Justia Insurance Law Opinion Summaries

Sheldon Hathaway became embroiled in a stranger-originated-life-insurance (STOLI) scheme at the involving his neighbor, Jay Sullivan. Here, Intervenor Defendant-Appellant Windsor Securities, LLC (Windsor) loaned Defendant-Appellant the Sheldon Hathaway Family Trust (the Trust) $200,000 to finance the initial premium on a life insurance policy (the policy) for Hathaway. In exchange, Windsor “receive[d] a moderate return on [its] investment” if a trust repaid the loan. Alternatively, Windsor “foreclose[s] on the life insurance policy that was pledged as collateral” when a trust fails to do so. That’s what happened here. But before Windsor could profit from its investment, Plaintiff-Appellee PHL Variable Insurance Company (PHL) sought to rescind the policy based on alleged misrepresentations in Hathaway’s insurance application. The district court ultimately granted PHL’s motion for summary judgment on its rescission claim, and allowed And it allowed PHL to retain the premiums Windsor already paid. On appeal, Windsor and the Trust (collectively, the defendants) argued the district court erred in granting PHL’s motion for summary judgment because there was at least a genuine dispute of material fact as to whether PHL waived its right to rescind the policy. Alternatively, they argued the district court erred in granting summary judgment because, at a minimum, a genuine dispute of material fact existed as to: (1) whether the application contained a misrepresentation; and (2) whether PHL relied on that misrepresentation in issuing the policy. Finally, even assuming summary judgment was appropriate, defendants argued the district court lacked authority to allow PHL to retain the paid premiums. The Tenth Circuit affirmed, concluding no genuine dispute of material fact existed as to whether PHL waived its right to rescind the policy. Nor was there any genuine dispute of material fact as to whether the application contained a misrepresentation or whether PHL relied on that misrepresentation in issuing the policy. Lastly, the Court held the district court had authority to allow PHL to retain the paid premiums. View "PHL Variable Insurance v. Sheldon Hathaway Family Trust" on Justia Law

Defendant Dylan Stinson appealed a judgment finding him liable to plaintiffs Kevin and Linda Flanagan for damage to their vacation home from a fire started in an outdoor fireplace on their deck by a group of teenagers who were there without their permission. Stinson contended that: (1) there was insufficient evidence to find him liable for the damage under a concerted-action theory; (2) it was improper for the trial court to admit and rely on evidence of the actual cash value of the lost personal property; and (3) the pre and postjudgment interest rate awarded by the trial court was unconstitutional under the U.S. and Vermont Constitutions. Finding no reversible error, the Supreme Court affirmed. View "Concord General Mutual Insurance Company v. Gritman" on Justia Law

In an interlocutory appeal, Pekin Insurance Company challenged the denial of its motion to dismiss for lack of personal jurisdiction. Pekin was an Illinois company not licensed to sell insurance in Mississippi. Pekin asserted it had not entered into a contract with a Mississippi Resident, had not committed a tort in Mississippi and had not done any business in Mississippi-- making in ineligible to be subject to the jurisdiction of Mississippi courts under the Mississippi long-arm statute. The Mississippi Supreme Court, after review of the facts of this case, found that Pekin voluntarily submitted itself to Mississippi's jurisdiction in federal court when it asked that court to resolve the same coverage dispute over which it claimed here that Mississippi courts had no jurisdiction. The Court accordingly affirmed the trial court here in denying Pekin's motion to dismiss, and remanded the case for further proceedings. View "Pekin Insurance Company v. Hinton" on Justia Law

Utica Mutual Insurance Company (Utica) insured Herbert H. Landy Insurance Agency (Landy) under a professional liability insurance policy. The policy required Utica to defend Landy in lawsuits arising from Landy’s provision of professional services as an insurance broker and agent. CRES Insurance Services, LLC sued Landy in California state court, alleging negligence and that Landy engaged in unfair business practices. When Landy demanded that Utica defend it in the CRES lawsuit, Utica filed this action in federal district court seeking a declaration that CRES’s negligence claim did not trigger its duty to defend. The district court granted summary judgment to Landy. The First Circuit affirmed, holding (1) CRES’s complaint can be reasonably construed to allege a professional liability claim and is therefore covered by the policy; and (2) Utica failed to meet its burden of establishing that the policy’s exclusion for “unfair competition of any type” applies in this case. View "Utica Mut. Ins. Co. v. Herbert H. Landy Ins. Agency, Inc." on Justia Law

Jerry and Karen Slack hired Jeffrey Fisher and his construction company, Fisher Builders, to build a remodeled home. During the project, the deck collapsed, and the Slacks’ construction permit was revoked. The Slacks filed a negligence action against Fisher and his company. Fisher had a commercial general liability insurance policy with Employers Mutual Casualty Company (EMC). EMC filed a declaratory action alleging that there was no coverage and that it had no duty to defend or indemnify any party in the negligence action. Fisher and Fisher Builders ultimately settled with the Slacks and assigned their rights under the EMC insurance policy to the Slacks. The district court granted summary judgment in favor of EMC, ruling that Fisher’s conduct was clearly intentional and did not fit within the meaning of “occurrence” under the policy, regardless of whether Fisher intended the consequences. The Supreme Court reversed, holding that the district court (1) erred by concluding that, in the context of general liability insurance, the term “occurrence,” defined by the policy as “an accident,” categorically precludes coverage for any intentional conduct on the part of the insured with unintended results; and (2) erred when it granted summary judgment in favor of EMC, as issues of material fact precluded summary judgment. Remanded. View "Employers Mut. Cas. Co. v. Slack" on Justia Law

Because of an internal oversight, American Bank failed to respond to a summons and the state court entered a $98.5 million default judgment against it. Eight months after receipt of the summons, American Bank notified its insurer, St. Paul, of the lawsuit and St. Paul denied coverage due to late notice. American Bank was subsequently able to have the default judgment vacated and the suit dismissed, but at an expense of $1.8 million. St. Paul now seeks a declaratory judgment that it had no duty to pay for American Bank's defense, and American Bank counterclaims. The court affirmed the district court's entry of judgment for St. Paul where, among other things, American Bank did not provide St. Paul with notice as soon as practicable, as required by the terms of its insurance policy, and because the late notice caused St. Paul prejudice. Therefore, St. Paul was within its right to deny coverage. View "St. Paul Mercury Ins. Co. v. American Bank Holdings, Inc." on Justia Law

Plaintiff was a pedestrian in a crosswalk when he was struck by a vehicle operated by an uninsured motorist. Plaintiff, who was an insured under his mother’s automobile insurance policy, filed suit against The Commerce Insurance Company seeking uninsured motorist coverage for his injuries. The parties stayed the action pending arbitration pursuant to the terms of the policy. The arbitrator awarded Plaintiff a total of $197,550. Plaintiff filed a motion to confirm the arbitration award. Defendant, in turn, filed a motion to modify/correct the arbitration award to conform with the insurance policy, which provided uninsured-motorist coverage up to a limit of $100,000. The superior court granted Defendant’s motion and entered an order for Plaintiff in the amount of $100,000. The Supreme Court vacated the order of the superior court, holding that the trial justice erred when he (1) reviewed the arbitrator’s award under a de novo review and supplemented the record with the admission of the insurance policy and the testimony of the arbitrator; and (2) modified the arbitration award because there were no grounds to do so under Rhode Island’s Arbitration Act. Remanded with instructions to issue an order confirming the arbitration award. View "Lemerise v. Commerce Ins. Co." on Justia Law

Karpinski sued, alleging that Smitty’s Sausalito bar negligently allowed two intoxicated men to enter and remain in the bar, and that the men punched Karpinski in the head, causing serious injuries. After court-ordered mediation, Karpinski agreed to dismiss Smitty’s in exchange for $40,000. Karpinski moved for entry of judgment under Code of Civil Procedure 664.6. Smitty’s opposed the motion because liens had been imposed by the federal government, based on Medicare payments to Karpinski, and by the state, based on crime victim compensation payments. The court entered a default judgment against the individuals ($1,430,968.84) and granted enforcement of the settlement, reasoning that the agreement requires that Karpinski "negotiate, satisfy, and dispose of all liens," but does not state that he must do so before receiving payment, and requires Karpinski to hold Smitty’s, its attorneys, and insurer harmless with respect to lien claims. Regardless of concern over whether Karpinski will honor that obligation, there is a remedy if he does not. The court awarded Karpinski $2,200 in attorney fees. The court of appeal affirmed. That there are no guarantees does not alter the fact that Smitty’s agreed to pay Karpinski $40,000 in exchange for his release and promises to satisfy all liens. View "Karpinski v. Smitty's Bar, Inc." on Justia Law

A group of New York-based third party payor health insurers (“TPPs”) that provided prescription drug benefits to union members appealed a Superior Court judgment dismissing with prejudice their second amended complaint. At issue were claims brought by the TPPs under various state consumer fraud laws against AstraZeneca Pharmaceuticals LP, and Zeneca Inc. (collectively “AstraZeneca”). The TPPs alleged that AstraZeneca falsely advertised its more expensive patented prescription drug "Nexium" as superior to the less expensive generic drug "Prilosec," causing the TPPs to overpay for Nexium when generic Prilosec would have sufficed. After conducting an extensive choice of law analysis, the Superior Court determined that New York law controlled the TPPs’ claims. The court then held that the TPPs failed to state a claim under New York’s consumer fraud statute for failure to allege legally sufficient causation. The TPPs appealed, arguing the Superior Court's choice of law analysis was flawed, and that the Superior Court's causation analysis was equally flawed. After a careful review of the record on appeal, the Delaware Supreme Court affirmed the ultimate judgment of the Superior Court, finding it not necessary to discuss whether the Superior Court correctly analyzed the choice of law issue, because under either state consumer fraud statute the TPPs could not recover damages as a matter of law. View "Teamsters Local 237 Welfare Fund, et al. v. AstraZeneca Pharmaceuticals LP" on Justia Law

After Eric Orloske shot his brother, Brian, to death after Eric tripped and fell down the stairs in his home while holding a loaded shotgun, the trustee for Brian's next of kin filed a wrongful death suit against Eric. At issue in this appeal is whether Country Mutual's homeowner's policy, which covered Eric's home, provided coverage for Brian's death. The court concluded that the district court correctly determined that Minnesota's reasonable-expectations doctrine is inapplicable in this case and correctly granted summary judgment to Country Mutual.The doctrine forces insurers to communicate the coverage and exclusions of their policies clearly; it is not a means of avoiding unambiguous policy language. Here, the policy expressly listed the criminal-acts exclusion - Eric had pleaded guilty to manslaughter for Brian's death - in the exclusion section of the policy between exclusions related to controlled substances and pollution. Accordingly, the court affirmed the judgment. View "Country Mutual Ins. Co. v. Orloske" on Justia Law