Justia Insurance Law Opinion Summaries

A mass shooting occurred at a Florida high school in 2018, resulting in numerous deaths and injuries. The Sheriff’s Office, which employed a school resource officer at the school, faced 60 lawsuits from victims alleging negligence in failing to secure the premises. The Sheriff’s Office held an excess liability insurance policy with Evanston Insurance Company, which required the Sheriff to pay a $500,000 self-insured retention (SIR) per “occurrence” and a $500,000 annual aggregate deductible before coverage would be triggered. The central dispute was whether the shooting constituted a single “occurrence” under the policy, or multiple occurrences—one for each victim or gunshot.The United States District Court for the Southern District of Florida reviewed the case after the Sheriff filed a declaratory judgment action. The district court denied Evanston’s motion to dismiss, finding that the policy’s definition of “occurrence” was ambiguous under Florida law, and that ambiguity should be construed in favor of the insured. The court determined that the Parkland shooting was a single occurrence, meaning only one SIR applied. The court also found that the Sheriff had satisfied both the SIR and the deductible through legal expenses and other covered claims, and awarded attorney’s fees and costs to the Sheriff.The United States Court of Appeals for the Eleventh Circuit affirmed the district court’s rulings. The Eleventh Circuit held that a justiciable controversy existed, as the Sheriff had demonstrated a substantial likelihood of future injury and had satisfied the policy’s prerequisites for coverage. The court further held that, under controlling Florida law, the term “occurrence” was ambiguous and must be construed in favor of the insured, resulting in the Parkland shooting being treated as a single occurrence. The court also upheld the award of attorney’s fees and costs to the Sheriff. View "Sheriff of Broward County v. Evanston Insurance Company" on Justia Law

D S Avionics Unlimited LLC owned a 1964 Piper PA-30 aircraft, which was insured under a policy issued by U.S. Specialty Insurance Company for the period between June 27, 2014, and June 27, 2015. In November 2014, DSA delivered the aircraft to a mechanic for maintenance at an Omaha airport. After a dispute between the mechanic and the airport owner, the mechanic was locked out of the hangar, and the aircraft was moved outside. When DSA attempted to retrieve the aircraft, a truck blocked its removal, and the airport owner refused to move it until storage fees were paid. The aircraft subsequently disappeared from view, and the airport owner informed authorities and the insurer that he was holding the aircraft pending payment. DSA reported the aircraft stolen and submitted a claim to USSIC, which was denied.USSIC filed suit in the District Court for Douglas County, Nebraska, seeking a declaration of noncoverage. DSA counterclaimed for breach of contract and bad faith. Both parties moved for summary judgment. The district court ruled in favor of USSIC, finding that DSA’s claim was not covered because there was no “accident” under the policy and that the Conversion Exclusion applied. The court also found that DSA failed to prove damages and that USSIC had an arguable basis for denial. DSA appealed, and the matter was moved to the Nebraska Supreme Court’s docket.The Nebraska Supreme Court held that DSA’s claim was within the policy’s coverage for “direct physical loss” caused by an “accident,” as defined by the policy. The court found that the airport owner’s actions constituted an “accident” from DSA’s perspective and that the Conversion Exclusion did not apply, as conceded by USSIC. The Supreme Court reversed the district court’s order and remanded for further proceedings regarding USSIC’s alleged bad faith and any damages due to DSA. View "U.S. Specialty Ins. Co. v. D S Avionics" on Justia Law

In April 2018, Mark Fiechtner was involved in a motor vehicle accident in Lincoln County, South Dakota, caused by another driver, Caitlyn Belliveau, who lost control on icy roads. Fiechtner subsequently experienced neck pain, headaches, vision problems, and memory issues, seeking treatment from various healthcare providers. He held an insurance policy with American West Insurance Company, which paid the $10,000 medical benefits limit. Fiechtner also received the $100,000 liability limit from Belliveau’s insurer. He then sought $900,000 in underinsured motorist (UIM) benefits from American West, but was offered only $10,000. After unsuccessful negotiations, Fiechtner sued American West for breach of contract, bad faith, punitive damages, and attorney fees.The case was tried in the Circuit Court of the Second Judicial Circuit, Lincoln County, South Dakota. At trial, evidence showed that American West’s investigation of the UIM claim was limited and did not include contacting Fiechtner or his healthcare providers, nor reviewing prior claim notes. The jury found in favor of Fiechtner on all counts, awarding $400,000 for breach of contract, $250,000 for bad faith, $890,000 in punitive damages, and attorney fees. The circuit court denied American West’s post-trial motions for judgment as a matter of law and for a new trial.The Supreme Court of the State of South Dakota reviewed the case. It affirmed the circuit court’s denial of American West’s motions, holding that sufficient evidence supported the jury’s findings of bad faith and punitive damages, and that the circuit court did not clearly err in awarding attorney fees under SDCL 58-12-3. The Supreme Court also found no abuse of discretion in the circuit court’s evidentiary rulings. View "Fiechtner v. American West Ins." on Justia Law

A medical-malpractice insurance company based in California issued a policy to a healthcare provider headquartered in Ohio. After a patient sued the provider in Connecticut, the provider submitted the claim to its insurer, which accepted coverage and managed the defense. Disagreements arose between the provider and insurer regarding settlement strategy, leading the provider to self-fund a settlement to avoid the risk of a verdict exceeding policy limits. Subsequently, the provider sued the insurer in Ohio, alleging bad-faith insurance-claim handling and seeking reimbursement for the settlement and related costs.The insurer moved to stay proceedings and compel arbitration under the policy’s arbitration clause, which had been amended to require arbitration of “any dispute…relating to this Policy (including any disputes regarding [the insurer’s] contractual obligations).” The Stark County Court of Common Pleas granted the motion to compel arbitration. On appeal, the Fifth District Court of Appeals reversed, relying on the Ohio Supreme Court’s decision in Scott Fetzer Co. v. American Home Assurance Co., Inc., and held that the bad-faith claim was a tort arising by operation of law and thus not subject to arbitration under the policy’s endorsement.The Supreme Court of Ohio reviewed the case and held that the arbitration agreement in the insurance policy is a broad clause, creating a presumption of arbitrability. The Court found that the presumption was not overcome, as the bad-faith claim could not be maintained without reference to the policy or the insurer-insured relationship, and there was no express exclusion of such claims from arbitration. The Supreme Court of Ohio reversed the Fifth District’s judgment and reinstated the trial court’s order compelling arbitration. View "U.S. Acute Care Solutions, L.L.C. v. Doctors Co. Risk Retention Group Ins. Co." on Justia Law

An attorney with over two decades of experience brought suit against an insurance company and its agent after his life insurance policy lapsed due to a missed payment. He claimed to have cured the lapse by paying the overdue premium and submitting required information, and alleged that the insurer confirmed reinstatement before later refunding his payment and rescinding the reinstatement. The insurer denied ever reinstating the policy and asserted it had expired by its own terms. The attorney filed suit in state court, alleging breach of contract and other claims. After removal to federal court, the parties mediated and signed a settlement memorandum outlining five essential terms, including a $10,000 payment to the plaintiff and mutual releases. The memorandum stated that final settlement language would use standard contractual terms.After mediation, the plaintiff refused to sign the draft settlement agreement, objecting to a non-reliance clause he claimed was not discussed during mediation. He also began raising new questions about the status of his insurance policy. He moved to vacate the settlement and sought further discovery, while the defendants moved to enforce the settlement. The United States District Court for the Western District of Missouri held an evidentiary hearing, which the plaintiff missed, and then granted the defendants’ motion to enforce the settlement and denied the plaintiff’s motions. The plaintiff’s motion for rehearing was also denied.On appeal, the United States Court of Appeals for the Eighth Circuit held that the settlement memorandum contained all essential terms and that the non-reliance clause in the draft agreement was standard language, not a material new term. The court found no clear error in the district court’s factual findings and no abuse of discretion in denying a new hearing. The Eighth Circuit affirmed the district court’s judgment enforcing the settlement. View "Schlecht v. Goldman" on Justia Law

Nearly a million barrels of crude oil owned by a U.S. company were seized from a vessel in Venezuelan waters by Venezuelan authorities under threat of force. The oil was insured under a marine cargo reinsurance policy that covered losses arising from war-related risks, including “insurrection.” The insured company claimed that the political turmoil in Venezuela, including the contested presidency and violent suppression of opposition, constituted an insurrection as defined by the policy. The reinsurers denied coverage, arguing that the events did not meet the policy’s definition of insurrection, leading to litigation.The United States District Court for the Southern District of New York reviewed cross-motions for summary judgment. The court found the term “insurrection” in the policy to be ambiguous and, applying New York law and the doctrine of contra proferentem, construed the ambiguity in favor of the insured. The court held that the Maduro regime’s actions constituted an insurrection within the meaning of the policy. The case proceeded to trial on causation and damages, where the jury found in favor of the insured on most issues, awarding over $54 million in damages plus interest.On appeal, the United States Court of Appeals for the Second Circuit considered challenges to the district court’s summary judgment ruling, judicial notice orders, and jury instructions on causation. The Second Circuit held that the district court did not err or abuse its discretion in any of the challenged rulings. It affirmed that the policy’s “arising from” language required only but-for causation, not proximate causation. The court affirmed the district court’s judgment in all respects, upholding the award to the insured. View "CITGO Petroleum Corp. v. Ascot Underwriting Ltd." on Justia Law

A law firm sought defense and indemnification from its professional liability insurer after being sued in New York state court by a judgment creditor of its client. The creditor alleged that the firm facilitated the sale of the client’s diamond ring and received a portion of the proceeds to satisfy past fees and as a retainer for future services, despite a restraining notice prohibiting the client from transferring assets due to an unpaid judgment. The state court complaint accused the firm of fraudulent conveyance, tortious interference with judgment collection, and contempt of court.The United States District Court for the Western District of New York dismissed the law firm’s claims for defense and indemnification and denied its motion for partial summary judgment regarding the insurer’s duty to defend. The district court found that the policy’s misappropriation exclusion applied, concluding that the firm’s handling of the sale proceeds was unauthorized in light of the restraining notice, regardless of the client’s consent.On appeal, the United States Court of Appeals for the Second Circuit reviewed the district court’s rulings de novo. Applying New York law, the Second Circuit held that the allegations in the underlying complaint involved the provision of professional services by the law firm and did not constitute “misappropriation” as commonly understood, since there was no allegation that the firm acted without its client’s authorization. The court found the term “misappropriation” ambiguous and construed it in favor of the insured. The Second Circuit vacated the district court’s dismissal, reversed the denial of partial summary judgment on the duty to defend, and remanded with instructions to enter partial summary judgment for the law firm on the insurer’s duty to defend. The court did not address other policy exclusions or the insurer’s ultimate duty to indemnify. View "Marcus & Cinelli, LLP v. Aspen Am. Ins. Co." on Justia Law

A serious automobile accident occurred in June 2018 involving Tommi Hummel, who was insured by Standard Fire Insurance Company. The accident resulted in severe injuries to Bradley Baldwin and John Hopkins, both of whom were involved in the crash, while a third passenger, Jill McCarty, left the scene. Hummel’s insurance policy provided $50,000 per person and $100,000 per accident in bodily injury liability coverage. After the accident, Baldwin sued the Hummels for negligence and made a time-limited settlement demand for the $50,000 per-person policy limit. Standard Fire, recognizing that multiple claims could exceed the policy limits, rejected Baldwin’s demand and instead filed an interpleader action, depositing the $100,000 policy limit with the trial court and naming all potential claimants.The Marshall County Circuit Court granted summary judgment for Standard Fire, finding that it had not breached any duty to its insureds and was released from further liability. The Indiana Court of Appeals affirmed in part but reversed on the issues of breach of the duty of good faith and bad faith, holding that genuine issues of material fact existed regarding Standard Fire’s rejection of Baldwin’s settlement demand and its conduct in filing the interpleader action.The Indiana Supreme Court reviewed the case and affirmed the trial court’s grant of summary judgment for Standard Fire. The Court adopted Section 26 of the Second Restatement of Liability Insurance, establishing that an insurer facing multiple claims against insufficient policy limits fulfills its duty of good faith by filing an interpleader action, naming all known claimants, depositing policy limits with the court, and continuing to defend the insured. The Court held that Standard Fire’s actions satisfied this standard and did not constitute a breach of the duty of good faith or bad faith. View "Baldwin v. The Standard Fire Insurance Co." on Justia Law

Nilfisk, Inc. leased a large warehouse building in Springdale, Arkansas from Fort Worth Partners, LLC under an industrial lease that required Nilfisk to maintain property insurance covering the full replacement cost of the building, excluding certain foundation and below-grade structures. In March 2022, a tornado destroyed the building, and Nilfisk’s insurance coverage at the time was significantly less than the full replacement cost required by the lease. Fort Worth Partners sued Nilfisk and its parent company for breach of contract, seeking damages equal to the full replacement cost that would have been covered by adequate insurance.The United States District Court for the Western District of Arkansas reviewed cross-motions for summary judgment. It denied Nilfisk’s motion and granted Fort Worth Partners’ motion in part, finding Nilfisk had breached its insurance obligation under the lease. The court held a bench trial to determine damages, considering expert testimony from both parties. It awarded Fort Worth Partners damages for the building’s replacement cost, excluding foundation damages per the lease, and also awarded attorney’s fees and costs, with reductions for limited success and prevailing local rates. Nilfisk appealed the denial of summary judgment and the damages award, while Fort Worth Partners cross-appealed aspects of the damages and fee awards.The United States Court of Appeals for the Eighth Circuit affirmed the district court’s grant of partial summary judgment for Fort Worth Partners and its denial of Nilfisk’s summary judgment motion. The appellate court held that Fort Worth Partners’ claim was timely, as each deficient insurance policy constituted a separate breach with its own limitations period. The court also affirmed the district court’s interpretation of the lease excluding all foundation damages and upheld the reduction in attorney’s fees. However, it reversed and remanded the damages award for unrebutted costs, instructing the district court to make specific factual findings supporting that portion of the award. View "Fort Worth Partners, LLC v. Nilfisk, Inc." on Justia Law

This case arises from a 2004 automobile accident in which one driver, LaMoin Larkin, died. Larkin’s insurer paid benefits to his estate and then sued the surviving driver, Jared Weston, for negligence, also seeking a declaratory judgment that Weston was insured by Farmers Insurance Exchange at the time of the accident. Farmers Insurance Exchange denied coverage, claiming the policy had been cancelled prior to the accident. Weston filed a crossclaim against Farmers, alleging breach of the duty to defend. Weston and Larkin’s insurer arbitrated the negligence claim, resulting in a finding of liability against Weston and a judgment entered in 2009.The Third District Court, Salt Lake County, confirmed the arbitration award and entered judgment. It later held a bench trial to resolve whether Farmers had properly cancelled Weston’s policy, ultimately finding the cancellation was valid and that Weston was not insured at the time of the accident. The court also granted summary judgment that Farmers had breached its duty to defend Weston, as the complaint raised a genuine issue regarding cancellation. Subsequent proceedings addressed damages, including emotional distress and attorney fees. The district court found Weston failed to prove emotional distress caused by the breach and reduced damages to zero. The court also ruled that the 2009 judgment had not expired, allowing it to be amended to include interest and costs.The Utah Court of Appeals affirmed the district court’s findings on cancellation, breach of duty to defend, and emotional distress, but reversed on consequential damages, holding Farmers liable for the arbitration judgment and related attorney fees. On certiorari, the Supreme Court of the State of Utah held that the 2009 judgment expired in 2017 under Utah law, reversing the court of appeals on that issue and vacating the award of damages and attorney fees based on the expired judgment. The Supreme Court affirmed that Farmers breached its duty to defend but found no basis for damages or attorney fees due to the expiration of the judgment. View "Farm Bureau v. Weston" on Justia Law