Justia Insurance Law Opinion Summaries

Articles Posted in US Court of Appeals for the Fifth Circuit
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Plaintiff, a Texas resident, filed suit against Allstate Texas, a Texas entity, seeking damages for breach of contract and violations of the Texas Deceptive Trade Practices Act, the Texas Insurance Code, the Texas Business and Commerce Code, and the Texas Civil Practice and Remedies Code. Allstate Illinois, rather than Allstate Texas, answered the petition and removed the case to federal court on the basis of diversity jurisdiction under 28 U.S.C. 1332(a) and 1441(b).The Fifth Circuit reversed the district court's denial of plaintiff's motion to remand to state court, and remanded with instructions for the district court to remand to state court. The court held that Allstate Illinois lacked the authority to remove the suit to federal court and the district court did not have subject matter jurisdiction over the case when it denied plaintiff's motion to remand because the only parties to the case at the time of removal was plaintiff and Allstate Texas, both Texas residents. In this case, Allstate Illinois was not a defendant as originally filed and did not become a defendant through proper means. View "Valencia v. Allstate Texas Lloyd's" on Justia Law

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Plaintiffs filed suit against State Farm after it denied their claim for windstorm damage to their home. The district court granted summary judgment for State Farm on various causes of action. Plaintiffs' breach of contract claim was presented to the jury where the jury presented a verdict in plaintiffs' favor. After the district court originally granted plaintiffs relief on their request for attorney's fees and statutory interest, it then ruled that the failure to specifically plead relief under Texas Insurance Code 542.060 (the Texas Prompt Payment of Claims Act or "TPPCA") barred the requested relief and entered judgment only in the amount of the breach of contract damages found by the jury, together with regular pre-judgment and post-judgment interest.The Fifth Circuit reversed and remanded, holding that the district court erred in holding that Chavez v. State Farm Lloyds, 746 F. App'x 337 (5th Cir. 2018), barred plaintiffs' claims for the 18 percent penalty and attorney's fees under Chapter 542. The court held that subsequent Texas Supreme Court cases make clear that Chavez is no longer good law. Rather, the Texas Supreme Court recently stated that nothing in the TPPCA would excuse an insurer from liability for TPPCA damages if it was liable under the terms of the policy but delayed payment beyond the applicable statutory deadline. View "Agredano v. State Farm Lloyds" on Justia Law

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After ASIC denied Waste coverage for all costs associated with a criminal proceeding, Waste filed suit in Texas state court against ASIC and AIG Claims. After ASIC removed to federal court, the district court denied Waste's motion to remand and determined that ASIC had no duty to defend Waste.The Fifth Circuit affirmed the district court's denial of Waste's motion to remand. The court held that, even assuming that an adjuster can be held liable under Texas Insurance Code sections 541.060(a)(2), (a)(4), and (a)(7), Waste did not allege facts that, taken as true, demonstrate a violation of these provisions. In this case, Waste's threadbare factual allegations, along with its conclusory recitation of the elements of a claim under the Texas Insurance Code, are insufficient to state a plausible claim for relief. Therefore, the district court did not err in finding that there was no reasonable probability that Waste would recover against AIG Claims, and the district court did not err in disregarding AIG Claims' citizenship and determining that there was complete diversity.The court also affirmed the district court's summary judgment determination that ASIC had no duty to defend Waste against the criminal allegations. In this case, the district court did not err in finding that there was no claim that triggered ASIC's duty to defend against the criminal allegations. Finally, the district court also did not err in granting summary judgment in favor of ASIC on all remaining claims. View "Waste Management, Inc. v. AIG Specialty Insurance Co." on Justia Law

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After Armond Jairon Brown was tragically shot by a police officer after a stand-off in (and in front of) a house, Brown's mother (defendant) properly submitted claims to American General Life Insurance Company (AGLIC) for (1) life insurance benefits and (2) accidental death benefits. After AGLIC paid the life insurance benefits but denied the accidental death benefits, the insurer sought a declaratory judgment declaring that it properly denied defendant's claim.The Fifth Circuit affirmed the district court's grant of summary judgment for AGLIC, holding under Louisiana law that defendant's admissions conclusively establish that Brown was the aggressor and that this pattern of aggression precipitated his death by provoking the officers' responsive shooting. In this case, there is no record that defendant ever responded to the insurer's requests for admission and thus the admissions are factually conclusive under Federal Rule of Civil Procedure 36(a)(1)-(3). Therefore, the court held that, given defendant's binding admissions, there is no dispute of material fact and defendant cannot recover under the AGLIC accidental death rider. View "American General Life Insurance Co. v. Whitaker" on Justia Law

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After plaintiff allegedly damaged a house's electrical wiring while installing siding, Mid-Continent refused to provide him with defense and indemnity for the accident. The district court granted defendant a partial final judgment, holding that Mid-Continent owed plaintiff a duty to defend.Applying Texas law and the eight-corners rule, the Fifth Circuit affirmed and held that the underlying litigation falls within the coverage provisions of the commercial general liability (CGL) policy and hence obligates Mid-Continent to defend plaintiff. The court also held that the policy's j(5) and j(6) exclusions do not apply in this case. View "Gonzalez v. Mid-Continent Casualty Co." on Justia Law

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Appellants filed suit against Liberty in Texas state court claiming breach of contract and violations of Sections 541 and 542 of the Texas Insurance Code. After Liberty removed to federal court, the district court granted Liberty's motion for summary judgment and denied appellants' partial motion for summary judgment.After determining that it has appellate jurisdiction, the Fifth Circuit affirmed, holding that the insurance policy does not provide coverage for appellants' claims. The court need not determine whether the policy at issue is an all-risks policy because the court construed the policies one at a time. The court held that an ensuing loss provision like the one presented here is only triggered when one (excluded) peril results in a distinct (covered) peril, meaning there must be two separate events for the exception to trigger. In the underlying action, appellants' welding operation involved falling slag, which damaged the exterior glass of Energy Center 5. The court explained that the welding operation is inseparable from the falling slag and that they are not two separate events. Furthermore, the court held that the policy is not illusory. Therefore, appellants have not met their burden to show that the exception to the exclusion reinstates coverage. Finally, appellants' ambiguity argument is forfeited. View "Balfour Beatty Construction, LLC v. Liberty Mutual Fire Insurance Co." on Justia Law

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State Farm filed suit seeking a declaratory judgment that it had no duty to defend or indemnify the insureds in the underlying action. In the underlying action, Jayden Meals' mom filed a personal injury suit against his paternal grandparents, the insureds, after Jayden, who was 10 years old, died in an ATV accident. The district court found that the extrinsic evidence satisfied both the motor-vehicle exclusion and the insured exclusion.The Fifth Circuit certified a question of Texas law to the Texas Supreme Court, which answered that the policy-language exception to the eight-corners rule is not a permissible exception under Texas law. Therefore, the district court erred by applying the policy-language exception in this case. The court held that the eight-corners rule applies here; the underlying third-amended complaint contains allegations within its four corners that potentially constitute a claim within the four corners of the policy; and thus the court reversed the district court's holding that State Farm does not have a duty to defend the insureds. The court stated that State Farm has a duty to defend, so the exception to non-justiciability does not apply. Because the underlying suit remains pending, the court reversed the district court's holding that State Farm has no duty to indemnify. View "State Farm Lloyds v. Richards" on Justia Law

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The Fifth Circuit affirmed the district court's grant of the insurer's motion to dismiss an action brought by the insureds, seeking coverage of a residence destroyed by fire. The court also affirmed the district court's grant of summary judgment for the insurer. The insureds had purchased the property with the intention of moving into it, but had not moved in before the fire burned down the house.The court held that Louisiana requires the insured to first prove coverage, after which the insurer can show that an exclusion applies. In this case, plaintiffs failed to show coverage where they repeatedly admitted that they never resided at the property; the insureds failed to satisfy the policy's residence requirement and the property was not a covered "residence premises;" and thus the vacancy exclusion did not apply under the circumstances. The court also held that the reside-at-inception policy is not absurd because insureds who had yet to move in purchased it. The court explained that purchasing the wrong insurance policy is not unheard of, and the law provides a remedy when the fault lies with the agent who procured it. View "GeoVera Specialty Insurance Co. v. Joachin" on Justia Law

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This insurance coverage case concerns flood damage from Hurricane Harvey to two office buildings owned by Pan Am and insured by Lexington.The Fifth Circuit affirmed the district court's grant of summary judgment in favor of Lexington. The court held that the unequivocal language of the "Windstorm" deductible, which covered flood damage, controls. Therefore, Pan Am may not recover because its buildings were damaged solely by flooding. Furthermore, even if the generic $100,000 "Flood" deductible were to also apply, the 5% TIV-based deductible would prevail under the policy's anti-stacking clause. View "Pan Am Equities, Inc. v. Lexington Insurance Co." on Justia Law

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The term "Actual Cash Value" is ambiguous with respect to the withholding of labor depreciation in Mississippi homeowners insurance policies that provide no further definition of ACV. The Fifth Circuit affirmed the district court's denial of State Farm's motion to dismiss with respect to plaintiff's breach of contract claim. The court found that, in the context of a Mississippi homeowners policy that refers to "Actual Cash Value" without further definition, both interpretations are reasonable. Therefore, the court held that the contract was ambiguous and the court applied Mississippi's interpretive canons, which provides that an ambiguous insurance contract is interpreted against the insurance company.The court reversed the district court's denial of State Farm's motion to dismiss with respect to plaintiff's tort claims. The court explained that, because the law on this question of interpreting "Actual Cash Value" in Mississippi was unsettled, State Farm had an arguable basis to depreciate labor costs. The court also found that the district court did not abuse its discretion in certifying a class of Mississippi State Farm policyholders similarly situated to plaintiff, who received "Actual Cash Value" payments in which labor was depreciated and whose contracts similarly did not define "Actual Cash Value." View "Mitchell v. State Farm Fire & Casualty Co." on Justia Law