Justia Insurance Law Opinion Summaries

In 2002, in Texas, Dr. Phillips performed a laparoscopic hysterectomy on Bramlett, a 36-year-old mother. While hospitalized, Bramlett suffered internal bleeding and died. Her family filed a wrongful death lawsuit against the hospital and Dr. Phillips, who held a $200,000 professional liability insurance policy with MedPro. He notified MedPro of the lawsuit. In 2003, the hospital settled with the Bramletts for approximately $2.3 million. The Bramletts wrote to Dr. Phillips’s attorney, Davidson, with a $200,000 Stowers demand; under Texas law, if an insurer rejects a plaintiff's demand that is within the insured’s policy limit and that a reasonably prudent insurer would accept, the insurer will later be liable for any amount awarded over the policy limit. MedPro twice refused to settle. The family won a $14 million verdict. The Supreme Court of Texas capped Dr. Phillips’s liability. The family sued MedPro, which settled. MedPro was insured by AISLIC, which declined to cover MedPro’s settlement. The district court granted AISLIC summary judgment, concluding that coverage was excluded because MedPro should have foreseen the family’s claim. An exclusion precluded coverage for “any claim arising out of any Wrongful Act” which occurred prior to June 30, 2005, if before that date MedPro “knew or could have reasonably foreseen that such Wrongful Act could lead to a claim.” The Seventh Circuit reversed in part, finding genuine issues of material fact regarding whether MedPro’s failure to settle was a Wrongful Act and whether MedPro could have foreseen a "claim" before the malpractice trial. View "Medical Protective Co. of Fort Wayne, Indiana v. American International Specialty Lines Insurance Co." on Justia Law

The Second Circuit affirmed the district court's summary judgment dismissal of all claims in the Second Amended Complaint against defendants in an action stemming from construction projects with the U.S. Army Corps of Engineers. The court held that MES's claims failed to articulate any support for its accusations that Safeco breached its contractual obligations or engaged in bad faith or tortious conduct. The court noted that the claim that Safeco acted inappropriately by attending the cure meetings was particularly frivolous. In this case, MES failed to identify any good faith basis, in law or on the basis of the agreements at issue, for its assertion that Safeco had no right to take steps to meet its obligations under the surety bonds. The court sua sponte awarded Safeco double costs. View "M.E.S., Inc. v. Safeco Insurance Co. of America" on Justia Law

Plaintiffs hold participating life-insurance policies from State Farm and Country Life that guarantee policyholders annual dividends from their insurers’ surpluses. The insurers decide the dividend amounts. Dissatisfied with their dividends, Plaintiffs filed nearly identical class-action complaints claiming that the dividend provisions in their policies violate the Illinois Insurance Code by failing to include a provision mandated by the Code. Plaintiffs concede that their annual dividends satisfied the terms of their respective policies. In consolidated appeals, the Seventh Circuit affirmed the dismissal of the claims. Illinois requires only that life-insurance policies of this type contain a provision for policyholders to participate in their insurers’ surpluses. The policies at issue here contain the required provision and are in compliance, despite allowing insurers discretion to set dividend amounts. View "Anderson v. Country Life Insurance Co." on Justia Law

MCI held a business owners insurance policy with an “Employment-Related Practices Liability Endorsement” from Society Insurance. When DirecTV sued MCI under 47 U.S.C. 521 for publicly displaying its programming in MCI’s two restaurants without paying the commercial subscription rate, Society denied MCI’s claim. MCI sued Society; the Seventh Circuit affirmed summary judgment for Society. The Endorsement requires Society to cover MCI for “damages resulting from a ‘wrongful act’ to which [the Policy] applies” and defines “wrongful act” to include, “[l]ibel, slander, invasion of privacy, defamation or humiliation.” There is no reasonable interpretation of the DirecTV complaint that could arguably fall within the category of libel, slander or defamation. That complaint alleged that MCI damaged DirecTV’s goodwill by showing its programming without paying the correct subscription fee; there are no allegations that MCI made any false, defamatory statement about DirecTV. DirecTV’s actions did not include allegations that MCI made any kind of statement at all. View "Martinsville Corral, Inc. v. Society Insurance" on Justia Law

The Supreme Court answered a certified question submitted by the United States District Court for the District of Nevada by holding that, under Nevada law, an insurer’s liability where it breaches its contractual duty to defend is not capped at the policy limits plus any costs incurred by the insured in mounting a defense. Instead, an insurer may be liable for any consequential damages caused by its breach. Further, good faith determinations are irrelevant for determining damages upon a breach of the duty to defend.Respondents filed suit against Appellant-insurer for breach of contract and other causes of action. The federal court concluded that Appellant did not act in bad faith but did breach its duty to defend. The federal court subsequently entered an order staying the proceedings until resolution of the certified question by the Supreme Court. The Supreme Court answered as set forth above, holding that an insured may recover any damages consequential to the insurer’s breach of its duty to defend, and therefore, an insurer’s liability for breach of that duty is not capped at the policy limits, even if the insurer did not act in bad faith. View "Century Surety Co. v. Andrew" on Justia Law

At issue in this case was whether full faith and credit required Washington courts to enforce an Illinois class action judgment by dismissing subsequent local cases based on the same facts. An Illinois medical provider brought a nationwide consumer protection class action against Liberty Mutual Insurance Company in Illinois. The suit was settled and approved by an Illinois trial court. Chan Healthcare group, a Washington provider, received reasonable notice of the suit, but neither opted out of the class nor objected to the settlement. Chan sought to collaterally challenge the Illinois judgment in Washington courts, arguing the interests of Washington class members were not adequately represented in Illinois. The Washington Supreme Court concluded Chan failed to show its due process rights were violated, thus full faith and credit required Washington courts to enforce the Illinois judgment. View "Chan Healthcare Grp. v. Liberty Mut. Fire Ins. Co." on Justia Law

The Supreme Court reversed the decision of the court of appeals affirming the trial court’s grant of summary judgment in favor of Auto-Owners Insurance Company on Lee Comley’s complaint seeking payment from Auto-Owners for the loss to his property caused by water damage, holding that the lower courts erred in concluding that the damage-causing event was excluded by the policy.Comley had homeowner’s insurance through Auto-Owners. When water inundated the basement of Comley’s home from a public water main that broke at a railroad crossing near his home, Comley filed a claim for loss to his home and its contents. Auto-Owners denied the claim based upon the application of policy exclusions relating to water damage. The trial court ruled that the policy’s exclusions applied to deny Comley’s claim, and the court of appeals agreed. The Supreme Court reversed, holding that none of the policy exclusions applied under the facts of this case to negate potential coverage, and therefore, summary judgment was improperly granted. View "Comley v. Auto-Owners Insurance Co." on Justia Law

The Supreme Court affirmed the circuit court’s decision granting summary judgment in favor of Protective Life Insurance Company on Plaintiff’s complaint alleging breach of contract and bad faith, holding that there were no genuine issues of material fact indicating that Protective breached its contract with Plaintiff.Specifically, the Court held (1) Plaintiff’s claim that Protective breached the implied contractual duty of good faith and fair dealing was reviewable; (2) the circuit court did not err when it determined that Protective did not breach the implied contractual duty of good faith and fair dealing; and (3) the circuit court did not err in ruling that Protective did not commit bad faith in handling Plaintiff’s claims. View "Zochert v. Protective Life Insurance Co." on Justia Law

The issue this case presented for the Colorado Supreme Court's review were the insurance proceeds owed to petitioners Rosalin Rogers and Mark Thompson because of a failed property investment orchestrated by their broker-dealer, United Securities Alliance. Ten years into litigation, the issue of the amount of debt at issue has remained at issue, and unresolvable by the courts. United's insurer, Catlin Insurance, was ordered to pay petitioners under a professional liability policy; an appellate court upheld a district court's determination of attorney fees and costs that Catlin could deduct from the liability limit under the policy. The Supreme Court first addressed whether the "Thompson IV" division erred when it upheld the district court’s decision to consider new evidence on remand from Thompson v. United Securities Alliance, Inc. (Thompson III), No. 13CA2037, (Colo. App. Oct. 16, 2014). And Secondly, the Supreme Court addressed whether the Thompson IV division erred when it held that there was no legal basis for awarding prejudgment interest in a garnishment proceeding. As to the first issue, the Supreme Court affirmed the court of appeals; as to the second, it reversed and remanded for further proceedings. View "Thompson v. Catlin" on Justia Law

Beginning in 2009, plaintiffs sued defendants, including Associated Insulation, for injuries arising out of plaintiffs’ alleged asbestos exposure. Plaintiffs served Associated with the complaints. Associated, which apparently ceased operating in 1974, did not respond. The court entered default judgments, ranging from $350,000 to $1,960,458. Plaintiffs served notice of the judgments on Associated, but not on Fireman’s Fund. After entry of the judgments, Fireman’s located insurance policies appearing to provide coverage for Associated, retained counsel, and moved to set aside the defaults. Fireman’s argued “extrinsic mistake” because service of the complaint on Associated did not provide notice to Fireman’s and that it “never had the opportunity to participate in [the] lawsuit.” Plaintiffs noted that in two cases, they sent a “demand seeking coverage” to Fireman’s which was “acknowledged and denied” in 2012. Fireman’s had responded that it had searched all available records without locating any reference or policies of insurance issued to Associated. Plaintiffs did not respond with evidence of coverage. The court set aside the defaults. The court of appeal affirmed, noting that Fireman’s has a meritorious case and articulated a satisfactory excuse for not presenting a defense. Fireman’s established diligence in “seeking to set aside the default” judgments once they were discovered. View "Mechling v. Asbestos Defendants" on Justia Law