Justia Insurance Law Opinion Summaries

The Supreme Court granted a writ of prohibition sought by West Virginia Mutual Insurance Company (Mutual) from the order of the circuit court denying Mutual's motion for summary judgment on common law bad faith claims brought by Michael Covelli, M.D., holding that Mutual demonstrated that the writ of prohibition was appropriate.A jury awarded Dominique Adkins almost $5.8 million on her medical malpractice claim against Dr. Covelli, which was above the limits of his medical malpractice insurance. However, Mutual, Covelli's insurer, settled Adkins's suit within policy limits before the circuit court reduced the verdict to judgment. When a second patient of Dr. Covelli learned of Adkins's large jury award, that patient too sued Dr. Covelli for malpractice. Mutual also settled that claim within policy limits. Thereafter, Dr. Covellie sued Mutual for common law bad faith. At issue was the order of the circuit court denying Mutual's motion for summary judgment on Dr. Covelli's claims. The Supreme Court granted the writ, holding that the circuit court clearly erred by denying Mutual's motion for summary judgment. View "State ex rel. W. Va. Mutual Insurance Co. v. Honorable Salango" on Justia Law

In 1999, Kristina drugged her sons and put them, and herself, in a running car in a closed garage. Matthew died; Adam and Kristina survived. Kristina was convicted of second-degree murder and remained in prison until 2016. In 1999, Kristina had State Farm automobile and homeowners insurance policies. In 2001, Matthew’s estate, Adam, and their father (the Rotells) sued Kristina for wrongful death and bodily injury.Kristina tendered her defense to State Farm, which filed state court declaratory judgment actions, seeking determinations that her policies did not cover the incident. The Rotells allege that State Farm rejected a settlement offer even though Kristina wished to accept it. The state court then held that the policies did not cover the incident. State Farm withdrew from the wrongful-death lawsuit. The state court entered a default judgment against Kristina; a jury entered a $505 million verdict. Kristina was insolvent, so the Rotells petitioned for involuntary Chapter 7 bankruptcy. The bankruptcy court entered an order subjecting Kristina’s assets (claims against State Farm for bad faith and malpractice) to its control and appointed Carapella as trustee. The verdict is Kristina’s only liability. Carapella sued State Farm in Florida state court. State Farm then sought to intervene, post-judgment, in the wrongful-death action and moved to vacate the judgment, arguing that the Rotells’ fifth amended complaint was untimely and that the default judgment was void.The district court and the Eleventh Circuit affirmed the denial of the motion. The Bankruptcy Code’s “automatic stay” provision, 11 U.S.C. 362(a), precluded State Farm’s motion to intervene. View "State Farm Florida Insurance Co. v. Carapella" on Justia Law

Former students sued Kamehameha Schools, alleging sexual abuse by a doctor who had practiced on SFMC’s campus. Kamehameha filed crossclaims against SFMC, which sent these crossclaims to its insurer, Argonaut. Argonaut ultimately represented SFMC subject to a reservation of rights. Neither party could determine the terms of the relevant policies from decades earlier. Argonaut sought declaratory relief in federal court under 28 U.S.C. 2201, as to what policies Argonaut had issued to SFMC during the relevant period and the terms of those policies. SFMC asked the district court to decline jurisdiction and, alternatively counterclaimed for declaratory and monetary relief.The Ninth Circuit affirmed the district court’s order, declining to exercise jurisdiction. Generally, a district court has the discretion to decline jurisdiction over a 28 U.S.C. 2201 declaratory-relief claim, after considering the relevant factors but when a declaratory claim is joined with an independent monetary one, the court usually must retain jurisdiction over the entire action. That mandatory jurisdiction rule did not apply; parties can plead a conditional counterclaim and still preserve objections to jurisdiction. SFMC’s counterclaims were conditional. Because SFMC did not waive its threshold defense, the district court still had discretionary jurisdiction. The district court thoroughly considered and correctly concluded that each relevant factor favored declining jurisdiction, noting that the declaratory claims could be filed in state court and that deciding them would not settle all aspects of the controversy or clarify the parties’ legal relationships. View "Argonaut Insurance Co. v. St. Francis Medical Center" on Justia Law

The Supreme Judicial Court affirmed the judgment of the superior court in this insurance dispute, holding that the superior court properly entered summary judgment in favor of 21st Century Centennial Insurance Company and 21st Century Insurance and Financial Services, Inc. (collectively, 21st Century).Collette Boure and Alexander Meyers took the car of Nancy Snow, Meyers's great aunt, and fled Maine to begin a drive across the country. While the teenage couple was in Oklahoma, they crashed in a chase with police, resulting in Boure's death. Boure's Estate sought uninsured motorist coverage from Concord General Mutual Insurance Company (Concord) on a personal auto policy issued to him and from 21st Century on a personal auto policy issued to Meyers's great aunt. After both insurers denied coverage Concord brought a declaratory judgment action against the Estate. The Estate counterclaimed against Concord and brought a separate action against 21 Century. The court granted summary judgments in favor of Concord and 21st Century. The Supreme Judicial Court affirmed, holding (1) the Estate's appeal of the summary judgment in favor of Concord was untimely; and (2) the court properly entered summary judgment in favor of 21st Century. View "Concord General Mutual Insurance Co. v. Estate of Collette J. Boure" on Justia Law

This appeal presented an issue of first impression for the Court of Appeals: does a commercial property insurance policy provide coverage for a business’s lost income due to the COVID-19 pandemic? After review of the specific insurance policy that California Mutual Insurance Company (California Mutual) issued to The Inns by the Sea (Inns) for its five lodging facilities, the Court determined Inns could not recover from California Mutual for its lost business income resulting from the COVID-19 pandemic. Further, Inns did not identify any manner in which it could amend its complaint to state a claim for coverage. Accordingly, the Court affirmed the trial court’s order sustaining California Mutual’s demurrer without leave to amend. View "The Inns by the Sea v. Cal. Mutual Ins. Co." on Justia Law

The Supreme Court held in this case that the circuit court had the power to enter an order precluding a party to a West Virginia lawsuit from instituting or prosecuting collateral litigation in a sister state.This lawsuit was brought by a pharmaceutical distributor against the insurance companies that provided it with liability insurance. At issue on appeal was the West Virginia circuit court's "anti-suit injunction" prohibiting the insurance companies from pursuing parallel litigation against the distributor in California. The Supreme Court affirmed in part and reversed in part, holding (1) the circuit court clearly had the authority to enter an anti-suit injunction; but (2) an anti-suit injunction was not narrowly tailored to protect the court's authority while respecting the sister state court, necessitating remand. View "St. Paul Fire & Marine Insurance Co. v. AmerisourceBergen Drug Corp." on Justia Law

Anderson, the lead plaintiff in a putative class action against her life insurance provider, Wilco, alleged that in 2011-2016, the company breached the terms of her universal life insurance policy by increasing her monthly rate for impermissible reasons. Her policy provides for a “guaranteed maximum monthly cost of insurance rate” and a “current monthly cost of insurance rate.” The guaranteed rate is calculated “based on” Anderson’s “age, sex, and premium class.” The current rate, by contrast, “will be determined by the Company” but cannot exceed the guaranteed rate. As a typical universal life insurance policy, Anderson’s policy was a hybrid investment vehicle and life insurance policy. As her policy aged, Wilco began to increase Anderson’s current rate sharply; her policy’s accumulation value (essentially the investment earnings from which Anderson could cover her monthly payments) was wiped out, and Anderson failed to make the monthly payments out-of-pocket. Her policy lapsed, and Anderson sued.The Eleventh Circuit affirmed the dismissal of her complaint. The policy gave Wilco discretion to set Anderson’s current rate as long as that rate was less than the guaranteed rate and unambiguously gave Wilco discretion to set Anderson’s current monthly rate. View "Anderson v. Wilco Life Insurance Co." on Justia Law

The primary issue in this case was whether imposing sales tax on in-state lessors of business equipment to a title insurer violated Article XIII, section 28(f) of the California Constitution. The California Department of Tax and Fee Administration (Department) contended it did not because the lessor, not the title insurer/lessee, was the taxpayer. In the Department’s view, whether the lessee reimburses the lessor for its sales tax obligation was strictly a matter of contract and did not implicate the constitutional limit on taxing insurers. Conversely, First American Title Insurance Company (First American) pointed out that in equipment leases not involving an insurer, the state assesses a use tax, not a sales tax. But where, as here, the lessee is constitutionally exempt from paying use tax, Regulation 1660(c)(1) solved that problem by providing that the sales tax applied instead. First American argued that as a result, Regulation 1660(c)(1) imposed a de facto use tax on title insurers in violation of Article XIII, section 28(f). The trial court agreed with First American and ordered the Department to “remove, strike out and otherwise give no force or effect to that portion of Regulation 1660(c)” providing that when the lessee is not subject to use tax, the sales tax applies. The Court of Appeal reversed: “Article XIII, section 28(f) does not prohibit a sales tax whose legal incidence is on a lessor, even though the economic burden of the tax is ultimately borne by the title insurer/lessee.” View "First American Title Insurance Co. v. Cal. Dept. of Tax and Fee Admin." on Justia Law

Guzman applied for an Allstate life insurance policy in 2017. In his application, Guzman disclosed his history of seizures but denied using tobacco or nicotine products. After receiving some of Guzman’s medical records and the results of his blood and urine tests, Allstate issued him a $250,000 policy at a “Standard Non-Tobacco” annual premium rate. Guzman, then 28 years old, died in 2019, after suffering a seizure at work. Allstate began a contestable-claims investigation and obtained additional medical records, most of which described Guzman as a smoker. Two underwriting referrals determined that Guzman would not have been issued the same policy as a smoker. Allstate informed Gusman’s wife, Mirna, that it was rescinding the contract and gave her a $433 premium refund.Mirna sued Allstate for breach of contract and violations of the Texas Deceptive Trade Practice–Consumer Protection Act, and the Texas Insurance Code. Mirna denied that her husband was a smoker and submitted an affidavit from Guzman’s sister, Martha. The district court granted Allstate summary judgment. The Fifth Circuit reversed. Mirna’s and Martha’s affidavits are competent summary judgment evidence. Though self-serving, their testimony created a genuine dispute of material fact. Allstate’s evidence was insufficient to carry its summary judgment burden. The medical records were inconsistent and Allstate has not identified definitively the sources of the medical records information. View "Guzman v. Allstate Assurance Co." on Justia Law

The Supreme Court reversed in part and affirmed in part the judgment of the district court concluding that Appellant was not entitled to underinsured motorist (UIM) and medical payment (MP) coverages under his automobile policy with USAA Casualty Insurance Company, holding that the court erred in part.The district court granted summary judgment for USAA on both coverages. The Supreme Court reversed in part, holding (1) as to the UIM coverage, the district court erred by interpreting the contract and determining its terms were not contrary to public policy; and (2) as to the MP coverage, the district court properly granted summary judgment in favor of USAA. View "Goss v. USAA Casualty Insurance Co." on Justia Law