Justia Insurance Law Opinion Summaries

Appellant Rainforest Chocolate, LLC appealed the grant of summary judgment motion in favor of appellee Sentinel Insurance Company, Ltd. Rainforest was insured under a business-owner policy offered by Sentinel. In May 2016, Rainforest’s employee received an email purporting to be from his manager. The email directed the employee to transfer $19,875 to a specified outside bank account through an electronic-funds transfer. Unbeknownst to the employee, an unknown individual had gained control of the manager’s email account and sent the email. The employee electronically transferred the money. Shortly thereafter when Rainforest learned that the manager had not sent the email, it contacted its bank, which froze its account and limited the loss to $10,261.36. Rainforest reported the loss to Sentinel. In a series of letters exchanged concerning coverage for the loss, Rainforest claimed the loss should be covered under provisions of the policy covering losses due to Forgery, for Forged or Altered Instruments, and for losses resulting from Computer Fraud. Sentinel denied coverage. In a continuing attempt to obtain coverage for the loss, Rainforest also claimed coverage under a provision of the policy for the loss of Money or Securities by theft. Sentinel again denied coverage, primarily relying on an exclusion for physical loss or physical damage caused by or resulting from False Pretense that concerned “voluntary parting” of the property—the False Pretense Exclusion. Finding certain terms in the policy at issue were ambiguous, the Vermont Supreme Court reversed summary judgment and remanded for the trial court to consider in the first instance whether other provisions in the policy could provide coverage for Rainforest's loss. View "Rainforest Chocolate, LLC v. Sentinel Insurance Company, Ltd." on Justia Law

A jury convicted former United States Postal Service employee Robert Hamilton of three counts of making a false or fraudulent statement for the purpose of obtaining compensation under the California workers' compensation law. On appeal, Hamilton argued: (1) because, as a federal employee, his workers' compensation benefits were provided under the Federal Employment Compensation Act, the doctrine of federal preemption barred him from being prosecuted under California law for any offense alleging fraud in obtaining federal workers' compensation benefits under FECA; and (2) regardless of whether the prosecution was preempted, his conviction was supported by insufficient evidence under Insurance Code section 1871.4 (a)(1) because that statute applied only to false or fraudulent statements made for the purpose of obtaining compensation afforded under the California workers' compensation law, which was not applicable to him as a federal employee. On the issue of federal preemption, the Court of Appeal concluded that Hamilton did not meet his burden to establish that the State's prosecution of him was preempted. With respect to the sufficiency of the evidence, the Court agreed with the State's concession that insufficient evidence supported Hamilton's convictions because he did not receive compensation under the California workers' compensation law. The Court declined to exercise discretion to modify the judgment to impose convictions on a lesser included offense. Accordingly, the judgment was reversed. View "California v. Hamilton" on Justia Law

Defendant issued a life insurance policy to the Decedent. Plaintiff, Decedent’s former wife, is the primary beneficiary; the contingent beneficiaries are Decedent’s “surviving children equally.” Plaintiff and Decedent divorced. Their Dissolution Agreement required that Plaintiff pay the premium of the Defendant’s policy and required “Husband at his expense [to] maintain" insurance on his life with the parties’ children as irrevocable primary beneficiaries. The couple had minor children at the time of Decedent’s death. When Plaintiff requested payment, Defendant requested that Plaintiff obtain waivers from "other potential parties” and court-appointed guardians for the children or that Plaintiff waive her rights so that Defendant could disburse the proceeds to the minor children. The court dismissed Defendant’s subsequent interpleader complaint and ordered Defendant to disburse to Plaintiff. A jury found that Defendant breached its contract, resulting in actual damages of $350,000; Defendant’s refusal to pay was in bad faith, resulting in additional damages of $87,500; and Defendant’s refusal to pay was either intentional, reckless, malicious, or fraudulent. The jury awarded punitive damages of $3,000,000. A Tennessee statute capped punitive damages at two times the compensatory damages awarded or $500,000, whichever is greater. Plaintiff challenged the cap under the Tennessee Constitution. The Tennessee Supreme Court declined to provide an opinion on certified questions. The district court then rejected Plaintiff’s challenge, reducing Defendant’s punitive damages liability to $700,000. The Sixth Circuit vacated in part, finding that the statutory cap on punitive damages, T.C.A. 29-39-104, violates the individual right to a trial by jury. View "Lindenberg v. Jackson National Life Insurance Co." on Justia Law

Somnus Mattress Corporation d/b/a Posturecraft Mattress Company ("Somnus") appealed the grant of summary judgment in favor of Stephen Hilson and Crutchfield & Graves Insurance Agency, LLC ("CGIA"), on Somnus's claim that Hilson and CGIA were negligent in advising Somnus not to purchase insurance coverage for business interruption and loss of profits ("business-income coverage"). After review of the circuit court record, the Alabama Supreme Court concluded Hilson and CGIA did not have a duty to advise Somnus concerning the adequacy of its insurance coverage. Without such a duty, as a matter of law Somnus could not establish that Hilson and CGIA were negligent in their actions. Therefore, the circuit court did not err in entering a summary judgment in favor of Hilson and CGIA. View "Somnus Mattress Corp. v. Hilson" on Justia Law

Ace American Insurance Company ("Ace"), an intervenor in the action below, appeals from the Baldwin Circuit Court's dismissal of the action filed by Ace's insured, Willie James Westbrook, against Rouse's Enterprises, LLC, d/b/a Rouses Markets ("Rouses Markets"). In August 2016, Westbrook sued Rouses Markets seeking to recover damages for injuries he sustained as the result of the allegedly negligent operation of a pallet jack by a Rouses Markets' employee while Westbrook was delivering goods to the Rouses Markets' location in Spanish Fort during the course of his employment with Cardinal Logistics Management Corporation ("Cardinal"). The Alabama Supreme Court has stated previously that, "'since dismissal with prejudice is a drastic sanction, it is to be applied only in extreme situations' and that, as a result, 'appellate courts will carefully scrutinize such orders and occasionally will find it necessary to set them aside.'" The Court could not say that the circumstances presented by this case presented an extreme situation in which dismissal of Ace's claim for want of prosecution was warranted. Accordingly, it reversed the judgment of the trial court dismissing Ace's claim and remanded the case for further proceedings. View "Ace American Insurance Company v. Rouse's Enterprises, LLC, d/b/a Rouses Markets" on Justia Law

The Supreme Court reversed the decision of the circuit court granting Plaintiffs’ motion to compel certain discovery and Plaintiffs’ request for attorney fees, holding that the circuit court abused its discretion in granting the motion to compel and that the award of attorney fees was unsupported by the record and the requirements of S.D. Codified Laws 15-6-37(a)(4)(A).Plaintiffs filed a complaint against Defendant, alleging failure to pay underinsured motorist benefits. After Plaintiffs served written discovery requests on Defendant and Defendant did not respond, Plaintiffs filed a motion to compel. The circuit court granted the motion in its entirety, concluding that Defendant had intentionally not responded to requests related to a bad faith cause of action. The Supreme Court reversed, holding (1) in granting the motion to compel, the circuit court failed to consider Defendant’s arguments that Plaintiffs had not attempted to meet and confer in good faith regarding the scope of discovery, as required by statute; and (2) having failed to consider whether Plaintiffs made a good faith effort to meet and confer when Defendant asserted as such, the circuit court abused its discretion in awarding attorney fees. View "Krueger v. Grinnell Mutual Reinsurance Co." on Justia Law

The Supreme Court answered a certified question from the Unitde States District Court by holding that Ohio Rev. Code 4123.35(O) is not unconstitutional as applied to the tort claims of an enrolled subcontractor’s employee who is injured while working on a self-insured construction project and whose injury is compensable under Ohio’s workers’ compensation laws.Daniel Stolz was injured while working as a concrete finisher for Jostin Construction. Jostin was a subcontractor of Messer Construction Company, the general contractor for the project. Under section 4123.35(O), Messer provided workers’ compensation coverage on the project for employees of subcontractors like Jostin that chose to enroll in Messer’s self-insurance plan. Stolz eventually sued Messer and several subcontractors for negligence. Messer and three enrolled subcontractors argued that they were immune from liability under section 4123.35(O). The Supreme Court concluded that the statute provides immunity to both general contractors and enrolled subcontractors from tort claims brought by employees of other enrolled subcontractors. Stolz later amended his complaint to allege that section 4123.35(O) is unconstitutional. The enrolled subcontractors petitioned the district court to certify a question of state law to the Supreme Court. The Supreme Court answered that section 4123.35(O) does not violate the Ohio Constitution’s right-to-remedy, right-to-jury, or equal-protection provisions. View "Stolz v. J & B Steel Erectors, Inc." on Justia Law

After Liberty refused to provide High Point a defense pursuant to the terms of insurance policies providing coverage for advertising injuries, the district court granted High Point's motion for partial summary judgment. The underlying litigation stemmed from Buyer's Direct's claim that High Point's Fuzzy Babba slipper infringed on the Snoozie's design patent.The Second Circuit agreed with the district court that as used in the counterclaims and with the additional context of the discovery demands in the underlying litigation, the term "offering for sale" includes advertising, such that Liberty owes High Point a defense. However, the court held that Liberty's duty to provide a defense did not arise until High Point provided Liberty with discovery demands served in the underlying litigation. Therefore, the district court vacated the award of damages and remanded for the district court to determine the amount of legal fees incurred from that point forward. View "High Point Design, LLC v. LM Insurance Corp." on Justia Law

Plaintiff filed suit for breach of an insurance contract and bad faith against State Farm, requesting punitive damages. The Court of Appeal affirmed the trial court's grant of summary adjudication in State Farm's favor, holding that plaintiff forfeited any contention of error regarding the breach of the insurance contract claim because she neither discussed the claim nor suggested that there were unpaid policy benefits. In regard to the bad faith claim, the court held that plaintiff raised no contention that State Farm improperly delayed arbitration under Insurance Code section 11580.2, subdivision (f). The court held that there were no triable issues regarding bad faith where State Farm acted reasonably in delaying payment of uninsured-underinsured motorist benefits. View "Case v. State Farm Mutual Automobile Insurance Co." on Justia Law

Billy Hamilton appealed a district court’s order granting summary judgment in favor of defendant Northfield Insurance Company as to Hamilton’s claim for breach of the implied duty of good faith and fair dealing and his accompanying request for punitive damages. In March 2015, Hamilton purchased a Northfield insurance policy for a commercial building in Council Hill, Oklahoma. Northfield had a third party inspect the property for underwriting purposes; the underwriting survey report concluded the risk was “Satisfactory with Recommendation Compliance” and identified eight recommendations for repairs. A tenant informed him the roof was leaking in December 2015, and Hamilton reported the leak and the resulting interior damage to Northfield. Northfield denied the claim because a claims adjuster saw no evidence of damage. Hamilton had made repairs, but the adjuster did not see evidence of them, and did not ask whether any were made. A week after receiving the denial, Northfield informed Hamilton it would not renew his policy when it expired. Hamilton was unsuccessful in his suit against Northfield, challenging on appeal the outcome with respect to breach of the implied duty of good faith and fair dealing (he won a jury verdict on his breach of contract claim). The Tenth Circuit found no abuse of the trial court’s discretion in its rulings on Hamilton’s claims, and affirmed. View "Hamilton v. Northfield Insurance Company" on Justia Law