Justia Insurance Law Opinion Summaries

Plaintiff-Appellant Jeffrey Allen was injured in a car accident in May 2013. His automobile insurance policy included coverage for medical expenses arising from car accidents, but this coverage contained a one-year limitation period such that he could not obtain reimbursement for medical expenses that accrued a year or more after an accident. Allen sought reimbursement for medical expenses accruing more than a year after his accident, arguing this limitation period was invalid on two grounds: (1) a 2012 disclosure form that his insurer sent him stated that his policy covers reasonable medical expenses arising from a car accident, Colorado’s reasonable-expectations doctrine rendered the one-year limitations period unenforceable; and (2) Colorado’s MedPay statute, which required car insurance companies to offer at least $5,000 of coverage for medical expenses, prohibited placing a one-year time limit on this coverage. The district court granted summary judgment in favor of the insurer. After review, the Tenth Circuit rejected both of Allen’s arguments and affirmed the district court order. View "Allen v. USAA" on Justia Law

Kimberly Blalock appealed a circuit court order holding Crimson Sutphin was the rightful beneficiary of a policy insuring the life of Loyd Sutphin, Jr. ("Loyd"), issued by New York Life Insurance Company. Loyd took out a $250,000 individual whole life-insurance policy, naming his daughter, Sutphin, as the sole beneficiary. In October 2012, Loyd married Blalock, and they lived together at his home in Henegar. Soon after, in December 2012, Loyd submitted a change-of-beneficiary-designation form to New York Life, designating Blalock and Sutphin each as a 50% beneficiary under the policy. A few years later, in February 2016, Loyd and Blalock divorced; however, the life-insurance policy was not addressed in the divorce judgment, and Loyd never changed the beneficiary designation following the divorce. Loyd died later that year on December 23, 2016. In April 2017, Sutphin filed a action seeking a judgment declaring that she was the rightful beneficiary of the entire proceeds of the New York Life policy because, she asserted, pursuant to section 30-4-17, Ala. Code 1975, Blalock's beneficiary designation had been revoked upon her divorce from Loyd. Blalock moved to dismiss the action, arguing that Tennessee, not Alabama, law should govern and, thus, that the DeKalb Circuit Court did not have subject-matter jurisdiction to hear the case. The circuit court denied the motion to dismiss; Blalock filed a motion to reconsider the denial. At an evidentiary hearing on her motion to reconsider, Blalock again argued that the DeKalb Circuit Court lacked subject-matter jurisdiction but also asserted that the application of 30-4-17 in this instance violated section 22 of the Alabama Constitution of 1901; the circuit court denied Blalock's motion to reconsider. The case proceeded to a bench trial, at which Blalock argued that she and Loyd had established a common-law marriage after their divorce and before his death, thereby reviving her beneficiary designation under the policy. The circuit court heard testimony from numerous witnesses on this issue, most of whom testified on Blalock's behalf. In 2018, the circuit court issued a final order in the case, holding that Sutphin was the rightful beneficiary under the policy because Blalock's beneficiary designation had been revoked by virtue of 30-4-17 and no common-law marriage existed to revive that designation before Loyd's death. Finding that Blalock's beneficiary designation was revoked under 30-4-17 by virtue of her divorce, the Alabama Supreme Court affirmed the circuit court. View "Blalock v. Sutphin" on Justia Law

The Supreme Court reversed the decision of the Court of Appeals affirming the decision of the district court granting summary judgment to The Bar Plan Mutual Insurance Company on Daniel Becker’s insurance coverage dispute with the company, holding that the lower courts erroneously relied upon certain caselaw in granting summary judgment and that, under the correct caselaw, questions of fact remained that were inappropriate for summary judgment.Specifically, the Court held (1) the lower courts erred in relying on the “expansion of coverage” rule in concluding that Becker was asking for the coverage to be expanded beyond the insurance contract’s terms and that that courts should instead have continued their analysis to see if estoppel was appropriate to apply to the facts under the “reservation of rights” rule; and (2) because several genuine issues of material fact remained on the issue of estoppel, this case must be remanded for further proceedings. View "Becker v. Bar Plan Mutual Insurance Co." on Justia Law

Thee Sombrero, Inc. (Sombrero) owned commercial property. Pursuant to a conditional use permit (CUP), Sombrero’s lessees operated the property as a nightclub called El Sombrero. Crime Enforcement Services (CES) provided security guard services at the club. In 2007, after a fatal shooting, the CUP was revoked and replaced with a modified CUP, which provided that the property could be operated only as a banquet hall. In a previous action, Sombrero sued CES, alleging that CES’s negligence caused the shooting, which in turn caused the revocation of the CUP, which in turn caused a diminution in value of the property. It won a default judgment against CES. Sombrero then filed this direct action against Scottsdale Insurance Company (Scottsdale), CES’s liability insurer. The trial court granted summary judgment in favor of Scottsdale, ruling that Sombrero’s claim against CES was for an economic loss, rather than for “property damage” as defined in and covered under the policy. The Court of Appeal held Sombrero’s loss of the ability to use the property as a nightclub constituted property damage, which was defined in the policy as including a loss of use of tangible property. View "Thee Sombrero, Inc. v. Scottsdale Ins. Co." on Justia Law

The Supreme Court reversed the decision of the district court granting summary judgment in favor of the insurer in this insurance dispute, holding that the district court abused its discretion in issuing declaratory relief on this record.Plaintiff, a limited liability company, presented a theft claim to Defendant insurer under the physical damage coverage of an aircraft policy. After denying coverage, Insurer sought a determination that Plaintiff’s theft claim was not covered under the policy. The district court granted summary judgment in favor of Plaintiff on the coverage question, concluding that Plaintiff’s claim was not covered under the physical damage coverage of the applicable policy. The Supreme Court reversed, holding (1) the district court’s order decided the legal effect of a state of facts which are future, contingent, or uncertain and resulted in a declaratory judgment adjudicating hypothetical or speculative situations which may never come to pass; and (2) therefore, the district court abused its discretion in entering declaratory relief. View "U.S. Specialty Insurance Co. v. D S Avionics Unlimited LLC" on Justia Law

In a case arising from a fee dispute about litigation expenses that an arbitration panel found attorneys had improperly allocated to their clients, the Fifth Circuit affirmed the district court's judgment that there was no coverage under the terms of the excess policy. The court applied Texas law and held that Lexington, the excess carrier, was not liable for any portion of the judgment and for any attorneys' fees as defense costs expended in the underlying litigation. In this case, the excess policy's provisions expressly stated that there was no coverage for the type of breach of contract found by the arbitrators in the underlying action. Furthermore, the definition of "Loss" did not cover the remedy that the arbitration panel imposed as a consequence of the breach of fiduciary duty. View "John M. O'Quinn, P.C. v. Lexington Insurance Co." on Justia Law

American Family filed a declaratory judgment action against Walter and Lisa Krop, contending their homeowner's insurance policy did not cover a tort action pending against their son. The Krops filed a counterclaim against American Family and a third-party claim against Andrew Varga, an insurance agent for American Family. The appellate court reversed the circuit court's dismissal of the Krops' claims as untimely.The Supreme Court of Illinois held that when customers have the opportunity to read their insurance policy and can reasonably be expected to understand its terms, the cause of action for negligent failure to procure insurance accrues as soon as the customers receive the policy. In this case, the complaint was filed over two years after the Krops received their policy and the complaint failed to plead facts that would support any recognized exception to the expectation that customers will read the policy and understand its terms. Therefore, their claim was untimely and the court reversed the appellate court's decision. View "American Family Mutual Insurance Co. v. Krop" on Justia Law

The Court of Appeal reversed the trial court's grant of summary judgment for Farmers in an action filed by the sons of the insured after Farmers denied them benefits under the insured's policy. The court held that the notice of prejudice rule applied to the waiver of deduction rider and Farmers could not make a showing of prejudice from the delayed notice of the insured's disability. The court held that, because Farmers did not assert that it was prejudiced and there was no dispute that the insured was totally disabled within the meaning of the rider, she was entitled to the benefit promised under the rider: to have the deductions charged to her account waived. Furthermore, because the deductions should have been waived and Farmers' denial of coverage was based solely on those deductions, Farmers failed to establish that, as a matter of law, the insured's policy had lapsed or that it was justified in denying her beneficiaries' claim under the policy. The court held that Farmers' arguments to the contrary were unavailing. View "Lat v. Farmers New World Life Ins. Co." on Justia Law

In 2013, while the disputed insurance policy was in effect, several guests at the Siloam Springs Hotel allegedly sustained injuries due to carbon monoxide poisoning stemming from an indoor-swimming-pool heater that had recently been serviced. The hotel sought coverage under the policy, and the insurer denied coverage based on the exclusion for “qualities or characteristics of indoor air.” This case made it back to the Tenth Circuit following a remand in which the district court was directed to determine whether there was complete diversity of citizenship between the parties, which was an essential jurisdictional issue that needed to be decided before it could properly address the merits of this case. On remand, the district court received evidence on this question and determined that diversity jurisdiction was indeed proper. The district court also certified a policy question to the Oklahoma Supreme Court, which held that the exclusion at issue in this case - however interpreted -should not be voided based on public policy concerns. Following the Oklahoma Supreme Court’s resolution of the certified question, the insurer asked the district court to administratively close the case, arguing that “no further activity in this case . . . remains necessary to render the [district c]ourt’s adjudication of the coverage issue which the case concerns a final judgment.” The hotel asked the court to reopen the case to either reconsider its previous order or to enter a final, appealable judgment against the hotel. The district court held that the case had already been administratively closed and it had no need to reopen the case, since “both its finding of diversity jurisdiction and the Oklahoma Supreme Court’s answer to the certified question did not alter in any way” the court’s summary judgment decision on the merits of the coverage dispute. The hotel appealed. The Tenth Circuit determined the hotel was entitled to coverage under the policy at issue, and reversed the district court's denial. The case was remanded for further proceedings on the question of damages. View "Siloam Springs Hotel v. Century Surety Company" on Justia Law

The DC Circuit vacated its previous opinion and substituted the following opinion.Homeowners filed suit against their insurance company for breach of contract when the company refused to cover flood damage to homeowners' residence. Homeowners also filed suit against their cleaning-and-restoration company for failing to adequately remedy the damage and prevent mold. The district court granted summary judgment for the insurance company and transferred the remaining claim to the district court based on lack of personal jurisdiction. The DC Circuit held that it lacked jurisdiction to review the transfer order. The court affirmed the grant of summary judgment, holding that homeowners' claim against the insurance company failed under Delaware law where there was no dispute that homeowners were away from their beach home for over 72 hours, which under the clear terms of the policy means the flooding occurred while the house was "unoccupied." View "Katopothis v. Windsor-Mount Joy Mutual Insurance Co." on Justia Law