Justia Insurance Law Opinion Summaries

The Supreme Court reversed the judgment of the circuit court ruling that an all-terrain vehicle (ATV) was covered under a homeowner's insurance policy as a "farm type vehicle," holding that the circuit court erred.Diamond Jones was injured while riding as a passenger on the back of an ATV driven by the daughter of Jennifer and Richard Rekowski. Jones filed a negligence action against the Rekowskis, who were insured by a homeowner's policy issued by Erie Insurance Exchange, and then filed this action seeking a judgment that Erie was obligated to pay the insurance claim. The circuit court concluded that the policy covered the accident. The Supreme Court reversed, holding (1) the ATV involved in the accident was not a "farm type" vehicle; and (2) therefore, the ATV was excluded from coverage by the homeowner's insurance policy. View "Erie Insurance Exchange v. Jones" on Justia Law

PCS Nitrogen sought insurance coverage for liability arising from contamination of a fertilizer manufacturing site in Charleston, South Carolina, claiming its right to coverage stemmed from an assignment of insurance benefits executed by Columbia Nitrogen Corporation in 1986. Respondents, the insurance carriers who issued the policies at issue, claimed they owed no coverage because Columbia Nitrogen Corporation executed the assignment without their consent. The circuit court granted summary judgment to Respondents, and the court of appeals affirmed. The South Carolina Supreme Court granted PCS's petition for a writ of certiorari, finding Columbia Nitrogen Corporation executed a valid post-loss assignment of insurance rights in 1986. "PCS cannot be denied coverage on the basis that Respondents did not consent to the assignment." The case was remanded to the trial court for further proceedings. View "PCS Nitrogen, Inc. v Continental Casualty Company, et al." on Justia Law

BITCO General Insurance Corporation (“BITCO”) and Monroe Guaranty Insurance Company (“Monroe”) issued general liability insurance policies to 5D Drilling & Pump Service Inc. (“5D”). A property owner sued 5D for breach of contract and negligence. BITCO sought a declaratory judgment that Monroe also owed a duty to defend 5D.The parties dispute whether any “property damage” alleged could have occurred during Monroe’s policy period. The magistrate found that damage must have occurred during a period when Monroe’s policy was in force.The court reasoned that under Texas law, courts determine whether an insurer’s duty to defend has been triggered by using the “eight corners” rule. The party seeking coverage has the initial burden of establishing that the underlying claims potentially state a cause of action. When pleadings in the underlying lawsuit have been amended, the court analyzes the duty to defend by examining the “latest, and only the latest, amended pleadings.”Typically, the eight-corners rule prevents courts from considering any extrinsic evidence. Texas law recognizes a limited exception to the eight-corners rule when it is impossible to discern whether coverage is potentially implicated and when the extrinsic evidence goes solely to a fundamental issue of coverage.Monroe contends that even if the owner’s pleading alleges damage within its policy period, it still has no duty to defend because all the damage falls within policy exclusions. The court found that Monroe cannot carry its burden because it cannot show that either exception unambiguously applies. Thus, the court affirmed the district court’s order. View "BITCO Gen Ins v. Monroe Guar Ins" on Justia Law

The Supreme Court answered in the affirmative a certified question issued by the United States Court of Appeals for the Ninth Circuit in this insurance dispute.At issue was Mont. Code Ann. 33-15-334(2), which provides that Mont. Code Ann. 33-15-337(2) is "not intended to increase the risk assumed under policies subject to" its requirements. Specifically in question was whether, when an insurance policy does not adhere to the technical requirements of Mont. Code Ann. 33-15-337(2), the insurer may nonetheless rely on unambiguous exclusions or limitations to the policy's coverage. The Supreme Court answered the question in the affirmative, concluding that, notwithstanding a failure to follow the provisions of section 33-15-337(2), an insurer may rely on unambiguous exclusions or limitations to the policy's coverage when invalidating such a provision would result in an increase of the risk assumed. View "High Country Paving, Inc. v. United Fire & Casualty Co." on Justia Law

In this insurance dispute, the Supreme Court affirmed the judgment of the superior court in favor of Defendant following the denial of Plaintiff's request for declaratory judgment and the grant of Defendant's motion for summary judgment, holding that there was no error in the proceedings below.Plaintiff filed a complaint seeking a declaratory judgment that Defendant was required to provide him with full insurance coverage and indemnification for his claims in his underlying personal injury lawsuit. The hearing justice granted summary judgment for Defendant as to all of Plaintiff's claims. The Supreme Court affirmed, holding that Plaintiff was not entitled to relief on his claims of error. View "Dulong v. Merrimack Mutual Fire Insurance Co." on Justia Law

ECE's movie theaters lost money after North Carolina's Governor imposed statewide closures in response to COVID-19. ECE’s insurance policy with HCC provides: We will pay the actual loss of Business Income you sustain due to the necessary “suspension” of your “operations” during the “period of restoration.” The “suspension” must be caused by direct physical loss of or damage to property at premises that are described in the Declarations and for which a Business Income Limit of Insurance is shown in the Declarations. The loss or damages must be caused by or result from a Covered Cause of Loss. A “Civil Authority” provision covers “the actual loss of Business Income you sustain and necessary Extra Expense caused by action of civil authority that prohibits access to the described premises due to direct physical loss of or damage to property, other than at the described premises, caused by or resulting from any Covered Cause of Loss.”After HCC denied ECE’s claim, the district court dismissed ECE’s suit. ECE argued that the policy covered losses due to COVID-related closures because the virus rendered ECE’s property unsafe. The Seventh Circuit affirmed the dismissal. ECE alleged neither a physical alteration to property nor an accessor use-deprivation so substantial as to constitute physical dispossession. View "East Coast Entertainment of Durham, LLC v. Houston Casualty Co." on Justia Law

Relator Gilbert Ellinger brought a qui tam suit on behalf of the People of the State of California against Zurich American Insurance Company (Zurich), ESIS, Inc. (ESIS), and Stephanie Ann Magill, under Insurance Code section 1871.7, a provision of the Insurance Frauds Prevention Act (IFPA). In January 2016, Ellinger injured his back while working, and he immediately informed his supervisor. The following month, Ellinger reported to his employer’s human resources manager that he had sustained a work-related injury and had told his supervisor about it. The human resources manager created a “time line memorandum” summarizing the conversations she had with Ellinger about the injury. She placed the memorandum in Ellinger’s personnel file. Ellinger filed a workers’ compensation claim. Magill worked as a senior claims examiner for ESIS and was the adjuster assigned to investigate Ellinger’s claim. ESIS denied Ellinger’s claim on an unspecified date. Magill later testified that she denied the claim because of a written statement from Ellinger’s supervisor in which the supervisor claimed that Ellinger had not reported the injury to him. When the human resources manager was deposed in November 2016, she produced the time line memorandum, which Ellinger’s counsel in the workers’ compensation action did not know about until then. Nearly eight months after that disclosure, in July 2017, ESIS reversed its denial of the claim and stipulated that Ellinger was injured while working, as he had alleged. Contrary to Magill’s testimony, her email messages showed that the human resources manager had emailed Magill the time line memorandum in March and April 2016, and Magill thanked the manager for sending it. Ellinger alleged that Magill’s concealment of or failure to disclose the time line memorandum violated Penal Code section 550 (b)(1) to (3). On the basis of those alleged violations, Ellinger alleged that defendants were liable under section 1871.7. Against each defendant, Ellington sought a civil penalty and an assessment of no greater than three times the amount of his workers’ compensation claim. The trial court sustained defendants’ demurrers without leave to amend, concluding defendants could not be held liable under section 1871.7 for any failures of Magill in the claims handling or review process. Finding no reversible error in sustaining the demurrers, the Court of Appeal affirmed. View "California ex rel. Ellinger v. Magill" on Justia Law

This appeal involved a challenge to how Geico General Insurance Company (“GEICO”) processed insurance claims under 21 Del. C. 2118. Section 2118 provided that certain motor vehicle owners had to obtain personal injury protection (“PIP”) insurance. Plaintiffs, all of whose claims for medical expense reimbursement under a PIP policy were denied in whole or in part, were either GEICO PIP policyholders who were injured in automobile accidents or their treatment providers. Plaintiffs alleged GEICO used two automated processing rules that arbitrarily denied or reduced payments without consideration of the reasonableness or necessity of submitted claims and without any human involvement. Plaintiffs argued GEICO’s use of the automated rules to deny or reduce payments: (1) breached the applicable insurance contract; (2) amounted to bad faith breach of contract; and (3) violated Section 2118. Having reviewed the parties’ briefs and the record on appeal, and after oral argument, the Delaware Supreme Court affirmed the Superior Court’s ruling that the judiciary had the authority to issue a declaratory judgment that GEICO’s use of the automated rules violated Section 2118. The Supreme Court also affirmed the Superior Court’s judgment as to the breach of contract and bad faith breach of contract claims. The Court concluded, however, that the issuance of the declaratory judgment was improper. View "GEICO General Insurance Company v. Green" on Justia Law

The Supreme Court affirmed the order of the district court denying Appellant's motion for summary judgment and granting summary judgment in favor of United Services Automobile Association (USAA) in this insurance dispute, holding that the district court did not err.Appellants filed a complaint alleging that USAA violated its duty to defend Shawn Conrad, one of USAA's insured policy-holders against whom Appellants had obtained a judgment. The district court granted summary judgment for USAA, concluding that USAA had no duty to defend Conrad because his conduct against Appellants did not fall within the scope of the policy's coverage. The Supreme Court affirmed, holding (1) Appellants' claims against Conrad were beyond the scope of coverage in USAA's policy; and (2) therefore, USAA did not have a duty to defend Conrad. View "R.S. v. United Services Automobile Ass'n" on Justia Law

While driving the co-plaintiffs car, the plaintiff negligently changed lanes and caused a collision, seriously injuring another driver. At the time of the incident at-fault car’s owner had a GEICO insurance policy that provided bodily-injury coverage up to $100,000 per person. The victim and Geico assert they made offers to settle, but the parties never agreed. After the conclusion of the victim's lawsuit, plaintiffs sued GEICO for bad faith, seeking to recover the amounts of the final judgments entered against them that exceeded the $100,000 policy limit. They contended that GEICO had breached its fiduciary duty to them by failing to settle the victim’s case within the policy limit. Plaintiffs challenge Cawthorn v. Auto-Owners Insurance Co 791 F. App’x 60, 65 (11th Cir. 2019), arguing that Florida law doesn’t require that a verdict precede an excess judgment as a prerequisite to proving the causation element of an insurer-bad-faith claim. The court reasoned that plaintiffs' available coverage and final judgments entered against them constituted excess judgments. Thus, plaintiffs could prove causation in their bad-faith case because they were subject to excess judgments. Finally, the court declined to follow Cawthorn because that court incorrectly analyzed Florida's bad-faith law and is unpersuasive. View "Erika L. McNamara v. Government Employees Insurance Company" on Justia Law