Justia Insurance Law Opinion Summaries

Two trees fell on Christopherson’s home, months apart, resulting in its total destruction. The village ordered demolition. Christopherson’s insurer, ASI, had advanced living expenses but did not provide the requested demolition payment by the village's deadline, so Christopherson razed the house himself. He did not provide invoices for the demolition or for his own labor. Christopherson sued, alleging bad-faith denial of policy benefits and informed ASI that, excluding personal property losses and additional living expenses yet to be determined, Christopherson’s losses were $143,384: the $135,000 dwelling coverage limit, $6,884 for demolition, and $1,500 for tree removal. ASI indicated that it would pay that amount, noting that it had not yet received any notice of claims for personal property.The court granted ASI a discovery protective order with respect to the bad faith claim, reasoning that Christopherson could not establish any underlying breach of the policies. ASI had already paid the full limits of his 2018–19 policy, Christopherson’s claims under his 2017–18 policy, and his additional living expenses under both policies. ASI obtained summary judgment. Christopherson had not presented evidence of costs actually incurred but not paid by ASI and could not show a breach; he had nearly exhausted the limits under both policies.The Seventh Circuit affirmed, rejecting an argument that the case should be remanded to state court. Christopherson’s arguments ignore policy provisions that the insured must first incur the expenses and then provide the insurer with documentation before the insurer is obliged to pay. View "Christopherson v. American Strategic Insurance Co." on Justia Law

In this legal malpractice action by an insurer against a law firm retained to represent its insured in a separate prior litigation, the Supreme Court held that, where the insurer had a duty to defend, the insurer had standing through its contractual subrogation provision to maintain the malpractice action against counsel hired to represent the insured.The trial court granted summary judgment in favor of the law firm, concluding that the insurer lacked standing to directly pursue a legal malpractice action because there was no privity between the law firm and the insurer. The Fourth District Court of Appeal affirmed, concluding that the insurer lacked standing to pursue the professional negligence action. The Supreme Court quashed the decision below, holding that the insurer had standing to maintain this legal malpractice action because the insurer was contractually surrogated to the insured's rights under the insurance policy. View "Arch Insurance Co. v. Kubicki Draper, LLP" on Justia Law

The Supreme Court answered a certified question in the positive and held that the costs incurred by Plaintiffs complying with an injunction in the underlying case were "damages" within the meaning of the policies with their insurance carrier, Liberty Mutual Insurance Company.In the underlying action, Plaintiffs were sued for negligence and nuisance. Liberty Mutual agreed to defend against the suit under Plaintiffs' homeowners policy and a personal liability policy. A permanent injunction was entered against Plaintiffs. Liberty Mutual, however, stated that it would not indemnify Plaintiffs for the costs they incurred in complying with the injunction on the grounds that the costs did not constitute covered damages under Plaintiffs' policies. Plaintiffs then filed suit against Liberty Mutual, alleging breach of the duty to indemnify. The federal district court certified to the Supreme Court the question of whether Liberty Mutual must indemnify Plaintiffs for the cost of complying with the injunction. The Supreme Court answered the question in the positive, holding that the costs incurred by Plaintiffs to comply with the injunction constituted covered "damages" under the Liberty Mutual policies. View "Sapienza v. Liberty Mutual Insurance" on Justia Law

After plaintiff filed suit against Reliance for denying his long-term disability claim, the district court granted summary judgment in favor of Reliance. The district court concluded that plaintiff's absence on medical leave at the time Reliance took over his group policy created a gap in his coverage and rendered his complained-of disability an excluded preexisting condition.The Fifth Circuit reversed and rendered judgment in favor of plaintiff, concluding that the district court misread the policy. The court held that the insurance plan's Transfer Provision, which determines whether employees covered under the group's previous plan with Prudential remained continuously insured when Reliance's policy took effect, applies to plaintiff. Therefore, the plan covered plaintiff when it took effect on September 1, 2015, during his leave, and thus Reliance wrongly denied his disability claim. Accordingly, the court remanded for determining the amount of plaintiff's benefit. View "Miller v. Reliance Standard Life Insurance Co." on Justia Law

Hallmark filed a declaratory judgment action contending that it did not breach the insurance policy or act in bad faith when adjusting Phoenix's claims stemming from a fire on Phoenix's property. Phoenix asserted three counterclaims. The district court granted Hallmark's motion in its entirety and granted Phoenix's motion in part. Phoenix appealed.The Eighth Circuit affirmed the district court's judgment in favor of Hallmark on Phoenix's claims for bad faith and Hallmark's claim for declaratory judgment. The court concluded that Hallmark had an objectively reasonable basis for denying Phoenix's demand and limiting its payment to $28,774.34 on January 9, 2018. Furthermore, to the extent that HSNO's report included any inaccuracies, an imperfect investigation, standing alone, is not sufficient cause for recovery if the insurer in fact has an objectively reasonable basis for denying the claim. The court also found that there was a reasonable basis for Hallmark to deny Phoenix's demand for an additional $124,800 in October 2017, and Hallmark had an objectively reasonable basis for denying Phoenix's bad faith claim for equipment loss and repair. Because summary judgment was appropriate on Phoenix's bad faith claim, the court explained that it follows that summary judgment was appropriate on Hallmark’s declaratory judgment claim. Finally, Phoenix's punitive damages claim is moot. View "Hallmark Specialty Insurance Co. v. Phoenix C & D Recycling, Inc." on Justia Law

The Eleventh Circuit affirmed the district court's grant of summary judgment in favor of Progressive in a third-party bad-faith action brought by plaintiff. Plaintiff claimed that Progressive was collaterally estopped by a previous action against the driver of the vehicle that hit plaintiff's vehicle, permanently injuring her and killing her son, from arguing that it had no opportunity to settle her claims within policy limits.Applying Florida law, the court concluded that, at bottom, it agreed with the district court's endorsement of the magistrate judge's detailed and well-reasoned factual findings and legal conclusions that Progressive did not act in bad faith. In this case, the day that Progressive learned of the accident, it concluded that it should offer the full bodily-injury policy limits to plaintiff and her son's estate; while the driver's criminal proceedings were ongoing, Progressive stayed in touch with plaintiff, informing her that it was ready to settle at her discretion; and after receiving plaintiff's counsel's unilateral offer to settle, Progressive's claims examiner, in-house counsel, and outside counsel promptly moved to satisfy his time-limited demands. The court explained that, under Florida law, an overbroad release can create a factual dispute regarding bad faith, but the totality of the circumstances and Progressive's release did not support a finding that Progressive acted in bad faith. View "Eres v. Progressive American Insurance Co." on Justia Law

Keith Bronner sued the City of Detroit seeking no-fault benefits. Bronner was a passenger on a city-operated bus when the bus was involved in an accident with a garbage truck operated by GFL Environmental USA Inc. The city self-insured its buses under the no-fault act, MCL 500.3101 et seq. Under the city’s contract with GFL, GFL agreed to indemnify the city against any liabilities or other expenses incurred by or asserted against the city because of a negligent or tortious act or omission attributable to GFL. The city paid Bronner about $58,000 in benefits before the relationship broke down and Bronner sued the city. Shortly after Bronner sued the city, the city filed a third-party complaint against GFL pursuant to the indemnification agreement in their contract. GFL moved for summary judgment, arguing that the city was attempting to improperly shift its burden under the no-fault act to GFL contrary to public policy. The circuit court denied GFL’s motion and granted summary judgment for the city. GFL appealed as of right, arguing that the indemnification agreement was void because it circumvented the no- fault act. The Court of Appeals agreed with GFL and reversed in an unpublished opinion, citing the comprehensive nature of the no-fault act and concluding that the act outlined the only mechanisms by which a no-fault insurer could recover the cost of benefits paid to beneficiaries. The Michigan Supreme Court reversed, finding that regardless of the differing opportunities for an insurer to reach an indemnification agreement with a vendor, such agreements were enforceable. View "Bronner v. City of Detroit" on Justia Law

In this dispute over an illegal stranger-originated life insurance (STOLI) policy, the district court found that the AIG Policy at issue lacked an insurable interest at its inception and was therefore void under Delaware Code Annotated Title 18, 2704(a), which, in relevant part, governs the purchase of a life insurance policy on the life of another person.The Eleventh Circuit affirmed the district court's decision allowing the Estate to recover the policy's proceeds under section 2704(b) and finding that the policy was void. However, the court reversed the district court's decision to strike Berkshire's counterclaims for fraudulent and negligent misrepresentations. The court deferred its decision on the remaining issues in this case pending certification of two questions to the Supreme Court of Delaware. The court stated that Berkshire may be entitled to the premiums it paid and the district court erred by striking its misrepresentation counterclaims. The court reserved judgment on the questions of whether the district court properly calculated prejudgment interest to which the Estate is entitled. View "Estate of Malkin v. Wells Fargo Bank, NA" on Justia Law

The United States Court of Appeals for the Tenth Circuit certified two questions of law to the Oklahoma Supreme Court. Plaintiff-appellant George Morgan was driving drunk and hit Jesse Atkins with his truck at more than 40 miles per hour. Atkins was severely injured, and his resulting medical bills totaled more than $2 million. Defendant-appellee State Farm Mutual Automobile Insurance Company provided liability insurance to Morgan at the time of the accident under a policy with a $100,000 limit. State Farm negotiated and executed a settlement with Atkins whereby State Farm paid its policy limit to Atkins and Atkins released his claims against Morgan. During the same timeframe, Atkins pursued a workers' compensation claim because he had been traveling for work when he was injured. The workers' compensation court issued a preliminary order for compensation, and the workers' compensation insurer began making payments to Atkins. The workers' compensation insurer's subrogee, New York Marine and General Insurance Company (NYM), sued Morgan in Oklahoma state court in June 2011 for reimbursement of the amounts paid to Atkins. Morgan retained personal counsel to represent him in the action. State Farm also provided counsel to Morgan and mounted a vigorous defense. A jury would later return a verdict in favor of NYM in the amount of $844,865.89, finding that State Farm knew about NYM's potential claim but failed to apprise NYM of its pending settlement with Atkins. The Oklahoma Court of Civil Appeals affirmed the judgment, and the Oklahoma Supreme Court denied certiorari. Morgan then filed suit against State Farm alleging State Farm's failure to secure NYM's release as part of its settlement with Atkins amounted to: (1) breach of the implied duty of good faith and fair dealing; and (2) breach of contract. The United States District Court for the Western District of Oklahoma found that Morgan's claims accrued in 2010, when State Farm negotiated the original settlement with Atkins and, therefore, concluded the applicable two and five year statutes of limitations for the tort and contract claims, respectively, barred Morgan's suit. Morgan appealed to the Tenth Circuit Court of Appeals. The Tenth Circuit asked: (1) where a plaintiff is injured by entry of an adverse judgment that remains unstayed, is the injury sufficiently certain to support accrual of a tort cause of action based on that injury under 12 O.S. 95 before all appeals of the adverse judgment are exhausted?; and (2) does an action for breach of an insurance contract accrue at the moment of breach where a plaintiff is not injured until a later date? The Oklahoma Court answered the first question with a "no:" the claim accrues when the appeal is finally determined in the underlying case. The Court answered the second question with a "yes:" an action for breach of contract accrues when the contract is breached, not when damages result; the limitations period may be tolled if the defendant fraudulently concealed the cause of action. View "Morgan v. State Farm mutual Automobile Insur. Co." on Justia Law

The Eighth Circuit reversed the district court's grant of summary judgment in favor of Continental and vacated the district court's declaration regarding the scope of Continental's duty to defend in nearly one hundred underlying lawsuits in which Daikin Applied is a defendant. Continental filed suit seeking a declaratory judgment that it has a duty to defend only those underlying asbestos-related suits expressly alleging in some manner that the named Subsequent Entity has been sued on account of McQuay-Perfex's liabilities, which is not true of any of the underlying lawsuits in dispute. Daikin Applied counterclaimed for a declaratory judgment to the effect that Continental owed it a duty to defend in all of the underlying lawsuits in dispute, arguing that the naming of a Subsequent Entity as a defendant was, by itself, sufficient to trigger Continental's duty to defend.The court concluded that the district court misapplied Minnesota law in its declaration regarding the scope of Continental's duty to defend by declaring that Continental's duty to defend arises only where an underlying suit alleges liability arising out of the predecessor's actions or where Daikin has been sued as successor to McQuay-Perfex. The court explained that by failing to declare the "arguably" standard applicable here, the district court erroneously heightened Daikin Applied's burden to trigger Continental's duty to defend. In this case, Daikin Applied need only show that the underlying complaints arguably allege McQuay-Perfex liabilities. The court also found that Daikin Applied's position requires too little to trigger Continental's duty to defend under Minnesota law. Because of its declaration, the court concluded that the district court did not analyze each underlying lawsuit to determine whether the complaint named a Subsequent Entity arguably on account of McQuay-Perfex's liabilities in light of the allegations therein or, if not, whether extrinsic facts proffered by Daikin Applied and known to Continental about that case clearly establish this. Accordingly, the court remanded for the district court to conduct this analysis in the first instance. View "The Continental Insurance Co. v. Daikin Applied Americas Inc." on Justia Law