Justia Insurance Law Opinion Summaries

In this case, the United States Court of Appeals for the Fifth Circuit considered an appeal by Colony Insurance Company against First Mercury Insurance Company related to a settlement agreement for an underlying negligence case. Both companies had consecutively insured DL Phillips Construction, Inc. (DL Phillips) under commercial general liability insurance policies. After the settlement, Colony sued First Mercury, arguing that First Mercury needed to reimburse Colony for the full amount of its settlement contribution, as it contended that First Mercury's policies covered all damages at issue. The district court granted summary judgment in favor of First Mercury, prompting Colony's appeal.In the underlying negligence case, DL Phillips was hired to replace the roof of an outpatient clinic in Texas. Shortly after completion, the roof began leaking, causing damage over several months. The clinic's owner sued DL Phillips for various claims, including breach of contract and negligence. A verdict was entered against DL Phillips for over $3.7 million. Both Colony and First Mercury contributed to a settlement agreement, and then Colony sued First Mercury, arguing it was responsible for all the property damage at issue.The appellate court held that under the plain language of First Mercury's policies and relevant case law, First Mercury was only liable for damages that occurred during its policy period, not all damages resulting from the initial roof defect. The court also found that Colony failed to present sufficient evidence to create a genuine dispute of material fact about whether there was an unfair allocation of damages, which would be necessary for Colony's contribution and subrogation claims. As such, the court affirmed the district court's decision to grant summary judgment in favor of First Mercury and denied summary judgment for Colony. View "Colony Insurance Company v. First Mercury Insurance Company" on Justia Law

Certain Underwriters at Lloyds, London (“Lloyds”) brought an intervenor complaint against Cox Operating LLC (“Cox”) seeking to recover maintenance and cure benefits Lloyds paid to an injured seaman. Cox filed a motion for summary judgment, arguing that Lloyds bears responsibility for the payments under a protection and indemnity (“P & I”) policy under which Cox is an assured. The district court agreed and granted the motion. Lloyds timely appealed.   The Fifth Circuit affirmed. The court explained that even if there were ambiguity as to the term “intended operations,” as included in the limitation on the waiver of subrogation, any such ambiguity is to be resolved “in favor of coverage.” Because the M/V SELECT 102 was engaged in its “intended operations” at the time of the seaman’s injury and the limitation on the waiver of subrogation does not apply, Lloyds waived its subrogation rights as to Cox. Thus, the court affirmed the he district court’s dismissal of Lloyds’s intervenor complaint. View "Certain Underwriters v. Cox Operating" on Justia Law

Defendant Compass Minerals Louisiana, Inc. (“Compass”) is part of a mineral company that owns and operates multiple salt mines. Among Compass’s locations is its Cote Blanche salt mine. Compass contracted with Louisiana-based companies Fire & Safety Specialists, Inc. (“FSS”) and MC Electric, LLC (“MCE”). An electrician employed by MCE died in an accident at the Cote Blanche salt mine. Both FSS and MCE held a commercial general liability policy with QBE. QBE filed a declaratory action in federal court, asserting that the indemnification and additional-insured provisions in the FSS and MCE purchase orders are “null, void, and unenforceable” under the Louisiana Oilfield Anti-Indemnity Act (“LOAIA”). The court rejected QBE’s argument that Compass “drills for” salt by using the drill-and-blast method for breaking a salt wall. It concluded, relatedly, that the term “drilling for minerals” in the LOAIA “should be construed as referring to the drilling of a well.” QBE appealed.   Finding no clear and controlling precedent on this issue of Louisiana law, the Fifth Circuit certified two questions to the Louisiana Supreme Court: 1.     Does the Louisiana Oilfield Anti-Indemnity Act, La. Stat. Ann. Section 9:2780, apply to provisions in agreements that pertain to “drilling for minerals,” even where the agreement does not “pertain to a well”? 2.     If the Act applies to agreements that pertain to “drilling for minerals,” irrespective of the agreement’s nexus to a well, does the Act apply to invalidate these indemnification and additional-insured provisions contained in contracts for fire suppression and electrical work in a salt mine, by virtue of the salt mine’s use of a “drill-and-blast” method for mining salt? View "QBE Syndicate 1036 v. Compass Minerals" on Justia Law

Defendants United Services Automobile Association and USAA General Indemnity Company (“USAA”) contract with insureds to pay “Actual Cash Value” (“ACV”) for totaled vehicles. USAA calculates ACV using the CCC One Market Valuation Report (“CCC”) rather than, e.g., the National Automobile Dealers Association guidebook (“NADA”) or Kelley Blue Book (“KBB”). Plaintiffs are USAA-insureds whose vehicles were totaled and who received ACV as determined by CCC. Plaintiffs alleged that CCC violates Louisiana statutory law, that they would have been paid more if USAA used NADA, and that they are owed the difference. Plaintiffs sought certification for a class of USAA-insureds who were paid less under CCC, and the district court granted it. USAA appealed class certification. On appeal, the parties dispute, among other things, whether common questions across the class involving damages and liability predominate over individual differences between class members, as required for class certification under Rule 23(b)(3).   The Fifth Circuit vacated and remanded. The court held that Plaintiffs failed to show injury and therefore failed to establish USAA’s liability on a class-wide basis because they failed to demonstrate entitlement to the NADA values for their totaled vehicles. The court held that with respect to Plaintiffs’ breach of contract claim, the district court’s choice of NADA is not simply an arbitrary choice among imperfect damages models. It is an arbitrary choice of a liability model, and a district court’s wide discretion to choose an imperfect estimative-damages model at the certification stage does not carry over from the context of damages to the context of liability. View "United Svcs Automobile v. Sampson" on Justia Law

Sixteen professional models (the Models) sued three Texas strip clubs (the Clubs) following the Clubs’ use of the Models’ likeness for advertising campaigns without the Models’ consent. Relevant to those claims, 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. PESLIC named both the Models and the Clubs as Defendants. The parties disputed whether that policy’s Exhibitions and Related Marketing Exclusion rendered illusory the Personal and Advertising Injury coverage. The district court agreed with the Models and the Clubs that it did. The district court also held that PESLIC had a duty to indemnify the Clubs under the 02 Policy. PESLIC appealed.   The Fifth Circuit reversed, rendered in part, and remanded. The court explained that PESLIC does not have a duty to defend the Clubs under the 01 Policy. Its duty to indemnify under the 01 Policy depends on the final resolution of the state case. As for the 02 Policy, PESLIC does not have a duty to defend or indemnify under it because the 02 Policy does not provide coverage for the claims alleged by the Models. The court held that the district court erred by concluding otherwise. Accordingly, the court reversed the district court’s summary judgment, rendered in part, and remanded the remaining issue of indemnity under the 01 Policy with instructions for the district court to stay disposition of that issue pending final resolution of the underlying state court lawsuit. View "Princeton Excess v. AHD Houston" on Justia Law

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