Justia Insurance Law Opinion Summaries

At issue in this appeal is whether the district court had subject matter jurisdiction over an interpleader action commenced by a liability insurance company, whose policy was exposed to conflicting and excess claims. In this case, AmGuard, a Pennsylvania corporation with its principal place of business in Pennsylvania, commenced this action in the nature of an interpleader and for a declaratory judgment against its insured and the claimants to the proceeds of its policy, all of whom were South Carolina citizens.The Fourth Circuit reversed the district court's dismissal of the action based on lack of subject matter jurisdiction. The court explained that, because AmGuard disputed the amount that the claimants maintained was available under AmGuard's policy, having acknowledged coverage for only a lesser amount, it was a "claimant" adverse to the other claimants to the proceeds of the policy. Therefore, the diverse citizenship between AmGuard and the South Carolina claimants provided the district court with the minimal diversity needed for jurisdiction under 28 U.S.C. 1335. Furthermore, 28 U.S.C. 1332 also provided the district court with jurisdiction to resolve AmGuard's declaratory judgment claim, yet the district court dismissed the entire action without addressing why it did not have jurisdiction under section 1332. The court concluded that this error also required reversal. The court remanded for further proceedings. View "AmGuard Insurance Co. v. SG Patel and Sons II LLC" on Justia Law

The Eighth Circuit affirmed the district court's grant of summary judgment to Integrity in an action brought by plaintiff for negligent performance of an undertaking. Plaintiff filed suit after he was injured in a cab driven by a drunk driver, alleging that Integrity should have done a better background check on the cab driver.The court concluded that Integrity did not owe any duty to plaintiff under Iowa law. The court explained that, even assuming Integrity could have discovered the cab driver's Minnesota DWI, its review of his records did not put plaintiff in a worse situation because the cab company put the driver behind the wheel. Therefore, plaintiff failed to state a duty as a matter of law under the Restatement (Second) of Torts, Sec. 324A. The court also concluded that there was no liability under Sec. 324A(c) of the Restatement because the cab company did not rely on the insurer's background check and conducted its own review of the driver's record. View "Foster v. Integrity Mutual Insurance Co." on Justia Law

Progressive Northwest Insurance Company (“Progressive”) insured Dean and Laura Lautenschlager with a combined single limit policy of $500,000, which provided liability coverage, in addition to underinsured and uninsured motorist coverage. The Lautenschlagers were subsequently injured in a collision between their motorcycle, driven by Dean, and a van, driven by an underinsured motorist. Both Dean and Laura individually recovered the policy limits of $15,000 per-person from the underinsured motorist. In addition, Laura recovered a $375,000 settlement from Progressive due to Dean’s partial responsibility for the collision. Progressive then filed this lawsuit seeking a declaration that Progressive was only responsible for an additional $95,000 in underinsured motorist benefits under the policy following the various settlements. The district court granted summary judgment in Progressive’s favor, concluding that the offset provisions in the Lautenschlagers’ policy did not violate Idaho public policy and that the remaining coverage from Progressive was limited to $95,000. The Lautenschlagers appealed, arguing that the offset provisions of their insurance policy are void on public policy grounds and that the policy is ambiguous with respect to the amount of coverage offered. Finding no reversible error, the Idaho Supreme Court affirmed the district court. View "Progressive Northwest Insurance Company v. Lautenschlager" on Justia Law

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