Justia Insurance Law Opinion Summaries

Hilger, the president of Allied, which provides customized products to financial institutions, was named in separate lawsuits brought by credit unions in Michigan and Tennessee. Hilger’s codefendants include O’Malley, who sells life insurance through O’MA, and Phillips, who brokers the sale of life-insurance to third parties through Berkshire and Capital. The credit unions allege that the defendants persuaded them to fund loans used to pay life-insurance premiums by overstating the value of the policies that would serve as collateral. Hilger tendered his defense to Landmark under a professional liability policy held by O’MA. Although Hilger is not a named insured under O’MA’s policy, the policy defines “covered persons and entities” to include O’MA’s independent contractors. Landmark sought a declaratory judgment that it has no duty to defend, arguing that Hilger did not perform the professional services at issue in the Michigan and Tennessee suits as an O’MA independent contractor. The district court, applying Illinois law, entered judgment on the pleadings for Hilger. The Seventh Circuit reversed. Landmark is entitled to take discovery and offer evidence regarding the true nature of Hilger’s relationship to O’MA. Judgment on the pleadings was inappropriate. Under Illinois law an insurer that seeks a declaration of its duty to defend may offer evidence outside the underlying complaint for purposes of establishing that no duty exists. View "Landmark Am. Ins. Co v. Hilger" on Justia Law

In 2011, Linda Phillips, an employee of Hoker Trucking, driving a semi‐truck in Indiana, struck a vehicle driven by Robbins, who died as a result of the injuries he sustained in the accident. The truck driven by Phillips was pulling a trailer Hoker borrowed from Lakeville. Lakeville had a Great West Casualty insurance policy covering the trailer. There was a separate suit concerning the liability of Phillips and Hoker. To preempt a possible claim against Lakeville’s policy, Great West sought a declaratory judgment against Hoker, Phillips, and Robbins’s estate, that it did not have to indemnify Hoker and Phillips for any liability in connection with the accident. The district court granted summary judgment in favor of Great West. The Seventh Circuit affirmed, rejecting arguments that Great West’s policy was ambiguous as to whether Hoker and Phillips were excluded from coverage and should be construed against Great West; that even if the exclusions are not ambiguous, they do not exclude Hoker and Phillips from coverage; and regardless of whether the exclusions apply to Hoker and Phillips or not, such exclusions are invalid under Wisconsin law, the state where the trailer is registered. The court found the policy unambiguous. View "Great West Cas. Co. v. Robbins" on Justia Law

Rizvi and his company, Prime Builders, performed repair work for Alikhan, whose house was damaged in a fire. When the work was completed in 2009, Alikhan paid Rizvi only part of what he owed. Rizvi sued for breach of contract in federal court, invoking diversity jurisdiction under 28 U.S.C. 1332. (Rizvi and Prime are Illinois citizens. Alikhan is a citizen of Texas.) When Alikhan failed to appear, plaintiffs obtained a default judgment, then served a citation to discover assets on Allstate under an Illinois statute that governs supplementary proceedings to assist in collecting on a judgment. Allstate responded that Alikhan had no accounts of any sort with Allstate, had no claims pending with Allstate, and was not owed any insurance payments by Allstate. Plaintiffs then asked the court to order Allstate to remit “outstanding insurance proceeds of $110,926.58” and to impose sanctions, arguing that Allstate had participated in negotiating the repair contract and had made a partial payment to Alikhan in 2008. The court ultimately dismissed the supplemental action. The Seventh Circuit affirmed. Allstate is a citizen of Illinois, the supplemental proceeding against Allstate was sufficiently independent of the underlying case as to require its own basis for subject matter jurisdiction. View "Rizvi v. Allstate Corp." on Justia Law

In 2012, Williams visited the Van de Venters in Monroe County, Indiana. They told Williams that their labrador retriever, Emma, would ring a bell by the door if she needed to go out and he should let her out. Williams chose to walk Emma on a leash. When a neighborhood dog barked, Emma lurched toward the sound, pulling Williams to the ground and seriously injuring his shoulder. Williams sued the Van de Venters. Their AmFam home-insurance policy included personal liability coverage indemnifying them for damages for bodily injury and guaranteeing a defense against such suits. The policy contained a provision stating: “Intra-Insured Suits. We will not cover bodily injury to any ‘insured’,” defined as “any person ... legally responsible for a[n] ... animal owned by [a named insured or resident relative of a named insured] to which [the policy’s personal-liability coverages] apply.” The district court rejected AmFam’s position that these provisions relieved it of the duty to defend or indemnify. The Seventh Circuit affirmed. It would make no sense to treat Williams as if he were “legally responsible” for his own injuries resulting from the dog’s actions; he was not an insured for purposes of this incident. View "Am. Family Mut. Ins. v. Williams" on Justia Law

In 1991 Cheney began working as an attorney at Kirkland. She became a partner in 1997. She suffered from a spinal disease that led her to seek ergonomic accommodations in 1994 and ultimately resulted in a three‐level anterior cervical discectomy and fusion and removal of her C5 vertebra. After making various accommodations, the firm approved a leave, from January 3, until July of 2012. Her last day of work was December 19, 2011. On April 17, 2012, Cheney's neurosurgeon advised her to complete a 12‐week intensive physical therapy program and receive cervical epidural injection therapy. After the program failed to improve Cheney’s condition, the neurosurgeon recommended cervical spinal fusion surgery, which Cheney received on August 27. Cheney submitted her claim for long‐term disability benefits on July 17, before the surgery. Kirkland’s insurer denied her claim, stating that her coverage had ended in March because she was able, through March, to perform her job. Cheney sued under the Employee Retirement Income Security Act, 29 U.S.C. 1132. The court found in favor of Cheney. The Seventh Circuit vacated, finding that the district court made unsupported factual findings and misinterpreted the governing documents relating to whether Cheney’s situation fell within allowable absences from “active work.” View "Cheney v. Standard Ins. Co." on Justia Law

Berg was a long‐time pit broker at the Chicago Mercantile Exchange. In 1991 and 1994, Berg bought disability‐income insurance policies. In 2005, he started to experience a tremor in his arms and hands, which interfered with his ability to write quickly and legibly. In 2007, the tremor forced him to leave his job. In 2010, a neurologist diagnosed Berg with an “essential tremor.” Berg applied for total disability benefits. Although the insurers approved Berg’s claim, they designated his disability onset date as February 2010, rather than September 2007. In 2012, Unum discontinued Berg’s total‐disability benefits, asserting that he was eligible only for residual‐disability benefits because when he applied, his regular occupation was “unemployed person.” The district court granted summary judgment to the defendants. The Seventh Circuit reversed, rejecting an argument that, until he saw a physician in 2010, Berg did not meet the policy’s definition: “Total Disability means that the Insured can not [sic] do the substantial and material duties of his or her regular job,” that “[t]he cause of the total disability must be an injury or a sickness,” and that “[t]he injury or sickness must be one which requires and receives regular care by a Physician.” The clause does not contain a temporal element. View "Berg v. New York Life Ins. Co." on Justia Law

West Virginia sued pharmaceutical distributors, seeking to hold them liable for contributing to the state’s epidemic of prescription drug abuse. The complaint alleged that certain pharmacies, “pill mills,” knowingly provided citizens with hydrocodone, oxycodone, codeine, and other prescription drugs, not for legitimate uses, but to fuel and profit from their addictions. The state contends that those pharmacies ordered drugs in quantities so large that the distributors should have known they would be used for illicit purposes. H.D. Smith, a distributor, had a general commercial liability insurance policy issued by Cincinnati Insurance. The policy covered damages that H.D. Smith became legally obligated to pay “because of bodily injury,” defined as “bodily injury, sickness or disease sustained by a person, including death.” “[D]amages because of bodily injury” include “damages claimed by any person or organization for care, loss of services or death resulting at any time from the bodily injury.” Cincinnati refused to defend the suit and obtained a declaratory judgment. The Seventh Circuit reversed summary judgment. The plain language of the policy requires Cincinnati to defend a suit brought by a plaintiff to recover money paid to care for someone who was injured by H.D. Smith. West Virginia’s suit fits that description. View "Cincinnati Ins. Co. v. H.D. Smith, LLC." on Justia Law

Three female employees of Metro Paramedic Services sued Metro and Antioch Rescue Squad, alleging an unrelenting practice of egregious sexual harassment, assault and battery, retaliation for whistleblowing, and failure to supervise. They alleged that Antioch and Metro were a partnership or joint venture, jointly staffed and operated. Metro used Antioch ambulances, and employees of both entities used Antioch uniforms and gear. Two of the employees resolved their claims, based on an offer of judgment from Metro and Antioch; the third reached a settlement with both. AAIC, Antioch’s liability insurer, covered Antioch’s defense costs and indemnified its offers of judgment and settlement, but insisted that it had no obligation to cover Metro under Antioch’s policy and sought a declaratory judgment. The district court found, and the Seventh Circuit affirmed, that AAIC owed Metro a duty to defend. The policy stated, “If you are ... a partnership or joint venture, you are an insured. Your members and your partners are also insureds but only within the course and scope of your operations.” The arrangement qualified as a joint venture. View "Am. Alternative Ins. Corp. v. Metro Paramedic Servs., Inc." on Justia Law

In 2008, the Marchettis purchased real estate for $180,000, with a loan for that amount, plus $155,000, for planned improvements. Jonathon Marchetti acted as buyer, real-estate broker, mortgage broker, and general contractor. Three months earlier, Jonathon had been indicted for mortgage and wire fraud regarding other real-estate transactions. He ultimately pleaded guilty. The parcel, which the Marchettis nominally acquired from Seville, actually was owned by Lekich. A series of sham transactions orchestrated by Hodgman made it look as if Seville held title. In 2010 Lekich sought to quiet title. The Lender had the property appraised at $110,000, agreed to accept $110,000 from a Chicago Title Insurance policy as full satisfaction, and released the Marchettis from liability. Lekich’s suit settled. Chicago Title became subrogated to the Marchettis’ claims against their predecessors in title. Hodgman was indicted. Chicago Title obtained $37,500 in restitution. The Marchettis sued, claiming that Chicago Title owed them $37,500 from Hodgman, plus the $88,000 difference between the maximum value of the policy and the amount paid the Lender. The Marchettis had the property appraised for $202,000, and claimed that the insurer had to disburse the policy’s $198,000 maximum value. The Seventh Circuit affirmed summary judgment in favor of Chicago Title. Market value matters only as one determinant of how much loss the owner suffers. The Marchettis suffered no loss; they had no equity interest in the property. View "Marchetti v. Chicago Title Ins. Co." on Justia Law

BMO Harris Bank holds a security interest in the assets of Gillen, formerly in the construction business. Gillen failed to perform on a subcontract with Meyne, which received an arbitration award of $1.8 million. Liberty Mutual, Gillen’s primary insurer, paid Meyne $1 million, the policy’s limit. Gillen unsuccessfully sought to set aside the award, then appealed. To avoid execution of the judgment, Gillen posted a supersedeas bond, underwritten by F&D. The appeal was settled and dismissed; as part of that agreement, F&D paid Meyne the remaining $800,000 and stepped into its shoes as Gillen’s creditor. ICSOP, the insurer under an “excess” policy, paid $1.2 million into the court’s registry. BMO sought the entire amount, arguing that its status as a secured creditor put it ahead of F&D and Gillen. The district court awarded $800,000 to F&D, because it is subrogated to Meyne’s rights, and Meyne could have collected from ICSOP without impairing the Bank’s security interest. The remaining $400,000 was awarded to BMO as Gillen's secured creditor. The Seventh Circuit affirmed. Under Wisconsin law insurance bypasses security interests. Wisconsin is a direct‐action jurisdiction in which the victim of an insured wrong can collect from the insurer, Wis. Stat. 632.24. In Wisconsin, even the insolvency of the client and the presence of other creditors does not affect the victim’s rights. View "BMO Harris Bank N.A. v. Edward E. Gillen Co." on Justia Law