Justia Insurance Law Opinion Summaries

Malcolm Wiener purchased $16 million in permanent life insurance from AXA Equitable Life Insurance in the 1980s. In 2013, his policy lapsed after he failed to pay premiums on time. When Wiener sought reinstatement, AXA erroneously determined he had four serious medical conditions and reported these to the Medical Information Bureau (MIB), a consortium used by insurers to assess applicants. As a result, Wiener was unable to obtain comparable life insurance from other companies at standard rates; most rejected him outright, and two offered only limited coverage at much higher premiums. Wiener then brought a negligence claim against AXA, alleging that the false MIB report rendered him uninsurable.The case was tried in the United States District Court for the Western District of North Carolina. The jury found AXA liable for negligence and awarded Wiener $16 million in damages, reduced to $8 million for failure to mitigate. AXA moved for judgment as a matter of law under Rule 50(b), arguing that Wiener had not provided sufficient evidence to support the damages award. The district court initially dismissed the case for lack of subject matter jurisdiction, but the United States Court of Appeals for the Fourth Circuit reversed and remanded, instructing the district court to address the sufficiency of the evidence for damages. On remand, the district court found the evidence insufficient to support the jury’s damages calculation and reduced the award to $1 in nominal damages.On appeal, the United States Court of Appeals for the Fourth Circuit affirmed the district court’s decision. The court held that, although there was sufficient evidence that AXA’s negligence caused Wiener to become uninsurable at a reasonable cost, there was not enough evidence for the jury to calculate the amount of damages with reasonable certainty, particularly because Wiener failed to provide evidence of his expected remaining lifespan. As a result, only nominal damages were appropriate. View "Wiener v. AXA Equitable Life Insurance Co." on Justia Law

The plaintiff, after her vehicle was declared a total loss in a collision, received a payment from her insurer based on the “actual cash value” of her car, as determined by a third-party valuation system. This system used comparable vehicle listings and, when actual sales prices were unavailable, applied a “Projected Sold Adjustment” to estimate market value. The plaintiff accepted the insurer’s offer, paid her deductible, and did not contest the valuation or invoke the policy’s appraisal process. Despite this, she filed suit alleging breach of contract, claiming the insurer’s use of the adjustment resulted in underpayment, and sought to represent a class of similarly situated South Carolina policyholders.The United States District Court for the District of South Carolina certified a class of individuals who received total loss payments calculated using the Projected Sold Adjustment. The court found that the plaintiff’s claims were typical of the class and that common questions predominated, thus meeting the requirements for class certification under Federal Rule of Civil Procedure 23.On interlocutory appeal, the United States Court of Appeals for the Fourth Circuit reversed the class certification order. The Fourth Circuit held that the plaintiff lacked standing because she did not suffer a concrete injury—she accepted the insurer’s payment, was not out-of-pocket beyond her deductible, and never demonstrated that her vehicle’s value exceeded the amount paid. The court further held that, even if standing existed, class certification was improper because determining whether the insurer breached its obligation to pay actual cash value would require individualized inquiries into each class member’s vehicle and circumstances. Thus, the requirements of commonality and predominance under Rule 23 were not met. The district court’s order certifying the class was therefore reversed. View "Freeman v. Progressive Direct Insurance Company" on Justia Law

Employers’ Innovative Network and its president, Jeff Mullins, entered into contracts with Bridgeport Benefits, Capital Security, and other parties to secure a new health insurance policy for their employee healthcare benefit plan. The relationship between the parties deteriorated, leading Employers’ Innovative Network to file a lawsuit in West Virginia state court in April 2018, alleging breach of contract, fraud, slander, and violations of the West Virginia Unauthorized Insurers Act. The case was removed to federal court but was stayed pending arbitration in Bermuda, as stipulated in the contracts.The arbitration was conducted in Bermuda, where the arbitrator, Delroy Duncan, ruled in favor of the defendants. Employers’ Innovative Network later challenged Duncan’s impartiality, citing conflicts of interest, but the Bermuda Arbitration Institute upheld Duncan’s position. The plaintiffs did not appeal this decision to the Bermuda Supreme Court. Subsequently, the defendants sought to enforce the arbitral award in the United States under Chapter 2 of the Federal Arbitration Act (FAA), and the Southern District of West Virginia granted their request, rejecting the plaintiffs’ public policy defense.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court vacated the district court’s decision and remanded the case for further fact-finding to determine whether Chapter 1 or Chapter 2 of the FAA applies. The appellate court noted that the arbitration might be governed by Chapter 1, which includes an “evident partiality” defense, or by Chapter 2, which does not explicitly include such a defense but allows for non-enforcement on public policy grounds. The court emphasized the need to clarify the citizenship of Capital Security and the nature of the parties’ relationship to determine the applicable chapter. View "Employers' Innovative Network, LLC v. Bridgeport Benefits, Inc." on Justia Law

James Cooper was injured in a car accident in August 2019 while riding as a passenger in a car owned by Rick Huffman. Both Cooper and Huffman were employees of Pison Management, LLC, and were driving to a jobsite for work. Cooper's injuries exceeded the third-party driver's insurance limits, so he sought underinsured motorist (UIM) coverage under Pison's commercial automobile policy issued by Erie Insurance Property & Casualty Company. The policy provided $1 million in liability coverage for two vehicles owned by Pison and a class of non-owned vehicles but only offered UIM coverage for the owned vehicles. Erie denied Cooper's claim for UIM coverage.The United States District Court for the Southern District of West Virginia granted summary judgment in favor of Cooper, holding that West Virginia Code § 33-6-31 required Erie to offer UIM coverage for all vehicles covered by the liability policy, including non-owned vehicles. The court issued a declaratory judgment that Cooper was entitled to $1 million in UIM coverage. Erie appealed the decision.The United States Court of Appeals for the Fourth Circuit reviewed the case and certified a question of law to the West Virginia Supreme Court of Appeals. The West Virginia court concluded that West Virginia Code § 33-6-31 did not require Erie to offer UIM coverage for non-owned vehicles. The court determined that Cooper was not an "insured" under the statute because Pison, the named insured, did not own the vehicle in which Cooper was riding and thus could not consent to its use for UIM purposes.Applying the West Virginia court's interpretation, the Fourth Circuit vacated the district court's judgment in favor of Cooper and remanded the case with instructions to enter judgment in favor of Erie. View "Erie Insurance Property & Casualty Company v. Cooper" on Justia Law

Adam and Lydia Duffy were severely injured in a motorcycle accident, resulting in damages of nearly $2,000,000. The at-fault motorist's insurance coverage was insufficient, so the Duffys sought compensation through their underinsured motorist (UIM) policies, including one from Selective Insurance Company of South Carolina. Selective paid $300,000, arguing that North Carolina law did not require stacking of the Duffys' multiple insurance policies because the vehicles covered were not "nonfleet private passenger vehicles."The United States District Court for the Western District of North Carolina granted summary judgment in favor of Selective. The court found that the Duffys' policy covered seven vehicles used for their landscaping business, classifying it as fleet coverage under North Carolina law. The court also determined that the vehicles were not "private passenger vehicles" because they were used for commercial purposes. Consequently, the anti-stacking provisions of North Carolina law did not apply.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court's decision. The appellate court agreed that the policy was fleet coverage and that the vehicles were not private passenger vehicles. The court also found that the insurance contract clearly limited coverage to $1,000,000 per accident, regardless of the number of insureds. Therefore, Selective's payment of $300,000, after accounting for the contributions from other insurers, was appropriate. The court held that the policy's terms were unambiguous and did not allow for stacking of coverage limits across multiple policies. View "Selective Insurance Company of South Carolina v. Duffy" on Justia Law

Towers Watson & Co. (Towers Watson) was insured under a directors and officers (D&O) liability policy by National Union Fire Insurance Company of Pittsburgh, PA (National Union) and had excess coverage from other insurers. Following a merger with Willis Group Holdings plc (Willis), Towers Watson shareholders filed class actions alleging that the merger consideration was inadequate due to a conflict of interest involving Towers Watson’s CEO. The shareholders settled for $90 million, and Towers Watson sought indemnity coverage under the D&O policy. The insurers denied coverage, citing the policy’s “bump-up exclusion,” which excludes coverage for settlements that effectively increase the consideration paid for an acquisition.The United States District Court for the Eastern District of Virginia initially granted summary judgment in favor of Towers Watson, finding that the merger did not involve an acquisition within the meaning of the bump-up exclusion. The insurers appealed, and the United States Court of Appeals for the Fourth Circuit vacated and remanded, clarifying that the merger did involve an acquisition. On remand, the district court held that the bump-up exclusion applied, barring indemnity coverage for the settlement, and granted summary judgment in favor of the insurers.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court’s decision. The court held that the settlements represented an effective increase in the consideration paid for the merger, thus triggering the bump-up exclusion. The court also upheld the district court’s application of the common fund doctrine, concluding that the entire settlement amount, including the portion allocated to attorneys’ fees, fell within the exclusion. Consequently, Towers Watson was not entitled to indemnity coverage under the D&O policy. View "Towers Watson & Co. v. National Union Fire Insurance Co." on Justia Law

Edward Joseph Walsh, III was riding his lawn mower when he was struck and killed by an underinsured motorist. Walsh had underinsured motorist (UIM) coverage on two personal automobiles insured by Owners Insurance Company. After Owners paid benefits equal to the UIM coverage limits for a single covered automobile, Walsh’s estate sought to stack the UIM coverage from the other. Owners asserted that stacking was unavailable and, in the declaratory judgment action that followed, the district court agreed. The court found that neither South Carolina law nor the terms of the policy entitled the insured to stack coverage under these circumstances.The United States District Court for the District of South Carolina evaluated the parties’ cross-motions for summary judgment. The district court determined that the policy terms disallowed stacking and that this limitation was consistent with South Carolina law. Consequently, the court granted summary judgment to Owners Insurance Company and dismissed the case.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s grant of summary judgment de novo. The appellate court considered whether Walsh’s estate was entitled to stack UIM benefits from both scheduled automobiles under South Carolina law and the terms of the policy. The court concluded that the policy provisions clearly limited stacking to specific circumstances not applicable in this case. Additionally, the court found that the lawn mower involved in the accident was not an insured vehicle, and thus, the estate was not entitled to stack UIM coverage. The Fourth Circuit affirmed the district court’s judgment, holding that the estate was not entitled to collect additional UIM benefits beyond what had already been paid by Owners Insurance Company. View "Owners Insurance Co. v. Walsh" on Justia Law

A fire broke out in an apartment building in Surry County, North Carolina, leading to the deaths of four occupants due to smoke inhalation. The 911 dispatcher advised the caller not to open the window, which was believed to fuel the fire. The estates of the deceased sued Surry County and the dispatchers for negligence. The Travelers Indemnity Company, which insured Surry County, settled the claims for $9 million and sought contribution from American Alternative Insurance Corporation (AAIC), which also had issued a policy to Surry County.The United States District Court for the Middle District of North Carolina ruled that AAIC's policy provided primary but not excess coverage for the 911 call center employees, ordering AAIC to pay $1 million to Travelers. Both parties appealed the decision.The United States Court of Appeals for the Fourth Circuit reviewed the case and concluded that AAIC's policy did not cover the 911 call center employees. The court determined that both the primary and excess coverage provisions of AAIC's policy were limited to employees of Surry County Emergency Services and did not extend to the 911 call center. Consequently, the court affirmed the district court's ruling regarding the excess coverage but reversed the ruling on the primary coverage, concluding that AAIC was not liable for any part of the settlement. The case was remanded for the entry of judgment in favor of AAIC. View "The Travelers Indemnity Co. v. American Alternative Insurance Corp." on Justia Law

The Berkeley County School District filed a lawsuit against several defendants, including HUB International Ltd. and HUB International Midwest Ltd., alleging claims related to insurance policies and services provided. HUB sought to compel arbitration based on brokerage service agreements (BSAs) from 2002, 2003, 2005, 2006, 2009, and 2011. The district court denied the motion, and HUB appealed. The appellate court reversed and remanded for a trial to resolve factual disputes about the agreements. After a bench trial, the district court again denied the motion, finding no meeting of the minds for the 2006, 2009, and 2011 BSAs and precluding consideration of the 2002 and 2003 BSAs. HUB appealed again, and the appellate court vacated the judgment regarding the 2002 and 2003 BSAs.On remand, the district court found the 2002 and 2003 BSAs valid and enforceable but denied HUB's motion to compel arbitration, deciding that the dispute did not fall within the scope of those agreements. HUB appealed this decision.The United States Court of Appeals for the Fourth Circuit reviewed the case and determined that the district court erred by deciding the arbitrability of the dispute itself. The appellate court held that the arbitration provisions in the 2002 and 2003 BSAs, which incorporate the American Arbitration Association (AAA) commercial rules, clearly delegate arbitrability questions to the arbitrator. Therefore, the district court should have compelled arbitration to resolve whether the claims fall within the scope of the arbitration agreements.The Fourth Circuit reversed the district court's judgment and remanded the case with instructions to compel arbitration of the threshold arbitrability question in accordance with the parties' agreement. View "Berkeley County School District v. HUB International Limited" on Justia Law

David Levine, former CEO of Geostellar Inc., was accused of defrauding and bankrupting the company. Geostellar had a directors and officers insurance policy from Philadelphia Indemnity Company, which began providing Levine's defense. The policy had a $3 million coverage limit. Levine and his wife later filed for personal bankruptcy, which stayed the Geostellar adversary action. The Geostellar Trustee moved to lift the stay to proceed against Levine to the extent of the insurance coverage, admitting that Levine's debt to Geostellar was uncollectable beyond the insurance coverage.The bankruptcy court granted the motion to lift the stay. The Trustees then filed an adversary action for declaratory judgment, seeking to establish that the right to settlement under the policy was an asset of the Levine Bankruptcy Estate, for which the Levine Trustee was the exclusive representative. The bankruptcy court dismissed the action, and the district court affirmed, finding that neither Trustee had standing to sue the insurer.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court's decision. The court held that the Geostellar Trustee had no standing because West Virginia law did not permit a direct action against the insurer under the circumstances, and the policy only provided coverage to Levine, not Geostellar. The Levine Trustee also lacked standing because any judgment in the Geostellar adversary action would not impact the Levine Bankruptcy Estate, as Levine's debt to Geostellar was discharged and uncollectable beyond the insurance coverage. The court concluded that the right to consent to settlement under the policy was not the property of either Trustee. View "Fluharty v. Philadelphia Indemnity Insurance Co." on Justia Law