Justia Insurance Law Opinion SummariesArticles Posted in US Court of Appeals for the Fifth Circuit
Talamantes v. Metropolitan Life Insurance Co.
After plaintiff filed suit under the Employee Retirement Income Security Act (ERISA) to recover long-term disability benefits from MetLife, the district court severed the coverage issue from the remaining issues. At issue in regards to coverage was whether Standard, the carrier for calendar year 2016, or MetLife, the carrier for 2017, provided coverage. The district court concluded that Standard, which had been previously dismissed, covered this claim.The Fifth Circuit reversed, concluding that the court's reading of the Standard and MetLife policies lead it to conclude that Standard provided no coverage and coverage was afforded to plaintiff under MetLife's policy. The court explained that the Standard and MetLife policies outline how to transition coverage between old and new policies, as well as provide special rules for employees who temporarily recover during a transition. In this case, the plain language of the policies make it clear that plaintiff's benefits coverage for his alleged long-term disability shifted from Standard to MetLife. Accordingly, the court remanded for further proceedings. View "Talamantes v. Metropolitan Life Insurance Co." on Justia Law
Miller v. Reliance Standard Life Insurance Co.
After plaintiff filed suit against Reliance for denying his long-term disability claim, the district court granted summary judgment in favor of Reliance. The district court concluded that plaintiff's absence on medical leave at the time Reliance took over his group policy created a gap in his coverage and rendered his complained-of disability an excluded preexisting condition.The Fifth Circuit reversed and rendered judgment in favor of plaintiff, concluding that the district court misread the policy. The court held that the insurance plan's Transfer Provision, which determines whether employees covered under the group's previous plan with Prudential remained continuously insured when Reliance's policy took effect, applies to plaintiff. Therefore, the plan covered plaintiff when it took effect on September 1, 2015, during his leave, and thus Reliance wrongly denied his disability claim. Accordingly, the court remanded for determining the amount of plaintiff's benefit. View "Miller v. Reliance Standard Life Insurance Co." on Justia Law
Dillon Gage, Inc. v. Certain Underwriters at Lloyds
The Fifth Circuit certified the following questions to the Supreme Court of Texas: 1. Whether Dillon Gage's losses were sustained consequent upon handing over insured property to UPS against a fraudulent check, causing the policy exclusion to apply. And if that answer is yes: 2. Whether UPS's alleged errors are considered an independent cause of the losses under Texas law. View "Dillon Gage, Inc. v. Certain Underwriters at Lloyds" on Justia Law
Hall CA-NV, LLC v. Old Republic National Title Insurance Co.
Hall filed various contract, statutory, and common-law claims against Old Republic in federal district court for failing to indemnify Hall under its title insurance policies. The district court concluded that, although the unpaid Penta pre-policy-date work is a defect under Covered Risk 2 and an encumbrance under Covered Risk 10, coverage is precluded by Exclusions 3(a) and 3(d), which bar claims for liens and work performed after the policy date. The district court found that Hall had not raised a genuine dispute of material fact that Penta's liens were for unpaid work before the policy date, and granted Old Republic's motion for summary judgment and denied Hall's motion for partial summary judgment.The Fifth Circuit concluded that the insuring clauses do not cover Hall's Penta lien losses. The court explained that any doubt about whether Covered Risks 2 and 10 could possibly be read to cover the Penta lien losses at issue here is removed by the fact that the parties also signed standard ALTA Form 32-06. In so doing, the parties specifically contracted to eliminate one coverage provision of the standard-form insurance policy—Covered Risk 11(a). Even assuming arguendo that the 32-06 endorsements and the Covered Risks conflict or result in an ambiguity about whether the Penta lien losses are covered, the court explained that it is the more general provisions that suggest that there may be coverage (under Hall's theory), while the more specific provisions instruct that there is no such coverage. Under basic principles of contract interpretation, the specific controls the general. Therefore, the court need not review the district court's conclusions regarding Exclusions 3(a) and 3(d) to affirm the judgment.The court also affirmed the district court's grant of Old Republic's motion for summary judgment on Hall's bad-faith and Texas Insurance Code claims. The court explained that, because Hall is not entitled to indemnification for the Penta lien losses, Hall cannot show that Old Republic acted in bad faith in denying its claim. Furthermore, because Hall alleges no other harm apart from the Penta lien losses, Hall cannot demonstrate that Old Republic caused it any harm in violating the Texas Insurance Code—assuming arguendo that the Texas Insurance Code applies, and that Old Republic ran afoul of its provisions. Finally, the court affirmed the district court's grant of Old Republic's motion for summary judgment on Hall's independent-counsel (or duty-to-defend) claim. View "Hall CA-NV, LLC v. Old Republic National Title Insurance Co." on Justia Law
Playa Vista Conroe v. Insurance Company of the West
After a Texas condo association suffered property damage during Hurricane Harvey, it filed a property-damage claim against its insurer. When the insurer refused to pay, the association filed suit for breach of its insurance contracts.The Fifth Circuit affirmed the district court's grant of summary judgment in favor of the association, holding the insurer liable. Applying de novo review, the court held that the association established coverage and that the insurer failed to prove that an exclusion applies. In this case, the association met its burden to show that its boat slips are covered in the absence of an applicable exclusion. Furthermore, in the face of an affidavit tending to establish that the boat slips were not destroyed by a "flood," the insurer could not carry its legal burden to prove one of the "flood" exclusions by submitting nothing. The court explained that this is particularly true where the policy exclusions on their face do not apply to the loss of the association's boat slips. Finally, the insurer conceded in the district court that the association's boat slips are covered by the storage provision, and the insurer cannot rely on the governmental-body exclusion. View "Playa Vista Conroe v. Insurance Company of the West" on Justia Law
American Guarantee & Liability Insurance Co. v. ACE American Insurance Co.
After Mark Braswell died when his road bike collided with a stopped truck, his survivors filed suit against the truck's owner, the Brickman Group. Brickman was primarily insured by ACE and secondarily insured by AGLIC. ACE rejected plaintiffs' three settlement offers before and during trial. The jury ultimately awarded plaintiffs nearly $28 million, plaintiffs and Brickman settled for nearly $10 million, and AGLIC paid nearly $8 million of the amount. AGLIC then filed suit against ACE, arguing that because ACE violated its Stowers duty to accept one of the three settlement offers for the primary policy limits, ACE had to cover AGLIC's settlement contribution. The district court agreed.The Fifth Circuit affirmed the district court's judgment and held that ACE's Stowers duty was triggered by plaintiffs' third offer, and that ACE violated this duty. In this case, the offer generated a Stowers duty because it "proposed to release the insured fully" and it was not conditional. Furthermore, the evidence was sufficient to support that ACE violated its Stowers duty by failing to reevaluate the settlement value of the case and accept plaintiffs' reasonable offer. View "American Guarantee & Liability Insurance Co. v. ACE American Insurance Co." on Justia Law
Valencia v. Allstate Texas Lloyd’s
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
Agredano v. State Farm Lloyds
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
Waste Management, Inc. v. AIG Specialty Insurance Co.
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
American General Life Insurance Co. v. Whitaker
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