Justia Insurance Law Opinion Summaries

An Oklahoma City car dealer, Automax Hyundai South, sued its insurance company for refusing to defend it when the dealership was sued by customers. Two aggrieved customers brought claims against Automax relating to car purchases they made. The customers won their cases at the state court. The district court ruled that the insurance company had no duty to defend or indemnify Automax in the underlying lawsuits. Upon review of the district court record and the policy at issue, the Tenth Circuit agreed with Automax and concluded the insurance company had a duty to defend. View "Automax v. Zurich, et al" on Justia Law

Defendant-Appellant Lloyds of London Syndicate 2003 ("Lloyds") appealed the district court's denial of its summary judgment motion and subsequent grant of summary judgment in favor of Plaintiff-Appellee Brecek & Young Advisors, Inc. ("BYA") in an action arising out of a professional liability insurance contract. The district court concluded Lloyds failed to pay sufficient indemnity to BYA for claims brought against BYA in an arbitration before the National Association of Securities Dealers. The underlying suit alleged BYA agents mismanaged and unlawfully "churned" the investment accounts of its clients. The court concluded the claims brought in the arbitration did not relate back to earlier claims brought outside the policy period and, therefore, rejected Lloyds' argument coverage was precluded altogether. Additionally, the court rejected BYA's argument that Lloyds was equitably estopped from denying coverage due to its course of conduct in receiving and defending the claims. Upon review, the Tenth Circuit concluded that the district court erred in its interpretation of the law of the case, and therefore abused its discretion in making its judgments in this case. Accordingly, the district court's decisions were reversed and the case remanded for further proceedings. View "Brecek & Young Advisors, Inc. v. Lloyds of London Syndicate 2003" on Justia Law

Defendant-Appellant Indiana Lumbermens Mutual Insurance Company (ILM) appealed the district court's denial of its motion for judgment as a matter of law, or in the alternative, for a new trial following a $2.2 million jury verdict in favor of Plaintiff-Appellee Ryan Development Company, L.C., d/b/a Agriboard Industries (Agriboard). This case arose from a fire that destroyed a Texas manufacturing facility in April 2009. Agriboard, manufactured building panels made of compressed straw. At the time of the fire, Agriboard was insured under a fire and related losses insurance policy issued by ILM with various coverages including lost income. By May 2009, ILM had paid $450,000; Agriboard filed suit and thereafter ILM paid $1.8 million. Agriboard continued to seek recovery under the policy, but ILM refused to pay the amount requested and Agriboard re-filed suit, seeking $2.4 million in unpaid coverages. The trial court denied ILM's motion for judgment as a matter of law, or in the alternative, for a new trial. ILM timely appealed that denial to the Tenth Circuit. Upon review, the Tenth Circuit found no abuse of the trial court's discretion in denying ILM's motion and affirmed the lower court's judgment. View "Ryan Development Co. v. Indiana Lumbermens Mutual Ins. Co." on Justia Law

Petitioner Jose Cardoza brought this lawsuit pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), to challenge United of Omaha Life Insurance Company’s calculation of his long-term disability benefits (LTD benefits). United of Omaha answered, asserting its calculation was appropriate, and counterclaimed, demanding that Petitioner reimburse it for payments of short-term disability benefits (STD benefits) which it claimed were miscalculated. On cross-motions, the district court granted Petitioner's motion for summary judgment and denied United of Omaha’s motion, concluding United of Omaha’s decision to calculate Petitioner's LTD benefits and recalculate his STD benefits as it did was arbitrary and capricious. United of Omaha appealed. Upon review, the Tenth Circuit concluded that the district court erred in granting Petitioner's motion for summary judgment with respect to United of Omaha’s LTD benefits calculation: "[t]he plain language of the long-term disability benefits policy instructed United of Omaha to base its calculation of Cardoza’s LTD benefits on his earnings as verified by the premium it received. Thus, United of Omaha’s decision to do so was reasonable and made in good faith." The district court did not err, however, in granting Petitioner's motion for summary judgment with respect to United of Omaha’s recalculation of his STD benefits and demand for reimbursement "United of Omaha’s decision to recalculate Cardoza’s STD benefits based on his earnings verified by premium rather than his actual earnings was not reasonable." The Court therefore reversed in part, affirmed in part, and remanded the case to the district court for further proceedings. View "Cardoza v. United of Omaha Life Insurance" on Justia Law

In this appeal the Tenth Circuit addressed: (1) whether a foster child in Oklahoma had a "contractual or statutory" relationship with the insurance company that provided foster care liability insurance to the foster child's foster parent, such that the insurer owed the foster child either contractual obligations or an implied duty of good faith and fair dealing; (2) whether a judgment creditor may garnish a judgment debtor's insurance policy in excess of the insurer's actual liability to the judgment debtor; and (3) whether a defendant's status as intervenor in a co-defendant's cross-claim against a plaintiff was relevant to matters adjudicated solely between the defendant and the plaintiff. Upon review, the Court concluded that the answer to all three questions was no. Accordingly, the Court affirmed the judgment of the district court. View "Colony Insurance v. Burke" on Justia Law

Plaintiff James Bannister was injured in a motorcycle accident on the freeway near Oklahoma City in 2009. According to Bannister, he was forced to lay down and slide his motorcycle at a high speed when a car in front of him braked suddenly, that car having been cut off by another car. Bannister slammed into the wall of the freeway and suffered substantial injuries. He did not collide with any other vehicle; neither of the aforementioned cars remained at the scene of the accident; and no witnesses besides Bannister ever gave an account of the crash. Bannister filed an insurance claim with his insurer, defendant State Farm Automobile Insurance Company (State Farm). State Farm denied Bannister’s claim, finding him to be majority at fault in the accident. Bannister subsequently filed suit in Oklahoma state court, and State Farm removed the case to the Western District of Oklahoma. By the time the case went to trial, Bannister sought relief solely on a tort theory: that State Farm violated its duty of good faith and fair dealing in denying his claim. The jury found in favor of Bannister, but the district court granted State Farm’s renewed motion for judgment as a matter of law (“JMOL”), ruling essentially that the evidence showed that State Farm’s denial of Bannister’s claim was based on a reasonable dispute regarding whether Bannister was majority at fault, and that no evidence suggested that further investigation would have undermined the reasonableness of that dispute. Bannister failed to “make a showing that material facts were overlooked or that a more thorough investigation would have produced relevant information” that would have delegitimized the insurer’s dispute of the claim. As such, the Tenth Circuit concluded his inadequate-investigation theory of bad faith was without merit, and JMOL in favor of State Farm was appropriate. View "Bannister v. State Farm Mutual Auto Ins Co" on Justia Law

Plaintiff-Appellee Larry Frederick brought a putative class action suit against Hartford Underwriters Insurance Company (Hartford) in Colorado state court; Hartford removed the case to federal court. Looking to the face of Plaintiff’s complaint, the district court concluded that the amount in controversy did not exceed $5,000,000 (which was required for federal jurisdiction under the Class Action Fairness Act (CAFA)). Accordingly, the district court remanded the case to state court. In reaching its decision, the district court acknowledged that the Tenth Circuit had not defined the burden a defendant must carry to prevent a remand in a CAFA suit. Faced with this question, the Tenth Circuit held that a defendant in these circumstances is entitled to present his own estimate of the amount at stake and must show by a preponderance of the evidence that the amount in controversy exceeds the amount in 28 U.S.C. 1332(d)(2) (currently $5,000,000). The Court emphasized that the preponderance standard applies to punitive damages as well, and that such damages cannot be assumed when calculating the amount in controversy. Accordingly, the Court reversed the district court and remanded the case for further proceedings. View "Frederick v. Hartford" on Justia Law

The district court overturned an employee benefit plan's denial of a former employee's claim for permanent and total disability life insurance benefits. On appeal, Defendant Owens-Illinois Hourly Employees Welfare Benefit Plan contended the district court erred in rejecting Defendant’s argument that the employee was not eligible for this benefit under the Plan’s life insurance coverage provisions because his PTD life insurance claim was not filed until after he retired. Upon review, the Tenth Circuit concluded that the district court should have entered judgment in favor of Plaintiff on the administrative record rather than remanding for further administrative proceedings. The Tenth Circuit therefore remanded the case with directions for the district court to modify its order and enter judgment in favor of Plaintiff.

"Haunted houses may be full of ghosts, goblins, and guillotines, but it’s their more prosaic features that pose the real danger." When the flashlight Tyler Hodges used in connection with taking tickets at an Oklahoma City haunted house began flickering and then died, he ventured inside the house in search of a replacement. To navigate, Mr. Hodges used the light of his cell phone. An actor complained that the light dampened the "otherworldly atmosphere" of the house, Mr. Hodges turned it off and made his way to the freight elevator, where the spare flashlights were stored. When he reached the elevator, Mr. Hodges lifted the wooden gate across the entrance and stepped in, not seeing that the elevator car was not there. Mr. Hodges sued Brewer Entertainment, the haunted house’s operator, for various torts. Brewer held two insurance polities, one with Western World Insurance Company, and the other with Markel American Insurance Company. Brewer quickly looked to them to defend the lawsuit and ultimately pay any award. For its part, Western World had excluded from its haunted house coverage “any claim arising from chutes, ladders, . . . naked hangman nooses, . . . trap doors . . . [or] electric shocks.” Because the policy did not specifically exclude "blind falls down elevator shafts," the company admitted coverage and proceeded to defend Mr. Hodges’s suit. Markel however, balked, refusing to defend or pay any claim. Western World sued to have Markel contribute to the costs of defending Mr. Hodges' suit. The district court agreed with Markel, and entered summary judgment in its favor. Upon review of the record, the Tenth Circuit found that Markel's escape clause was not enough for it to avoid contributing to defending Mr. Hodges' suit. The Court reversed the grant of summary judgment in Markel's favor and remanded the case for further proceedings.

In 2005, pursuant to the Black Lung Benefits Act's administrative provisions, an Administrative Law Judge (ALJ) awarded lifetime benefits to Merrill Lambright and survivor benefits to his widow, Delores Ashmore. Lambright's claims arose out of his employment with Petitioner Bridger Coal Company. In 2006, a three-member panel of the U.S. Department of Labor Benefits Review Board vacated the ALJ's decision and remanded to the ALJ for reconsideration. In 2008, the ALJ denied benefits on both the lifetime and survivor claims. In 2009, a three-member panel of the Board reversed this decision and reinstated the 2005 award of benefits. The issue on appeal was the characterization of Ms. Ashmore's 2002 request for a modification in her survivor benefits: "it appears the director interpreted Ashmore's motion as a motion for modification based on change in conditions, but only to the extent Ashmore alleged she was entitled to additional (survivor) benefits due to Lambright's death. To the extent the order granting modification was based on a change in conditions, the ruling only implicated the claim for survivor benefits, not Lambright's original claim for lifetime benefits." On reconsideration en banc, the full five-member Board was unable to reach a disposition in which at least three permanent members concurred. As a result, the 2009 panel decision stood. Petitioner appealed, challenging the scope of the 2009 panel's authority to review the 2008 ALJ decision, the standard used in determining whether to award benefits, and the onset-date determination. Upon review, the Tenth Circuit affirmed the 2009 panel decision.