Justia Insurance Law Opinion Summaries

Ellen Williams purchased a residential property in Houma, Louisiana, which was mortgaged by Flagstar Bank. Since Williams did not insure the home, Flagstar obtained a lender-placed hazard insurance policy from Integon National Insurance Company at Williams's expense. The policy named Flagstar as the "Insured" and Williams as the "Borrower." Williams paid all premiums and complied with all policy requirements. The policy included a provision stating that if the loss amount exceeded Flagstar's insurable interest, Integon would pay Williams any residual amount due for the loss, not exceeding the policy limit.In August 2021, Williams's home was damaged by Hurricane Ida. Although Integon inspected the property and exchanged repair estimates with Williams, it ultimately refused to pay for the full property repairs. Williams sued Integon in the 32nd Judicial District Court for the Parish of Terrebonne, asserting breach-of-contract and bad-faith claims under Louisiana law. Integon removed the case to the United States District Court for the Eastern District of Louisiana and filed a Rule 12(b)(6) motion to dismiss, arguing that Williams lacked standing to sue under the policy. The district court agreed with Integon, ruling that Williams was not a named insured, additional insured, or third-party beneficiary, and dismissed the case without allowing Williams to amend her complaint.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court found that the policy's loss payment provision clearly manifested an intent to benefit Williams, provided a certain benefit when the loss amount exceeded Flagstar's insurable interest, and that this benefit was not merely incidental. The court held that Williams might be able to plead plausible facts supporting her status as a third-party beneficiary. Consequently, the Fifth Circuit reversed the district court's decision and remanded the case with instructions to allow Williams to amend her complaint. View "Williams v. Integon National Insurance" on Justia Law

Sterling Senechal submitted a claim to Allstate Vehicle and Property Insurance Company for water damage caused by a broken water heater. Allstate issued three payments totaling $12,410.48. After a dispute over the loss amount, an appraisal determined the actual cash value to be $58,396.58, which Allstate paid minus the deductible and prior payments. Senechal then filed a lawsuit alleging breach of contract, violations of the Texas Prompt Payment of Claims Act (TPPCA), bad faith claims under Chapter 541 of the Texas Insurance Code, and breach of the common law duty of good faith and fair dealing. Allstate removed the case to federal court and paid what it calculated as the maximum potential interest owed.The United States District Court for the Southern District of Texas granted summary judgment in favor of Allstate on all claims. Senechal conceded the breach of contract claim but opposed summary judgment on the other claims. The district court ruled that Allstate's payment of the appraisal award and interest defeated Senechal's claims.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court affirmed the summary judgment on Senechal's bad faith claims under Chapter 541 and common law, citing the Texas Supreme Court's decision in Ortiz v. State Farm Lloyds, which held that payment of an appraisal award and interest precludes recovery for bad faith claims unless there is an independent injury. However, the court vacated the summary judgment on Senechal's TPPCA claims, noting that payment of an appraisal award and interest does not automatically absolve an insurer of TPPCA liability. The case was remanded for further proceedings to determine whether Allstate's initial payment "roughly corresponds" with the appraisal award and whether Allstate is liable under the TPPCA. View "Senechal v. Allstate" on Justia Law

Joseph Mirelez submitted a claim under his homeowner’s insurance policy with State Farm Lloyds for wind damage to his property. Disputes arose regarding the amount of loss and repair costs, leading Mirelez to invoke the appraisal process. In January 2023, an agreement on the loss amount was reached, but coverage issues persisted. Mirelez filed a lawsuit in state court in May 2023, alleging breach of contract, violations of the Texas Prompt Payment of Claims Act (TPPCA), various bad faith claims under the Texas Insurance Code, and breach of the duty of good faith and fair dealing. State Farm removed the case to federal court, citing diversity jurisdiction, and subsequently paid the appraisal award amount, minus the deductible and prior payments, plus interest.The United States District Court for the Southern District of Texas granted summary judgment in favor of State Farm on all claims. Mirelez conceded that summary judgment was appropriate for his breach of contract and TPPCA claims but contested the dismissal of his statutory and common law bad faith claims. The district court concluded that State Farm had paid all benefits owed under the policy and that Mirelez was not entitled to any additional damages under the Texas Insurance Code.The United States Court of Appeals for the Fifth Circuit reviewed the case de novo and affirmed the district court’s decision. The court held that under Texas Supreme Court precedent, specifically Ortiz v. State Farm Lloyds, payment of an appraisal award forecloses an insurer’s liability for breach of contract and bad faith claims unless the insured suffered an independent injury. Since Mirelez only sought policy benefits that had already been paid and did not allege any independent injury, his extracontractual bad faith claims were barred. View "Mirelez v. State Farm" on Justia Law

A&T Maritime Logistics, Inc. had an insurance contract with RLI Insurance Company and a bareboat charter agreement with Alexis Marine, L.L.C. While operating the M/V Uncle John, a vessel owned by Alexis Marine, A&T Maritime caused the ship to allide with an embankment. Believing the damage to be minimal, A&T Maritime did not take immediate action. After a lawsuit was filed, RLI was notified of the claim. A&T Maritime and Alexis Marine sought defense and indemnification from RLI, which denied coverage under the insurance contract. The district court upheld RLI's denial of coverage on summary judgment, finding that RLI was prejudiced by the delayed notice.The United States District Court for the Eastern District of Louisiana initially denied A&T Maritime's and Alexis Marine's motions for partial summary judgment seeking reimbursement for defense costs, noting that the policy did not include a duty to defend. The Champagnes, who had purchased the damaged property, settled their claims for $200,000, funded solely by Alexis Marine. RLI then moved for summary judgment, arguing that the Uncle John was not covered under the policy. The district court disagreed but granted partial summary judgment to RLI, holding that the prompt notice requirements were breached and RLI was prejudiced.The United States Court of Appeals for the Fifth Circuit reviewed the case and affirmed the district court's decision. The court held that RLI was actually prejudiced by the delayed notice from both A&T Maritime and Alexis Marine, as the damage worsened over time and the opportunity to settle for a lower amount was lost. Consequently, the denial of coverage for both A&T Maritime and Alexis Marine was appropriate. The court also concluded that RLI had no duty to reimburse defense costs, as indemnification depended on coverage, which was voided due to the breach of the prompt notice requirement. View "A&T Maritime Logistics v. RLI Insurance Co." on Justia Law

In 2014, McDonnel Group, L.L.C. served as the general contractor for the renovation of Jung, L.L.C.'s property. In 2015, McDonnel obtained insurance from Starr Surplus Lines Insurance Company and Lexington Insurance Company. In 2017, the project experienced significant water damage, leading McDonnel to file a claim for $3,226,164.30. The dispute arose over the flood deductible amount, with McDonnel asserting it was $500,000, while the insurers claimed it was $3,443,475, resulting in no payout under the policy.The United States District Court for the Eastern District of Louisiana granted summary judgment in favor of the insurers, determining that the policy language regarding the flood deductible was clear and unambiguous. The plaintiffs appealed, and the United States Court of Appeals for the Fifth Circuit found the policy language ambiguous and remanded the case for further proceedings to consider extrinsic evidence and the presumption in favor of coverage.Upon remand, the district court reviewed supplemental briefings and extrinsic evidence, ultimately finding in favor of the insurers. The court concluded that the extrinsic evidence resolved the ambiguity, showing that the industry standard interpretation of "VARTOL" (value-at-risk-at-time-of-loss) supported the insurers' deductible calculation. The plaintiffs appealed again.The United States Court of Appeals for the Fifth Circuit affirmed the district court's decision. The appellate court agreed that the extrinsic evidence provided by the insurers, including industry standards and expert testimony, resolved the ambiguity in the policy language. The court also held that the district court did not err in not applying the presumption in favor of coverage, as the ambiguity had been resolved through extrinsic evidence. View "McDonnel Group v. Starr Surplus Lines" on Justia Law

Plaintiffs filed suit alleging that defendants unlawfully used WCTL to calculate the base value of total loss vehicles. Plaintiffs alleged that using WCTL, instead of lawful sources such as the National Automobile Dealers Association (NADA) Guidebook or the Kelly Blue Book (KBB), resulted in their vehicles being assigned a lower base value and accordingly resulted in plaintiffs receiving lower payouts on their insurance claims. Plaintiffs contended that damages can be calculated by replacing defendants' allegedly unlawful WCTL base value with a lawful base value, derived from either NADA or KBB, and then adjusting that new base value using defendants' current system for condition adjustment. The Fifth Circuit found that plaintiffs' damages methodology was sound and did not preclude class treatment. The Fifth Circuit reversed the district court's certification of a fraud class where plaintiff failed to show that class issues will predominate. Defendant argued for the first time on appeal that by accepting defendants' condition score calculation as is, plaintiffs may have impermissibly waived unnamed class members' ability to assert a future claim contesting defendants' computation of the condition factor. Because this argument was not expressly raised to the district court, and may present important certification questions, the Fifth Circuit remanded the certification order as to the contract and statutory claims. View "Slade v. Progressive Security Insurance" on Justia Law

State Farm filed suit seeking a declaratory judgment that a homeowner's insurance policy issued by State Farm to Cedric Flowers was void ab initio as a result of material misrepresentations made by him in his application for the policy. The district court granted State Farm's motion for summary judgment. In this case, the district court noted that, in both his answer to State Farm's complaint and his response to State Farm's request for admission, Cedric Flowers admitted to telling the agent who took his insurance application that he was the owner of the property and to stating as much in his application. Because there was no actual controversy over whether Cedric Flowers made a material misstatement on his insurance application, the court affirmed the judgment. View "State Farm Fire & Casualty Co. v. Flowers" on Justia Law

Plaintiff, a dependent eligible for benefits under the Eyesys Vision Inc. group health plan, filed suit challenging Humana's denial of benefits. The district court ultimately granted summary judgment for Humana. The court found that Texas's anti-discretionary clause does not change the court's normal abuse of discretion deference pursuant to Pierre v. Connecticut General Life Insurance Co./Life Insurance Co. of North America. The court concluded that the district court did not err in finding that Humana's consideration of the Mihalik criteria was proper because the record supported a finding that the Mihalik criteria are in line with national standards. Finally, the court concluded that it was not unreasonable on this record to conclude that plaintiff could be treated with a less costly, equally effective outpatient treatment. Therefore, substantial evidence supported Humana's finding that further treatment for plaintiff at the Avalon Hills facility was not medically necessary. The court found plaintiff's remaining arguments were without merit and affirmed the judgment. View "Ariana M. v. Humana Health Plan of Texas" on Justia Law

Wise Regional, a Texas municipal hospital authority, filed suit against Aetna, an insurance plan administrator, in state court over a dispute regarding medical insurance claims Wise Regional submitted on behalf of its patients. Aetna removed to federal court under 28 U.S.C. 1442, but the district court remanded to state court, awarding attorneys' fees. The court concluded that it had appellate jurisdiction over the remand order because Aetna relied upon the federal officer removal statute in its notice of removal; remand was proper because Aetna's notice of removal was untimely; and the district court did not abuse its discretion in awarding attorneys' fees where Aetna lacked an objectively reasonable basis for seeking removal of this action almost five months after expiration of the thirty-day deadline for removal. Accordingly, the court affirmed the judgment. View "Decatur Hospital Authority v. Aetna Health, Inc." on Justia Law

Plaintiffs filed suit against oil and gas companies and their insurers, claiming that the companies' dredging activities caused damage to the fisheries the fishermen used. The district court granted summary judgment for Florida Gas and Southern Natural because plaintiffs did not create a genuine issue of material fact as to whether the companies' activities constituted "dredging" so as to support maritime tort claims. The district court then denied plaintiffs' motion for reconsideration. The court affirmed the district court's judgment as to Florida Gas because none of plaintiffs' evidence created a genuine issue of material fact as to whether Florida Gas participated in dredging activities. However, the court reversed the district court's judgment as to Southern Natural because plaintiffs presented new, conclusive evidence in their motion for reconsideration pertaining to Southern Natural that they were justified in not presenting earlier. In this case, plaintiffs provided three types of new evidence upon reconsideration: Southern Natural's deposition transcript; documentary evidence offered during Southern Natural's deposition; and Southern Natural's responses to requests for admission. The court disagreed with the district court's analysis, particularly as it pertained to Southern Natural's deposition transcript and responses to requests for admission. The court explained that these items were clearly probative and, if the district court would have considered the contents of Southern Natural's deposition or its admissions, plaintiffs would have defeated summary judgment as to Southern Natural. View "In Re: Louisiana Crawfish Producers" on Justia Law