurance policy further highlighted the arbitration provision and explained that its effect was that any disagreement related to coverage would be resolved by arbitration and not in a court of law. In July 2010, MLBHC terminated Reedstrom's employment and, in December 2010, Reedstrom sued MLBHC alleging that his termination constituted a breach of his employment contract. MLBHC asserted various counterclaims against Reedstrom based on his alleged misconduct while serving as executive director. Thereafter, Reedstrom gave Federal Insurance notice of the claims asserted against him and requested coverage under the terms of the Federal Insurance policy. Federal Insurance ultimately denied his claim and refused to provide him with counsel to defend against MLBHC's claims. A jury returned a verdict awarding Reedstrom $150,000 on his claim against MLBHC and awarding MLBHC $60,000 on its claims against Reedstrom. Consistent with its previous denial of his request for coverage, Federal Insurance refused Reedstrom's request to satisfy the judgment entered against him. Reedstrom sued Federal Insurance, asserting one claim of breach of contract and seeking $72,000 in damages ($60,000 for the judgment entered against him and $12,000 for the attorney fees he incurred in defending those claims). The Supreme Court reversed and remanded, finding that the trial court did not articulate its rationale for denying the motion to compel arbitration. The denial was apparently based on the court's resolving at least one of the arbitrability issues raised by Reedstrom in his favor and against Federal Insurance. However, because the subject arbitration provision delegated to the arbitrators the authority to resolve such issues, the trial court erred by considering the waiver and nonsignatory issues raised by Reedstrom instead of granting the motion to compel arbitration and allowing the arbitrators to resolve those issues. View "Federal Insurance Company v. Reedstrom" on Justia Law