Justia Insurance Law Opinion Summaries

The Fifth Circuit concluded that Arch, the issuer of a commercial general liability policy, has a duty to defend a highway construction project's general contractor. In this case, the developer's claims against the project's general contractor implicate defective construction of the project's drainage systems; Archer Western constructed those drainage systems; and Archer Western's commercial general liability insurer (Arch) owes a duty to defend the general contractor (CTHC) in its underlying litigation with the developer. Accordingly, the court reversed the district court's judgment to the contrary. View "Zurich American Insurance Co. v. Arch Insurance Co." on Justia Law

Plaintiff State Farm Mutual Automobile Insurance Company (State Farm) filed an Insurance Fraud Protection Act (IFPA) action alleging defendants Sonny Rubin, M.D., Sonny Rubin, M.D., Inc., and Newport Institute of Minimally Invasive Surgery (collectively, defendants) fraudulently billed insurers for various services performed in connection with epidural steroid injections. A month prior, however, another insurer, Allstate, filed a separate IFPA lawsuit against the same defendants, alleging they were perpetrating a similar fraud on Allstate. The trial court sustained defendants’ demurrer to State Farm’s complaint under the IFPA’s first-to-file rule, finding it alleged the same fraud as Allstate’s complaint. State Farm appealed, arguing its complaint alleged a distinct fraud. After review, the Court of Appeal agreed the demurrer was incorrectly sustained, but for another reason. The Court found the trial court and both parties only focused on whether the two complaints alleged the same fraudulent scheme, but in this matter of first impression, the Court found the IFPA’s first-to-file rule required an additional inquiry. "Courts must also review the specific insurer-victims underlying each complaint’s request for penalties. If each complaint seeks penalties for false insurance claims relating to different groups of insurer-victims, the first-to-file rule does not apply. A subsequent complaint is only barred under the first-to-file rule if the prior complaint alleges the same fraud and seeks penalties arising from the false claims, submitted to the same insurer-victims." Judgment was reversed and the matter remanded for further proceedings. View "California ex rel. State Farm Mutual Automobile Ins. Co. v. Rubin" on Justia Law

The Supreme Court affirmed the decision of the district court granting summary judgment in favor of State Farm Mutual Automobile Insurance Company and dismissing Plaintiffs' claim alleging that they were entitled to uninsured motor vehicle (UIM) benefits after they were injured in an automobile accident caused by another driver, holding that State Farm was entitled to judgment as a matter of law.After their accident, Plaintiffs filed claims with State Farm for full UIM benefits of $100,000 after settling with the tortfeasor's insurance company. When State Farm did not respond, Plaintiffs brought suit, asserting breach of contract, bad faith in delaying and denying payment for the benefits, and breach of the implied covenant of good faith and fair dealing. The district court granted summary judgment for State Farm. The Supreme Court affirmed, holding that under the unambiguous language of the State Farm insurance policy, Plaintiffs were not entitled to UIM benefits and were not entitled to relief on their claims. View "Bergantino v. State Farm Mutual Automobile Insurance Co." on Justia Law

The Georgia Supreme Court granted certiorari review to consider whether the Court of Appeals erred in reversing a trial court’s order confirming an arbitration award against Interstate National Dealer Services, Inc. (“INDS”), in favor of Southern Mountain Adventures, LLC (“Dealer”), and Adventure Motorsports Reinsurance Ltd. (“Reinsurer”). The dispute arose from the parties’ contractual relationship pursuant to which Dealer sold motorsports vehicle service contracts, which were underwritten and administered by INDS, to Dealer’s retail customers, and Reinsurer held funds in reserve to pay covered repair claims. The Supreme Court concluded the Court of Appeals erred in reversing the confirmation of the award because the arbitrator manifestly disregarded the law in rendering the award. In Case No. S21G0015, the Supreme Court reversed the Court of Appeals’ decision reversing the order confirming the arbitration award on that basis, and remanded for resolution of INDS’s argument that the arbitrator overstepped his authority in making the award. In Case No. S21G0008, the Supreme Court vacated the Court of Appeals’ decision dismissing as moot Dealer and Reinsurer’s appeal of the trial court’s failure to enforce a delayed-payment penalty provided in the arbitration award, and remanded for reconsideration of that issue. View "Adventure Motorsports Reinsurance, Ltd., et al. v. Interstate National Dealer Services, Inc." on Justia Law

The insured's intended beneficiaries filed suit for breach of contract and violations of the Texas Insurance Code and Texas Prompt Payment of Claims Act in Texas court after the insurer denied coverage. After removal to federal court, the district court granted summary judgment in favor of the insurer.The Fifth Circuit reversed, concluding that the parties' arguments and the record presented to the district court at summary judgment reveal a genuine dispute as to whether the insured's application was amended. In this case, plaintiffs point to more than enough evidence in the record to raise a genuine dispute of fact as to whether there was a meeting of the minds to amend the application. Furthermore, because the district court's grant of summary judgment on plaintiffs' statutory, extracontractual claims was based on the conclusion that the insurer had legitimately denied plaintiffs' claim for benefits, the grant of summary judgment on the statutory, extra-contractual claims must also be reversed. Accordingly, the court remanded for further proceedings. View "Pham v. TransAmerica Premier Life Insurance Co." on Justia Law

Mashallah sells handcrafted jewelry at its Chicago store. Ranalli’s operates a bar and restaurant. Both purchased West Bend all-risk commercial property insurance policies. In March 2020, in response to the COVID-19 pandemic, Illinois Governor Pritzker ordered all individuals to stay at home except to perform specified “essential activities” and ordered “non-essential” businesses to cease all but minimum operations. Restaurants were considered essential businesses and permitted to sell food solely for off-premises consumption. Ranalli’s was restricted to filling takeout and delivery orders. Mashallah was not classified as an essential business and had to cease its retail activities. Both businesses sustained heavy financial losses. Their West Bend policies are materially identical. West Bend agreed to pay for actual business income lost and necessary extra expenses incurred if they were caused by “direct physical loss of or damage to” the businesses’ properties. Both policies contain virus exclusions. West Bend denied their claims.The Seventh Circuit affirmed the dismissal of contract and bad faith claims and a claim that West Bend’s retention of full premiums—despite decreased risks occasioned by the reduction in insureds’ business operations—constituted unjust enrichment, requiring rebates. The virus exclusions barred coverage for the purported losses and expenses and the businesses failed to allege viable legal bases for rebate of premiums. View "Mashallah, Inc v. West Bend Mutual Insurance Co." on Justia Law

In March 2020, in response to the rapidly expanding COVID-19 pandemic, Illinois Governor Pritzker issued an order mandating the temporary closure to the public of restaurants, bars, and movie theaters; a subsequent order required all non-essential businesses to shut down partially and temporarily. Bradley operates a Quality Inn & Suites with a restaurant, bar, and general event space and suspended in-person dining at the restaurant and bar, and canceled previously scheduled weddings and meetings.Bradley’s general business property insurance policy from Aspen requires “direct physical loss of or damage to” covered property; its loss of use exclusion bars coverage for “loss or damage caused by or resulting from … [d]elay, loss of use or loss of market” and another exclusion bars coverage for “loss or damage caused directly or indirectly by … [t]he enforcement of or compliance with any ordinance or law: (1) Regulating the construction, use or repair of any property; or (2) Requiring the tearing down of any property.”Affirming the district court, the Seventh Circuit held that the term “direct physical loss of or damage to” property does not apply to a business’s loss of use of the property without any physical alteration. The loss of use exclusion and the ordinance or law exclusion in this policy provide separate bars to coverage. View "Bradley Hotel Corp. v. Aspen Speciality Insurance Co." on Justia Law

In March 2020, the Dallas County government issued orders restricting the operations of local businesses in light of the COVID-19 pandemic. Hotels were permitted to continue to provide lodging, and delivery and take-out food services, subject to social-distancing rules. Crescent owns the Dallas Ritz-Carlton hotel, which offers guest rooms, a restaurant and bar, general event space, a salon, spa, and fitness center. Crescent alleges that COVID-19 rendered the air in the hotel unsafe and diminished the functional space available, causing significant losses of income. Crescent also alleges that it incurred expenses to install plexiglass partitions and hand sanitizer stations, to display signs throughout the hotel, and to move furniture to permit social distancing. Crescent’s Zurich insurance policy requires “direct physical loss or damage” to covered property and includes an exclusion for losses attributable to any communicable disease, including viruses, and a microorganism exclusion, which bars coverage for losses “directly or indirectly arising out of or relating to mold, mildew, fungus, spores or other microorganisms of any type, nature, or description, including but not limited to any substance whose presence poses an actual or potential threat to human health.”The Seventh Circuit affirmed the dismissal of Crescent’s suit against Zurich. The phrase “direct physical loss or damage” requires either “a permanent [dispossession] of the property due to a physical change … or physical injury to the property requiring repair.” The microorganism exclusion independently bars coverage for the hotel’s claimed losses. View "Crescent Plaza Hotel Owner, L.P. v. Zurich American Insurance Co." on Justia Law

On March 15, 2020, in response to the rapidly expanding COVID-19 pandemic, Illinois Governor Pritzker issued an order mandating the temporary closure to the public of restaurants, bars, and movie theaters. On March 20, another order required all non-essential businesses to shut down partially and temporarily. As a result of these orders, the plaintiffs (businesses) were each required to close or dramatically scale back operations. The businesses held materially identical commercial-property insurance policies, issued by Cincinnati Insurance Company, providing coverage for income losses sustained on account of a suspension of operations caused by “direct physical loss” to covered property. The policies also provided coverage for income losses sustained as a result of an action of civil authority prohibiting access to covered property, when such action was taken in response to “direct physical loss” suffered by other property. Cincinnati denied their claims.The Seventh Circuit affirmed the dismissal of each suit. The businesses did not adequately allege that either the virus that causes COVID-19, SARS-CoV-2, or the resulting closure orders caused “direct physical loss” to property; the loss of use, unaccompanied by any physical alteration to property, does not constitute “direct physical loss” under the relevant insurance policies. View "Sandy Point Dental, P.C. v. Cincinnati Insurance Co." on Justia Law

In this considering the provisions of a personal injury protection (PIP) insurance policy permit permitting the insurer to limit reimbursement payments in accordance with a statutory schedule of maximum charges the Supreme Court held that the PIP policy in this case was effective to authorize the use of the schedule of maximum charges under the pertinent provisions of Fla. Stat. 627.736(5).The certified question in this case related to the Second District Court of Appeal's holding that State Farm's policy provisions permitted State Farm to use the schedule of maximum charges even though the policy also referred to the use of other statutory factors for determining reasonable charges. The Supreme Court affirmed, holding that the PIP policy issued by State Farm was effective to authorize the use of the schedule of maximum charges under the relevant provisions of Fla. Stat. 627.736(5). View "MRI Associates of Tampa, Inc. v. State Farm Mutual Automobile Insurance Co." on Justia Law