Justia Insurance Law Opinion Summaries

Articles Posted in US Court of Appeals for the Fifth Circuit
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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

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Plaintiff and other Texas residents filed a putative class action against a life insurance company that sells annuities, alleging that the company overcharged them by miscalculating early-withdrawal fees in breach of the annuities contracts.The Fifth Circuit vacated the class certification order and remanded for further proceedings. The court held that the company did not waive its personal jurisdiction as to any non-Texas class members. The court also held that the district court erred in its predominance analysis by failing to assess how state-law variations may impact adjudication of the breach question and also by failing to consider the individualized evidence relevant to the company's affirmative defenses of waiver and ratification. Finally, the court held that plaintiffs failed to offer a damages model adequate to support class treatment, an issue they virtually conceded at oral argument. View "Cruson v. Jackson National Life Insurance, Co." on Justia Law

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The Fifth Circuit affirmed the district court's adverse judgment against plaintiffs on Employee Retirement Income Security Act (ERISA) claims assigned by Cigna-insured patients. The court held that the law of the case did not require the district court on remand to determine the legal correctness of Cigna's policy interpretation, and under Connecticut General Life Insurance Co. v. Humble Surgical Hospital, L.L.C., 878 F.3d 478, 485 (5th Cir. 2017), a court need not reach legal correctness if the insurer's determination was not an abuse of discretion. Furthermore, Humble moots consideration of the conflicts and inferences of bad faith that plaintiffs assert against Cigna.In this case, the district court correctly applied this court's previous decision in the instant controversy as well as Humble, and thus plaintiffs' exhaustion argument was moot. Plaintiffs' procedural challenge to Cigna's review failed for lack of substantiating evidence, which left the damages issue moot. Finally, plaintiffs failed to establish any right to attorney's fees. View "North Cypress Medical Center Operating Co. v. Cigna Healthcare" on Justia Law

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IberiaBank filed suit against the insurers for breach of contract after the insurers denied IberiaBank's claim for coverage in the underlying DOJ Settlement.The Fifth Circuit affirmed the district court's grant of the insurers' motion to dismiss, holding that the government is not IberiaBank's "client" and did not become IberiaBank's "client" as a result of the Direct Endorsement Program. Therefore, IberiaBank's DOJ Settlement claim was not covered by the policies and the district court properly granted the insurers' motions to dismiss. The court need not consider Travelers' alternative argument. View "IberiaBank Corp. v. Illinois Union Insurance Co." on Justia Law

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The Fifth Circuit affirmed the district court's dismissal of a complaint brought by two policyholders against their insurance company, claiming that it should pay for the taxes and fees associated with replacing their totaled vehicles, thus making them whole. The court interpreted the relevant policy language under Texas law and held that each of the policyholders was entitled to the fair market value of his pre-loss vehicle. The court also held that the fair market value does not include the taxes and fees payable to purchase a replacement vehicle. View "Singleton v. Elephant Insurance Co." on Justia Law

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This dispute arose from a 2013 oil well blowout on the HERCULES 265 drilling rig in the Gulf of Mexico. After the rig's charterer filed suit raising products liability claims against a refurbisher of the rig's blowout-prevention components, counterclaims and third-party claims ensued. The district court subsequently granted a series of summary judgments, based both on contractual indemnity and also on the merits of the liability claims.The Fifth Circuit affirmed the district court's grant of summary judgment as to Hercules' duty to defend, hold harmless, and indemnify Axon; reversed the district court's grant of summary judgment as to Walter's duty to directly indemnify Axon; reversed the district court's grant of summary judgment as to Walter's duty to indemnify Hercules for Axon's claims; vacated the district court's order excluding Bellemare's testimony; vacated the district court's orders excluding the expert reports of Sones, Bourgoyne, Williams, Rusnak, Bellemare, and Adair, as well as the orders excluding the affidavits of Sones and Bourgoyne; reversed the district court's grant of summary judgment as to the causation and "unreasonably dangerous condition" prongs of the Louisiana Products Liability Act; vacated the district court's final judgment and fee orders; and remanded for further proceedings. View "Certain Underwriters at Lloyd's v. Axon Pressure Products Inc." on Justia Law