Justia Insurance Law Opinion Summaries

Mesco Manufacturing, LLC ("Mesco") held a business insurance policy from Motorists Mutual Insurance Company ("Motorists Mutual") covering direct physical loss or damage caused by covered causes, including hail. After a storm in August 2018, Mesco claimed hail damage to its manufacturing facility roofs. Motorists Mutual initially adjusted the claim for $7,806.75, but Mesco disagreed and invoked the policy's appraisal provision. The appraisers selected an umpire who determined that the modified bitumen roofs were hail damaged, awarding $1,020,490.32 in replacement cost value. Motorists Mutual only paid $265,296.21, excluding the modified bitumen and EPDM roofs from the award.Mesco filed a complaint in the United States District Court for the Southern District of Indiana, alleging breach of contract and bad faith under Indiana law. The district court granted Mesco's motion for summary judgment, concluding that Motorists Mutual breached the contract by not paying the full appraisal award. The court relied on the precedent set in Villas at Winding Ridge v. State Farm Fire & Casualty Co., which held that a similar appraisal provision was binding and unambiguous. The court found no exceptional circumstances to set aside the appraisal award and denied Motorists Mutual's motion for reconsideration.The United States Court of Appeals for the Seventh Circuit reviewed the case de novo. The court affirmed the district court's judgment, holding that the appraisal award was binding and that Motorists Mutual breached the insurance contract by not paying the full award. The court determined that the appraisal process properly included determining the extent of hail damage, and Motorists Mutual's "right to deny" clause did not permit it to set aside the binding appraisal award. The court emphasized that the purpose of the appraisal process is to provide a speedy and inexpensive means of settling disputes. View "Mesco Manufacturing, LLC v. Motorists Mutual Insurance Co." on Justia Law

Heather Schroeder and Misty Tanner, representing a class of Indiana car owners insured by Progressive Paloverde Insurance Company and Progressive Southeastern Insurance Company, filed a lawsuit claiming that Progressive breached its contractual duty by applying "Projected Sold Adjustments" to the list prices of comparable cars when determining the actual cash value of totaled cars. The insurance policy in question specifies that the actual cash value is determined by the market value, age, and condition of the vehicle at the time of the loss.The United States District Court for the Southern District of Indiana, Indianapolis Division, recognized that whether Progressive paid each class member the actual cash value of their car is not susceptible to classwide proof. However, it concluded that common evidence could establish that Progressive employed an unacceptable method for calculating actual cash value payments by applying Projected Sold Adjustments. The court certified a class on this basis.The United States Court of Appeals for the Seventh Circuit reviewed the case and concluded that Progressive’s policy does not preclude the use of Projected Sold Adjustments in calculating actual cash value payments, as long as the insureds are ultimately paid the actual cash value of their totaled cars as defined under the policy and Indiana law. The court found that individual questions about whether Progressive failed to pay each class member the actual cash value of their car would overwhelm any common ones. Consequently, the Seventh Circuit reversed the district court’s class certification decision and remanded the case for further proceedings. View "Schroeder v. Progressive Paloverde Insurance Co." on Justia Law

Jason Rahimzadeh was injured while riding his bicycle and sought underinsured motorist (UIM) coverage from his employer's commercial automobile insurance policy with Ace American Insurance Company. Ace denied the claim, stating that Rahimzadeh did not qualify as an insured under the policy. Rahimzadeh then filed a lawsuit in Illinois state court, alleging breach of the insurance contract. Ace removed the case to the United States District Court for the Northern District of Illinois, which granted Ace's motion to dismiss for failure to state a claim.The district court found that the terms of the insurance policy were unambiguous and that Rahimzadeh did not meet the policy's requirement of "occupying" a covered vehicle to qualify as an insured. The court also rejected Rahimzadeh's argument that the occupancy requirement was unenforceable as contrary to public policy, distinguishing the case from Galarza v. Direct Auto Insurance Co., which involved a personal automobile insurance policy. The court relied on Stark v. Illinois Emcasco Insurance Co., which upheld occupancy requirements in commercial policies.The United States Court of Appeals for the Seventh Circuit reviewed the district court's decision de novo. The court affirmed the district court's judgment, holding that the occupancy requirement in the commercial automobile insurance policy was permissible and did not violate Illinois public policy. The court distinguished the case from Galarza, noting that the public policy concerns in personal insurance policies do not apply to commercial policies. Therefore, Rahimzadeh was not entitled to UIM coverage under his employer's policy. The court also declined to certify the question to the Supreme Court of Illinois, finding no genuine uncertainty about the state law issue. View "Rahimzadeh v. Ace American Insurance Co." on Justia Law

Best Inn Midwest, LLC (Best Inn) owned and operated a hotel in Indianapolis, Indiana, which faced numerous issues, including health code violations and criminal activity. In 2017, Best Inn purchased a commercial property insurance policy from Ohio Security Insurance Company (Ohio Security). The policy excluded coverage for vandalism if the building was vacant for sixty consecutive days or more. Best Inn filed a claim for vandalism to air conditioning units on the hotel’s roof, which Ohio Security denied, citing vacancy. Ohio Security requested information about the hotel's occupancy, which Best Inn failed to provide, leading Ohio Security to file a suit seeking a declaration that the policy did not cover the claim.The United States District Court for the Southern District of Indiana granted Ohio Security's motion for summary judgment on Best Inn's counterclaim for bad faith. The court found that Best Inn had failed to comply with discovery requests and court orders, leading to a sanction declaring the hotel vacant during the relevant period. This finding was based on Best Inn's repeated failure to provide requested documents and information, despite numerous attempts by Ohio Security to obtain them.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court's decision. The appellate court held that the district court did not abuse its discretion in imposing sanctions and declaring the hotel vacant. This declaration meant that the insurance policy did not cover the vandalism claim, and thus, Ohio Security was entitled to summary judgment on Best Inn's bad faith counterclaim. The appellate court concluded that the sanctions were appropriate and proportionate to Best Inn's conduct, and there were no remaining disputes as to any material fact. View "Ohio Security Insurance Company v Best Inn Midwest, LLC" on Justia Law

Hammond Power Solutions, a manufacturer of electric transformers, purchased commercial liability insurance policies from National Union Fire Insurance Company and Illinois National Insurance Company from 2017 to 2022. These policies included an exclusion for claims arising from "radioactive matter or any form of radiation." In 2022, two individuals sued Hammond Power, alleging harm from electromagnetic field (EMF) radiation emitted by transformers near their apartment. The central issue was whether the insurers were obligated to defend and indemnify Hammond Power in this lawsuit.The case was initially filed in a New York state court, and Hammond Power requested defense and indemnification from the insurers, who denied coverage based on the radiation exclusion. Hammond Power then filed a suit in state court seeking a declaration of coverage and alleging breaches of duty to defend and good faith. The case was removed to the Eastern District of Wisconsin, where both parties moved for summary judgment. The district court granted summary judgment in favor of the insurers, concluding that the exclusion for "any form of radiation" unambiguously included EMF radiation, thus precluding coverage.The United States Court of Appeals for the Seventh Circuit reviewed the district court's decision de novo. The court affirmed the district court's ruling, agreeing that the exclusion's language was unambiguous and applied to EMF radiation. The court held that the insurers had no duty to defend or indemnify Hammond Power for the claims arising from EMF radiation exposure, as the policy clearly excluded coverage for any form of radiation. The judgment of the district court was affirmed. View "Hammond Power Solutions, Inc. v National Union Fire Insurance Company of Pittsburg" on Justia Law

Union Pacific Railroad Company, as the corporate successor to a dissolved coal mining company, periodically received mine subsidence claims from the Illinois Mine Subsidence Insurance Fund. The Fund, acting as a reinsurer for primary insurers offering mine subsidence coverage, sought to recover its reinsurance payments from Union Pacific. After years of litigation, Union Pacific sued the Fund for declaratory and injunctive relief to preclude future cases. The Fund moved to dismiss, and the district court allowed the complaint seeking injunctive relief to proceed on certain theories but not others. Union Pacific brought an interlocutory appeal.The United States District Court for the Central District of Illinois had previously ruled that Union Pacific could seek declaratory and injunctive relief for subsidence claims acquired by the Fund before the Gillespie case and the 2019 Opinion but not for future claims. Union Pacific amended its complaint, and the district court reiterated its earlier decision, dismissing the request for future injunctive relief while allowing the case to proceed on the earlier claims.The United States Court of Appeals for the Seventh Circuit reviewed the case and concluded that it lacked appellate jurisdiction. The court determined that the district court's order was a narrowing of the injunctive relief rather than a definitive refusal. The court also found that the injunctive relief sought on appeal was not substantially different from the relief still pending in the district court. As a result, the appeal was dismissed. View "Union Pacific Railroad Co. v. Illinois Mine Subsidence Insurance Fund" on Justia Law

Mullins Food Products, Inc. was sued in Illinois state court for violating the Biometric Information Privacy Act (BIPA). Mullins requested its liability insurer, Citizens Insurance Company of America, to defend the suit, but Citizens declined and instead filed a federal suit seeking a declaratory judgment that it had no duty to defend or indemnify Mullins based on exclusions in the commercial liability insurance policies issued to Mullins in 2015, 2016, and 2017. While the federal suit was pending, Mullins settled the state-court action.The United States District Court for the Northern District of Illinois agreed with Citizens that the policy exclusions relieved Citizens of the duty to defend or indemnify Mullins. Specifically, the court found that the Access or Disclosure of Confidential or Personal Information exclusion and the Recording and Distribution of Material or Information in Violation of Law exclusion barred coverage for BIPA claims. The district court also ruled against Mullins on its counterclaim for breach of contract, reasoning that Citizens' timely filing of the declaratory judgment action precluded a finding of breach.The United States Court of Appeals for the Seventh Circuit reviewed the case and vacated the district court's decision. The appellate court concluded that the Access or Disclosure exclusion in the 2016 and 2017 policies barred coverage for BIPA claims, but the Statutory Violations exclusion did not. Therefore, Citizens had a duty to defend and indemnify Mullins under the 2015 policy, assuming Mullins provided timely notice of the state-court action. The appellate court remanded the case for further proceedings to determine the timeliness of Mullins' notice and to address Mullins' claim for reimbursement of defense costs. View "Citizens Insurance Company of America v Mullins Food Products, Inc." on Justia Law

Griffith Foods International Inc. and Sterigenics U.S. operated a medical supply sterilization plant in Willowbrook, Illinois, emitting ethylene oxide (EtO) over 35 years. In 2018, a report linked these emissions to high cancer rates in the area, leading to over 800 lawsuits against the companies. The plaintiffs alleged that the companies knowingly emitted dangerous levels of EtO, causing various illnesses, including cancer.The United States District Court for the Northern District of Illinois handled the insurance dispute between Griffith, Sterigenics, and National Union Fire Insurance Company. Griffith and Sterigenics sought a declaration that National Union had a duty to defend them under their commercial general liability (CGL) policies. The district court ruled in favor of Griffith and Sterigenics, determining that the pollution exclusion in the CGL policies did not apply because the emissions were authorized by a permit from the Illinois Environmental Protection Agency (IEPA).The United States Court of Appeals for the Seventh Circuit reviewed the case. The court focused on whether the pollution exclusion in the CGL policies applied to the emissions of EtO. The court noted that the Illinois Supreme Court's decision in American States Insurance Co. v. Koloms interpreted the pollution exclusion to apply to traditional environmental pollution. However, an Illinois appellate court decision in Erie Insurance Exchange v. Imperial Marble Corp. suggested that emissions authorized by a regulatory permit might not constitute traditional environmental pollution.Given the conflicting interpretations and the significant implications for the insurance industry, the Seventh Circuit decided to certify the question to the Illinois Supreme Court. The court sought clarification on the relevance of a permit or regulation authorizing emissions in assessing the application of a pollution exclusion within a standard-form CGL policy. View "Sterigenics U.S., LLC v National Union Fire Insurance Company of Pittsburg" on Justia Law

Griffith Foods International and Sterigenics U.S. operated a medical supply sterilization plant in Willowbrook, Illinois, emitting ethylene oxide (EtO) over a 35-year period. In 2018, a report revealed high cancer rates in Willowbrook, allegedly due to these emissions. Griffith and Sterigenics faced over 800 lawsuits from residents claiming bodily injuries, including cancer, caused by the emissions. Griffith had obtained permits from the Illinois Environmental Protection Agency (IEPA) for the plant's operation, which included EtO emissions.The United States District Court for the Northern District of Illinois reviewed the case. Griffith and Sterigenics sought declarations that National Union Fire Insurance Company had a duty to defend them under their commercial general liability (CGL) policies. The district court ruled in favor of Griffith and Sterigenics, determining that the pollution exclusion in the CGL policies did not apply because the emissions were authorized by IEPA permits. The court relied on the Illinois appellate decision in Erie Insurance Exchange v. Imperial Marble Corp., which found ambiguity in the pollution exclusion when emissions were permitted by regulatory authorities.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court acknowledged the importance of the pollution exclusion in CGL policies and the precedent set by the Illinois Supreme Court in American States Insurance Co. v. Koloms. The Seventh Circuit noted the conflicting interpretations between Koloms and Imperial Marble regarding the scope of the pollution exclusion. Given the significant implications for Illinois law and the insurance industry, the Seventh Circuit decided to certify the question to the Illinois Supreme Court to determine the relevance of regulatory permits in applying the pollution exclusion in CGL policies. View "Griffith Foods International Inc. v National Union Fire Insurance Company of Pittsburg" on Justia Law

Jacques Rivera, after being released from over 20 years in prison for a wrongful murder conviction, sued the City of Chicago and several police officers under 42 U.S.C. §1983 for civil rights violations. A jury awarded him over $17 million, and his attorneys sought more than $6 million in fees and costs. The case was settled for $18.75 million, including at least $3.75 million for attorneys' fees and costs. Chicago, which had an insurance policy with Starstone Insurance SE covering liabilities between $15 and $20 million, sought indemnity for the $3.75 million. Starstone refused, claiming their policy only covered damages, not attorneys' fees and costs, and filed for a declaratory judgment.The United States District Court for the Northern District of Illinois ruled in favor of Chicago, determining that the insurance policy covered the entire $18.75 million settlement as an "ultimate net loss" that Chicago was legally obligated to pay. Starstone appealed this decision.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court first addressed whether Starstone, a Societas Europaea (SE) based in Liechtenstein, qualified as a "corporation" under 28 U.S.C. §1332 for diversity jurisdiction purposes and concluded that it did. On the merits, the court found that the insurance policy's language covered the entire settlement amount, including attorneys' fees and costs, as part of the "ultimate net loss" Chicago was legally obligated to pay. The court affirmed the district court's decision, holding that the policy's terms included indemnity for attorneys' fees and costs awarded under statutory provisions. View "Starstone Insurance SE v City of Chicago" on Justia Law