Justia Insurance Law Opinion Summaries

Creditor extended to Debtor a line of credit, and Debtor granted Creditor, pursuant to an agreement, a security interest in payments due to Debtor under an insurance policy. The agreement provided that Maine law governed all rights under the agreement. Insurer subsequently issued a commercial property insurance policy to Debtor. After a freight train owned by Debtor derailed, Creditor filed a claim under the policy, which Insurer denied. Debtor then filed for Chapter 11 bankruptcy. Creditor instituted an adversary proceeding seeking a declaration regarding the priority of its asserted security interest in any payments due under the policy. Insurer subsequently settled with Debtor and the trustee requiring Insurer to pay $3,800,000 to Debtor in satisfaction of all claims under the policy. Creditor objected to approval of the proposed settlement, arguing that the agreement granted it a first-priority security interest in the settlement. The bankruptcy court concluded that Debtor was entitled to the settlement proceeds free and clear of Creditor’s asserted interest because Creditor had failed to perfect its interest under Maine law. The bankruptcy appellate panel affirmed. The First Circuit affirmed, holding that the courts below did not err in concluding that Debtor was entitled to the proposed settlement payment free and clear of Creditor’s asserted security interest. View "Wheeling & Lake Erie Ry. v. Keach" on Justia Law

Century filed suit seeking a declaratory judgment that it is not required to defend or indemnify the insured in an underlying suit. The district court dismissed the declaratory judgment action and all counterclaims. Because Clausen v. Fidelity & Deposit Co. of Md.’s interpretation of the Louisiana Unfair Trade Practices Act (LUTPA), La. Rev. Stat. 51:1406(1), makes clear that the district court was correct in holding that the insured failed to state a claim for unfair trade practices, the court affirmed the district court’s dismissal of that counterclaim; because the district court provided neither notice to the insured that it intended to dismiss all of its claims nor an opportunity to defend the sufficiency of the claims not challenged by Century, the court reversed the dismissal of these three counterclaims and remanded for further proceedings; and the court need not consider whether the district court applied the correct test or applied it correctly because some of the insured’s counterclaims have been remanded. The court vacated the dismissal of the declaratory judgment action and remanded. View "Century Surety Co. v. Blevins" on Justia Law

Plaintiff, the personal representative of Paola Penafiel, filed suit against GEICO, alleging Coblentz v. Am. Sur. Co. of N.Y. bad faith claims. On appeal, GEICO challenged the judgment in favor of plaintiff. The court agreed with GEICO that the district court erred in denying the admission of evidence of the development of Florida law as it pertained to whether an insurance policy GEICO issued to Edgar Baena (Edgar) covered a vehicle collision involving Edgar and Penafiel. The court also agreed with GEICO that the district court improperly excluded evidence of earlier decisions of the district court rejecting the theory on which plaintiff based her argument that coverage existed. Accordingly, the court vacated and remanded. View "Garcia v. Geico General Ins. Co." on Justia Law

In 1994, defendant Felicia Alford, then a minor, settled a personal injury claim against certain insureds of defendant State Farm Fire. Under the settlement, State Farm Life was to deliver an annuity providing for guaranteed payments. In July 2012, Alford entered into a contract with RSL Funding, LLC under which she received $30,000 in exchange for a $50,000 portion of the payment due on August 11, 2016. RSL assigned its payment to Extended Holdings, Ltd. (EHL). The trial court approved the transfer, and State Farm did not contest the transfer. A year later, Alford entered into a second contract with RSL in which Alford agreed to assign to RSL $25,000 of the $100,000 payment due on August 11, 2016, and $25,000 of the payment of $151,558.80 due on August 11, 2021, in exchange for a current payment of $22,500. RSL filed a petition for approval of the transfer. State Farm filed an opposition to the petition, asserting, among other grounds, that: (1) the proposed transfer would violate a California Ins. Code, sec. 10139.5, subd. (e)(3)), which provided that an annuity issuer and settlement obligor may not be required to divide payments; and (2) the proposed transfer would materially increase State Farm’s burdens and risks. The trial court approved the transfer petition, and State Farm appealed. After review, the Court of Appeal concluded that the trial court’s order indeed violated section 10139.5(e), and State Farm did not forfeit its right to oppose that order. The Court reversed the trial court and remanded for further proceedings. View "RSL Funding v. Alford" on Justia Law

This case stemmed from alleged acts of pre-leasing housing discrimination that resulted in alleged emotional distress. At the relevant time, the defendants in the underlying case (“Insureds”) were covered under an umbrella insurance policy issued by Insurer. After Insureds settled the underlying case, Insureds sued Insurer for breach of contract for failing to defend Insureds pursuant to the umbrella policy. A federal trial court granted summary judgment in favor of Insurer on its duty to defend and indemnify Insureds under the umbrella policy. The federal court of appeals reversed. At issue before the Supreme Court was whether the umbrella policy’s intentional-acts exclusion - through application of the inferred-intent doctrine - obviated Insurer’s duty to defend in this case. The Supreme Court affirmed, holding (1) the umbrella policy at issue here arguably provides coverage for emotional-distress damages through its coverage for humiliation; and (2) emotional-distress damages are not inherent in a claim for discrimination, and therefore, the inferred-intent doctrine was inapplicable. View "Granger v. Auto-Owners Ins." on Justia Law

Homeowners hired Benchmark Construction Services, Inc. to renovate their Massachusetts home. The homeowners hired an architect to design the renovation plans, and the architect hired a decorative painter to apply decorative painting to the interior walls. The painter's employee, Meghan Bailey, was assigned to the task. While Bailey was applying the decorative paint, she fell from a ladder and was injured. Bailey sued Benchmark, alleging negligence. Benchmark sought a defense from its insurer, United States Liability Insurance Company’s (ULSIC). USLIC determined that Bailey’s claims were not covered under Benchmark’s insurance policy and, therefore, USLIC had no duty to defend or indemnify Benchmark against those claims. USLIC then filed a declaratory judgment action to establish that the insurance policy did not provide coverage for Bailey’s claims and that, consequently, USLIC had no duty to defend or indemnify Benchmark against those claims. The district court entered judgment for USLIC, holding that the policy excluded Bailey’s claims. The First Circuit reversed, holding that Bailey’s claims fell within the bounds of insurance coverage, and therefore, USLIC had a duty to defend and indemnify Benchmark in the underlying negligence suit. View "U.S. Liability Ins. Co. v. Benchmark Constr. Servs., Inc." on Justia Law

Bridgett Noland suffered severe injuries in an accident in Utah when the bicycle she was riding collided with a truck. Bridgett’s parents, the Nolands, owned Flathead Janitorial & Rug Services, Inc. Flathead Janitorial was the named insured under a corporate policy issued by American States Insurance for the time period in which the accident occurred. Bridgett was listed as a driver in a piece of correspondence from American States. The Nolands sought underinsured motorist (UIM) and medical payment (MP) benefits under the American States commercial automobile policy issued to Flathead Janitorial. American States denied coverage and sought a declaratory judgment that Bridgett was not covered under the UIM or MP sections of the policy. The district court ruled in favor of American States, concluding that because Bridgett was not occupying a vehicle owned by Flathead Janitorial and covered by the policy when she was injured, she did not qualify for coverage under the policy as a matter of law. The Supree Court affirmed, holding that Bridgett was not entitled to coverage because the policy was a corporate policy clearly identifying the named insured as Flathead Janitorial and because, at the time of the accident, Bridgett was not occupying a covered auto. View "Am. States Ins. Co. v. Flathead Janitorial & Rug Servs., Inc." on Justia Law

Burlington purchased more than $8 million worth of cast vinyl film products from Ritrama to manufacture graphic decals for customers in the recreational vehicle (RV) industry. No later than early 2008, Burlington reported to Ritrama that RV owners were experiencing issues with the graphics. In September, 2008, Burlington sent Ritrama a spreadsheet detailing three claims for monetary damages based on the product failures, which totaled $53,219.37. The companies discussed settlement. In early 2009, Ritrama purchased a commercial general liability insurance policy from Gerling that provided coverage for claims made between March 31, 2009, and March 31, 2010. The policy did not define “claim.” On July 17, 2009, Ritrama advised its insurance agent of its issues with Burlington. The insurance agent sent a "notice of occurrence" to Gerling. Ritrama claims that the notice was not an acknowledgment of a claim, but merely a notification of a "customer having problems." Ritrama failed to meet Burlington's demands. The Eighth Circuit affirmed summary judgment in favor of Gerling. Burlington demanded money in 2008 and, before inception of the Policy, Ritrama attempted to settle existing and future claims for damages based on the RV adhesive issues. Although these communications did not involve an attorney or expressly refer to litigation, Burlington clearly demanded compensation. View "Ritrama, Inc. v. HDI-Gerling Am. Ins. Co." on Justia Law

The Schmidts operate a farm Worthington, Minnesota. Madison hosted a sleepover party at the family farm to celebrate her twelfth birthday. A guest, 10-year old Alyssa, was driving the Schmidts' ATV around the property when the ATV struck a tree. Alyssa died as a result of the accident. The Schmidts tendered defense of a wrongful death action to Grinnell under their farm policy, which provided $300,000 in coverage. Grinnell initially informed the Schmidts the policy appeared to provide coverage, but reserved its right to dispute coverage and sought a declaratory judgment. The wrongful death action settled for $462,500. Both parties agree the coverage dispute turns on whether Jerome or Kelly – the named insureds – gave Alyssa "express permission" to operate the ATV within the meaning of an exclusion contained in the Select Recreational Vehicle Limited Liability Coverage endorsement. The Eight Circuit affirmed summary judgment in favor of the Schmidts. While the Schmidts observed the girls on the ATV and did not object, Alyssa never “expressly” sought permission, so her conduct did not fall within the exclusion. View "Grinnell Mut. Reinsurance v. Schmidt" on Justia Law

A commercial general liability insurer initially refused to defend its insured against a third-party lawsuit but subsequently provided independent counsel under a reservation of rights (so-called Cumis counsel) to defend its insured in the third party suit. A court order required the insurer to pay defense costs but expressly preserved the insurer’s right to later challenge and recover payments for “unreasonable and unnecessary” charges by counsel. The insurer sought reimbursement, alleging that independent counsel “padded” their bills by charging fees that were, in part, excessive unreasonable and unnecessary. The trial court concluded that the insurer’s right to reimbursement, if any, was from its insureds, not directly from Cumis counsel. The Court of Appeal affirmed, concluding that reimbursement could not be obtained directly from Cumis counsel. The Supreme Court reversed, holding that, under the circumstances of this case, the insurer could seek reimbursement directly from Cumis counsel. View "Hartford Cas. Ins. Co. v. J.R. Marketing, LLC" on Justia Law