Justia Insurance Law Opinion Summaries

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Appellants had been renting their San Francisco home to tenants for eight years when the front porch collapsed, causing injury to a tenant. When the tenants sued, appellants sought defense and indemnification from their insurance provider, respondent State Farm, which denied their claim, because appellants’ homeowners’ insurance policy excluded coverage for injuries arising out of an insured’s business pursuits or the rental of their home. Appellants sued State Farm for breach of contract and bad faith denial of their insurance claim. The court of appeal affirmed summary judgment in favor of State Farm. The court rejected an argument that coverage should be restored under an exception for activities that are “ordinarily incident to non-business pursuits.” Appellants sought “to fold into a homeowners policy coverage for the commercial risks attendant to renting their home as a for-profit venture. There is a separate policy tailored to those business risks, a rental dwelling policy, that appellants eschewed in favor of a cheaper policy. Appellants’ argument, if accepted, would upend the allocation of risks and costs associated with commercial or personal activities that insurers rely upon to keep homeowners’ premiums lower than that of business enterprises.” View "Terrell v. State Farm General Ins. Co." on Justia Law

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Benjamin Robinson drove his employer’s vehicle into the rear end of a stopped Holmes County garbage truck. The garbage truck was stopped picking up garbage on the side of the highway in dense fog. Robinson sued Holmes County and his uninsured motorist carrier, Brierfield Insurance Company. Robinson claimed Holmes County was negligent in its operation of the garbage truck. Robinson also asserted a breach of contract claim, stating that Brierfield Insurance Company breached the insurance contract by denying him uninsured motorist benefits. The trial court granted summary judgment and found not only that Holmes County was not negligent but also that it was immune under the Mississippi Tort Claims Act. The trial court further found that, since Holmes County was not negligent, Brierfield also was not liable as the uninsured motorist insurance provider. Robinson appealed, but finding no reversible error, the Mississippi Supreme Court affirmed granting summary judgment to Holmes County and Brierfield Insurance Company. View "Robinson v. Holmes County, Mississippi" on Justia Law

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The United States Court of Appeals for the Third Circuit certified a question of law to the Pennsylvania Supreme Court regarding whether an increase to the limits of underinsured motorist (“UIM”) coverage for multiple vehicles that are insured under an existing policy constitutes a “purchase” for purposes of Subsection 1738(c) of the Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”). Michelle Barnard purchased a personal automobile policy from Travelers Home and Marine Insurance Company (“Travelers”) to insure her two vehicles. As part of this policy, Barnard purchased UIM coverage in the amount of $50,000 per vehicle. Barnard waived stacking of her UIM coverage limits. Two years later, Barnard increased the UIM coverage limit on each of her vehicles to $100,000. Barnard did not execute a new stacking waiver at that time. Then several more years later, Barnard was involved in a motor vehicle accident with an underinsured motorist. When Barnard sought UIM benefits from Travelers, Travelers offered her $100,000 based upon the UIM coverage limit on one of her vehicles. Barnard filed a complaint for declaratory judgment, seeking $200,000 in stacked UIM benefits. Travelers removed the case to the United States District Court for the Eastern District of Pennsylvania, where the parties filed cross-motions for summary judgment. Based upon the plain language of Subsection 1738(c), the Pennsylvania Supreme Court answered the Third Circuit's question in the affirmative: therefore, an increase of UIM coverage under circumstances as was presented here triggered an insurance company’s statutory obligation to offer an insured the opportunity to waive stacking of the new, aggregate amount of UIM coverage. View "Barnard v. Travelers Home, et al" on Justia Law

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DVO was to design and build an anaerobic digester for WTE to generate electricity from cow manure to be sold to the electric power utility. WTE sued DVO for breach of contract. Crum initially provided a defense under a reservation of rights, but a later advised DVO that it would no longer provide a defense. The court ordered DVO to pay WTE $65,000 in damages and $198,000 in attorney’s fees. DVO’s Crum insurance policies provided commercial general liability, pollution liability, and Errors & Omissions coverage. Under the E&O professional liability coverage, Crum is required to pay “those sums the insured becomes legally obligated to pay as ‘damages’ or ‘cleanup costs’ because of a ‘wrongful act’ to which this insurance applies.” An endorsement provides that the Policy does not apply to claims or damages based upon or arising out of breach of contract. DVO argued that the exclusion was so broad as to render the E&O professional liability coverage illusory. The district court disagreed. The Seventh Circuit reversed and remanded for contract reformation. The exclusion’s language is extremely broad. It includes claims “based upon or arising out of” the contract, thus including a class of claims more expansive than those based upon the contract, rendering the professional liability coverage in the E&O policy illusory. The court considered DVO's reasonable expectations in purchasing E&O coverage to insure against professional malpractice claims. View "Crum & Forster Specialty Insurance Co. v. DVO, Inc." on Justia Law

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In the context of a demurrer by defendant Certain Underwriters at Lloyd’s, London Subscribing To Policy Number 11EPL-20208, the trial court interpreted the term “wage and hour or overtime law(s)” to encompass all provisions of the Labor Code. Plaintiff owned and operated over 250 Pizza Hut and Wing Street restaurants. Defendant provided to plaintiff Southern California Pizza Company, LLC, an employment practices liability insurance policy, which covered certain losses arising from specified employment-related claims brought against plaintiff. The trial court sustained defendant’s demurrer, concluding all causes of action in the underlying employment lawsuit against plaintiff fell within the scope of the Policy exclusion. Using well-established insurance policy interpretation principles, the Court of Appeal found the wage and hour law language of the exclusion was more narrow in scope than stated by the trial court: it concerned laws regarding duration worked and/or remuneration received in exchange for work. Applying that interpretation, and taking into account the Policy’s general coverage, the Court concluded many of the disputed underlying lawsuit claims were potentially subject to coverage. Thus, the trial court erred in sustaining defendant’s demurrer. View "Southern Cal. Pizza Co., LLC v. Certain Underwriters, etc." on Justia Law

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Sapa manufactures aluminum extruded profiles, pre-treats the metal and coats it with primer and topcoat. For decades, Sapa supplied “organically coated extruded aluminum profiles” to Marvin, which incorporated these extrusions with other materials to manufacture aluminum-clad windows and doors. This process was permanent, so if an extrusion was defective, it could not be swapped out; the whole window or door had to be replaced. In 2000-2010, Marvin bought about 28 million Sapa extrusions and incorporated them in about 8.5 million windows and doors. Marvin sometimes received complaints that the aluminum parts of its windows and doors would oxidize or corrode. The companies initially worked together to resolve the issues. In the mid-2000s, there was an increase in complaints, mostly from people who lived close to the ocean. In 2010, Marvin sued Sapa, alleging that Sapa had sold it extrusions that failed to meet Marvin’s specifications. In 2013, the companies settled their dispute for a large sum. Throughout the relevant period, Sapa maintained 28 commercial general liability insurance policies through eight carriers. Zurich accepted the defense under a reservation of rights, but the Insurers disclaimed coverage. Sapa sued them, asserting breach of contract. The district court held that Marvin’s claims were not an “occurrence” that triggered coverage. The Third Circuit vacated in part, citing Pennsylvania insurance law: whether a manufacturer may recover from its liability insurers the cost of settling a lawsuit alleging that the manufacturer’s product was defective turns on the language of the specific policies. Nineteen policies, containing an Accident Definition of “occurrence,” do not cover Marvin’s allegations, which are solely for faulty workmanship. Seven policies contain an Expected/Intended Definition that triggers a subjective-intent standard that must be considered on remand. Two policies with an Injurious Exposure Definition also include the Insured’s Intent Clause and require further consideration. View "Sapa Extrusions, Inc. v. Liberty Mutual Insurance Co." on Justia Law

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Trek, a Wisconsin bicycle manufacturer, had agreements with Taiwanese companies. Trek purchases bicycles from Giant, sells them under its own brand name, and purchases bicycle parts from Formula. The purchase orders required Giant and Formula to have Trek named as an additional insured in their products-liability insurance policies with Zurich and Taian, Taiwanese insurers. Those policies agreed to indemnify the insured and its listed vendors, including Trek, for judgments, expenses, and legal costs incurred “worldwide,” allowed the insurer to control the litigation or settlement of a covered claim but did not require it to do so; included a Taiwanese choice of law provision; and required disputes to be resolved by arbitration in Taiwan. Giessler rented Trek bicycle in Texas. The front-wheel detached from the bicycle's frame, Giessler fell, and the resulting injuries rendered him a quadriplegic. Although Giant had manufactured the bicycle and Formula had manufactured the front-wheel release, neither was a party to Giessler’s lawsuit. Trek’s insurer, Lexington, defended Trek and attempted to notify the Taiwanese companies of Giessler’s lawsuit. The case settled. Lexington paid Giessler on Trek’s behalf. Lexington unsuccessfully sought reimbursement from Zurich and Taian then sued them in Wisconsin. The Seventh Circuit affirmed that the district court lacked personal jurisdiction. Lexington failed to demonstrate that either insurer made any purposeful contact with Wisconsin before, during, or after the formation of the insurance contracts. They did not solicit Trek’s business or target the Wisconsin market. They negotiated and drafted these contracts in Taiwan with Taiwanese companies. The insurers may be liable to Trek and included worldwide coverage provisions but that does not establish Wisconsin's jurisdiction. View "Lexington Insurance Co. v. Hotai Insurance Co., Ltd." on Justia Law

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The Supreme Court affirmed the judgment of the circuit court granting summary judgment in favor of Mid-Century Insurance Company and dismissing Christina Blanchard's bad-faith complaint, holding that the circuit court properly granted summary judgment for Mid-Century. In her complaint, Blanchard alleged that Mid-Century pursued a "baseless and meritless appeal" from a decision of the South Dakota Department of Labor awarding Blanchard workers' compensation benefits. On appeal, Blanchard argued, among other things, that the circuit court erred in excluding evidence under the litigation conduct rule. The Supreme Court concluded that the circuit court's exclusion of the evidence under the litigation conduct rule was determinative of the appeal, and therefore it was unnecessary to discuss Blanchard's other claims of error, holding that the circuit court properly excluded the evidence and properly granted summary judgment based upon the other undisputed facts in the record. View "Blanchard v. Mid-Century Insurance Co." on Justia Law

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In this breach of contract and negligent infliction of emotional distress action the Supreme Court affirmed the appellate court's judgment affirming the trial court's judgment denying Defendant's motion for judgment notwithstanding the verdict, holding that there was sufficient evidence to support the jury's verdict for Plaintiff. This action stemmed from Defendant's handling of Plaintiff's homeowner's insurance claim. The jury returned a verdict for Plaintiff on both counts. Defendant filed a motion for judgment notwithstanding the verdict, renewing its motion for a directed verdict, arguing that the verdict was not supported by sufficient evidence presented during Plaintiff's case-in-chief. The trial court denied the motion. On appeal, Defendant contended that the so-called waiver rule - which provides that a defendant waives the right to appeal the trial court's denial of the defendant's motion for directed verdict at the close of the plaintiff's case by opting to introduce evidence in its own behalf - is inapplicable to civil cases in which a trial court reserves decision on a motion for directed verdict. The Supreme Court disagreed, holding that a court reviewing the sufficiency of the evidence to support a jury's verdict must consider all of the evidence considered by the jury returning the verdict, not just the evidence presented in the plaintiff's case-in-chief. View "Riley v. Travelers Home & Marine Insurance Co." on Justia Law

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In this insurance dispute the Supreme Court reversed in part the district court's determination that Carla King was not entitled to her taxable costs and her claimed nontaxable costs after a jury found in favor of King, holding that the district court erred in concluding that King was not entitled to her claimed nontaxable costs. King was injured when her vehicle was hit by a drunk driver. King sought underinsured motorist coverage from State Farm, but King and State Farm did not agree on the value of King's claim. State Farm had offered to settle the claim for $20,000. The jury found that King had suffered damages in the amount of $410,000. The district court entered judgment against State Farm in the amount of the policy limit of $50,000. The district court awarded King $20,000 in attorney fees and denied King's claimed litigation expenses and costs. The Supreme Court held (1) the district court correctly held that King was not entitled to her taxable costs as provided by Mont. Code Ann. 25-10-201 because they were not timely filed; and (2) the district court erred in concluding that King was not entitled to her claimed nontaxable costs because those litigation costs were part of the insurance exception to the American Rule. View "King v. State Farm Mutual Automobile Insurance Co." on Justia Law