Justia Insurance Law Opinion Summaries
Articles Posted in US Court of Appeals for the Tenth Circuit
MVT Services v. Great West Casualty Company
In this case, the plaintiff, MVT Services, LLC (MVT), purchased a workers’ compensation and employers’ liability policy (WC/EL Policy) from Great West Casualty Company (Great West) for coverage from January 1, 2013, to January 1, 2014. MVT also entered into a Staff Leasing Agreement with OEP Holdings, LLC (OEP) and purchased a non-subscriber insurance policy from Crum & Forster Specialty Insurance Company (C&F). On August 13, 2013, MVT terminated its Texas coverage under the WC/EL Policy, effective September 16, 2013. On September 15, 2013, a day before the termination, MVT’s semi-tractor trailer crashed, killing driver Lawrence Parada. Parada’s widow filed a lawsuit against MVT. Great West denied coverage, leading MVT to seek defense under the C&F Policy.The United States District Court for the District of New Mexico found that Great West breached its duty to defend MVT, causing MVT to incur damages. The court awarded MVT damages and attorney fees. Great West appealed, arguing that the district court erred in finding that the Parada lawsuit would have resolved within the policy limit and that the breach did not proximately cause the damages.The United States Court of Appeals for the Tenth Circuit reviewed the case. The court held that the district court did not clearly err in its factual findings that MVT would have invoked the Exclusive Remedy defense and that the gross negligence claim would have resolved within the policy limit. The court also found that the district court did not err in awarding damages for the $250,000 retention under the C&F Policy, the $250,000 MVT contributed to the settlement, and $41,476.84 in attorney fees. The court affirmed the district court’s award of attorney fees, concluding that Great West failed to show the district court committed legal error or clearly erred in its fact findings. The Tenth Circuit affirmed the district court’s judgment. View "MVT Services v. Great West Casualty Company" on Justia Law
M.S. v. Premera Blue Cross
Plaintiffs M.S. and L.S. sought insurance coverage for mental health treatments for their child, C.S., under a health benefits plan provided by M.S.'s employer, Microsoft Corporation. The plan, administered by Premera Blue Cross, is subject to ERISA and the Parity Act. Premera denied the claim, stating the treatment was not medically necessary. Plaintiffs pursued internal and external appeals, which upheld the denial. Plaintiffs then sued in federal district court, alleging improper denial of benefits under ERISA, failure to produce documents in violation of ERISA’s disclosure requirements, and a Parity Act violation for applying disparate treatment limitations to mental health claims.The United States District Court for the District of Utah granted summary judgment to Defendants on the denial-of-benefits claim but ruled in favor of Plaintiffs on the Parity Act and ERISA disclosure claims. The court found that Defendants violated the Parity Act by using additional criteria for mental health claims and failed to disclose certain documents required under ERISA. The court awarded statutory penalties and attorneys’ fees to Plaintiffs.The United States Court of Appeals for the Tenth Circuit reviewed the case. The court vacated the district court’s grant of summary judgment on the Parity Act claim, finding that Plaintiffs lacked standing to bring the claim. The court reversed the district court’s ruling that Defendants violated ERISA by not disclosing the Skilled Nursing InterQual Criteria but affirmed the ruling regarding the failure to disclose the Administrative Services Agreement (ASA). The court upheld the statutory penalty for the ASA disclosure violation and affirmed the award of attorneys’ fees and costs to Plaintiffs. View "M.S. v. Premera Blue Cross" on Justia Law
Travelers Casualty Insurance Co. of America v. A-Quality Auto Sales
The case involves an insurance dispute between Travelers Casualty Insurance Company of America and A-Quality Auto Sales, Inc., along with its owners, Felicia and Shawn Richesin. The Richesins purchased a Subaru for resale through their dealership, A-Quality Auto Sales. After having the car inspected and repaired by RNS Auto Services, they experienced mechanical issues while driving it. Ms. Richesin was severely injured when she exited the vehicle on the side of the highway and was struck by another car. RNS had a garage insurance policy with Travelers, which provided commercial general liability coverage with a per-occurrence limit of $500,000 and a general aggregate limit of $1,000,000. The Richesins sought additional compensation from RNS and Travelers for Ms. Richesin's injuries.In the lower courts, the Richesins filed a suit against Travelers and other parties in New Mexico state court. The state court dismissed all claims against Travelers, citing a lack of privity between the injured party and the insurer. Later, the Richesins and RNS entered into agreements that led to Travelers paying the Richesins $500,000, which Travelers believed to be the policy limit. The Richesins, however, argued that there were multiple occurrences and therefore the policy's aggregate limit of $1,000,000 was available. Travelers then filed a complaint in federal district court seeking a judicial declaration that the accident was a single occurrence and the policy coverage limit for the accident was $500,000.The United States Court of Appeals for the Tenth Circuit affirmed the district court's entry of declaratory judgment. The court held that the dispute was ripe for resolution under Article III of the Constitution. It also ruled that the district court did not err by declining to abstain under the Brillhart and Younger abstention doctrines. The court further held that the district court did not err by denying the Richesins' Rule 56(d) motion, thereby denying them discovery needed to meaningfully oppose Travelers' motion for summary judgment. The court concluded that the accident was a single occurrence and the policy coverage limit for the accident was $500,000. View "Travelers Casualty Insurance Co. of America v. A-Quality Auto Sales" on Justia Law
Johnson v. Metropolitan Property and Casualty Insurance Company
The case involves Bryar Johnson, who was seriously injured in a traffic accident while riding his motorcycle. After the other drivers' insurance policies paid out their liability limits, Johnson sought additional uninsured motorist (UM) coverage from his parents' automobile policy with Metropolitan Property and Casualty Insurance Company (MetLife). MetLife denied Johnson's claim under an exclusion in his parents' policy that denies coverage to resident-relative insureds injured while operating their own motor vehicle that is not insured by a motor vehicle insurance policy. Johnson had liability insurance on his motorcycle but had declined to purchase the offered UM coverage.The United States District Court for the Western District of Oklahoma ruled in favor of MetLife. The court found that although Johnson was a resident relative and insured under his parents' policy, he had the opportunity to purchase his own UM coverage but declined it. The court interpreted Oklahoma law as requiring Johnson to either obtain liability insurance and UM coverage on his motorcycle policy or forego UM coverage under his parents' policy.On appeal, the United States Court of Appeals for the Tenth Circuit reversed the lower court's decision. The court concluded that MetLife's exclusion does not defeat UM coverage for Johnson. Because Johnson carried liability insurance on his motorcycle, the court held that his motorcycle was "insured by a motor vehicle insurance policy." The court found that MetLife's exclusion did not require that resident-relative insureds carry UM coverage on their own motor vehicles to be eligible for UM benefits on other applicable policies. Therefore, MetLife owes Johnson UM coverage from his parents' policy. The case was remanded for further proceedings. View "Johnson v. Metropolitan Property and Casualty Insurance Company" on Justia Law
Team Industrial Services v. Zurich American Insurance Company, et al.
Plaintiff Team Industrial Services, Inc. (Team) suffered a $222 million judgment against it in a wrongful-death lawsuit arising out of a steam-turbine failure in June 2018 at a Westar Energy, Inc. (Westar) power plant. Team sought liability coverage from Westar, Zurich American Insurance Company (Zurich), and two other insurance companies, arguing that it was, or should have been, provided protection by Westar’s Owner-Controlled Insurance Program (OCIP) through insurance policies issued by Zurich and the two other insurers. Team’s claims derived from the fact that its liability for the failure at the Westar power plant arose from work that had previously been performed by Furmanite America, Inc. (Furmanite), which had coverage under Westar’s OCIP. The district court granted summary judgment to Defendants, and Team appealed. Not persuaded by Team's arguments for reversal, the Tenth Circuit affirmed the district court. View "Team Industrial Services v. Zurich American Insurance Company, et al." on Justia Law
Monarch Casino & Resort v. Affiliated FM Insurance Company
Monarch Casino & Resort, Inc. appealed a district court’s grant of Affiliated FM Insurance Company’s (“AFM”) motion for partial judgment on the pleadings, which denied Monarch coverage under AFM’s all-risk policy provision, business-interruption provision, and eight other additional-coverage provisions. Monarch also moved the Tenth Circuit Court of Appeals to certify a question of state law or issue a stay. Monarch presented AFM with claims incurred through business interruption losses from COVID-19 and government orders directing Monarch to close its casinos. AFM denied certain coverage on the ground that COVID-19 did not cause physical loss of or damage to property. Monarch sued for breach of contract, bad faith breach of insurance contract, and violations of state law. The Tenth Circuit denied Monarch’s motions to certify a question of state law and issue a stay. And it affirmed the district court’s judgment: (1) AFM’s policy had a Contamination Exclusion provision that excludes all-risk coverage and business-interruption coverage from the COVID-19 virus; and (2) Monarch could not obtain coverage for physical loss or damage caused by COVID-19 under AFM’s all-risk provision, business-interruption provision, or eight additional-coverage provisions because the virus could not cause physical loss or damage and no other policy provisions distinguished this case. Accordingly, Monarch could not obtain the coverage that the district court denied. View "Monarch Casino & Resort v. Affiliated FM Insurance Company" on Justia Law
Dyno Nobel v. Steadfast Insurance Company
Explosives manufacturer Dyno Nobel tendered an action to its commercial general liability insurance policyholder, Steadfast Insurance Company (“Steadfast”), after being sued in Missouri for damages caused by the release of a nitric oxide plume from one of its Missouri plants. Steadfast denied the claim based on the insurance policy’s clauses precluding indemnification and defense of pollution-related bodily injury actions. Dyno Nobel thereafter filed an action in Utah state court seeking a declaratory judgment that Steadfast had a duty to indemnify and defend against this action under an endorsement titled “Vermont Changes – Pollution” (“Vermont Endorsement”). Contrary to Coverages A, B, and C in the insurance policy, the Vermont Endorsement would have required Steadfast to defend and indemnify against pollution-related bodily injury claims up to an aggregate amount of $3 million. Steadfast removed the action to federal court, and the federal district court entered judgment for Steadfast, concluding the Vermont Endorsement applied only to claims with a nexus to Vermont. Dyno Nobel appealed. After its review, the Tenth Circuit affirmed, finding the plain language of the insurance contract did not cover Dyno Nobel’s claim in the underlying action. View "Dyno Nobel v. Steadfast Insurance Company" on Justia Law
American Southwest Mortgage Corp., et al. v. Continental Casualty Company
American Southwest Mortgage Corporation and American Southwest Mortgage Funding Corporation (together, “the Lenders”) loaned money to First Mortgage Company, LLC. Robinson Gary Johnson & Associates, PLLC (the “Auditor”) audited First Mortgage’s finances for several years. The Auditor’s annual reports failed to note that First Mortgage was committing fraud. The Lenders sued the Auditor, and the Auditor’s insurer, Continental Casualty, Inc., defended the suit. The parties settled some claims. The district court held that each negligently conducted audit report was not “interrelated” to each other, while also holding that the Lenders’ claims on each audit in the same year were “interrelated.” Both sides appealed. After review, the Tenth Circuit reversed in part and affirmed in part. The district court erred by not finding each audit here interrelated. "That is because, under the insurance policy, each audit is logically connected by common facts and circumstances relating to the Auditor’s negligence." The Court affirmed that the Lenders’ claims pertaining to each individual audit were “interrelated,” finding the policy clarified that all claims arising out of the same act—here, each audit—were interrelated regardless of the quantity or type of claimants. View "American Southwest Mortgage Corp., et al. v. Continental Casualty Company" on Justia Law
McAnulty v. McAnulty, et al.
Husband Steven McAnulty was married twice: once to Plaintiff Elizabeth McAnulty, and once to Defendant Melanie McAnulty. Husband's first marriage ended in divorce; the second ended with his death. Husband’s only life-insurance policy (the Policy) named Defendant as the beneficiary. But the Missouri divorce decree between Plaintiff and Husband required Husband to procure and maintain a $100,000 life-insurance policy with Plaintiff listed as sole beneficiary until his maintenance obligation to her was lawfully terminated (which never happened). Plaintiff sued Defendant and the issuer of the Policy, Standard Insurance Company (Standard), claiming unjust enrichment and seeking the imposition on her behalf of a constructive trust on $100,000 of the insurance proceeds. The district court dismissed the complaint for failure to state a claim. Plaintiff appealed. By stipulation of the parties, Standard was dismissed with respect to this appeal. The only question to be resolved was whether Plaintiff stated a claim. Resolving that issue required the Tenth Circuit Court of Appeals to predict whether the Colorado Supreme Court would endorse Illustration 26 in Comment g to § 48 of the Restatement (Third) of Restitution and Unjust Enrichment (Am. L. Inst. 2011) (the Restatement (Third)), which would recognize a cause of action in essentially the same circumstances. Because the Tenth Circuit predicted the Colorado Supreme Court would endorse Illustration 26, the Court held Plaintiff has stated a claim of unjust enrichment, and accordingly reversed the previous dismissal of her case. View "McAnulty v. McAnulty, et al." on Justia Law
Catholic Charities of Southwest Kansas v. PHL Variable Insurance Company
In 2007, Defendant PHL Variable Insurance Company issued two life-insurance policies to Plaintiff Catholic Charities of Southwest Kansas, Inc. on the lives of Elwyn Liebl and John Killeen. Both policies guaranteed Plaintiff, as their named beneficiary, $400,000 upon the insureds’ death. Between 2013 and 2014, Defendant sent Plaintiff grace notices for both policies and demanded premium payments. Plaintiff believed the demanded premium payments were too high and that the grace notices were defective and untimely under the policies. So Plaintiff did not pay the requested premiums. Because Plaintiff did not pay the requested premiums, Defendant sent cancellation notices, informing Plaintiff that both policies had lapsed. In 2016, the insureds died. Plaintiff sought payment of benefits under both policies. Defendant declined, believing that it terminated Plaintiff’s policies for nonpayment of premiums two to three years earlier. In 2020, Plaintiff sued Defendant in the District of Kansas for failure to pay the death benefits under both policies. Defendant moved to dismiss both claims, arguing that Kansas’s five-year statute of limitations for breach of contract actions bars them. According to Defendant, the statute of limitations began to run in 2013 and 2014 when it informed Plaintiff that it was terminating the policies. In response, Plaintiff asserted that Defendant first breached both insurance contracts when it failed to pay the benefits upon the insureds’ death in 2016 because Defendant never successfully terminated the policies. The district court agreed with Defendant and dismissed Plaintiff’s claims as untimely. The appeal this case presented for the Tenth Circuit's review centered on a question of when the statute of limitations for a breach of contract claim alleging the wrongful termination of a life insurance contract began to run under Kansas law: if the limitations period began when Defendant acted to terminate Plaintiff’s policies, the district court correctly dismissed Plaintiff’s complaint; if the limitations period began when Plaintiff’s death benefits became due, the district court erred. Finding the district court did not err in dismissing Plaintiff's claims, the Tenth Circuit affirmed. View "Catholic Charities of Southwest Kansas v. PHL Variable Insurance Company" on Justia Law