Justia Insurance Law Opinion Summaries

In 2007, the Sonoma County project’s owner sued Hearn, the general contractor, Second Generation, the roofer, and other subcontractors for design and construction defects. Hearn cross-complained against Second Generation and others. In 2009, Hearn assigned its interests under its subcontracts to two insurers, North American and RSUI. Hearn then settled with the owner and all but two subcontractors, one of which was Second Generation. Hearn filed an amended cross-complaint, purportedly in the name of the insurers, against those subcontractors, adding breach of a contractual obligation to obtain insurance and seeking equitable contribution for Hearn’s defense costs premised on a breach of that duty. In 2013, the court dismissed the cross-complaint against Second Generation on procedural grounds, awarded $30,256.79 in costs and granted prevailing party attorney fees of $179,119. Second Generation moved to amend the orders to name North American as a judgment debtor owing the amounts awarded against Hearn. The trial court denied the motion, stating: Hearn remains the only proper party and that the subcontractor’s exclusive remedy was to pursue a separate action against Hearn’s insurers. The court of appeal reversed, finding that, after the assignment, Hearn was “out of this case.” View "Hearn Pac. Corp. v. Second Generation Roofing, Inc." on Justia Law

NSC, a wholly owned subsidiary of Fireman's Fund, filed a declaratory judgment action against Dustex seeking a judicial determination that it did not have a duty to defend or indemnify Dustex in an arbitration proceeding, which, at the time, was pending before the American Arbitration Association (AAA). The district court subsequently concluded that Dustex failed to establish the affirmative defense of estoppel. The court concluded that, under either Georgia or Iowa law, the district court did not clearly err in finding that Dustex knew or should have known that Fireman's Fund was proceeding under a reservation of rights. The court's review of the district court's findings does not indicate that Fireman's Fund failed to provide Dustex with an effective reservation of rights that included a specific basis for Fireman's Fund's reservations about coverage. Accordingly, the court affirmed the judgment. View "National Surety Corporation. v. Dustex Corp." on Justia Law

Cummins installed asbestos containing products in California and had received hundreds of asbestos bodily injury claims, including many lawsuits, based on exposure to its asbestos containing materials. Cummins purchased 19 U.S. Fidelity insurance policies 1969-1987, and purchased four U.S. Fire policies, 1988-1992, for “primary, umbrella, and or excess insurance policies,” some of which “may be missing or only partially documented.” Cummins and its parent company (Holding, formed in 2014) sought a “declaratory judgment that defendants are obligated to defend and/or indemnify Cummins [Corp.], in full, including, without limitation, payment of the cost of investigation, defense, settlement and judgment . . . , for past, present and future Asbestos Suits under each of the Policies triggered by the Asbestos Suits.” The trial court dismissed without leave to amend, finding that Holding lacked standing. The court of appeal affirmed. Holding, the controlling shareholder of Cummins, does not have a contractual relationship with the insurers and is not otherwise interested in the insurance contracts. View "D. Cummins Corp. v. U.S. Fid. & Guar. Co." on Justia Law

Columbia Insurance Group, Inc. and Columbia Mutual Insurance Co. (collectively, Columbia) filed a complaint for declaratory judgment to determine Columbia’s obligations under the Commercial General Liability Insurance Policy (CGL policy) issued to its insureds, Arkansas Infrastructure, Inc. and David Barron (collectively, AII). Specifically, Columbia sought a declaration that it had no duty to defend or indemnify AII with respect to claims brought against AII in state court by Homeowners. A federal district court concluded that Columbia had an obligation to defend AII in the underlying suit. The district court then certified two questions of law to the Supreme Court, asking (1) whether faulty workmanship resulting in property damage to the work or work product of a third party constitutes an “occurrence," and (2) if so, and an action is brought in contract for property damage to the work or work product of a third party, whether any exclusion in the policy bars coverage for this property damage. The Supreme Court (1) reaffirmed the Court’s previous position that a CGL policy does not extend basic coverage for a claim of breach of contract; and (2) held that because there is no coverage under the policy in this case, the certified questions are moot. View "Columbia Ins. Group v. Cenark Project Mgmt. Servs., Inc." on Justia Law

32nd Street filed suit against the insurers for quantum meruit, unjust enrichment, and vexatious refusal to pay an insurance claim, as well as injunctive relief arising out of medical services provided to the insurers' insureds. The district court granted summary judgment for the insurers and denied 32nd Street's motion to compel discovery. The court concluded that the plain language of the provisions at issue support the district court's conclusion that, in the ancillary-provider agreement, 32nd Street agreed to accept the Blue Traditional rate for services rendered to insureds belonging to all of the insurers’ networks; the district court did not err by finding that the equitable claims were barred by the contracts governing the reimbursement rates paid by the insurers; the district court did not err in granting summary judgment to the insurers on the vexatious-refusal claim where 32nd Street fails to establish any genuine issue of material fact that the insurers refused to pay an amount due under an insurance policy; and the district court did not abuse its discretion by denying 32nd Street's motion to compel. Accordingly, the court affirmed the judgment. View "32nd St. Surgery Ctr. v. Right Choice Managed Care" on Justia Law

American Family filed suit seeking a declaratory judgment as to whether an umbrella insurance policy issued to Todd Patton provided any coverage for an automobile accident in which a passenger in a vehicle driven by Todd's son, Jacob Patton, was seriously injured. The district court granted summary judgment for American Family. The court concluded that the Pattons breached the umbrella policy's cooperation clause by entering into a Miller-Shugart agreement after already being protected from personal liability in the Drake-Ryan settlement, and that such breach was material and prejudicial. Accordingly, the court affirmed the judgment. View "American Family Mutual Ins. v. Donaldson" on Justia Law

Stresscon Corporation, a subcontracting concrete company, filed suit against Travelers Property Casualty Company of America, alleging, among other things, that Travelers acted in bad faith, unreasonably delaying or denying its claim for covered insurance benefits; and Stresscon sought awards of two times the covered benefits along with fees and costs, as prescribed by statute. Stresscon’s claims for relief arose from a 2007 serious construction accident which was caused by a crane operator employed by a company that was itself a subcontractor of Stresscon. Stresscon’s general contractor, Mortenson, sought damages from Stresscon, asserting Stresson’s contractual liability for the resulting construction delays, and Stresscon in turn sought indemnification from Travelers. Travelers petitioned for review of the court of appeals’ judgment affirming the district court’s denial of its motion for directed verdict in a lawsuit brought by its insured, Stresscon. Much as the district court had done, the appellate court rejected Travelers’ contention that the no-voluntary-payments clause of their insurance contract relieved it of any obligation to indemnify Stresscon for payments Stresscon had made without its consent. Instead, the court of appeals found that the Colorado Supreme Court's opinion in "Friedland v. Travelers Indemnity Co.," (105 P.3d 639 (2005)) had effectively overruled the Court's prior “no voluntary payments” jurisprudence to the contrary and given Stresscon a similar opportunity. The Supreme Court reversed, finding that its adoption of a notice-prejudice rule in "Friedland" did not overrule any existing “no voluntary payments” jurisprudence. The Court declined to extend a notice-prejudice reasoning to Stresscon’s voluntary payments, made in the face of the no-voluntary-payments clause of its insurance contract with Travelers. View "Travelers Prop. Cas. Co. v. Stresscon Co." on Justia Law

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