Justia Insurance Law Opinion SummariesArticles Posted in U.S. Court of Appeals for the Fifth Circuit
Edwards v. Continental Casualty Co.
Plaintiff filed suit against Continental, seeking a declaratory judgment that Continental was required to defend him, pursuant to a professional liability insurance policy, in an action brought against plaintiff by Cal Dive. The district court granted plaintiff's motion for partial summary judgment and held that Continental had a duty to defend plaintiff in the underlying suit. The court agreed with Continental that Cal Dive’s claims against plaintiff are not the kind that are covered by the insurance policy. In this case, plaintiff is not seeking a defense against a "covered" claim where Cal Dive's claims against plaintiff do not arise out of an act or omission in plaintiff's rendering of or failure to render legal services. Accordingly, the court reversed and rendered judgment rejecting plaintiff's claims against Continental. View "Edwards v. Continental Casualty Co." on Justia Law
AIG Specialty Ins. Co. v. Tesoro Corp.
When Ultramar sold the Golden Eagle Refinery to Tesoro Refining, the purchase and sale agreement specified that Ultramar was to assign the Tosco indemnities, and to either secure an endorsement to the Chartis policy adding the new company as an additional insured or assign the Chartis policy directly. This litigation concerns the transfer of the Chartis policy from Ultamar. In this appeal, Tesoro Refining challenged the district court's grant of summary judgment for Chartis. The court agreed with the district court that Tesoro Refining cannot assert third-party judgment on the breach of contract claim premised upon a third-party beneficiary argument where the instant policy's language does not evince any intent to benefit a third party. The court also concluded that the Tesoro Parties were unable to point to any basis for concluding that the injury in this case—the alleged mistake over which entity was covered—is “inherently undiscoverable.” The court explained that Texas cases since 1996 have determined the discovery rule does not apply to delay the accrual of the cause of action in such situations. Therefore, the Tesoro Parties’ reformation claim is time-barred. The court affirmed the judgment. View "AIG Specialty Ins. Co. v. Tesoro Corp." on Justia Law
Federal Ins. Co. v. Northfield Ins. Co.
Bryan Wagner had previously obtained oil and gas properties in Louisiana from ExxonMobil, and Wagner agreed to indemnify and defend ExxonMobil against various claims and liabilities. Wagner and ExxonMobil were sued for damages in Louisiana by owners of land that is subject to these mineral rights, and ExxonMobil then sued Wagner in Texas state court seeking to enforce Wagner’s alleged contractual obligations to ExxonMobil. Northfield and Federal issued insurance policies to Wagner. Federal acknowledges its duty to defend Wagner in ExxonMobil’s suit, but Federal contends that Northfield also owes a duty to defend Wagner, and Federal seeks a declaration to that effect as well as recovery of 50% of Wagner’s defense costs. The district court determined that Northfield was not obligated to defend Wagner because of a pollution exclusion clause in Northfield’s policy. The court concluded that ExxonMobil has alleged potential claims against Wagner that are not clearly excluded by the Pollution Endorsement, and thus the district court should not have granted summary judgment in favor of Northfield on the basis of that exclusion. The court considered Federal's alternative claim and concluded that the district court did not err in granting summary judgment in favor of Northfield as to Federal's claim that ExxonMobil's allegations against Wagner are covered by his Northfield policy because of the “Underground Resources & Equipment Buyback” (the UREB) Endorsement. Finally, the court concluded that the exception to the Insured Contract exemption applies for purposes of the duty to defend. Accordingly, the court reversed and remanded. View "Federal Ins. Co. v. Northfield Ins. Co." on Justia Law
EMJ Corp. v. Hudson Specialty Ins.
Westchester was a commercial umbrella insurer for EMJ, a general contractor building a J.C. Penney store. During that project, EMJ subcontracted with Contract Steel for steel erection services. Contract Steel purchased a commercial umbrella policy from Hudson Insurance. After a building inspector examining Contract Steel's work fell off a ladder and suffered severe spinal injury, the inspector filed suit against a group of defendants, including EMJ. EMJ settled for five million dollars and EMJ’s primary liability insurer covered one million dollars. Westchester covered the remaining four million dollars. EMJ and Westchester filed suit against Hudson in the federal district court seeking reimbursement for the four million dollar settlement. The district court ultimately determined that the four million dollars should be apportioned between Hudson and Westchester based on their policy limits. This led the district court to determine that Hudson was responsible for paying Westchester only $667,000 in damages. The district court denied Westchester’s motion to reconsider. Both parties appealed. The court rejected Hudson's four arguments challenging coverage by its policy and concluded that Hudson was required to indemnify EMJ, at least in part, for the legal settlement from the inspector’s fall; the court rejected Hudson's two evidentiary challenges; and the district court correctly followed Mississippi law and ordered Hudson to pay Westchester 1/6th of the cost of the legal settlement. Accordingly, the court affirmed the judgment. View "EMJ Corp. v. Hudson Specialty Ins." on Justia Law
Louisiana Generating v. Illinois Union Ins. Co.
After the EPA accused LaGen of violating the Clean Air Act, 42 U.S.C. 7401, LaGen promised, among other things, to upgrade parts of its power plant pursuant to a consent decree. LaGen then asked its insurer, ILU, to pay the costs of these measures, but ILU refused. The district court entered summary judgment for LaGen. The court upheld the district court’s ruling that the Consent Decree Measures indirectly mitigate BCII’s (a coal-fired electric steam generating plant owned by LaGen) past pollution; there is no genuine issue of material fact on this point, nor would further discovery create one; it is unclear, however, whether indirect mitigation and abatement efforts qualify in the first place as “remediation,” and their costs as “remediation costs,” under the Policy; and therefore, a genuine dispute of material fact exists as to whether LaGen is entitled to indemnification for any of the costs of the Consent Decree Measures. Moreover, the court concluded that, even if indirect mitigation efforts can give rise to covered “remediation costs,” genuine disputes of material fact exist as to whether LaGen’s claimed costs are unreasonable. Specifically, it is unclear whether LaGen’s claimed costs include costs that Entergy paid; design and elevator costs properly attributable to Units 1 and 2; and unreasonable delay-related cost overruns. Accordingly, the court vacated and remanded for further proceedings. View "Louisiana Generating v. Illinois Union Ins. Co." on Justia Law
Richard v. Anadarko Petroleum Corp.
This case arises out of personal injuries sustained by Raylin Richard, an Offshore employee, while working on a drillship in the Gulf of Mexico. At issue is whether Valiant, as an excess insurer on a marine insurance policy, is required to reimburse Offshore, the insured, for payments in Richard's personal injury settlement. The district court granted summary judgment for Valiant, holding that an exclusion in the insurance policy precludes coverage. The court agreed with the district court that the facts as alleged by Offshore do not show conduct which would induce a reasonable person to conclude that Valiant waived its coverage defenses under the policy at issue. Accordingly, the court affirmed the judgment and denied Valiant's motion to strike portions of the record. View "Richard v. Anadarko Petroleum Corp." on Justia Law
Cotton v. Scottsdale Ins. Co.
Plaintiffs filed suit against Scottsdale, seeking additional pay for wind-related damages to their property from Hurricane Isaac. Two months later, plaintiffs added Underwriters as defendants and alleged that they were entitled to additional payment for flood damages. At issue in this appeal is plaintiffs' mortgage lender's, First American’s, breach of contract claim against Underwriters. Underwriters sought summary judgment on the merits of that claim, arguing that First American failed to timely submit a formal proof-of-loss statement and could not prove that the approximately $232,000 Underwriters already paid was insufficient to repair the properties’ damage. Determining that the district court has jurisdiction to allow the filing of the complaint adding First American’s claim that was tried against Underwriters, the court held that First American's claim was timely; there was adequate evidence to support the jury's findings that Underwriters received satisfactory proof of loss to support First American’s claim for additional recovery; and there was sufficient evidence from which to conclude that Underwriters’ presuit payments were inadequate to repair the properties to their pre-Hurricane Isaac condition. Accordingly, the court affirmed the district court's denial of Underwriter's motion for judgment as a matter of law. View "Cotton v. Scottsdale Ins. Co." on Justia Law
Tesoro Ref. & Mktg. Co. v. National Union Fire Ins.
Tesoro filed suit against National Union, seeking insurance coverage under a commercial crime policy for alleged acts of forgery committed by a Tesoro employee. The district court granted summary judgment for National Union because the policy did not cover Tesoro’s losses.The court concluded that Texas caselaw addressing theft by deception makes clear that the decision-maker must be aware of the false statement and induced by it. In this case, Tesoro has failed to connect any of the evidence of the employee mentioning these forged security documents to Tesoro’s decision-making process in selling fuel to Enmex, let alone show that the forged documents induced the sale. Therefore, even if the court were to accept Tesoro’s meaning of “unlawful taking,” Tesoro cannot survive summary judgment because it has failed to show a genuine dispute of material fact as to whether a theft by deception occurred. Accordingly, the court affirmed the judgment. View "Tesoro Ref. & Mktg. Co. v. National Union Fire Ins." on Justia Law
Southern Ins. Co. v. Affiliated FM Ins.
Southern and Affiliated provide insurance coverage for the Ogletree House, an on-campus building at the University, located in Hattiesburg, Mississippi. In February 2013, the house was one of several university buildings damaged by a tornado. Southern contends, inter alia, it is not liable because, under its policy’s valuation provision, the loss by its insured, the University of Southern Mississippi Alumni Association (association), is “nothing” for coverage purposes. Affiliated, the insurer for the University, contends Southern is fully responsible for the loss, and, in the alternative, contests the district court’s pro rata allocation of liability. The district court denied summary judgment for Southern, and granted it in part for the association and Affiliated. The court concluded that Southern is not entitled to summary judgment where its valuation condition can be construed as ambiguous; and, in the alternative, its construction of its policy engenders an unfair or absurd result. Accordingly, the court affirmed the district court's judgment. View "Southern Ins. Co. v. Affiliated FM Ins." on Justia Law
Hartford Cas. Ins. Co. v. DP Engine
In the underlying lawsuits, individuals filed suit against DP and its employee after the individuals were injured in an industrial accident at an Entergy nuclear power plant. In this case, DP's insurers, Hartford Casualty Insurance Company and Hartford Lloyds Insurance Company, seek a declaratory judgment that they have no duty to defend or to indemnify DP in the underlying suits. The district court granted summary judgment to the insurers. The court concluded that the underlying lawsuits fall within the professional services exclusion because the factual allegations in the underlying complaints describe injuries that “arise out of” DP’s and the employee’s allegedly negligent engineering services. Therefore, the district court correctly entered summary judgment for Hartford that there was no duty to defend. Likewise, the court affirmed the district court's resolution of DP's counterclaims related to the duty to defend. The court concluded, however, that the district court should not have determined the duty to indemnify based solely on the pleadings in the underlying lawsuit. Therefore, the court reversed the district court’s grant of summary judgment to Hartford on the duty to indemnify and remanded for further proceedings. View "Hartford Cas. Ins. Co. v. DP Engine" on Justia Law