Justia Insurance Law Opinion Summaries

Articles Posted in US Court of Appeals for the Second Circuit
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The United States District Court for the Southern District Court  concluded that Lincoln Life & Annuity Company of New York was not obligated under New York Insurance Law Section 3203(a)(2) to refund a payment that Plaintiff had deposited into a policy account associated with her life insurance policy five months before she died. Because no New York court has  analyzed this provision of New York insurance law, and because insurance policy implicates significant New York State interests, the Second Circuit deferred a decision on this appeal in order to certify the following question to the New York Court of Appeals: Whether a planned payment into an interest-bearing policy account, as part of a universal life insurance policy, constitutes a “premium actually paid for View "Nitkewicz v. Lincoln Life & Annuity Co. of N.Y." on Justia Law

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Plaintiff National Rifle Association of America (the "NRA") claims that Defendant, the former Superintendent of the New York State Department of Financial Services ("DFS"), violated its rights to free speech and equal protection when she investigated three insurance companies that had partnered with it to provide coverage for losses resulting from gun use and encouraged banks and insurance companies to consider discontinuing their relationships with gun promotion organizations. The NRA contends that Defendant used her regulatory power to threaten NRA business partners and coerce them into disassociating with the NRA, in violation of its rights.   The district court dismissed the equal protection claim on the basis that Defendant was protected by absolute immunity, but it declined to dismiss the free speech claims, concluding that the NRA plausibly alleged its claims and issues of fact existed as to whether she was protected by qualified immunity.   The Second Circuit reversed and remanded. The court explained that here, the various cases addressing the issue did not provide clear and particularized guidance but involved very different circumstances and much stronger conduct. The cases do not clearly establish that Defendant’s statements, in this case, were unconstitutionally threatening or coercive. Qualified immunity balances the need to hold public officials accountable when they exercise their power irresponsibly with the need to shield officials from harassment, distraction, and liability when they perform their duties responsibly. Here, the Complaint's factual allegations show that, far from acting irresponsibly, Defendant was doing her job in good faith. View "National Rifle Association of America v. Maria T. Vullo" on Justia Law

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Defendant OneBeacon Insurance Company reinsured one of three excess insurance policies issued by Plaintiff Fireman’s Fund Insurance Company to policyholder ASARCO, Inc. After developing significant potential liability on claims made by asbestos-injured claimants, ASARCO sought coverage from Fireman’s Fund under all of its excess policies. ASARCO and Fireman’s Fund ultimately settled all of the claims under the three policies. Fireman’s Fund allocated a portion of that settlement to the policy reinsured by OneBeacon and sought reinsurance coverage on the allocated sum. OneBeacon rejected Fireman’s Fund’s claim, arguing that the settlement allocation violated the terms of the excess and reinsurance policies. The district court granted summary judgment to Fireman’s Fund, and OneBeacon appealed.   The Second Circuit affirmed. The court agreed with the district court that Fireman’s Fund’s allocation of a portion of the settlement to the excess policy reinsured by OneBeacon was not contrary to that policy’s exhaustion requirement or to the terms of the reinsurance policy. OneBeacon is therefore obligated under the reinsurance policy’s follow-the-settlements clause to provide the requested coverage. View "Fireman's Fund Ins. Co. v. OneBeacon Ins. Co." on Justia Law

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TIG Insurance Company (“TIG”) appeals from a judgment and order of the district court. TIG asserts that Judge Ramos erred in ordering it to arbitrate a coverage dispute with ExxonMobil Oil Corporation (“Exxon”). Even if it was required to arbitrate, TIG contends that Judge Ramos erred in awarding Exxon prejudgment interest when confirming the arbitral award. After entering judgment, and after TIG had appealed, the district court clerk notified the parties that it was brought to Judge Ramos’s attention that he owned stock in Exxon when he presided over the case. Nothing in the record suggests that Judge Ramos was aware of his conflict at the time he rendered his decisions, and the parties do not suggest otherwise. TIG moved in the district court to vacate the judgment. The case was reassigned to a different judge, who denied the motion to vacate. TIG appealed from that denial as well.The Second Circuit affirmed the district court’s denial of Appellant’s motion to vacate and the district court’s order compelling arbitration, reversed in part its decision granting Exxon’s request for prejudgment interest, and remanded to the district court for further proceedings. The court explained that vacatur was not required because this case presents only questions of law, and a non-conflicted district judge reviewed the case de novo. As to the merits, the court held that the district court did not err in compelling arbitration because the parties were subject to a binding arbitration agreement, but that the district court erred in ordering TIG to pay pre-arbitral-award interest. View "ExxonMobil Oil Corporation v. TIG Insurance Company" on Justia Law

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Soto, a former Disney employee, alleged that Disney improperly denied her severance benefits upon her termination for physical illness that rendered her unable to work. Soto, a longtime employee had experienced a severe stroke and other medical problems, which left her unable to work. Disney formally terminated Soto’s employment, paid Soto sick pay, short-term illness benefits, and long-term disability benefits but did not pay her severance benefits. She filed suit under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1132(a)(1)(B); (a)(3), alleging that the Plan Administrator improperly determined that she did not experience a qualifying “Layoff” as required for severance benefits.The Second Circuit affirmed the dismissal of her case. Her complaint does not plausibly allege that the interpretation of “Layoff” and resulting denial of severance benefits to Soto were arbitrary and capricious. The Plan Administrator had reasoned bases, relating to taxation, for its interpretation of “Layoff” and consequent denial of severance benefits. The court noted an IRS regulation that defines an “involuntary” “termination of employment” as one arising from “the independent exercise of the unilateral authority of the [employer] to terminate to [employee’s] services, . . . where the [employee] was willing and able to continue performing services.” View "Soto v. Disney Severance Pay Plan" on Justia Law

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The Second Circuit affirmed the district court's denial of Global's request for a declaratory judgment that the policy limits of the reinsurance certificates capped Global's reinsurance obligations with respect to both losses and expenses. In this case, Global issued ten facultative reinsurance certificates to Century pursuant to which Global agreed to indemnify Century for losses and litigation expenses that Century might incur in connection with the liability policies it had issued to Caterpillar.The court held that the certificates' policy limits are not inclusive of defense costs and, in so holding, recognized that its prior decisions in Bellefonte Reinsurance Co. v. Aetna Casualty & Surety Co., 903 F.2d 910 (2d Cir. 1990), and Unigard Security Insurance Co. v. North River Insurance Co., 4 F.3d 1049 (2d Cir. 1993), which concerned matters of New York law, have been undermined by an intervening decision of the New York Court of Appeals and no longer constitute the law of the circuit. Applying ordinary rules of contract interpretation, the court agreed with the district court that the reinsurance certificates' follow-form clauses require Global to pay its proportionate share of Century's defense costs in excess of the certificates' liability limits. The court's conclusion was based on the certificates' unambiguous language as well as the testimony of Century's experts confirming that a strong presumption of concurrency prevailed in the reinsurance market at the time the certificates were issued. View "Global Reinsurance Corporation of America v. Century Indemnity Co." on Justia Law

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Plaintiff, which owns and operates a fine arts gallery and dealership in New York City, sought coverage under three provisions of an insurance policy issued by Sentinel for losses and extra expenses incurred when it suspended its operations in accordance with government restrictions on non-essential businesses during the COVID-19 pandemic. After Sentinel denied coverage, plaintiff filed suit in district court.The Second Circuit affirmed the district court's dismissal of plaintiff's claims for breach of contract and declaratory judgment with prejudice. The court concluded that, under New York law, the policy provisions that plaintiff invokes provide coverage only where the insured suspends its operations because its property or property in its immediate area suffered physical damage. In this case, plaintiff does not plausibly allege such physical damage and thus it is not entitled to coverage under the policy. The court denied plaintiff's alternative request to certify a proposed question to the New York Court of Appeals and considered plaintiff's remaining arguments, finding them to be without merit. View "10012 Holdings, Inc. v. Sentinel Insurance Co." on Justia Law

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The Second Circuit affirmed the district court's judgment holding that an insurance company was not obligated under an insurance policy to defend the insureds in underlying copyright infringement suits. At issue is whether the insureds were subject to the policy exclusion for injury purportedly caused by an insured in the business of "broadcasting" or "telecasting."The court concluded that the insurance company does not owe the insureds a duty to defend under the policy because "broadcasting," as used in its Media Exclusion is not ambiguous and applies to the insureds' business. Furthermore, the insureds' argument that the plain and ordinary meaning of "broadcasting" does not apply here fails. In this case, the language of the policy does not suggest an intention to adopt a specialized definition of "broadcasting." Therefore, the court rejected the insureds' invitation to discard the plain and ordinary meaning of the term "broadcasting" in favor of its preferred definitions. Accordingly, the district court did not err in granting summary judgment to the insurance company. View "Dish Network Corp. v. Ace American Insurance Co." on Justia Law

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The Second Circuit affirmed the district court's judgment sustaining the final determination of Hartford Life with respect to plaintiff's disability benefits under the terms of the long term disability plan.The court held that California Insurance Code 10110.6(a) applies only to the claims of California residents. It does not apply to plaintiff because he was a New York resident at all relevant times. The court also held that "full and fair review" under the Employee Retirement Income Security Act's (ERISA) claims-procedure regulations does not require the claims administrator to produce documents developed or considered during the appeal from the initial determination while the claim is still under review and before a final benefits determination. Therefore, plaintiff cannot establish that Hartford Life did not provide his claim a full and fair review. In this case, the district court correctly reviewed Hartford Life's determination under the arbitrary-and-capricious standard and correctly concluded that the final determination was reasonable and supported by substantial evidence in the record. View "Mayer v. Ringler Associates Inc. and Af." on Justia Law

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Utica Insurance issued primary and umbrella coverage in 1973 and 1974 and subsequently paid asbestos losses incurred by the manufacturer (Goulds). Utica had ceded parts of its risk to the reinsurers, Munich and Century, in exchange for a share of the premiums, via facultative certificates, i.e., a reinsurance contract particular to that policy. Munich and Century each paid Utica $5 million for their undisputed one-fifth shares of the umbrella policy; but they refused to pay defense costs in addition to limits when Utica billed them an extra $2,760,534 each. Utica sued; in two suits before different judges of the same court, with inconsistent results.On the issue of whether the reinsurers (Munich and Century) were obligated to reimburse Utica for defense costs in addition to policy limits, the Second Circuit held that the 1973 certificates reinsure defense costs within limits, not in addition. A 2007 settlement agreement with Goulds did not independently require Century or Munich to pay defense costs in addition to limits. View "Utica Mutual Insurance Co. v. Munich Reinsurance America, Inc." on Justia Law