Justia Insurance Law Opinion Summaries

James Cooper was injured in a car accident while riding as a passenger in a car owned by Rick Huffman. Both Cooper and Huffman were employees of Pison Management, LLC, and were driving to a jobsite during their employment. Cooper's injuries exceeded the at-fault driver's insurance limits, so he sought underinsured motorist (UIM) coverage under Pison’s commercial automobile policy issued by Erie Insurance Property & Casualty Company. The policy provided liability coverage for two vehicles owned by Pison and a class of non-owned vehicles, but UIM coverage was only provided for the owned vehicles. Erie denied Cooper’s claim for UIM coverage.Erie filed a suit in federal district court seeking a declaration that the policy did not provide the UIM coverage Cooper sought. Cooper counterclaimed, arguing that West Virginia Code § 33-6-31 required Erie to offer UIM coverage for the class of non-owned vehicles. The district court ruled in favor of Cooper, holding that the statute required Erie to make a commercially reasonable offer of UIM coverage for all vehicles covered by the liability policy, including non-owned vehicles. Erie appealed this decision to the United States Court of Appeals for the Fourth Circuit.The Supreme Court of Appeals of West Virginia reviewed the case. The court held that West Virginia Code § 33-6-31 does not require an insurer to offer UIM coverage for a class of non-owned vehicles when a commercial automobile insurance policy insures certain owned vehicles and a class of non-owned vehicles for liability protection. The court reasoned that UIM coverage is intended to protect the named insured and permissive users of the named insured’s vehicle, not to extend to non-owned vehicles. Therefore, the court answered the certified question in the negative and dismissed the case from its docket, returning the matter to the Fourth Circuit for further proceedings consistent with this opinion. View "Erie Insurance Property & Casualty Company v. Cooper" on Justia Law

Martin Montano Jr., an employee of Casas Custom Floor Care, LLC, was involved in a fatal car accident while driving his mother's truck to correct his timesheet at the company's main yard. Michael Cravens, the surviving spouse of the deceased, sued Montano and Casas, alleging negligence and vicarious liability. Cincinnati Indemnity Company, which insured Casas, issued a reservation of rights letter to Montano, disputing its obligation to defend or insure him under the policy.The Superior Court in Pima County granted summary judgment in favor of Cravens, ruling that Montano was using the vehicle "in connection with" Casas's business at the time of the accident, thus obligating Cincinnati to indemnify Montano. The court also upheld the enforceability of a Morris Agreement between Montano and Cravens, which stipulated Montano's liability and assigned his rights under the policy to Cravens. The court of appeals affirmed the superior court's rulings on both coverage and the agreement.The Supreme Court of Arizona reviewed the case and held that an employee operates a non-owned auto "in connection with your business" when using the vehicle while engaged in the employer's business. This does not include a routine commute. The court also held that a contingent Morris agreement is enforceable if it meets the substantive requirements to ensure against fraud, collusion, unfairness, or unreasonableness. The court vacated the court of appeals' coverage ruling, affirmed the ruling on the Morris Agreement, reversed the superior court's judgment, and remanded for further proceedings consistent with its opinion. View "CRAVENS v MONTANO" on Justia Law

Mara Lindsey was involved in a car accident where she was rear-ended by Carlos Pantoja, resulting in personal injuries. Lindsey sought compensation for her medical expenses and, after settling with Pantoja’s insurer for his policy limit of $50,000, she filed a claim with her own insurer, State Farm, under her underinsured motorist (UIM) policy. Dissatisfied with State Farm’s settlement offer of $689.58, Lindsey sued State Farm under the Uniform Declaratory Judgments Act (UDJA) for declarations regarding Pantoja’s liability, her damages, and her entitlement to UIM benefits. She also sued State Farm and its claims adjuster for Insurance Code violations, alleging bad faith in handling her claim.The trial court denied State Farm’s motions to abate the extracontractual claims and to quash the deposition notice of its corporate representative. The court of appeals denied State Farm’s mandamus petitions without substantive explanation. State Farm then petitioned the Supreme Court of Texas for mandamus relief.The Supreme Court of Texas held that the trial court abused its discretion by denying State Farm’s motions. The court ruled that extracontractual claims must be abated until the insured obtains a favorable judgment on the UIM coverage, as these claims are dependent on the right to receive UIM benefits. The court also held that discovery on extracontractual matters is improper before establishing entitlement to UIM benefits. Additionally, the court found that State Farm had demonstrated that the deposition of its corporate representative was not proportional to the needs of the case, given the lack of personal knowledge and the burden of the proposed discovery.The Supreme Court of Texas conditionally granted State Farm’s petition for writ of mandamus, ordering the trial court to vacate its previous orders and grant State Farm’s motions to abate the extracontractual claims and to quash the deposition notice. View "IN RE STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY" on Justia Law

Edward Joseph Walsh, III was riding his lawn mower when he was struck and killed by an underinsured motorist. Walsh had underinsured motorist (UIM) coverage on two personal automobiles insured by Owners Insurance Company. After Owners paid benefits equal to the UIM coverage limits for a single covered automobile, Walsh’s estate sought to stack the UIM coverage from the other. Owners asserted that stacking was unavailable and, in the declaratory judgment action that followed, the district court agreed. The court found that neither South Carolina law nor the terms of the policy entitled the insured to stack coverage under these circumstances.The United States District Court for the District of South Carolina evaluated the parties’ cross-motions for summary judgment. The district court determined that the policy terms disallowed stacking and that this limitation was consistent with South Carolina law. Consequently, the court granted summary judgment to Owners Insurance Company and dismissed the case.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s grant of summary judgment de novo. The appellate court considered whether Walsh’s estate was entitled to stack UIM benefits from both scheduled automobiles under South Carolina law and the terms of the policy. The court concluded that the policy provisions clearly limited stacking to specific circumstances not applicable in this case. Additionally, the court found that the lawn mower involved in the accident was not an insured vehicle, and thus, the estate was not entitled to stack UIM coverage. The Fourth Circuit affirmed the district court’s judgment, holding that the estate was not entitled to collect additional UIM benefits beyond what had already been paid by Owners Insurance Company. View "Owners Insurance Co. v. Walsh" on Justia Law

HIVE Construction, Inc. served as the general contractor for the construction of Masterpiece Kitchen, a restaurant. The contract required HIVE to follow specific architectural plans, including installing two layers of drywall on a wall separating the kitchen and dining area. Instead, HIVE installed one layer of drywall and one layer of combustible plywood without approval. A fire started within the wall, causing significant damage and forcing the restaurant to close. Mid-Century Insurance Company, as the property insurer and subrogee of Masterpiece Kitchen, paid for the damages and then sued HIVE for negligence, alleging willful and wanton conduct.The district court initially allowed Mid-Century to amend its complaint to include a breach of contract claim but later reversed this decision, requiring Mid-Century to proceed with the negligence claim. At trial, the jury found HIVE's conduct to be willful and wanton, awarding damages to Mid-Century. HIVE appealed, arguing that the economic loss rule barred the negligence claim. The Colorado Court of Appeals agreed, reversing the district court's decision and instructing a verdict in HIVE's favor.The Supreme Court of Colorado reviewed the case and concluded that the economic loss rule does not provide an exception for willful and wanton conduct. The court held that the rule barred Mid-Century's negligence claim because the duty HIVE allegedly breached was not independent of its contractual obligations. Consequently, the court affirmed the judgment of the Colorado Court of Appeals, upholding the application of the economic loss rule to bar the negligence claim. View "Mid-Century Ins. Co. v. HIVE Construction" on Justia Law

In 2018, a $200 million mixed-use development project at Louisiana State University experienced issues with its fire-protection sprinkler systems, which began to crack and leak. Allied World National Assurance Company, which paid over $10 million for system replacements, sued Nisus Corporation in 2021, alleging that Nisus falsely represented its product's compatibility with the pipe material, leading to the damage.The United States District Court for the Middle District of Louisiana granted summary judgment in favor of Nisus, concluding that Allied's claims were time-barred under Louisiana law. The court found that while Provident, the insured party, did not have actual or constructive knowledge of the cause of the damage, RISE Residential, Provident's agent, had constructive knowledge of the cause by November 2019. This knowledge was imputed to Provident, starting the prescription period.The United States Court of Appeals for the Fifth Circuit reviewed the case de novo and affirmed the district court's decision. The court held that RISE Residential's constructive knowledge of the sprinkler system issues, which was imputed to Provident, triggered the running of the prescription period well before July 23, 2020. The court also found that Nisus did not prevent Allied from timely availing itself of its causes of action, as a reasonable inquiry by RISE Residential would have uncovered the necessary information. Therefore, Allied's claims were prescribed, and the summary judgment in favor of Nisus was affirmed. View "Allied World National v. Nisus" on Justia Law

Wehr Constructors, Inc. (Wehr) entered into a contract with St. Claire Medical Center (St. Claire) to build an addition to the hospital. Wehr's performance was allegedly deficient, leading to significant construction defects. St. Claire terminated the contract and sought damages from Wehr's performance-bond carrier, Travelers Casualty and Surety Company (Travelers Surety). Travelers Surety then involved Wehr in the litigation. Wehr sought defense coverage from its insurers: Phoenix Insurance Company (Phoenix), St. Paul Surplus Lines Insurance Company (St. Paul), and Travelers Property Casualty Company of America (Travelers Property).The United States District Court for the Eastern District of Kentucky ruled that none of Wehr’s insurers had a duty to defend Wehr in the lawsuit initiated by St. Claire. The court held that Phoenix’s duty to defend was not triggered because St. Claire did not assert claims directly against Wehr. It also found that St. Paul had no duty to defend because Wehr did not specifically agree to perform as a construction manager, a requirement under the St. Paul policy. Although Wehr did not seek summary judgment against Travelers Property, the court noted that Travelers Property also had no duty to defend for the same reasons as Phoenix.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court affirmed the district court’s decision regarding St. Paul, agreeing that Wehr did not specifically agree to serve as a construction manager. However, it reversed the decision regarding Phoenix, holding that Phoenix had a duty to defend Wehr because the damages alleged by St. Claire potentially fell within the policy coverage, and Wehr was a party to the suit. The court vacated the decision regarding Travelers Property and remanded for further proceedings to determine whether Travelers Property had a duty to defend, given the ambiguity in the district court’s ruling and the stipulation by the parties. View "Phoenix Insurance Co. v. Wehr Constructors, Inc." on Justia Law

The case involves a shooting incident at the Pride of St. Lucie Lodge 1189, Inc. (the "Lodge") on March 2, 2015, where Tanya Oliver was shot in the forehead and later died from her injuries. The Lodge was insured by Kinsale Insurance Company ("Kinsale"), which had a $50,000 policy sublimit for claims arising out of assault and battery. The Estate of Tanya Oliver sued the Lodge for negligent security, and a jury awarded damages exceeding $3.348 million.The Lodge and the Estate then sued Kinsale for common law bad faith under Florida law, claiming Kinsale breached its duty of good faith by failing to make a settlement offer within the policy limits before the Estate’s claim was filed. The United States District Court for the Southern District of Florida granted summary judgment to Kinsale, concluding that Kinsale had no duty to initiate settlement negotiations because no reasonable jury could find that this was a case of "clear liability."The United States Court of Appeals for the Eleventh Circuit reviewed the case and found that, viewing the evidence in the light most favorable to the Lodge and the Estate, a jury could reasonably find that Kinsale knew or should have known that liability was clear. The court noted that the Lodge's security guards had failed to prevent a second fight in the parking lot, which led to the shooting, and that Kinsale was aware of the severity of Oliver's injuries and the potential for damages far exceeding the policy limit.The Eleventh Circuit reversed the district court's grant of summary judgment and remanded the case for trial by jury, holding that a jury could reasonably find that Kinsale acted in bad faith by failing to tender its policy limit before the Estate filed suit. View "Kinsale Insurance Company v. Pride of St. Lucie Lodge 1189, Inc." on Justia Law

John and Deena Dostart were awarded $182,408.30 in compensatory damages and $17,591.70 in exemplary damages by a jury for consumer fraud claims against their general contractor, Tyler Custom Homes, Ltd., and its owner, James Harmeyer. Columbia Insurance Group, which provided a commercial-general-liability (CGL) insurance policy to Tyler Custom Homes, declined to indemnify the judgment, arguing that consumer fraud is excluded from coverage under the CGL policy. Unable to collect directly from Tyler Custom Homes or Harmeyer, the Dostarts filed a suit seeking payment of the unsatisfied judgment from Columbia.The Iowa District Court for Polk County granted Columbia's motion for summary judgment regarding the exemplary damages but found that fact questions existed as to whether the consumer fraud was an "occurrence" under the CGL policy, whether the jury's award was for "property damage," and whether the intentional acts exclusion applied. The Iowa Court of Appeals affirmed the district court's decision, noting the lack of evidence about the underlying dispute beyond the verdict form and jury instructions.The Iowa Supreme Court reviewed the case and concluded that the consumer fraud involved in the underlying action is not a covered "occurrence" under the CGL policy and that the alleged harm does not include covered "property damage" as defined in the policy. The court vacated the decision of the Court of Appeals, reversed the district court's ruling, and remanded the case for entry of summary judgment in favor of Columbia. The court emphasized that defective workmanship or failure to complete construction does not constitute an "occurrence" under a CGL policy and that the damages sought were not for "property damage" as contemplated by the policy. View "Dostart v. Columbia Insurance Group" on Justia Law

In this case, the plaintiffs, Weston and Carrie Twigg, hired Rainier Pacific Development LLC to build a home. After taking possession, they discovered various construction defects, including issues with the garage floor. Rainier Pacific agreed to make repairs, but failed to meet deadlines, leading to arbitration. The parties settled through a "Repair Agreement," but Rainier Pacific's subsequent repairs were also defective, prompting the Twiggs to reinitiate arbitration. The arbitrator found Rainier Pacific's work defective and awarded the Twiggs $150,000 for the garage floor repairs.The Multnomah County Circuit Court granted summary judgment to Admiral Insurance Company, Rainier Pacific's insurer, concluding that the damages did not arise from an "accident" as required by the commercial general liability (CGL) policy. The court relied on the precedent set by Oak Crest Construction Co. v. Austin Mutual Insurance Co., which held that damages solely from a breach of contract do not qualify as an "accident."The Oregon Court of Appeals affirmed the trial court's decision, agreeing that the damages arose solely from a breach of contract and not from an "accident" as defined by the CGL policy. The court emphasized that the Twiggs had not contended that Rainier Pacific's liability arose from a separate duty of care, i.e., a tort.The Oregon Supreme Court reversed the Court of Appeals and the trial court's decisions. The Supreme Court held that whether an insurance claim seeks recovery for an "accident" does not depend on the plaintiff's pleading decisions but on whether there is a factual basis for imposing tort liability. The court found that there were material factual disputes regarding whether Rainier Pacific's defective work constituted an "accident" under the CGL policy. Therefore, the case was remanded to the circuit court for further proceedings. View "Twigg v. Admiral Ins. Co." on Justia Law