Justia Insurance Law Opinion Summaries

The Ninth Circuit federal Court of Appeals certified two questions of Alaska law to the State Supreme Court. Ingaldson Fitzgerald was an Alaska law firm. Attorneys Liability Protection Society, Inc. (ALPS) was a Montana insurance company and risk-retention group. From April 29, 2007, to April 29, 2008, ALPS insured Ingaldson Fitzgerald. Ingaldson Fitzgerald’s insurance policy with ALPS insured the firm against claims arising from “an act, error or omission in professional services that were or should have been rendered by [Ingaldson Fitzgerald].” The policy expressly excluded from coverage any claims arising from conversion or disputes over fees. The policy also contained a provision providing that Ingaldson Fitzgerald would reimburse ALPS for fees and costs ALPS incurred in defending non-covered claims. In 2008 the bankruptcy trustee for the bankrupt estate of a former client of Ingaldson Fitzgerald, in conjunction with a separate former client of the firm, brought a claim against the firm arising out of Ingaldson Fitzgerald’s actions in disbursing from and withdrawing fees and costs against a retainer. The former client and the trustee sought recovery of that retainer, and asserted claims against Ingaldson Fitzgerald for, among other things, restitution, disgorgement, and conversion. The Ninth Circuit asked: (1) whether Alaska law prohibited enforcement of a policy provision entitling an insurer to reimbursement of fees and costs incurred by the insurer defending claims under a reservation of rights, where (a) the insurer explicitly reserved the right to seek such reimbursement in its offer to tender a defense provided by independent counsel, (b) the insured accepted the defense subject to the reservation of rights, and (c) the claims were later determined to be excluded from coverage under the policy; and (2) if yes, then did Alaska law prohibit enforcement of a policy provision entitling an insurer to reimbursement of fees and costs incurred by the insurer defending claims under a reservation of rights, where (a) the insurer explicitly reserved the right to seek such reimbursement in its offer to tender a defense provided by independent counsel, (b) the insured accepted the defense subject to the reservation of rights, and (c) it is later determined that the duty to defend never arose under the policy because there was no possibility of coverage? The Alaska Supreme Court answered both certified questions “yes.” View "Attorneys Liability Protection Society, Inc. v. Ingaldson Fitzgerald, P.C." on Justia Law

Liberty National Life Insurance Company petitioned the Alabama Supreme Court for a writ of certiorari to review the Court of Civil Appeals' decision: (1) holding, as a matter of first impression, that 27-14-3(f), Ala. Code 1975, required an insurable interest in a life-insurance policy to exist at a point other than the time at which the policy becomes effective; and (2) reversing the trial court's dismissal of the complaint filed by Misty Ann Barton, as administratrix of the estate of Benjamin H. Miller, Jr, in which Barton alleged that Liberty National was negligent in allowing Leanne Miller, Benjamin Jr.'s stepmother, to substitute herself as beneficiary of an insurance policy insuring the life of Benjamin Jr. The Court granted Liberty National's petition, and, affirmed in part and reversed in part the judgment of the Court of Civil Appeals. Barton alleged that Liberty National was negligent in allowing Leanne to name herself as beneficiary of an insurance policy that was owned by Benjamin Sr. at his death and, pursuant to the terms of the policy, payable to Benjamin Jr.'s estate. The Court found that the policy was not produced or viewed by the trial court, nor had any discovery ensued concerning ownership of the policy, and who exactly had the right to effect a beneficiary change. Accordingly, in viewing the allegations of Barton's complaint most strongly in Barton's favor, it appeared to the Supreme Court that Barton could, under certain circumstances, maintain a cause of action against Liberty National alleging negligence on its part in allowing Leanne, either as personal representative of Benjamin Sr.'s estate or individually, to substitute herself as beneficiary on the policy insuring Benjamin Jr.'s life. The Court affirmed that portion of the Court of Civil Appeals' opinion reversing the trial court's order dismissing Barton's complaint. The Court reversed the Court of Civil Appeals' judgment insofar as it interpreted section 27-14-3(f) to require an insurable interest in personal insurance to exist at any point beyond the time the policy of insurance becomes effective. View "Ex parte Liberty National Life Insurance Company." on Justia Law

Mark Van Hoesen was seriously injured when he fell from a deck. Van Hoesen and his wife (together, Plaintiffs) filed an amended complaint alleging negligence against Lloyd’s of London, the insurer of the contractor who constructed the deck. The trial court granted summary judgment for Lloyd’s on the grounds that the insurance policy had been canceled and had expired long before the injuries alleged in Plaintiffs’ complaint occurred. The Supreme Court affirmed, holding (1) from the terms of the contract, for Plaintiffs’ claims to be covered, the “bodily injury” must also have occurred during the policy period; and (2) therefore, the insurance company had no duty to provide coverage for the bodily injury that happened outside the policy period. View "Van Hoesen v. Lloyd’s of London" on Justia Law

Alan Jesperson was injured in a motor vehicle accident when his motorcycle was struck from behind by a vehicle owned by Mary Basha and driven by Matthew Badelalla while Badelalla was making deliveries for Jet’s Pizza. Auto Club Insurance Association (ACIA) was notified of Jesperson’s injuries and that it was the highest-priority no-fault insurer. It began making payments to Jesperson shortly after it received that notice. Jesperson brought an action against Basha, Badelalla, and Jet’s seeking damages for the injuries he had sustained. He later moved to amend his complaint to add a claim against ACIA after it stopped paying him no-fault benefits. The trial court entered a default judgment against Badelalla and Basha, entered an order allowing Jesperson to amend the complaint, and entered an order severing Jesperson’s claims for trial. A jury returned a verdict of no cause of action with regard to Jesperson’s claims against Jet’s. Before trial on the remaining claim, ACIA moved for summary judgment, arguing that Jesperson’s claim against it was barred by the statute of limitations in MCL 500.3145(1). The court agreed that the statute of limitations barred Jesperson’s claim and granted ACIA’s motion for summary disposition. On appeal, the Court of Appeals affirmed, holding that the exception in MCL 500.3145(1) to the one-year limitations period when the insurer has previously made a payment applied only if the insurer has made a payment within one year after the date of the accident. Jesperson appealed, and the Supreme Court reversed. The Supreme Court found that the insurer's payment of no-fault benefits more than a year after the date of the accident satisfied the second exception to the one-year statute of limitations in MCL 500.3145(1). The Court vacated the trial court's order granting summary judgment in favor of the insurer and the case was remanded for further proceedings. View "Jesperson v. Auto Club Insurance Association" on Justia Law

In the underlying lawsuit, Larry Naquin was using an EBI land-based crane to relocate a test block when the pedestal of the crane snapped, causing the crane to topple over and sustaining injuries as result. Naquin subsequently filed suit against EBI and the jury awarded a verdict in Naquin's favor. EBI appealed. EBI then filed a third-party complaint against its insurance companies, SNIC and Certain London Insurers, alleging that the insurers breached their insurance contracts by denying EBI's insurance claims arising from Naquin's accident and by failing to provide EBI with defense and indemnity. In this appeal, EBI challenged the district court's grant of summary judgment for SNIC. The court agreed with SNIC that the terms of the policy does not provide coverage for the land-based incident due to EBI's negligence. Consequently, EBI has no valid underlying claim on which to stand and the district court did not err in dismissing EBI's claim for bad faith. The court affirmed the judgment. View "Naquin, Sr. v. Elevating Boats, LLC" on Justia Law

Care West and Ullico, two insurers, were jointly and severally liable for claims arising from an employee’s workplace injury. In a compromise and release agreement, they settled the employee’s claims and apportioned between themselves roughly 50/50 liability for any remaining third party charges. When Ullico became insolvent and was liquidated, responsibility for third party claims against it was assumed by CIGA. The Appeals Board subsequently denied CIGA's motion to dismiss on the ground that the Care West/Ullico agreement limited Care West’s liability to roughly half of any third party claims, thereby rendering Care West’s insurance unavailable as to the remaining half. CIGA petitioned for a writ of review. The court denied the petition, but the Supreme Court granted review and remanded back to the court with directions to hear the matter on the merits. The court now concludes that the Care West/Ullico compromise and release agreement did not relieve Care West of its several liability for third party claims. Accordingly, the court annulled the Appeals Board's decision. View "CA Ins. Guarantee Assoc. v. Workers' Comp. Appeals Bd." on Justia Law

The Joyce law firm purchased professional liability insurance from Professionals Direct. In 2007 the firm won a large damages award for a class of securities-fraud plaintiffs and hired another law firm to sue to collect the money from the defendant’s insurers. Some class members thought the Joyce firm should have handled enforcement of the judgment itself under the terms of its contingency-fee agreement. They took the firm to arbitration over the extra fees incurred. Professionals Direct paid for the firm’s defense in the arbitration. After the arbitrator found for the clients and ordered the firm to reimburse some of the fees they had paid, the insurer refused a demand for indemnification. The district judge sided with the insurer, concluding that the award was a “sanction” under the policy’s exclusion for “fines, sanctions, penalties, punitive damages or any damages resulting from the multiplication of compensatory damages.” The Seventh Circuit affirmed. While the arbitration award was not functionally a sanction, another provision in the policy excludes “claim[s] for legal fees, costs or disbursements paid or owed to you.” Because the arbitration award adjusted the attorney’s fees owed to the firm in the underlying securities-fraud class action, the “legal fees” exclusion applies. View "Edward T. Joyce & Assocs. v. Prof'ls Direct Ins. Co." on Justia Law

Amy Smith, individually and as next friend of her daughter Tyasia Brown, sued her landlord, Bobby Chupp for injuries Brown allegedly sustained as the result of ingesting lead from deteriorating lead-based paint at the house Smith rented from Chupp. The house was insured by Chupp under a commercial general liability (CGL) policy issued by Georgia Farm Bureau Mutual Insurance Company (GFB). After Chupp tendered Smith’s claims to GFB under the provisions of the policy, GFB filed a declaratory judgment action against Smith and Chupp seeking a determination that Brown’s injuries were not covered under the policy and that it had no duty to defend Chupp against Smith’s claims. The Georgia Supreme Court granted a petition for certiorari to the Court of Appeals to determine whether the Court of Appeals erred in holding, as a matter of first impression, that personal injury claims arising from lead poisoning due to lead-based paint ingestion were not excluded from coverage pursuant to an absolute pollution exclusion in CGL insurance policy covering residential rental property. Because the Supreme Court disagreed with the Court of Appeals’ conclusion that lead-based paint was not clearly a “pollutant” as defined by the policy, it reversed the Court of Appeals' decision in this case. View "Georgia Farm Bureau Mut. Ins. Co. v. Smith" on Justia Law

Appellants’ homeowners insurance policy with State Farm Fire and Casualty Company provided that State Farm will be only the “actual cash value” at the time of the loss of damaged property. Appellants brought a putative class action lawsuit against State Farm, claiming that State Farm breached the terms of Appellants’ policy when it calculated the actual cash value of damaged property. Specifically, Appellants alleged that State Farm’s practice of depreciating embedded labor costs breached State Farm’s duty to indemnify the insured for the actual cash value of the damaged property. The district court certified a question regarding the issue to the Supreme Court. The Court answered that, absent specific language in the insurance policy that identifies the method of calculating actual cash value, the trier of fact may consider, among many other factors, embedded-labor-cost depreciation when such evidence logically tends to establish the actual cash value of a covered loss. View "Wilcox v. State Farm Fire & Cas. Co." on Justia Law

The Iowa Individual Health Benefit Reinsurance Association (“IIHBRA”), a nonprofit corporation, sued its members (“the universities”) for unpaid assessments it was statutorily obligated to collect. The universities filed a motion to dismiss the petition, arguing that the IIHBRA lacks the capacity to sue based on the 2001 amendment to Iowa Code chapter 513C. Chapter 513C initially included a provision stating that IIHBRA had the power to “sue or be sued,” but the 2001 amendment deleted that provision. Alternatively, the universities argued that the district court lacked subject matter jurisdiction because the IIHBRA is required to arbitrate under Iowa Code 679A.19. The district court granted the motion to dismiss. The Supreme Court reversed, holding (1) the 2001 amendment to chapter 513C left intact the IIHBRA’s capacity to sue under Iowa Code chapter 504A; (2) the IIHBRA is not subject to mandatory arbitration under Iowa Code 679A.19; and (3) therefore, the IIHBRA has the capacity to sue its members in district court for unpaid assessments. View "Iowa Individual Health Benefit Reinsurance Ass’n v. Stat Univ. of Iowa" on Justia Law