Justia Insurance Law Opinion Summaries

Articles Posted in US Court of Appeals for the Eighth Circuit
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In 2021, a warehouse developed by TriStar Companies, LLC but possessed by Amazon collapsed during a tornado, causing injuries and deaths. Several personal injury and wrongful death lawsuits were filed against TriStar, claiming negligence in the warehouse's construction. TriStar, insured by AXIS Surplus Insurance Company, sought coverage under their policy, but AXIS denied coverage and filed a complaint for a declaratory judgment that it had no duty to defend or indemnify TriStar for the resulting lawsuits. The district court granted AXIS's motion for summary judgment, ruling that the insurance policy did not cover the warehouse due to certain exclusions and limitations.Upon appeal, the United States Court of Appeals for the Eighth Circuit affirmed the lower court's decision. The Court of Appeals applied Missouri law, giving the insurance policy terms "the meaning which would be attached by an ordinary person of average understanding if purchasing insurance." The court found that the policy's language was clear and unambiguous. It limited coverage to premises owned, rented, or occupied by TriStar per a schedule of locations on file with AXIS. As the warehouse's location was not listed in the schedule, and TriStar did not own, rent, or occupy the warehouse when the incident occurred, the court concluded that the policy did not cover the incident.The court rejected TriStar's interpretation of the schedule of locations, which would have resulted in coverage extending to an entire city, as untenable and against common sense. Therefore, AXIS had no duty to defend or indemnify TriStar for the lawsuits arising from the warehouse collapse. View "Axis Surplus Insurance Company v. TriStar Companies, LLC" on Justia Law

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The City of Richmond Heights, Missouri filed a claim with Mt. Hawley Insurance Company under a commercial property policy for losses of tax revenue due to government-mandated COVID-19 closures. Mt. Hawley denied the claim and sued for a declaratory judgment that it was not obligated to cover the losses. Richmond Heights counterclaimed with five counts: (1) breach of contract, (2) vexatious refusal to pay, (3) fraudulent inducement and misrepresentation, (4) negligent misrepresentation, and (5) breach of fiduciary duty. The United States District Court for the Eastern District of Missouri dismissed the counterclaims, denied amendments to two of them, and granted declaratory judgment to Mt. Hawley. On appeal, the United States Court of Appeals for the Eighth Circuit affirmed the decision of the lower court.The appellate court held that the insurance policy required "direct physical loss of or damage to property" for coverage which was not met by the COVID-19 shutdowns. The court also rejected the city's argument that the Additional Covered Property Endorsement in the policy removed the "physical damage or loss" requirement for losses of sales tax revenues. Furthermore, the court found that the city's claims of fraud, misrepresentation and breach of fiduciary duty were not distinct from its breach of contract claim and thus were properly dismissed by the district court. Lastly, the court affirmed the district court's denial of the city's motion to amend its breach of contract and vexatious refusal claims, concluding that the proposed amendments would not have survived a motion to dismiss. View "Mt. Hawley Insurance Company v. City of Richmond Heights" on Justia Law

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In this case, the United States Court of Appeals for the Eighth Circuit affirmed the lower court's decision that the Pacific Life Insurance Company did not owe benefits to Katie Blevins, the beneficiary of a life insurance policy taken out by her late fiancé, Dr. Travis Richardson. Richardson applied for a life insurance policy and paid the first month's premium three days before he died. He did not sign the received policy or any required amendments. Blevins claimed that the policy was in effect at the time of Richardson's death, despite the policy not being physically delivered or formally accepted. Blevins also brought claims of bad faith, promissory estoppel, and apparent authority against the insurance company. In its decision, the court stated the policy was clear in its conditions, which required physical delivery and acceptance before the policy was in force. The court found these conditions were not met, as the policy was neither delivered nor accepted by Richardson before his death. Therefore, no death benefit was owed. As a result, Blevins' bad faith claim was also dismissed, as the insurer could not have acted in bad faith if there was no obligation to pay out the policy. View "Pacific Life Insurance Company v. Blevins" on Justia Law

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Cynthia Bowen purchased an insurance policy from Farm Bureau Property & Casualty Insurance Company ("Farm Bureau") for her pick-up truck. She was injured when an employee of Menard, Inc. ("Menards") accidentally dropped a large board on her while helping load her truck at a store. Bowen sued Menards for damages, alleging negligence. Menards then filed an action against Farm Bureau seeking a declaratory judgment that it was entitled to a defense and indemnification from Farm Bureau under Bowen's insurance policy. The district court ruled in favor of Menards, finding that Menards and its employee were covered insureds under the policy and that no policy exclusion applied.On appeal, the United States Court of Appeals for the Eighth Circuit reversed the district court's decision. The court concluded that the policy's "Intrafamily Immunity" exclusion applied to the case. This exclusion stated that there was no coverage for any bodily injury to any "insured," which, in this case, included both Bowen and Menards. Therefore, the policy provided no liability coverage for Bowen's claim against Menards, another insured party. The court rejected the district court's reasoning that the term "intrafamily" limited the application of the exclusion, finding that the plain meaning of the operative policy provision prevailed. The court also rejected Menards' argument that Farm Bureau was estopped from asserting this defense to coverage. Consequently, the court reversed the district court's judgment, ruling that Farm Bureau was not obligated to provide defense and indemnification for Menards in connection with the lawsuit brought by Bowen. View "Menard, Inc. v. Farm Bureau P&C Ins. Co." on Justia Law

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The United States Court of Appeals for the Eighth Circuit affirmed a district court's ruling that BITCO General Insurance Corporation ("BITCO") had no obligation under its policy to cover damages from an accident involving a truck driven by a contractor engaged by the insured, KAT Excavation Company ("KAT"). KAT had arranged for E&S Quarry ("E&S") to supply rock for a construction project and had engaged other hauling companies, including Chris White Construction ("CWC"), to transport the rock. An accident occurred on a trip to the construction site by Clayton Hamlin, a driver used by CWC. The court held that for a vehicle to be considered a "hired auto" under the insurance policy, there must be a separate contract by which the vehicle is hired or leased to the named insured for their exclusive use or control. The court found that KAT did not exercise the requisite level of control over the dump truck and thus, the driver, Hamlin, was not covered under KAT's insurance policy. View "BITCO General Insurance Corporation v. Smith" on Justia Law

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A car dealership, Broadway Ford Truck Sales, Inc., in St. Louis, Missouri, suffered a significant fire damage to its business premises and filed claims under its insurance policy provided by Depositors Insurance Company. However, disputes arose over the coverage and Broadway Ford sued Depositors for breach of contract and vexatious refusal to pay. The United States District Court for the Eastern District of Missouri granted summary judgment favoring Depositors.At the time of the fire, Broadway Ford had an insurance policy that covered loss or damage to its Building and Business Personal Property (Building/Property) and loss of Business Income and Extra Expenses (BI/EE) due to a suspension of operations. Broadway Ford and Depositors later entered into a Limited Settlement Agreement and Release of Disputed Property Damage Claims (LSA), in which Depositors agreed to pay a certain amount for the fire damage and Broadway Ford released Depositors from any claims related to the property damage. BI/EE claims were not included in this agreement and remained open.Broadway Ford’s complaint against Depositors alleged that Depositors breached the policy's implied covenant of good faith and fair dealing and that Depositors’ conduct amounted to vexatious refusal under Missouri law. The district court granted Depositors' motion for summary judgment, finding that Broadway Ford’s complaint was foreclosed by the LSA. On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the grant of summary judgment de novo.The appellate court affirmed the judgment of the district court. The court found that Broadway Ford had released its claims related to the Building/Property coverage in the LSA and could not pursue litigation for additional compensatory damages in the form of the “business income” it lost and the “extra expenses” it incurred due to Depositors’ alleged mishandling of its Building/Property coverage claim. View "Broadway Ford Truck Sales, Inc. v. Depositors Insurance Company" on Justia Law

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In this case, the United States Court of Appeals for the Eighth Circuit heard an appeal by Armory Hospitality, LLC, an event venue in Minneapolis, Minnesota. Armory had an insurance policy with Philadelphia Indemnity Insurance Company and filed a claim to recover its business losses due to the closure of bars, restaurants, and performance venues for over a year by Minnesota’s Governor in response to the COVID-19 pandemic. The insurer denied the claim, leading to Armory suing. However, the district court dismissed Armory’s complaint, holding that the policy did not cover the losses, a decision which Armory appealed.The Court of Appeals affirmed the district court’s decision. The court interpreted the insurance policy under Minnesota law, which requires unambiguous policy language to be given its plain and ordinary meaning. Armory sought coverage under three clauses in its policy: the Building Coverage clause, the Business Income clause, and the Civil Authority clause. The first two clauses required “direct physical loss of or damage to” Armory’s property, which the court decided had not been met since the closure of the venue due to the pandemic did not satisfy the physicality requirement. The court disregarded Armory's argument that the "loss of" property included its inability to use its venue, citing previous precedent requiring physicality for both "loss of" and "damage to" property.As for the Civil Authority clause, the court found that Armory could not prove a causal link between the contamination of nearby properties (a hospital and a jail) by COVID-19 and the Governor’s orders to close venues. Hence, the court concluded that Armory could not recover under any of the clauses in its policy, and therefore affirmed the district court's dismissal of Armory's complaint. View "Armory Hospitality, LLC v. Philadelphia Indemnity Ins. Co." on Justia Law

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Plaintiff sued Travelers Indemnity Company of America, seeking a declaration that an insurance policy between Travelers and the City of Hermantown authorizes up to $2,000,000 in coverage for his tort claim against the city. The district court granted summary judgment for Plaintiff, and Travelers appeals.   The court concluded that the insurance policy limits the amount of Plaintiff’s recovery to $500,000 and therefore reversed the judgment. The court explained that under Minnesota law, a municipality is liable for its torts and those of its employees acting within the scope of their employment. But a municipality may obtain insurance coverage for damages “in excess of the limit of liability imposed by section 466.04,” and procurement of such insurance waives the statutory limit of liability. The court concluded that the insurance policy authorizes coverage up to only $500,000 for Plaintiff’s claim. The policy provides different limits for different types of liabilities. The policy provides a coverage limit of $2,000,000 for claims not subject to the statutory limit set forth in Minn. Stat. Section 466.04. But for claims subject to the statutory limit in Section 466.04, the endorsement expressly limits coverage to $500,000. The substance of this contractual arrangement is no different than if the parties agreed on two separate policies for the two different types of liability. Plaintiff’s claim for injuries arising from an automobile accident in Hermantown is subject to Minnesota’s $500,000 cap on municipal tort liability. View "James Prisk v. Travelers Indemnity Co. of America" on Justia Law

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K.C. Hopps, Ltd., sued its insurer, The Cincinnati Insurance Company, seeking coverage for lost business income incurred during the COVID-19 pandemic. Cincinnati moved for summary judgment based on K.C. Hopps’s inability to show physical loss or damage, which the district court denied. After the jury returned a verdict for Cincinnati, K.C. Hopps renewed its motion for judgment as a matter of law and moved for a new trial. The district court denied both motions.   The Second Appellate District affirmed. The court explained that K.C. Hopps alleged that COVID-19 particles were present at its properties. The court wrote that has repeatedly rejected similar claims for COVID-19-related business interruptions because the insured did not sufficiently allege physical loss or damage. The court explained that even if K.C. Hopps could show actual contamination of its properties, any possible contamination was not the cause of its lost business income. K.C. Hopps did not limit its operations because COVID-19 particles were found at its properties—it did so because of the shutdown orders. K.C. Hopps remained open until government orders limited its operations. And even if its premises weren’t contaminated, K.C. Hopps “would have been subject to the exact same restrictions.” View "K.C. Hopps, Ltd. v. The Cincinnati Insurance Co." on Justia Law

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Following a shooting at a bar in downtown St. Louis, Missouri, Plaintiff, who was injured as a bystander, obtained a $2.5 million judgment against the bar’s owner and operator, Steven Scaglione. Plaintiff thereafter filed this equitable-garnishment claim against Scaglione and his insurer, Acceptance Indemnity Insurance Company (Acceptance). Scaglione filed cross-claims against Acceptance, alleging that it had, in bad faith, failed to defend or indemnify him and breached its fiduciary duty. Acceptance filed motions to dismiss both Plaintiff’s and Scaglione’s claims, which the district court granted based on the applicability of an assault-and-battery exclusion in Scaglione’s policy. In this consolidated appeal, both Plaintiff and Scaglione assert that the district court erred in dismissing their claims. 
 The Eighth Circuit affirmed. The court explained that the district court did not suggest that the assault-and-battery exclusion did not apply solely because the purported victim was not the target. Accordingly, the court rejected this argument and concluded that the unambiguous policy language covers claims of injuries sustained by innocent bystanders arising out of an assault and battery. The court thus concluded that the policy exclusion applies. Further, the court concluded that Scaglione’s negligence was not independent and distinct from the excluded assault and battery. The court explained that the concurrent-proximate-cause rule thus does not apply, and, therefore, the exclusion bars coverage under the policy. Without coverage, Plaintiff and Scaglione cannot state a claim. The district court thus did not err in granting the motions to dismiss. View "Steven Scaglione v. Acceptance Indemnity Ins Co" on Justia Law