Justia Insurance Law Opinion Summaries

BMO Harris Bank holds a security interest in the assets of Gillen, formerly in the construction business. Gillen failed to perform on a subcontract with Meyne, which received an arbitration award of $1.8 million. Liberty Mutual, Gillen’s primary insurer, paid Meyne $1 million, the policy’s limit. Gillen unsuccessfully sought to set aside the award, then appealed. To avoid execution of the judgment, Gillen posted a supersedeas bond, underwritten by F&D. The appeal was settled and dismissed; as part of that agreement, F&D paid Meyne the remaining $800,000 and stepped into its shoes as Gillen’s creditor. ICSOP, the insurer under an “excess” policy, paid $1.2 million into the court’s registry. BMO sought the entire amount, arguing that its status as a secured creditor put it ahead of F&D and Gillen. The district court awarded $800,000 to F&D, because it is subrogated to Meyne’s rights, and Meyne could have collected from ICSOP without impairing the Bank’s security interest. The remaining $400,000 was awarded to BMO as Gillen's secured creditor. The Seventh Circuit affirmed. Under Wisconsin law insurance bypasses security interests. Wisconsin is a direct‐action jurisdiction in which the victim of an insured wrong can collect from the insurer, Wis. Stat. 632.24. In Wisconsin, even the insolvency of the client and the presence of other creditors does not affect the victim’s rights. View "BMO Harris Bank N.A. v. Edward E. Gillen Co." on Justia Law

Defendants, three excess liability insurers, appealed the district court's grant of summary judgment to plaintiffs on their breach of contract claims. The district court concluded that Georgia's uninsured/underinsured motorist (UM) statute imposed upon defendants an unconditional obligation to provide UM coverage to the insured as if they were primary insurers, and that defendants' failure to tender payment amounted to a breach of contract. The court held that Georgia's UM statute, Ga. Code Ann. 33-7-11, applies to defendants' excess liability policies; defendants' excess liability policies contain vertical exhaustion requirements; and section 33-7-11 does not supersede the vertical exhaustion requirements in defendants' excess liability policies. Accordingly, the court reversed and remanded. View "Coker v. American Guarantee and Liability Ins. Co." on Justia Law

Joann Enrique appealed the Superior Court’s grant of summary judgment for State Farm Mutual Automobile Insurance Company in an action she brought for bad faith denial of uninsured motorist (“UM”) coverage stemming from a 2005 car accident. In 2005, an uninsured driver crashed into Enrique’s car by improperly turning into her lane. Enrique suffered a fractured rib, trauma to the right knee requiring arthroscopic surgery, trauma to the left knee for which she was a candidate for arthroscopic surgery, abrasions, and soft tissue injuries. Throughout the settlement negotiations and the processing of Enrique’s claim, State Farm personnel expressed concerns about whether Enrique’s knee injuries were caused by pre-existing conditions. The record was unclear as to why there were large lapses in time during the settlement negotiations. While the parties were waiting for the Independent Medical Examiner report, in July 2008, Enrique filed suit against State Farm, seeking benefits up to the $100,000 policy limits, as well as punitive damages against State Farm for bad faith by refusing to pay up to those limits. In support of the bad faith claim, Enrique alleged that State Farm refused to compensate her up to the UM policy limits without any reasonable justification. In October 2008, the Superior Court severed and stayed the bad faith claim pending resolution of the UM damages claim. The parties then stipulated to a partial dismissal of the bad faith claim without prejudice. Due to the continuing impasse, in September 2008 State Farm decided to advance Enrique $25,000, as the parties both agreed the claim was worth at least that much. As trial approached, State Farm offered Enrique another $20,000 to settle the case, for a total of $45,000. Enrique also revised her demand, and as of January 2010, was willing to settle for an additional $65,000, representing a $90,000 demand. The parties could not bridge the gap, and the damages case went to trial in February 2010. The jury returned a $260,000 verdict. State Farm did not seek remittitur, but did appeal on an evidentiary issue. The Delaware Supreme Court affirmed, and State Farm paid the remaining $75,000 of their policy limits, costs and interests. Enrique then pursued her bad faith claim against State Farm, claiming as damages the unpaid $160,000 portion of the jury verdict, prejudgment interest, and punitive damages. The Superior Court granted State Farm summary judgment because Enrique failed to make a prima facie showing of bad faith. The court based its decision on causation issues arising from Enrique’s pre-existing knee problems (which gave State Farm a reasonable basis for its actions), State Farm’s multiple valuations of Enrique’s claim that put it below policy limits, and her failure to offer facts showing State Farm exhibited reckless indifference in handling her claim. Finding no reversible error as to the Superior Court's grant of summary judgment, the Supreme Court affirmed. View "Enrique v. State Farm Mutual Automobile Insurance Co." on Justia Law

Luz Herrera was injured in an accident while operating a vehicle insured by Hanover Insurance Company, a no-fault insurer. Herrera also had private health insurance through Aetna Health Plan. Herrera received medical treatment for her injuries, and the medical providers submitted some of their bills directly to Aetna, who paid the bills. Aetna subsequently sought reimbursement from Hanover, but Hanover did not respond. Meanwhile, Aetna filed a lien against Herrera for reimbursement. Herrera then resubmitted all of the medical bills to Hanover and assigned her rights against Hanover to Aetna. Aetna then commenced this action against Hanover seeking reimbursement for the medical bills it paid on Herrera’s behalf. Supreme Court dismissed the complaint, concluding (1) because Aetna was not a “health care provider” under the no-fault statute, it was not entitled to direct payment of no-fault benefits; (2) Aetna was neither in privity of contract with Hanover nor an intended third-party beneficiary of Hanover’s contract with Herrera; and (3) Aetna could not maintain a subrogation claim against Hanover. The Appellate Division affirmed. The Court of Appeals affirmed, holding that New York’s Comprehensive Motor Vehicle Reparations Act statutory law and regulatory scheme does not contemplate reimbursement to a health insurer, as opposed to a health care provider. View "Aetna Health Plans v. Hanover Ins. Co." on Justia Law

Sam was driving; his wife, Toni, was a passenger when their car slammed into a tree. Toni was injured and died within a week. Her estate sued Sam, claiming negligent driving, and sued the hospital and physicians, alleging malpractice. The medical defendants filed third-party actions against Sam, seeking contribution should they be held liable. State Farm is defending Sam in both suits, under a policy with indemnity of $250,000 per person ($500,000 total) for auto accidents. State Farm has offered to pay policy limits; its offer has not been accepted because of a dispute about the terms of the release. The couple had a Cincinnati Insurance excess policy ($5 million). Cincinnati unsuccessfully sought a declaratory judgment that its policy does not apply. The Seventh Circuit affirmed that Cincinnati must defend Sam in the suit between the estate and the medical defendants. The court found no prejudicial delay in notifying the company; rejected an argument that Cincinnati had no duty to defend because of State Farm’s failure to pay; and rejected Cincinnati’s argument that its policy does not apply because both Sam and Toni are insureds. The court cited the exclusion’s exception: “[w]hen a third party acquires a right of contribution against you or any relative.” Neither defense nor indemnity is appropriate in the estate’s suit against Sam. View "Cincinnati Ins. Co. v. Estate of Chee" on Justia Law

Plaintiff was injured in accident while working for Speed Mining LLC. Plaintiff and his wife (together, Plaintiffs) filed suit against Speed Mining. Plaintiffs also named as defendants related companies and individuals (collectively, the Baughan defendants). At the time of the accident, Speed Mining was a named insured on a workers’ compensation policy of insurance issued by Old Republic. Plaintiff received workers’ compensation benefits under Speed Mining’s workers’ compensation policy. Plaintiffs later amended their complaint to add a declaratory judgment action against Old Republic, as it had asserted a statutory subrogation lien with respect to any settlement obtained by Plaintiffs from the Baughan defendants. Old Republic asserted its own declaratory judgment action against Plaintiffs. The circuit court entered summary judgment in favor of Plaintiffs. Old Republic subsequently filed a W. Va. R. Civ. P. 60(b) motion for relief from entry of judgment order. The Supreme Court reversed in part and affirmed in part, holding (1) the circuit court erred in denying Old Republic’s Rule 60 motion; but (2) the circuit court correctly granted summary judgment in favor of Plaintiffs because Old Republic’s claim for subrogation failed. View "Old Republic Ins. Co. v. O'Neal" on Justia Law

Defendant Alfa Mutual Insurance Company petitioned for mandamus relief when a circuit court denied its motion to strike an amended complaint filed by plaintiffs Ronald and Mary Land on a dispute between the parties on a dispute arising out of a farm-owner's policy insurance issued to the Langs by Alfa. The matter was set for trial and was continued on at least four occasions. Thereafter, in connection with further discovery efforts by the Langs, Alfa asked whether the Langs intended to amend their original complaint and allegedly received no response from the Langs' attorney. Almost exactly two years from the filing date of their original complaint, the Langs filed an amended complaint, which added a fictitiously named defendant identified as the party "whose responsibility it was to inspect the property of the Langs, to insure their farm policy provide[d] adequate coverage and/or that the Langs were not paying for insurance to property which they did not own." The Langs' complaint, as amended, added new counts asserting negligence and fraudulent/reckless misrepresentation and an additional breach-of-contract claim. Alfa moved to strike the amended complaint on numerous grounds. The Supreme Court granted Alfa's application and issued the writ, finding that the Langs failed to demonstrate good cause ("or, in fact, any cause") for the excessive delay in amending their complaint when they knew or should have known of the claims before or at the time they filed their original complaint. "Further, the claims were actually suggested by Alfa's counsel." At the time the Langs filed their amendment, the case had been set for trial on several occasions, and the amendment would unduly prejudice Alfa, who, as a result of the Langs' excessive delay, could not fully and fairly defend against the claims added by the amendment because a key witness had died.The trial court exceeded its discretion in allowing the Langs to amend their complaint so near the trial date in order to add claims based on facts that were or ought to have been known to the Langs well prior to that date. View "Ex parte Alfa Mutual Insurance Company." on Justia Law

Developers and a general contractor of an apartment complex purchased a primary commercial general liability (CGL) insurance policy from Arch Insurance Group and an excess CGL insurance policy from National Surety Corporation (NSC). Westlake Investments, LLC, which purchased the complex, sued the insureds for construction defects. Arch defended the suit on behalf of the insureds, and the parties eventually settled. Pursuant to the settlement agreement, the insureds assigned their claims against NSC on the excess CGL policy to Westlake. Thereafter, NSC initiated this declaratory judgment action seeking a declaration that it had no obligation to pay any portion of the judgment awarded to Westlake. Westlake counterclaimed for breach of contract. The district court granted partial summary judgment in favor of Westlake, concluding that property damage resulting from defective work performed by an insured’s subcontractor may constitute an accident that qualifies as an occurrence covered by the Arch policy, and therefore, the NSC policy. After a trial, the jury returned a verdict in favor of Westlake. The Supreme Court affirmed in part and reversed in part, holding that defective workmanship by an insured’s subcontractor may constitute an occurrence under the terms of the Arch policy incorporated by reference into the NSC policy. View "Nat’l Surety Corp. v. Westlake Invs., LLC" on Justia Law

Gary Sullivan filed suit against VisionAid, Inc., his former employer and a Massachusetts-based company, in Massachusetts state court alleging that he was terminated as the result of illegal age discrimination. In its defense, VisionAid alleged that it terminated Sullivan because it discovered that he had misappropriated several hundred thousand dollars of corporate funds. VisionAid sought to have its insurer, Mount Vernon Fire Insurance Company, cover not only the defense against the age discrimination claim but also the prosecution of the state-court misappropriation counterclaim. VisionAid then filed the underlying suit for a declaratory judgment, arguing that it was not required to pay for the prosecution of VisionAid’s proposed misappropriation counterclaim. The district court entered judgment in Mt. Vernon’s favor, concluding that, according to the plain language of the policy, Mt. Vernon was not required to fund an affirmative counterclaim. The First Circuit certified three dispositive state law questions to the Massachusetts Supreme Judicial Court regarding when an insurer may owe a duty to its insured to prosecute and fund the insured’s counterclaim for damages. View "Mount Vernon Fire Ins. Co. v. Visionaid, Inc." on Justia Law

After Plaintiff was injured, he sought benefits from Defendant-insurer under an indemnity benefit policy. Plaintiff subsequently filed suit alleging that Defendant breached the insurance contract and the implied covenant of good faith and fair dealing. The jury awarded Plaintiff $31,500 in unpaid policy benefits, $35,000 in damages for emotional distress, and $19 million in punitive damages. The parties stipulated that the amount of attorney fees to which Plaintiff was entitled under Brandt v. Superior Court was $12,500, and the court awarded that amount. Defendant moved for a new trial seeking a reduction in the punitive damages award on the grounds that it was unconstitutionally excessive. The trial court granted the motion and reduced the jury’s award to a 10-to-1 ratio of punitive to compensatory damages. In so doing, the court considered only the $35,000 damages award but did not include the $12,500 in Brandt fees. The court of appeal affirmed. The Supreme Court reversed, holding that, in determining whether a punitive damages award is unconstitutionally excessive, Brandt fees may be included in the calculation of the ratio of punitive to compensatory damages, regardless of whether the fees are awarded by the trier of fact as part of its verdict or are determined after the verdict has been rendered. Remanded. View "Nickerson v. Stonebridge Life Ins. Co." on Justia Law