Justia Insurance Law Opinion Summaries

Erin Hughes, the plaintiff, obtained two homeowner’s insurance policies for her property in Malibu. One policy, through the California FAIR Plan Association (FAIR Plan), covered fire loss, while the other, issued by Farmers Insurance Exchange (Farmers), did not. After a fire caused significant damage to her property, Hughes filed a lawsuit against Farmers, alleging it was vicariously liable for the negligence of its agent, Maritza Hartnett, who assisted her in obtaining the FAIR Plan policy, resulting in underinsurance for fire loss.The Superior Court of Los Angeles County granted Farmers’ motion for summary judgment, ruling that Hartnett was not acting within the scope of her agency with Farmers when she assisted Hughes in obtaining the FAIR Plan policy. The court also denied Hughes’s motion for leave to amend her complaint.The Court of Appeal of the State of California, Second Appellate District, reviewed the case. The court affirmed the lower court’s decision, holding that Hartnett was not acting as Farmers’ actual or ostensible agent when she helped Hughes obtain the FAIR Plan policy. The court found that Hartnett’s agent appointment agreement with Farmers did not include authority to transact insurance business on behalf of Farmers for policies issued by unrelated carriers like FAIR Plan. Additionally, the court determined that Hughes failed to present evidence showing that Farmers’ conduct could have led her to reasonably believe Hartnett was acting as its agent in procuring the FAIR Plan policy. The court also upheld the trial court’s denial of Hughes’s motion for leave to amend her complaint, citing her failure to provide an excuse for the delay in filing the motion and the potential prejudice to Farmers. View "Hughes v. Farmers Insurance Exchange" on Justia Law

In 2015, Zongwei Shen, owner of a massage spa, purchased a commercial insurance policy from Continental Casualty Company, which included an exclusion for abuse or molestation. In 2019, Toiah Gordon, Morganne Mersadie Root, and Karina Carrero sued Shen and his wife, Zhong Xin, alleging Shen sexually assaulted them during massage sessions. After Continental declined to provide a defense, Shen and Xin stipulated to liability, resulting in a $6.8 million judgment against them. Shen and Xin assigned their rights against Continental to the plaintiffs in exchange for a covenant not to execute the judgment. The plaintiffs then sued Continental for breach of contract and related claims.The Superior Court of Los Angeles County granted Continental's motion for summary judgment, finding that the abuse or molestation exclusion in the insurance policy applied. The court held that the exclusion's language was unambiguous and did not require Shen to have "exclusive or complete control" over the plaintiffs. The court also found that the claims against Xin for negligent training fell within the exclusion, as negligent training is a form of negligent employment or supervision.The California Court of Appeal, Second Appellate District, affirmed the trial court's decision. The appellate court held that the abuse or molestation exclusion applied to Shen's actions because the plaintiffs were under Shen's care and control during the massages. The court also held that the exclusion applied to Xin's alleged negligent training of Shen, as it fell within the scope of negligent employment or supervision. Consequently, Continental had no duty to defend Shen and Xin, and the summary judgment in favor of Continental was affirmed. View "Gordon v. Continental Casualty Co." on Justia Law

Lawanda Small, a beneficiary and additional insured of her deceased husband's Allianz life insurance policy, filed a class action lawsuit against Allianz Life Insurance Company. She alleged that Allianz violated California Insurance Code sections 10113.71 and 10113.72 by failing to comply with notice procedures required to prevent policies from lapsing due to nonpayment of premiums. Small sought to represent two subclasses: the "Living Insured Subclass" seeking equitable relief to reinstate life insurance coverage, and the "Beneficiary Subclass" seeking damages from death benefits where the insured was deceased.The United States District Court for the Central District of California certified the class, finding that both subclasses satisfied the requirements of Federal Rule of Civil Procedure 23(a) and 23(b). The court granted summary judgment for Small and the class on their breach of contract and declaratory relief claims, ruling that Allianz improperly lapsed the policies by failing to comply with the Statutes. Allianz appealed, arguing that the district court erred in certifying the class and that the summary judgment orders violated the one-way intervention prohibition.The United States Court of Appeals for the Ninth Circuit reversed the district court's order certifying the class and vacated the summary judgment orders. The appellate court held that to recover for alleged violations of the Statutes, plaintiffs must show not only that the insurer violated the notice requirements but also that the violation caused them harm. The court found that individual questions of causation and injury predominated over common questions, making class certification inappropriate. Additionally, the court determined that Small was not an adequate representative with typical questions to represent both subclasses. The case was remanded for further proceedings. View "Small v. Allianz Life Insurance Co. of North America" on Justia Law

A paint company was sued by Santa Clara County, California, along with other governmental entities, for promoting and selling lead-based paint, which was alleged to have created a public nuisance. The lawsuit sought abatement, not damages, to mitigate the hazards of lead paint. The California trial court ordered the paint companies to pay $1.15 billion into an abatement fund, later reduced to $409 million, to be used for future lead hazard control measures. The paint companies eventually settled, agreeing to pay $101,666,667 each into the fund.The paint company then sought indemnification from its insurers in the Cuyahoga County Court of Common Pleas, arguing that the payment into the abatement fund constituted "damages" under their insurance policies. The trial court granted summary judgment in favor of the insurers, concluding that the payment was not for "damages" as it was intended to prevent future harm rather than compensate for past harm.The Eighth District Court of Appeals reversed the trial court's decision, holding that the payment into the abatement fund did qualify as "damages" under the insurance policies, as it was essentially to reimburse the government for its ongoing efforts to remediate lead paint hazards.The Supreme Court of Ohio reviewed the case and reversed the Eighth District's decision, reinstating the trial court's summary judgment in favor of the insurers. The Supreme Court held that the payment into the abatement fund was not "damages" under the insurance policies because it was intended to prevent future harm rather than compensate for past harm. The court emphasized that the abatement fund was an equitable remedy aimed at eliminating the hazard of lead paint to prevent future injuries, not to compensate for any prior harm. View "Sherwin-Williams Co. v. Certain Underwriters at Lloyd's London" on Justia Law

Jennings Plant Services, LLC, and its members, Spencer and Tarin Jennings, filed a lawsuit against Ellerbrock-Norris Agency, Inc., and Elliot Bassett, alleging that Ellerbrock-Norris failed to provide competent insurance advice. Specifically, Jennings claimed that Ellerbrock-Norris advised them not to add a company-owned vehicle, a Ford F-150, to their commercial insurance policies, which led to a lack of coverage when the vehicle was involved in a fatal collision. This resulted in a significant judgment against Jennings in a federal wrongful death case brought by Kacey Kimbrough, the special administrator of the estate of Shawn Thomas Kimbrough.In the U.S. District Court for the District of Nebraska, Kimbrough obtained a judgment of $5,436,266.87 against Jennings Plant Services. As part of a partial settlement, Jennings assigned Kimbrough a right to 85% of any proceeds from their state lawsuit against Ellerbrock-Norris. Kimbrough then sought to intervene in the state lawsuit under Neb. Rev. Stat. § 25-328, claiming an interest in the litigation due to her assigned right to a portion of the proceeds.The District Court for Washington County denied Kimbrough's motion to intervene, finding that she had no direct cause of action against either Jennings or Ellerbrock-Norris and no legal interest in the subject matter of the underlying litigation. The court determined that Kimbrough's interest was indirect and insufficient to warrant intervention under § 25-328.The Nebraska Supreme Court affirmed the district court's decision, holding that Kimbrough's alleged interest in the proceeds of the lawsuit was too attenuated to constitute a direct and legal interest in the litigation. The court concluded that Kimbrough, as a mere creditor with an indirect interest, did not meet the statutory requirements for intervention. View "Jennings Plant Services, LLC v. Ellerbrock-Norris Agency" on Justia Law

Hurricane Katrina destroyed Paul and Sylvia Minor’s home in 2005. The Minors had a homeowner’s insurance policy with United Services Automobile Association (USAA) that covered wind damage but excluded storm surge or flood damage. USAA issued payments for wind damage but not for storm surge or flood damage, leading to a dispute. The Minors claimed a total loss due to wind and demanded policy limits. In 2013, a jury awarded the Minors $1,547,293.37 in compensatory damages.The Minor Estate appealed a pretrial order granting partial summary judgment to USAA on the Minors’ bad faith claim. The Mississippi Court of Appeals reversed the trial court’s decision, finding a genuine issue of material fact regarding USAA’s denial and delay of payment. The case was remanded for further proceedings on the bad faith claim. On remand, a jury awarded the Minors $10,000,000 in punitive damages and $457,858.89 in extra-contractual damages (attorneys’ fees). USAA appealed, and the Minor Estate cross-appealed the denial of its post-trial motion for additional attorneys’ fees.The Supreme Court of Mississippi reviewed the case and found no reversible error, affirming the jury’s award of $10,457,858.89 in damages. The court also reversed and rendered attorneys’ fees on behalf of the Estate in the amount of $4,500,000, plus post-judgment interest. The court held that the trial judge did not err in submitting the issue of punitive damages to the jury and that the $10 million punitive damages award was not unconstitutionally disproportionate. The court also found no error in the jury’s award of extra-contractual damages and no errors warranting a new trial. View "United Services Automobile Association v. Estate of Minor" on Justia Law

In 2015, Zongwei Shen, owner of a massage spa, purchased a commercial insurance policy from Continental Casualty Company, which included an exclusion for abuse or molestation. In 2019, Toiah Gordon, Morganne Mersadie Root, and Karina Carrero sued Shen and his wife, alleging Shen sexually assaulted them during massage sessions. After Continental declined to provide a defense, Shen and Xin stipulated to liability, resulting in a $6.8 million judgment against them. Shen and Xin assigned their rights against Continental to the plaintiffs in exchange for a covenant not to execute the judgment. The plaintiffs then sued Continental for breach of contract and related claims.The Superior Court of Los Angeles County granted Continental's motion for summary judgment, finding that the abuse or molestation exclusion in the insurance policy applied. The court concluded that Shen had care and control of Gordon during the massage, thus the exclusion applied to her injury. The court also found that the claims against Xin for negligent training fell within the exclusion, as negligent training is a form of negligent hiring, retention, or supervision.The California Court of Appeal, Second Appellate District, affirmed the trial court's decision. The appellate court held that the abuse or molestation exclusion applied to Shen's actions because Gordon was under Shen's care and control during the massage. The court also held that the exclusion applied to the claims against Xin, as negligent training is encompassed within negligent employment and supervision. Consequently, Continental had no duty to defend Shen and Xin, and the summary judgment in favor of Continental was affirmed. View "Gordon v. Continental Casualty Co." on Justia Law

Erin Hughes, the plaintiff, obtained two homeowner’s insurance policies for her property in Malibu. One policy, through the California FAIR Plan Association (FAIR Plan), covered fire loss, while the other, issued by Farmers Insurance Exchange (Farmers), did not. After a fire caused significant damage to her property, Hughes filed a lawsuit against Farmers, alleging it was vicariously liable for the negligence of its agent, Maritza Hartnett, who assisted her in obtaining the FAIR Plan policy, resulting in underinsurance for fire loss.The Superior Court of Los Angeles County granted Farmers’ motion for summary judgment, concluding that Hartnett was not acting within the scope of her agency with Farmers when she assisted Hughes in obtaining the FAIR Plan policy. The court also denied Hughes’s motion for leave to amend her complaint.The Court of Appeal of the State of California, Second Appellate District, reviewed the case. The court affirmed the lower court’s decision, holding that Hartnett was not acting as Farmers’ actual or ostensible agent when she helped Hughes obtain the FAIR Plan policy. The court found that Hartnett was acting as an independent broker for the FAIR Plan policy and not on behalf of Farmers. Additionally, the court determined that Hughes failed to present evidence that could establish a triable issue regarding Farmers’ vicarious liability for Hartnett’s actions.The court also upheld the trial court’s denial of Hughes’s motion for leave to amend her complaint, noting that Hughes offered no explanation for the delay in filing the motion and that allowing the amendment would have prejudiced Farmers and Hartnett. The judgment in favor of Farmers was affirmed, and Farmers was entitled to recover its costs on appeal. View "Hughes v. Farmers Insurance Exchange" on Justia Law

Following heavy snowfall in Pine Bluff, Arkansas, the roofs of several chicken houses at ten poultry farms collapsed. Norfolk & Dedham Mutual Fire Insurance Company, which insured the farms, sued Rogers Manufacturing Corporation, the manufacturer of the roof trusses used in the chicken houses, claiming strict product liability, negligence, and breach of warranties. Rogers moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), arguing that Norfolk’s claims were barred by the Arkansas statute of repose.The United States District Court for the Eastern District of Arkansas agreed with Rogers and dismissed the complaint. Norfolk appealed the dismissal, arguing that the statute of repose did not apply to Rogers because the roof trusses were standardized goods, not custom-designed for the farms.The United States Court of Appeals for the Eighth Circuit reviewed the district court’s dismissal de novo, accepting the allegations in the complaint as true and drawing all reasonable inferences in Norfolk’s favor. The court found that Norfolk’s complaint plausibly supported an inference that the roof trusses were standardized goods, which would not be covered by the Arkansas statute of repose. The court emphasized that at this early stage, the complaint should not be dismissed if it allows for a reasonable inference of liability.The Eighth Circuit reversed the district court’s dismissal of the complaint and remanded the case for further proceedings, noting that the facts and legal arguments could be further developed as the case progresses. View "Norfolk & Dedham Mutual Fire Insurance Company v. Rogers Manufacturing Corporation" on Justia Law

Patricia Nicholson filed a garnishment action after her husband was killed in an accident involving Ava Mercer, who was insured by Key Insurance Company. Key provided Mercer with an attorney but did not actively defend her. Nicholson attempted to settle for the policy limit, but Key delayed. Nicholson then filed a wrongful death suit, and Key offered to settle for the policy limit, which Nicholson rejected. Instead, Nicholson and Mercer agreed that Mercer would assign her rights to sue Key for bad faith to Nicholson, and Nicholson would not execute any judgment against Mercer. Mercer waived her right to a jury trial and did not present a defense. Nicholson won a $3 million verdict.The Leavenworth District Court ruled against Key on the merits, finding that Key acted in bad faith and ordered garnishment for the $3 million judgment. Key did not argue that garnishment was statutorily unavailable due to the assignment of rights at the district court level. On appeal, Key raised the issue of subject-matter jurisdiction for the first time, arguing that garnishment was impossible following an assignment of rights, thus the district court lacked jurisdiction.The Kansas Supreme Court reviewed the case and affirmed the lower courts' decisions. The court clarified that subject-matter jurisdiction is the constitutional power of courts to decide disputes and does not disappear due to a flawed claim. The court held that the district court had jurisdiction to hear Nicholson's garnishment action on the merits. The court emphasized that Key's statutory arguments should have been presented as a motion to dismiss at the district court level and could not be raised for the first time on appeal under the guise of a jurisdictional argument. The judgment of the Court of Appeals and the district court was affirmed. View "Nicholson v. Mercer" on Justia Law