Justia Insurance Law Opinion Summaries

After a fatal truck accident claimed the lives of members of two families, the victims' families filed a personal injury action against the trucking company. The trucking company's insurer ultimately transferred $1 million to the law firm representing one of the families. The insurer then notified the other family that the policy limits had been exhausted. That same day, the insurer submitted two checks: one to the victim's family and one to the law firm.The family that was not party to the settlement filed an involuntary bankruptcy petition against the trucking company. The trustee brought an adversary proceeding against the other victim's family and their law firm, seeking to avoid and recover the transfer of the policy proceeds pursuant to 11 U.S.C. Secs. 547 and 550 of the Bankruptcy Code. The bankruptcy court denied the law firm's motion to dismiss.On appeal, the family that settled and the law firm argued that the district court erred in determining that the trucking company held an equitable property interest in the policy proceeds. The Fifth Circuit affirmed, finding that these facts fit the "limited circumstances" under which the policy proceed are considered the property of the estate. View "Law Office of Rogelio Solis v. Curtis" on Justia Law

Plaintiff planned on hosting a music festival in Austin, Texas. However, Austin canceled the event due to concerns related to COVID-19. In turn, ticket holders who were refused a refund sued, resulting in a judgment against PLaintiff of over $1 million. Plaintiff sued its insurer for failure to defend against the class action. The district court denied Plaintiff's motion for summary judgment and granted the insurer's motion for summary judgment. Plaintiff appealed.On appeal. the parties agreed that the district court had jurisdiction under 28 U.S.C. 1332(a)(1) and Plaintiff claimed the Fifth Circuit had jurisdiction pursuant to 28 U.S.C. 1291.Exercising its independent judgment, the Fifth Circuit could not find proper allegations or evidence of Plaintiff's citizenship, giving the parties an opportunity to respond. However, the Fifth Circuit found the proffered evidence of Plaintiff's citizenship insufficient, remanding the case for the limited purpose of determining whether jurisdiction exists. View "SXSW v. Federal Insurance" on Justia Law

In this case, the parties consented to have their commercial dispute tried before a United States magistrate judge. But, allegedly unbeknownst to Defendant, the judge was longtime family friends with the lead trial lawyer for the plaintiff. Specifically, the lawyer had been a groomsman in the judge’s own wedding, and the judge officiated the wedding of the lawyer’s daughter three months before this lawsuit was filed. None of this information was disclosed to Defendant. After a twenty-day bench trial, the magistrate judge rendered judgment for the Plaintiff, awarding $124.5 million, including over $100 million in trebled damages. After the issuance of the judgment and award, Defendant learned about the undisclosed longstanding friendship and sought to have the magistrate-judge referral vacated. The district judge denied the request and denied discovery on the issue. Defendant appealed.   The Fifth Circuit vacated. The court concluded that the facts asserted here, if true, raise serious doubts about the validity of Defendant’s constitutionally essential consent to have its case tried by this magistrate judge. Further, the court explained remand was necessary because the facts were not sufficiently developed for the court to decide whether Defendant’s consent was validly given or whether vacatur of the referral was otherwise warranted. Accordingly, the court remanded for an evidentiary inquiry. View "I F G Port Hold v. Lake Charles Harbor" on Justia Law

The Fifth Circuit reversed and remanded in part and affirmed in part the district court’s ruling in Plaintiff’s suit against the truck driver, trucking company, and insurance company.  The court found that there were genuine issues of material fact regarding whether Defendants acted in bad faith in destroying the tire. Plaintiff was driving on an interstate highway in Louisiana when his car was struck by part of a tire that came from the tractor-trailer being driven directly in front of him. The resulting crash caused serious injuries to Plaintiff and damage to his vehicle. The tractor-trailer was owned by Defendant New Prime, Inc. d/b/a Prime, Inc. and operated by its employee, Defendant James Arthur Rogers. The tread of the failed tire — a refurbished, retread tire manufactured by Prime’s own EcoTire facility — separated from the casing or tire core before it hit Plaintiff’s vehicle. Plaintiff filed suit against a truck driver, trucking company, and insurance company. The district court granted summary judgment in favor of Defendants. On appeal, Plaintiff contends the district court erred in ruling on several motions. The central question is whether the district court was correct to hold that there were no genuine issues of material fact.   The Fifth Circuit reversed and remanded in part and affirmed in part. The court explained that Plaintiff should be permitted a jury instruction that if jurors find bad faith, they may infer that the destroyed evidence would have been adverse to Prime’s defense in this suit. The court wrote that Prime destroyed the most crucial piece of evidence just weeks after learning that its tire may have caused a car accident, and Prime cannot explain why it transported the tire to its Salt Lake facility or what happened to the tire following the accident. These circumstances create a fact question on bad faith, necessitating a jury determination. View "Van Winkle v. Rogers" on Justia Law

Princeton Excess and Surplus Lines Insurance Company (PESLIC) filed this declaratory judgment action. PESLIC issued two commercial liability insurance policies to the Clubs covering the time period relevant to the Models’ claims: Number 1RA3GL0000179–01, with a policy period of November 9, 2015, to November 9, 2016 (the 01 Policy); and Number 1RA3GL0000179–02, with a policy period of November 9, 2016, to November 9, 2017 (the 02 Policy). The policies have identical coverage provisions but contain slightly different exclusions. The parties dispute whether this exclusion renders illusory the Personal and Advertising Injury coverage provided in the 02 Policy. If it does not, then the Clubs have no coverage applicable to the Models’ claims; if it does, then they have coverage, as the district court held.   The Fifth Circuit reversed the district court’s summary judgment ruling. The court held PESLIC does not have a duty to defend or indemnify the Clubs in the underlying lawsuit because neither the 01 Policy nor the 02 Policy provides coverage for the claims alleged by the Models. The court explained that the text of the 02 Policy is not ambiguous, and Texas law “presumes that the party knows and accepts the contract terms.” Those terms disclose that the policy’s Personal and Advertising Injury coverage comprises a single category of coverage and further that the Exhibition and Related Marketing Exclusion removes much but by no means all, of that coverage. The 02 Policy is, therefore, not illusory, and the exclusion must be enforced, constraining the court to conclude there is no coverage for the Models’ underlying claims under the 02 Policy. View "Princeton Excess v. AHD Houston" on Justia Law

Great Lakes Insurance, S.E. insured Hello Dolly VI, a boat owned by Gray Group Investments, L.L.C. The Hello Dolly sank in Pensacola, Florida, during a hurricane. Gray Group filed a claim under the insurance policy, Great Lakes denied coverage, and Great Lakes then sought a declaratory judgment that it properly did so. Specifically, Great Lakes faulted Gray Group for breaching the “hurricane protection plan” (the HPP) that Gray Group had submitted in response to Great Lakes’s “hurricane questionnaire” (the HQ). The issue on appeal is whether the HPP was incorporated by reference into the insurance policy and, if so, whether Gray Group breached the HPP.   The Fifth Circuit affirmed the district court’s ruling granting summary judgment for Great Lakes. The court explained that the HPP expressly identifies its contents, including the information in question, as warranties, providing that the insured “declare[s] that the particulars and answers in this form are correct and complete in every respect” and that “this declaration and warranty shall be incorporated in its entirety into any relevant policy of insurance.” Therefore, under the terms of the policy, as validly augmented by the HPP, Gray Group warranted that the Vessel would be “located” at the Orleans Marina during hurricane season. Gray Group’s breach of that warranty voided the policy ab initio, such that Great Lakes properly denied coverage. View "Great Lakes Ins v. Gray Group Invst" on Justia Law

Copart of Connecticut, Inc. (“Copart”) is a subsidiary of Copart, Inc., an online car-auction company that sells used, wholesale, and repairable vehicles. Copart owns several parcels of land in Lexington County, South Carolina, on which it operates “machine salvage junkyard and vehicle wash facilities.” This appeal concerns whether Copart’s insurer must defend or indemnify Copart with respect to a lawsuit filed against it in South Carolina Defendant Copart of Connecticut appealed the district court’s grant of summary judgment in favor of Plaintiffs Liberty Mutual Fire Insurance Company and Liberty Insurance Corporation.   The Fifth Circuit affirmed summary judgment as to Liberty’s duty to defend Copart in the Underlying Suit. The court reversed summary judgment as to Liberty’s duty to indemnify Copart with respect to the Underlying Suit and remanded to the district court for further proceedings to determine Liberty’s indemnity obligation, if any. The court explained that the duty to defend is negated here because the Livingston Plaintiffs only allege damage caused, either in whole or in part, by pollutants. But evidence arising from or related to the Underlying Suit may reveal that non-pollutants caused Plaintiffs’ damage. If, for example, relevant evidence shows that the plaintiffs’ “cloudy water” was caused only by sand and sediment, then the pollution exclusion may not apply. If this were so, Liberty may be obligated to indemnify Copart. View "Liberty Mutual Fire Ins v. Copart of CT" on Justia Law

Plaintiff-Appellant Weyerhaeuser NR Company (“NR”) entered into a manufacturing agreement with Simsboro Coating Services, LLC (“Simsboro”). That agreement required Simsboro to acquire commercial general liability insurance, which it obtained from Defendants-Appellees Burlington Insurance Company (“BIC”) and Evanston Insurance Company (“EIC”). It further required that “Weyerhaeuser and its Subsidiaries” be named as additional insureds. However, NR’s parent company, Weyerhaeuser Company (“W. Co.”), was never added to the insurance policies that Simsboro obtained from EIC and BIC. This insurance coverage dispute arose after several personal injury lawsuits were filed against Simsboro and W. Co. in state court. After those lawsuits settled, W. Co. and NR sued BIC and EIC, demanding that they defend and indemnify W. Co. and NR. EIC and BIC then filed Rule 12(b)(6) motions, which were granted by the district court.The Fifth Circuit affirmed the district court’s dismissal of Weyerhaeuser’s breach of contract claims. The court concluded that Defendants had no duty to defend or indemnify W. Co. and NR as additional insureds or as third-party beneficiaries to the CGL Policies or Excess Policy. The court explained that it was satisfied that BIC and EIC had no duty to defend W. Co. and NR as thirdparty beneficiaries. The indemnification inquiry, however, is fact intensive and may incorporate extrinsic evidence. The district court explained that because NR is listed on the CGL Policies as an additional insured and the CGL Policies might cover Simsboro’s indemnification obligation arising from the Agreement, NR might be a third-party beneficiary of the policies with respect to indemnification. View "Weyerhaeuser v. Burlington Insurance" on Justia Law

Plaintiff appealed the district court’s summary judgment of his claims against Safeco Insurance Company of Indiana (“Safeco”) for violating Section 541 and Section 542 of the Texas Insurance Code.   The Fifth Circuit explained that in 2017, the Texas legislature amended Section 542, raising an important issue of Texas insurance law as to which there is no controlling Texas Supreme Court authority, and the authority from the intermediate state appellate courts provides insufficient guidance. Thus, the court certified the following question of state law to the Supreme Court of Texas: In an action under Chapter 542A of the Texas Prompt Payment of Claims Act, does an insurer’s payment of the full appraisal award plus any possible statutory interest preclude recovery of attorney’s fees? View "Rodriguez v. Safeco" on Justia Law

A Listeria outbreak led to a shutdown of Blue Bell factories and a nationwide recall of its products. Consequently, Blue Bell suffered a substantial financial loss. A shareholder of Blue Bell Creameries brought a derivative action against Blue Bell’s directors and officers, alleging a breach of fiduciary duties. The shareholder, on behalf of Blue Bell, alleged that Blue Bell’s officers and directors breached their fiduciary duties of care and loyalty by failing “to comply with regulations and establish controls.” The Blue Bell Defendants appealed the district court’s grant of summary judgment in favor of Discover Property & Casualty Insurance Company and the Travelers Indemnity Company of Connecticut.   The Fifth Circuit affirmed. Here, only the duty to defend is at issue because the parties have stipulated that “If the district court finds there is no duty to defend, it may also find there is no duty to indemnify, but otherwise the duty to indemnify will not be a subject of the Parties’ motions.” Accordingly, the court wrote that it is confined by Texas’s “eight-corners rule,” which directs courts to determine an insurer’s duty to defend based on: (1) the pleading against the insured in the underlying litigation and (2) the terms of the insurance policy. The court explained that while it disagrees with the district court’s determination as to whether the directors and officers are “insureds” in relation to the shareholder lawsuit, it agreed with its determination that the complaint in the shareholder lawsuit does not allege any “occurrence” or seek “damages because of bodily injury.” Each issue is independently sufficient for affirmance. View "Discover Property Cslty v. Blue Bell" on Justia Law