Justia Insurance Law Opinion Summaries

JEI filed suit against its liability insurance carrier, U.S. Specialty, alleging breach of contract and seeking a declaratory judgment related to U.S. Specialty's refusal to indemnify JEI for settlement of the underlying suit brought by a former JEI director. U.S. Specialty argued that the underlying suit was excluded from coverage based on the language in the directors' and officers' liability insurance policy. The district court granted summary judgment for U.S. Specialty. The court concluded that application of the insured vs. insured exclusion in this case demonstrates that U.S. Specialty does not owe coverage to JEI; the exclusion applied to Cheryl Sullivan, an insured person under the policy, and her two daughters; U.S. Specialty need only show that the exclusion clause applied to the suit as brought and it has done so; the allocation clause does not restore coverage for any part of the underlying suit where the allocation clause speaks generally to any claim brought with covered and uncovered matters; and the insured vs. insured exclusion speaks directly to lawsuits brought with the participation of insured persons. Accordingly, the court affirmed the district court's grant of summary judgment in favor of U.S. Specialty. View "Jerry's Enterprises, Inc. v. U.S. Specialty Insurance Co." on Justia Law

The Riverwalk at Arrowhead Country Club and Magnolia North Horizontal Property Regime developments were constructed between 1997 and 2000. After construction was complete and the units were sold, the purchasers became aware of significant construction problems, including building code violations, structural deficiencies, and significant water-intrusion problems. In 2003, the purchasers filed suit to recover damages for necessary repairs to their homes. Lawsuits were filed by the respective property owners' associations (POAs), which sought actual and punitive damages for the extensive construction defects under theories of negligent construction, breach of fiduciary duty, and breach of warranty. As to the Riverwalk development, individual homeowners also filed a class action to recover damages for the loss of use of their property during the repair period. The defendants in the underlying suits were the related corporate entities that developed and constructed the condominium complexes: Heritage Communities, Inc. (the parent development company), Heritage Magnolia North, Inc. and Heritage Riverwalk, Inc. (the project-specific subsidiary companies for each separate development), and Buildstar Corporation (the general contracting subsidiary that oversaw construction of all Heritage development projects), referred to collectively as "Heritage." The issues presented to the Supreme Court by these cases came from cross-appeals of declaratory judgment actions to determine coverage under Commercial General Liability (CGL) insurance policies issued by Harleysville Group Insurance. The cases arose from separate actions, but were addressed in a single opinion because they involved virtually identical issues regarding insurance coverage for damages. The Special Referee found coverage under the policies was triggered and calculated Harleysville's pro rata portion of the progressive damages based on its time on the risk. After review of the arguments on appeal, the Supreme Court affirmed the findings of the Special Referee in the Magnolia North matter, and affirmed as modified in the Riverwalk matter. View "Harleysville Group Ins. v. Heritage Communities, Inc." on Justia Law

In the underlying lawsuit EmbroidMe was sued for alleged copyright infringement. EmbroidMe was insured by Travelers but failed to notify Travelers of the claim filed against it or to request that Travelers provide EmbroidMe with a defense on the suit. Travelers subsequently refused to reimburse EmbroidMe for legal expenses. EmbroidMe argued that because Travelers’ notification refusing to pay pre-tender legal expenses was made after the thirty-day statutory deadline had elapsed, it must now pay the pre-tender legal expenses. The court affirmed the district court's conclusion that Travelers’ refusal to reimburse expenses of EmbroidMe to which it had not consented did not constitute a coverage defense, meaning that the statutory time period for an insurer to notify its insured of its defense to coverage did not apply. Accordingly, the court affirmed the district court's grant of summary judgment to Travelers. View "Embroidme.com, Inc. v. Travelers Property Casualty Company of America" on Justia Law

James Dias suffered serious injuries in a motorcycle accident. At the time of the accident, Dias and his wife (together, Defendants) were insured under two policies. One policy, which Progressive Northern Insurance Co. underwrote, covered the motorcycle that Defendant was operating when he was injured, and the second policy, underwritten by Progressive Casualty Insurance Co. (Plaintiff), covered Defendants’ automobiles. Dias sought to recover underinsured-motorist benefits from Progressive Casualty, asserting that he was entitled to those benefits under R.I. Gen. Laws 27-7-2.1(i). Plaintiff denied coverage and then filed a declaratory judgment action requesting that the superior court declare that section 27-7-2.1(i) is not applicable because Progressive Northern is a separate and distinct corporation and business entity from Progressive Casualty and, therefore, Plaintiff may disclaim coverage with respect to Dias’ claim. The hearing justice granted summary judgment for Plaintiff. The Supreme Court affirmed, holding that, with regard to section 27-7-2.1(i), Plaintiff and Progressive Northern are separate and distinct entities, each of which is also distinct from its common sole shareholder, The Progressive Corporation. View "Progressive Casualty Insurance Co. v. Dias" on Justia Law

Geiger, an account executive, received Aetna group disability insurance coverage. In 2009, Geiger stopped working and obtained short term disability precipitated by lumbar back pain and a 2007 L5S1 discectomy and bilateral ankle pain caused by avascular necrosis of the talar bones. In 2010, Geiger had several ankle surgeries. Aetna determined that Geiger was disabled from her occupation and approved long-term disability benefits, citing “required walking and driving for this occupation.” Geiger received $4,012 per month, 50% of her predisability earnings. Upon her approval for Social Security disability benefits, the amount was reduced to $784. After 24 months, the Plan requires a claimant to be unable to work at any reasonable occupation. In 2012, Aetna’s physician examined Geiger and found her capable of sedentary work. Under surveillance, Geiger was observed driving and visiting stores. The Plan terminated her benefits. In 2013, Aetna reinstated Geiger’s benefits. In 2014, under surveillance, Geiger was seen climbing into and driving an SUV, shopping, and carrying a bag. Aetna again terminated her benefits, citing the surveillance, prior independent peer reviews, a comprehensive clinical review, and occupational information. Geiger filed suit, citing her lack of medical improvement, her worsening medical condition, and the impact of severe pain on her ability to work. The court granted Aetna summary judgment. The Seventh Circuit affirmed, finding that Aetna minimized any conflict of interest stemming from its roles as administrator and insurer; presented sufficient evidence supporting its decision; and properly considered Geiger’s impairment and pain and the surveillance video. View "Geiger v. Aetna Life Insurance Co." on Justia Law

This appeal arose out of a property damage claim filed by the Hayes Family Trust with its insurer, State Farm Fire & Casualty. When the parties could not agree on the amount of loss, Hayes invoked an appraisal process provided by the policy to calculate the loss incurred. After Hayes sought the district court's assistance with the appointment of an umpire, the parties participated in the appraisal process, which resulted in a unanimous award. State Farm paid the balance of that award, and Hayes accepted payment. But despite State Farm's payment, at Hayes's request, the district court confirmed the award and entered judgment in favor of Hayes. Hayes promptly moved for an award of prejudgment interest, attorney's fees, and costs under a prevailing party statute. In response, State Farm moved to vacate or amend the judgment. Finding that the parties settled any dispute over the amount of loss, the court agreed with State Farm and vacated its order confirming the appraisal award and the judgment. Hayes appealed the order vacating judgment in an attempt to recover prejudgment interest, fees, and costs. Finding no reversible error, the Tenth Circuit affirmed. View "In re: Hayes Family Trust" on Justia Law

This dispute centered on subrogation claims Victoria Insurance Company and Nationwide Insurance Company asserted against the City of Wilmington. This appeal presented a question of first impression before the Supreme Court: whether, under Delaware's motor vehicle insurance statute governing subrogation disputes among insurers and self-insurers, the losing party may appeal de novo to the Superior Court from an adverse arbitration award. In considering consolidated motions to dismiss two such appeals filed by the City against the insurers, the Superior Court determined that 21 Del. C. 2118(g)(3), which mandated arbitration for subrogation disputes arising between insurers and self-insurers, did not provide a right to appeal. Because the statute unambiguously provided for appeals from mandatory arbitration of subrogation disputes between insurers and self-insurers, the Supreme Court reversed. View "City of Wilmington v. Nationwide Insurance Co." on Justia Law

WCPP is a risk purchasing group for commercial property insurance. MGSA, an insurance broker, acts as WCPP’s program administrator, representing more than 600 properties. In 2011, MGSA sought renewal coverage for the WCPP properties. MGSA contracted with MC, which engaged NCAIG, which had previous insurance‐placement experience with Ward and his company JRSO. The chain of brokers for the WCPP renewal was: from MGSA, to MC, to NCAIG, to Ward and JRSO. In reality, Ward had created a fictitious policy for WCPP that was not actually backed by a legitimate insurer. Ward was convicted of wire fraud, sentenced to 10 years in prison, and ordered to pay restitution. One of the property groups in the WCPP program, Myan, had a history of losses, so MC had split it off from the main WCPP group for placement directly with JRSO for insurance. The Myan coverage used Norman-Spencer as program administrator, at the recommendation of NCAIG. Norman‐Spencer was paid $25,000 and issued policies for Myan’s coverage. Norman-Spencer wanted, but never obtained, additional contracts from WCPP. Norman-Spencer discovered an order issued against Ward and JRSO that could implicate Ward’s ability to bind coverage and, when Norman asked for a copy of Ward’s reinsurance agreement, Ward delayed for over a month and produced an agreement that contained irregularities. Norman‐Spencer did not inform WCPP or MGSA about these problems. None of the proposals or pricing information for WCPP came through Norman‐Spencer. MC and NCAIG received a commission from the WCPP premium; Norman‐Spencer did not. After Ward’s fraud was discovered, MGSA and WCPP sued Norman-Spencer. The Seventh Circuit affirmed summary judgment in favor of Norman-Spencer, concluding that Norman-Spencer owed no duty of care to either company. View "M.G. Skinner and Associates v. Norman-Spencer Agency, Inc" on Justia Law

Frye was seriously injured in an accident while driving for his job. Frye accepted $100,000, the per-person limit, from the other driver’s insurer, assigning it to his lawyer and to his employer’s insurer, Auto-Owners, from which Frye had received $692,895.79 in workers’-compensation benefits. Frye’s injuries were also covered by commercial automobile and commercial umbrella policies, issued by Auto-Owners to Frye’s employer. The automobile policy required Auto-Owners to pay any compensatory damages Frye was legally entitled to recover for bodily injuries caused by an underinsured motorist. The umbrella policy afforded follow-on coverage. Auto-Owners agreed to pay Frye $1,282,314.21: $900,000 under the automobile policy ($1 million in total coverage, less $100,000 from the other insurer); and $382,314.21 under the umbrella policy ($1 million in UIM coverage, less $617,685.79 in net workers’-compensation payments). Frye argued that Indiana law required Auto-Owners to provide through its umbrella policy UIM coverage in an amount equal to the policy’s general liability limit ($5 million) and that the setoff for workers’-compensation payments was impermissible under the contract and Indiana public policy. The district court awarded AutoOwners summary judgment. The Seventh Circuit reversed. While Indiana law allowed Auto-Owners to abstain from providing UIM coverage in the umbrella policy, once it provided such coverage it was required under Section 27-7-5-2(a) to provide that coverage in limits equal to the policy’s general liability limit: $5 million. It cannot decrease that cap based on workers’ compensation payments. View "Frye v. Auto-Owners Insurance Co." on Justia Law

Farm Bureau Property & Casualty Insurance Company issued a homeowner’s insurance policy to Howard Hunter that prohibited an assignment of “[a]ll rights and duties” without Farm Bureau’s consent. After a storm damaged the roof of Hunter’s home, he assigned his claim to Millard Gutter Company, the company that repaired the roof. Millard Gutter sued Farm Bureau and obtained a county court judgment. The district court affirmed. The Supreme Court affirmed, holding that, under the circumstances of this case, the postloss assignment of a claim under a homeowner’s insurance policy was valid despite the nonassignment cause. View "Millard Gutter Co. v. Farm Bureau Property & Casualty Insurance Co." on Justia Law