Justia Insurance Law Opinion Summaries

Articles Posted in US Court of Appeals for the Tenth Circuit
by
Reserve Mechanical Corp. appealed a Tax Court judgment affirming the decision of the Commissioner of Internal Revenue that it did not qualify for an exemption from income tax as a small insurance company and that the purported insurance premiums it received must therefore be taxed at a 30% rate under I.R.C. section 881(a). After review, the Tenth Circuit held that the record supported the Tax Court’s decision that the company was not engaged in the business of insurance. The court had two grounds for deciding that Reserve was not an insurance company: (1) Reserve had not adequately distributed risk among a large number of independent insureds; and (2) the policies issued by Reserve were not insurance in the commonly accepted sense. In addition, Reserve argued that if it was not an insurance company, the premiums it received should have been treated as nontaxable capital contributions. The Tenth Circuit also rejected that argument. View "Reserve Mechanical Corp. v. CIR" on Justia Law

by
This case arose from a claim for underinsured motorist (UIM) benefits by Plaintiff-Appellant Melinda Eckard (insured) against her insurer, Defendant-Appellee State Farm Mutual Automobile Insurance Company (State Farm). On summary judgment, the district court held that Eckard’s suit was time barred by Colorado Revised Statutes section13-80-107.5(1)(b). The Tenth Circuit reversed, finding the district court granted summary judgment to State Farm because it incorrectly found as a matter of law that Eckard “received payment of the settlement” when her lawyer received the settlement agreement and check on October 11, 2019. As was explained, Eckard actually “received payment of the settlement” when she executed the settlement agreement and authorized the check on November 7, 2019. As a result, section 13-80-107.5(1)(b) did not bar Eckard’s UIM claim against State Farm. View "Eckard v. State Farm Mutual Automobile" on Justia Law

by
Goodwill Industries of Central Oklahoma, Inc., suspended operations of its retail stores and donations centers on March 25, 2020, to comply with state and local orders regarding the COVID-19 pandemic. After suffering losses due to the shutdown, Goodwill sued its insurer, Philadelphia Indemnity Insurance Company (“Philadelphia”), under its commercial lines policy. The policy provided coverage for “loss of Business Income” when the insured must suspend its operations due to “direct physical loss of or damage to” covered property. The district court granted Philadelphia’s motion to dismiss, concluding the policy did not cover Goodwill’s loss and that the policy’s Virus Exclusion barred coverage. Finding no reversible error in that judgment, the Tenth Circuit affirmed. View "Goodwill Industries Central v. Philadelphia Indemnity" on Justia Law

by
Plaintiff-Appellant Neil Hall appealed the district court’s grant of summary judgment in favor of Defendant-Appellee Allstate Fire and Casualty Insurance Company (Allstate) on his claim for underinsured motorist benefits. Hall challenged the district court’s determination that Allstate successfully asserted the affirmative defense of failure to cooperate, and that his bad faith claim also failed as a result. Hall was injured in a car accident caused by underinsured motorist Teri Johnson. Johnson only carried $25,000 in liability insurance coverage. Hall carried underinsured motorist coverage through Allstate. Allstate gave Hall permission to settle with Johnson for her $25,000 limit. Hall’s counsel submitted a request for benefits to Allstate asserting that he was entitled to more than the $25,000 he had received. An Allstate claims adjuster reviewed the medical expenses in the letter and determined that the reasonable amount of expenses was $25,011.68. Allstate sent Hall’s counsel a payment of $11.68 along with a letter that stated: “I will be in contact with you to resolve the remaining components of your client’s claim.” Counsel did not respond to any of the five attempts over three months: two voicemails and three letters. Without any prior notice to Allstate, Hall filed suit against Allstate for breach of contract, statutory unreasonable delay or denial of payment of benefits, and common law bad faith. The Tenth Circuit affirmed the district court, finding that because the district court found the insured's failure to cooperate resulted in a material and substantial disadvantage to the insurer, the insurer properly denied coverage on this ground, and summary judgment was proper as to the insured's bad faith claim. View "Hall v. Allstate Fire" on Justia Law

by
The United States and four states sued DISH Network, LLC (“DISH”) for violations of the Telephone Consumer Protection Act (“TCPA”). DISH submitted a claim for defense and indemnity to its insurer, National Union Fire Insurance Company of Pittsburgh, Pennsylvania (“National Union”). National Union denied the claim and filed suit in Colorado federal court seeking a declaration that it had no duty to defend or indemnify DISH in the underlying TCPA lawsuit. The district court granted summary judgment to National Union, relying on the Tenth Circuit's decision in ACE American Insurance Co. v. DISH Network, LLC, 883 F.3d 881 (10th Cir. 2018). Finding no reversible error, the Tenth Circuit affirmed the district court's judgment. Further, the Court affirmed the district court’s denial of DISH’s request for further discovery under Federal Rule of Civil Procedure 56(d). And we deny DISH’s motion to certify a question of state law to the Colorado Supreme Court. View "National Union Fire Insurance v. Dish Network" on Justia Law

by
The issue on appeal in this case stemmed from an insurance claim filed by Bonbeck Parker, LLC and BonBeck HL, LC (collectively, BonBeck) for hail damage. The Travelers Indemnity Company of America (Travelers) acknowledged that some of the claimed damage to BonBeck’s property was caused by a covered hailstorm, but argued the remaining damage was caused by uncovered events such as wear and tear. BonBeck requested an appraisal to determine how much damage occurred, but Travelers refused this request unless BonBeck agreed the appraisers would not decide whether the hailstorm in fact caused the disputed damage. When BonBeck rejected this condition, Travelers filed suit, seeking a declaration that the appraisal procedure in BonBeck’s policy did not allow appraisers to decide the causation issue. The district court disagreed, ruling that the relevant policy language allowed appraisers to decide causation. After the appraisal occurred, the district court granted summary judgment to BonBeck on its breach of contract counterclaim, concluding that Travelers breached the policy’s appraisal provision. Travelers appealed. Applying Colorado law, the Tenth Circuit Court of Appeals affirmed: the disputed policy provision allowed either party to request an appraisal on “the amount of loss,” a phrase with an ordinary meaning in the insurance context that unambiguously encompassed causation disputes like the one here. "And contrary to Travelers’ view, giving effect to this meaning aligns both with other related policy language and with the appraisal provision’s purpose of avoiding costly litigation. For these reasons, the district court appropriately allowed the appraisers to resolve the parties’ causation dispute and granted summary judgment for BonBeck on its breach of contract claim." View "BonBeck Parker, et al. v. Travelers Indemnity" on Justia Law

by
Reliance Standard Life Insurance (“Reliance”) appealed district court’s orders: (1) concluding that Reliance wrongly denied David Carlile’s claim for long-term disability benefits; (2) refusing to remand the case and instead ordering an award of benefits; (3) awarding attorney fees and costs to Carlile; and (4) denying Reliance’s motion to amend or alter judgment. After reviewing the policy at issue here, the Tenth Circuit determined the relevant policy language was ambiguous and therefore construed it in Carlile’s favor, and in favor of coverage. Furthermore, the Court concluded the district court did not err in refusing to remand the case back to Reliance or in awarding attorney fees and costs to Carlile. View "Carlile v. Reliance Standard Life Ins." on Justia Law

by
In 2013, a fire caused the Sinclair Wyoming Refining Company to restrict operations for several months. It filed a claim with its eighteen insurers, including Infrassure, Ltd., which collectively provided Sinclair coverage for business interruption losses under an all-risk insurance policy. In 2015, after twenty months of claim adjustment, Sinclair and the other seventeen insurers settled the claim. But Infrassure did not agree with the settlement value and eventually exercised its right under the policy to have Sinclair’s covered loss calculated by a panel of three appraisers. The panel valued the loss at $60,365,508, with Infrassure liable for $4,527,413. Infrassure, still unsatisfied, sought to invalidate the award in district court, arguing that the appraisers relied improperly on the settlement amount rather than independently valuing the loss. The district court rejected this theory and confirmed the award, holding Infrassure failed to show any actionable misconduct on behalf of the appraisers. After review, the Tenth Circuit agreed the record revealed nothing warranting setting aside the appraisal award, and therefore affirmed. View "Sinclair Wyoming v. Infrassure" on Justia Law

by
The parents of a teenage girl (L.M.) sued Premera Blue Cross under the Employee Retirement Income Security Act (ERISA), claiming improper denial of medical benefits. L.M. experienced mental illness since she was a young girl. L.M. was eventually placed in Eva Carlston Academy, where she obtained long-term psychiatric residential treatment. For this treatment, the parents submitted a claim to Premera under the ERISA plan’s coverage for psychiatric residential treatment. Premera denied the claim ten days into L.M.’s stay. But Premera agreed to cover the first eleven days of L.M.’s treatment, explaining the temporary coverage as a "courtesy." The parents appealed the denial of subsequent coverage, and Premera affirmed the denial based on a physician's medical opinion. The parents filed a claim for reimbursement of over $80,000 in out-of-pocket expenses for L.M.’s residential treatment at the Academy. Both parties moved for summary judgment, and the district court granted summary judgment to Premera based on two conclusions: (1) Premera’s decision was subject to the arbitrary-and- capricious standard of review; and (2) Premera had not acted arbitrarily or capriciously in determining that L.M.’s residential treatment was medically unnecessary. The district court granted summary judgment to Premera, and the parents appealed. After review, the Tenth Circuit concluded the district court erred by applying the arbitrary-and-capricious standard and in concluding Premera had properly applied its criteria for medical necessity. Given these conclusions, the Court reversed and remanded the matter back to the district court for de novo reevaluation of the parents’ claim. View "M. v. Premera Blue Cross" on Justia Law

by
Colorado Center Development, LLC, the owner of certain property in Denver, Colorado, hired J.E. Dunn Construction Company to construct an office building (the Project). Colorado Center purchased from Defendant Liberty Mutual Fire Insurance Company a Builder’s Risk insurance policy (the Policy). The Policy provided protection against “direct physical loss or damage caused by a covered peril to ‘buildings or structures’ while in the course of construction, erection, or fabrication.” J.E. Dunn hired plaintiff Rocky Mountain Prestress, LLC (RMP) as a subcontractor to perform work including “engineer[ing], supply[ing,] and install[ing] all precast concrete components, connections, and erections aids” and “[s]upply[ing] and install[ing] grout and/or patching of all connections required by the engineering for the structural integrity of the precast.” Because of “potential concerns that arose at another project” relating to “sinking pillars/columns,” J.E. Dunn requested RMP to retain a third-party engineering firm to investigate “potential structural issues” with RMP’s work on the Project. The engineering firm concluded that the Project required “repairs to insufficiently grouted joints between precast concrete column and pilaster elements” at 264 locations throughout the structure. The engineering firm began its investigation in August 2016, and the final grouting repair work was completed in February 2017. In the meantime, in November 2016, RMP submitted a claim to Liberty seeking coverage under the Policy. The district court granted summary judgment in favor of the insurance company on three independent grounds: (1) RMP had not shown that the claimed loss was fortuitous; (2) the claimed loss did not constitute “direct physical loss or damage” as required for coverage under the policy; and (3) even if there might otherwise have been coverage, the claimed loss fell within the policy’s exclusion for defective workmanship. After review, the Tenth Circuit affirmed the district court’s decision based on the defective-workmanship exclusion. View "Rocky Mountain Presstress v. Liberty Mutual Fire Insurance" on Justia Law