Justia Insurance Law Opinion Summaries

ProLink and GPS compete, manufacturing and selling GPS-based golf course distance measurement and course management products. GPS owns the 518 patent for a player positioning and distance finding system and sued ProLink for patent infringement. GPS also claimed slander of title and unfair competition, alleging that ProLink falsely represented that it owned an exclusive license under the patent as part of a security agreement with Comerica Bank. This agreement was recorded and allegedly encumbered GPS’s title. ProLink entered into a second agreement, this time representing that it owned outright the 518 security agreement. ProLink was insured under Federal’s commercial general liability insurance policy and requested defense. Federal informed ProLink that it would not defend or indemnify because GPS’s allegations did not satisfy the policy definition of “personal injury;” if they did, the Intellectual Property Laws or Rights Exclusion or Expected or Intended Injury Exclusion would apply. ProLink sought declaratory judgment that Federal breached its duty to defend. The district court found in favor of Federal , holding that the first alleged “personal injury” for which GPS sought damages (2006) occurred outside of the policy period (2007-2008). The Seventh Circuit affirmed. The underlying allegations concern only disparagement of property, which is not covered. View "ProLink Holdings Corp. v. Federal Ins. Co." on Justia Law

Aschermann suffers from degenerating discs and spondylolisthesis and had lumbar fusion operations in 2002 and 2004. Until 2003 she worked as a sales representative. Back pain left her unable to perform its duties. Between 2003 and 2009 she received disability payments under the employer’s disability plan, a welfare-benefit plan governed by the Employee Retirement Income Security Act. The policy provides that after the first two years of benefits, the question becomes whether the recipient can perform any job in the economy as a whole. Lumbermens stopped paying disability benefits to Aschermann in fall 2009, concluding that she could do sedentary work. The district court held that the decision to end her disability benefits was not arbitrary. The Seventh Circuit affirmed. Aschermann does not deny that her education B.S. in psychology and master’s degree in social work and experience suit her for many desk-bound positions, but claimed inability to work more than four hours a day. The insurer gave notice complying with ERISA, (29 U.S.C. §1133(1), that it wanted new diagnostic test results and other recent information; she was given a “reasonable opportunity” to supplement the file and receive a “full and fair review.” View "Aschermann v. Aetna Life Ins. Co." on Justia Law

Travelers sought a declaratory judgment that they had no duty to defend their insured, Rogan Shoes, in an Illinois state court class action for violations of the federal Fair and Accurate Credit Transactions Act, 15 U.S.C. 1681c(g), which prohibits businesses from including on sales receipts the expiration date or more than the last five digits of the purchaser’s credit or debit card and authorizes damages of up to $1,000 per unlawful receipt. The suit sought statutory damages of $387 million. Rogan settled for $16 million; the settlement specified that the judgment would be satisfied only through proceeds from Travelers’ policies, with the exception of $50,000 to cover legal costs. Rogan assigned its claims and rights to payments under the policies. The state court approved the settlement. A state court citation to discover assets was served on Travelers’ agent. The district court dismissed the declaratory judgment action on the ground that parallel state proceedings were pending. The Seventh Circuit affirmed, finding that the case did not satisfy the amount-in-controversy requirement for diversity jurisdiction, 28 U.S.C. 1332(a), because Rogan had assigned its interests in its policies to class members, none of whom individually claim a share of more than $75,000. View "Travelers Prop. Cas. & Travelers Indem. Co. v. Good" on Justia Law

Budrik sued Wegman for injuries sustained in an accident on a construction site managed by Wegman and was demanding almost presented a realistic possibility of a potential loss above the policy limit, $1 million), but failed to warn Wegman of this possibility. Wegman sued Admiral for failure to act in good faith, alleging that it would promptly have sought indemnity from its excess insurer, AIG (policy limit $10 million). Budrik filed suit four years before Wegman notified AIG, which denied coverage for failure to timely notify. Budrik obtained a judgment of slightly more than $2 million. The district court dismissed Wegman’s suit against Admiral, and, on remand, granted a stay, pending state court resolution of Wegman’s suit against AIG. The Seventh Circuit dismissed appeal of the stay. Although Wegman’s suit against Admiral in federal court and against AIG in state court, are related, they do not satisfy the conditions for abstention.; the district court is not finished with the case. The stay really is a stay, and not a dismissal. View "R.C. Wegman Constr. Co. v. Admiral Ins. Co." on Justia Law

Marantz practiced pulmonary and critical care medicine. In 1997 she underwent surgery for a herniated disc and degenerative disc disease. The surgery did not eliminate her pain. In 1999, she stopped working full time. Through her employment with she received disability coverage from LINA. LINA approved her claim. Additional surgery did not resolve the problem. MRIs revealed degenerative disc disease and spinal stenosis. In 2000 LINA provided funding for Marantz to enroll in an online Masters of Public Health program, for retraining for less-demanding work. In 2001, Marantz began working approximately 20 hours per week for the Illinois Department of Public Health. LINA offset disability benefits and reduced its monthly payment from $7,616 to $5,000 per month. LINA paid benefits for 60 months. In 2004, LINA investigated whether Marantz satisfied the policy’s more stringent definition of disability relevant after the first 60 months: “unable to perform all the material duties of any occupation for which [that worker] may reasonably become qualified based on education, training or experience.” In 2005 LINA terminated benefits, based on a functional capacity evaluation, doctors’ assessments, and surveillance. Marantz sued under the ERISA, 29 U.S.C. 113. The district court entered judgment in the defendants’ favor. The Seventh Circuit affirmed. View "Marantz v. Permanente Med. Grp., Inc." on Justia Law

TAMS, a medical device manufacturer, hired Comtrans to coordinate shipment of equipment to a trade show in Chicago. Comtrans is not a carrier. It used its affiliate, ACS, which retained Atlas to perform the actual shipment. The Atlas truck was involved in a serious accident, leaving TAMS with more than $1 million in losses. TAMS’s insurance company sued on behalf of TAMS. Atlas is an interstate motor carrier authorized by the Federal Motor Carrier Safety Administration to transport goods in interstate commerce. Claims are subject to the Carmack Amendment, 49 U.S.C. 14706, which provides that a carrier of property in interstate commerce is liable for the actual loss or injury to the property caused b” the carrier, which may be limited “to a value established by written or electronic declaration of the shipper or by written agreement between the carrier and shipper if that value would be reasonable under the circumstances.” Atlas relied on the contract it had in place with ACS and the bill of lading delivered signed by a Comtrans warehouse manager when Atlas picked up TAMS’s shipment, as limiting liability to $0.60 per pound. The district court entered summary judgment for Atlas. The Seventh Circuit remanded for further development of the facts. View "Nipponkoa Ins. Co., L v. Atlas Van Lines, Inc." on Justia Law

The Directors & Officers Liability policy contains an insured vs. insured exclusion that removes the duty to defend or indemnify for “Loss on account of any Claim ... by or on behalf of any Insured or Company in any capacity.” The allocation clause provides: “If ... Insureds incur an amount consisting of both Loss covered by this Policy and loss not covered … because the Claim includes both covered and uncovered matters, such amount shall be allocated between covered Loss and uncovered loss based upon the relative legal exposures of the parties to covered and uncovered matters.” Five plaintiffs sued SCBI and directors and officers, asserting fraud, civil conspiracy, and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. The insurer declined to advance defense costs or otherwise indemnify SCBI, citing the exclusion. Two plaintiffs are former directors of SCBI who are insureds; a third is also included in the definition. The district court dismissed, finding no duty to defend or to indemnify. The Seventh Circuit held that the insurer has no duty to defend or indemnify the claims brought by the three insured plaintiffs, but must defend and indemnify with respect to the two non-insured plaintiffs. View "Miller v. St. Paul Mercury Ins. Co." on Justia Law

Crown hired LMI to construct an office building. LMI subcontracted installation of windows and doors to Frontrunner. Frontrunner was required to maintain insurance that named LMI as an additional insured. Frontrunner purchased an occurrence-based commercial general liability policy from Consolidated that covered sums that insureds became legally obligated to pay because of property damage and requiring Consolidated to defend any suit seeking damages for covered property. Late in construction, Crown experienced water infiltration at numerous locations and other construction defects. Crown filed suit. LMI tendered defense to Consolidated, but Consolidated made no coverage decision for six months. Though LMI had not obtained a coverage decision, it settled with Crown. Although informed of all settlement talks, Consolidated participated in none and later denied coverage. The district court found in Consolidated’s favor. The Seventh Circuit affirmed. Under Illinois insurance law, Consolidated had no duty to defend because the underlying complaint failed to allege damage to any covered property. Where the underlying suit alleges damage to the construction project itself because of a construction defect, there is no coverage; where the complaint alleges that a construction defect damaged something other than the project, coverage exists.View "Lagestee-Mulder, Inc. v. Consol. Ins. Co." on Justia Law

Safeco issued plaintiffs a homeowner’s policy that went into effect when they closed on the property and covered all accidental direct physical loss to property, unless limited or excluded, “occurring during the policy period.” Before receiving the policy and first seeing its terms, but after beginning renovations, plaintiffs discovered severe inner wall water leaks and significant water infiltration on three exterior walls. A mold specialist found that the home had numerous construction deficiencies that existed long before they purchased the home, resulting in chronic water intrusion that damaged interior finished walls, insulation, external plywood sheathing, and other aspects of the structure. Safeco denied coverage, stating that the prepurchase inspection confirmed multiple areas of water damage that were in need of attention and that the loss qualified as a preexisting condition that occurred outside of the policy period. The district court held that Safeco was precluded from raising the exclusions because it did not notify plaintiffs the exclusions until after they discovered the damage, awarded $485,100.64, and held that Safeco lacked a reasonable basis for denial and demonstrated reckless disregard, entitling plaintiffs to damages resulting from bad faith. The Seventh Circuit affirmed.View "Miller v. Safeco Ins. Co. of Am." on Justia Law

After discovering that she had lung cancer that had spread to her brain, Killian underwent aggressive treatment on the advice of her doctor. The treatment was unsuccessful and she died months later. Her husband submitted medical bills for the cost of the treatments to her health insurance company. The company denied coverage on most of the expenses because the provider was not covered by the insurance plan network. The husband filed suit, seeking benefits for incurred medical expenses, relief for breach of fiduciary duty, and statutory damages for failure to produce plan documents. The district court dismissed denial-of-benefits and breach-of-fiduciary-duty claims, but awarded minimal statutory damages against the plan administrator. The Seventh Circuit affirmed the dismissals, rejecting an argument that the plan documents were in conflict, but remanded for recalculation of the statutory damages award.