Justia Insurance Law Opinion Summaries

In this insurance dispute, the First Circuit affirmed the judgment of the district court granting summary judgment in favor of Defendants and dismissing Plaintiff's suit to recover unreimbursed defense costs that a former investment advisory firm (Firm) incurred in connection with a Securities and Exchange Commission (SEC) investigation of the Firm, holding that the Firm was not entitled to coverage.Plaintiff, in his capacity as trustee of a trust established during the bankruptcy proceedings of the Firm, filed this suit against Defendants, two of the Firm's excess insurers, seeking to recover defense costs that the Firm incurred in connection with the SEC investigation. The district court granted summary judgment for Defendants, concluding that an SEC order issued before the start of Defendants' coverage period initiated the investigation of the Firm, and this order triggered the policy's "deemed-made" clause, meaning that the claim was deemed first made prior to Defendants' policy taking effect. The First Circuit affirmed, holding (1) the SEC investigation was a claim that was deemed to have been made when the SEC order issued prior to the inception of Defendants' policies; and (2) accordingly and the claim was outside of the policies' coverage period, and Defendants were not obligated to reimburse the Firm for its defense costs. View "Jalbert v. Zurich Services Corp." on Justia Law

A construction contractor’s employees were injured on the job and received workers’ compensation benefits from their employer. The workers later brought a negligence suit against three other corporations: the one that had entered into the construction contract with their employer, that corporation’s parent corporation, and an affiliated corporation that operated the facility under construction. The three corporations moved for summary judgment, arguing that all three were “project owners” potentially liable for the payment of workers’ compensation benefits and therefore were protected from liability under the exclusive liability provision of the Alaska Workers’ Compensation Act. The superior court granted the motion, rejecting the workers’ argument that status as a “project owner” was limited to a corporation that had a contractual relationship with their employer. After review, the Alaska Supreme Court concluded a project owner, for purposes of the Act, "must be someone who actually contracts with a person to perform specific work and enjoys the beneficial use of that work." Furthermore, the Court found the workers raised issues of material fact about which of the three corporate defendants satisfied this definition. Judgment was therefore reversed and the matter remanded for further proceedings. View "Lovely, et al. v Baker Hughes, Inc., et al." on Justia Law

In August 2007 Brent McCormick was injured while working aboard FV CHIPPEWA, owned by Chippewa,Inc. McCormick filed a lawsuit against Chippewa and Louis Olsen, the vessel's captain in August 2010. McCormick initiated settlement negotiations with the employer's insurance company for "policy limits." Under the insurance policy there was a per-occurrence coverage limit. During negotiations, counsel for McCormick and the insurance company discussed the terms of the settlement over a phone call; the parties provided inconsistent accounts of which issues were addressed on the call. McCormick's counsel’s affidavit asserted he raised the issue of the number of occurrences and the parties agreed to leave it unresolved. Shortly after this phone call, the parties reached a purported settlement agreement. McCormick filed suit to enforce the purported settlement agreement for policy limits based on three occurrences. The insurance company filed for summary judgment, asserting that the agreement was for policy limits of a single occurrence. The superior court granted summary judgment for the insurance company, concluding that its interpretation of the purported settlement agreement was correct. On appeal, McCormick argued the superior court abused its discretion on evidentiary and discovery issues and erred by granting the insurer’s motion for summary judgment. After review, the Alaska Supreme Court found no abuse of discretion. But the Court did find an issue of fact barring summary judgment due to the contradictory accounts of the phone call. A reasonable person could have discerned a genuine factual dispute on a material issue because this phone call could have either: (1) provided extrinsic evidence of the meaning of the settlement agreement, or (2) indicated there was no meeting of the minds on an essential term, and thus no enforceable agreement was formed. Therefore, summary judgment was inappropriate and the matter was remanded for further proceedings. View "McCormick v. Chippewa, Inc." on Justia Law

In this insurance dispute, the Supreme Court answered a question of Texas law in a case certified from the United States Court of Appeals for the Fifth Circuit by stating that a "policy-language exception" to the "eight-corners rule" is not a permissible exception under Texas law.The certified question asked about the "eight-corners rule," which is given its name by the "four corners" of the petition and the "four corners" of the policy. Under the eight-corners rule an insurer's "duty to defend is determined by the claims alleged in the petition and the coverage provided in the policy. The instant case concerned a dispute as to whether State Farm must defend its insureds against personal injury claims. According to one federal district court applying Texas law, the eight-corners rule does not apply unless the policy includes language requiring the insurer to defend all actions against its insured, even if the allegations are groundless, fraudulent, or false. The case made its way to the federal district court, which asked whether the "policy-language exception" to the eight-corners rule was a permissible exception under Texas law. The Supreme Court answered that it was not. View "Richards v. State" on Justia Law

The Fifth Circuit affirmed the district court's adverse judgment against plaintiffs on Employee Retirement Income Security Act (ERISA) claims assigned by Cigna-insured patients. The court held that the law of the case did not require the district court on remand to determine the legal correctness of Cigna's policy interpretation, and under Connecticut General Life Insurance Co. v. Humble Surgical Hospital, L.L.C., 878 F.3d 478, 485 (5th Cir. 2017), a court need not reach legal correctness if the insurer's determination was not an abuse of discretion. Furthermore, Humble moots consideration of the conflicts and inferences of bad faith that plaintiffs assert against Cigna.In this case, the district court correctly applied this court's previous decision in the instant controversy as well as Humble, and thus plaintiffs' exhaustion argument was moot. Plaintiffs' procedural challenge to Cigna's review failed for lack of substantiating evidence, which left the damages issue moot. Finally, plaintiffs failed to establish any right to attorney's fees. View "North Cypress Medical Center Operating Co. v. Cigna Healthcare" on Justia Law

IberiaBank filed suit against the insurers for breach of contract after the insurers denied IberiaBank's claim for coverage in the underlying DOJ Settlement.The Fifth Circuit affirmed the district court's grant of the insurers' motion to dismiss, holding that the government is not IberiaBank's "client" and did not become IberiaBank's "client" as a result of the Direct Endorsement Program. Therefore, IberiaBank's DOJ Settlement claim was not covered by the policies and the district court properly granted the insurers' motions to dismiss. The court need not consider Travelers' alternative argument. View "IberiaBank Corp. v. Illinois Union Insurance Co." on Justia Law

Perry’s home suffered water damage and required extensive repairs. She filed a claim with her insurer, Allstate, which did not dispute that Perry’s home was seriously damaged, or that it was required to pay for repairs or replacement. The parties agreed that the total estimated cost to repair or replace Perry’s home is $32,965.09. After making deductions for “depreciation,” Allstate provided Perry with a net payment of $28,394.74. Perry’s Allstate policy provides, “If you do not repair or replace the damaged, destroyed or stolen property, payment will be on an actual cash value basis. This means there may be a deduction for depreciation.” The policy does not define “depreciation.” Allstate contends that “depreciation” must account for the cost of both materials and labor. Perry claims that “depreciation” is ambiguous with respect to labor costs. The district court reversed the dismissal of Perry’s lawsuit. Under Ohio law, when an insurance policy is ambiguous, courts must interpret the policy strictly against the insurer, so long as the insured’s interpretation is reasonable. Perry’s reading of the term “depreciation” is a reasonable interpretation of an ambiguous policy, so Allstate may not include the cost of labor in calculating depreciation. View "Perry v. Allstate Indemnity Co." on Justia Law

The Fifth Circuit affirmed the district court's dismissal of a complaint brought by two policyholders against their insurance company, claiming that it should pay for the taxes and fees associated with replacing their totaled vehicles, thus making them whole. The court interpreted the relevant policy language under Texas law and held that each of the policyholders was entitled to the fair market value of his pre-loss vehicle. The court also held that the fair market value does not include the taxes and fees payable to purchase a replacement vehicle. View "Singleton v. Elephant Insurance Co." on Justia Law

The insured, Brenda Sandoval, submitted a claim to her insurer, Unum Life Insurance Company of America, which initially paid benefits but then terminated them. The termination of benefits led Sandoval to sue Unum for: (1) a common-law tort (bad faith breach of insurance contract); (2) a statutory tort (unreasonable conduct under Colo. Rev. Stat. sec. 10-3-1115 to 1116); and (3) breach of contract. The district court granted Unum’s motion for partial summary judgment on the tort claims. The contract claim went to trial, where the jury rendered a verdict for Sandoval. The district court later denied Unum’s motion for judgment as a matter of law. Sandoval appealed the grant of Unum’s motion for partial summary judgment, and Unum cross-appealed the denial of its motion for judgment as a matter of law. After review, the Tenth Circuit affirmed the award of partial summary judgment on the tort claims because Unum conducted a reasonable investigation. On the contract claim, the Court also affirmed the denial of Unum’s motion for judgment as a matter of law: the policy contained two alternative tests for a disability, and the evidence permitted a reasonable finding that Sandoval had satisfied at least one of these definitions. View "Sandoval v. UNUM Life Insurance" on Justia Law

The Eighth Circuit affirmed the district court's grant of judgment on the pleadings in favor of the county in a dispute regarding Argonaut's duty to defend the county against a civil rights lawsuit.Under Missouri law, the court held that Argonaut had a duty to defend the county. The court explained that the duty to defend is analyzed by comparing the language of the policy with the allegations in the complaint, and if the complaint alleges facts that merely give rise to a potential claim within coverage, the insurer has a duty to defend. In this case, the county procured insurance to shield itself against, among other things, possible constitutional claims against its officers and agents during the performance of their law enforcement duties. Therefore, there was a covered wrongful act under the policy during the time the policy was in effect. View "Argonaut Great Central Insurance Co. v. Lincoln County" on Justia Law