Justia Insurance Law Opinion Summaries

Cox spent millions of dollars cleaning up pollution and debris after Hurricane Katrina caused extensive damage to the oil-and-gas facilities it operated. St. Paul, Cox's liability insurer, reimbursed Cox for $1.4 million and then filed suit seeking a declaration that the remainder of Cox’s costs were not “pollution clean-up costs” covered by the policy. Cox counterclaimed. The district court entered judgment awarding Cox damages for breach of the policy and penalty interest under the Texas Prompt Payment of Claims Act, Tex. Ins. Code Ann. 542.051-.061. The court concluded that the plain language of the Act provides that a violation of any of the Act’s deadlines - including St. Paul’s violation of the section 542.055(a) deadline here - begins the accrual of statutory interest under section 542.060. Therefore, the court rejected St. Paul’s argument that, notwithstanding an insurer’s violation of section 542.055(a), interest cannot begin to accrue until 60 days after the insurer receives sufficient information which would allow the insurer to adjust the claim. Because this argument is the only argument that either party has raised against the district court’s determination of the interest-accrual period, the court found no reversible error in the district court’s award of penalty interest to Cox. Accordingly, the court affirmed the judgment. View "Cox Operating, LLC v. St. Paul Surplus Lines Ins. Co." on Justia Law

Appellant was injured in a car accident. Appellant obtained a default judgment against both the driver and the owner of the other vehicle. Thereafter, Appellant brought this action under Nev. Rev. Stat. 485.3091, Nevada’s absolute-liability statute, against the owner’s insurer to recover upon the judgment under the insurance policy. The district court entered judgment in favor of the insurer. The Supreme Court affirmed in part, reversed in part, and remanded, holding that the district court (1) erred in declining to apply section 485.3091 to Appellant’s action, as a statutory third-party claimant can sue the insurer to enforce compliance with the statute; (2) properly dismissed Appellant’s claim for breach of the implied covenant of good faith and fair dealing, as the statute provides no express language that permits a third-party claimant to pursue an independent bad faith claim against an insurer; and (3) did not err in not awarding Appellant damages based upon a promissory estoppel theory. View "Torres v. Nev. Direct Ins. Co." on Justia Law

Asphalt hired a company that, from 2005-2008, sent about 44,000 fax advertisements to potential customers. FS, which received some of the faxes, filed a class-action, alleging violation of the Telephone Consumer Protection Act, 47 U.S.C. 227, seeking statutory damages of $500 for each fax. Asphalt notified Western, its insurer during the time when roughly 33,000 faxes were sent. The policies contained a deductible of $1,000 “per claim” for property damage, personal, and advertising injury, applicable to “all damages sustained by one person or organization as the result of any one claim” and to “legal expenses incurred in the handling and investigation of each claim.” Western hired a law firm to represent Asphalt, but did not refer to a reservation of rights. The firm handled the defense for four years. Western sent another letter, stating that Western intended to defend subject to a reservation of rights. Western sought a declaration that it owed no duty to defend or to indemnify. The district court determined that FS lacked standing to bring counterclaims and that Western had a duty to defend, having waived its defenses by waiting four years to issue a reservation-of-rights letter. The Eighth Circuit affirmed, holding that Western did not waive the $1,000 deductible, which applies separately to each fax, so that there is also no duty to indemnify. View "W. Heritage Ins. Co. v. Fun Servs. of Kan. City" on Justia Law

When the plant closed, plaintiffs retired under a collective bargaining agreement (CBA) that provided that the employer would continue health insurance and that coverage an employee had at the time of retirement or termination at age 65 or older (other than discharge for cause) “shall be continued thereafter provided that suitable arrangements for such continuation[] can be made… In the event… benefits … [are] not practicable … the Company in agreement with the Union will provide new benefits and/or coverages as closely related as possible and of equivalent value." In 2011 TRW (employer’s successor) stated that it would discontinue group health care coverage beginning in 2012, but would be providing “Health Reimbursement Accounts” (HRAs) and would make a one-time contribution of $15,000 for each eligible retiree and eligible spouse in 2012 and, in 2013, would provide a $4,800 credit to the HRAs for each eligible party. TRW did not commit to funding beyond 2013. Plaintiffs sued, claiming that the change violated the Labor-Management Relations Act, 29 U.S.C. 185, and the Employee Retirement Income Security Act, 29 U.S.C. 1001. The court entered summary judgment, ruling that the CBAs established a commitment to lifetime health care benefits. The Sixth Circuit affirmed, but subsequently vacated and remanded for reconsideration in light of the Supreme Court’s 2015 decision in M & G Polymers. View "United Steel v. Kelsey-Hayes Co." on Justia Law

Georgia-Pacific appealed the district court's declaratory judgment that Kinsale owed no indemnity under a policy it had issued to Georgia-Pacific. The district court found that a policy exclusion applied that related to claims brought by one insured against another. Georgia-Pacific hired Advanced for demolition work on Georgia-Pacific’s idled plywood plant in Gloster, Mississippi. Advanced was covered by a Commercial General Liability policy written by Kinsale. Georgia-Pacific was an additional insured under the policy. Lawsuits arose after a fire occurred at the plant, damaging equipment Advanced leased from H&E for the demolition work. H&E filed suit against Advanced and Advanced filed a third-party demand for indemnification against Georgia-Pacific. Georgia-pacific then filed a claim for coverage under the Kinsale policy for any indemnification it might be found to owe Advanced. Kinsale denied coverage based on a policy exclusion. The court concluded that the insured versus insured exclusion does not apply. In this case, Advanced “brought” a “claim” against another insured, Georgia-Pacific, but it was not one for “property damage.” The plain meaning of the exclusion makes it inapplicable to an indemnity claim. Accordingly, the court reversed and remanded. View "Kinsale Ins. Co. v. Advanced Services, Inc." on Justia Law

Georgia-Pacific appealed the district court's declaratory judgment that Kinsale owed no indemnity under a policy it had issued to Georgia-Pacific. The district court found that a policy exclusion applied that related to claims brought by one insured against another. Georgia-Pacific hired Advanced for demolition work on Georgia-Pacific’s idled plywood plant in Gloster, Mississippi. Advanced was covered by a Commercial General Liability policy written by Kinsale. Georgia-Pacific was an additional insured under the policy. Lawsuits arose after a fire occurred at the plant, damaging equipment Advanced leased from H&E for the demolition work. H&E filed suit against Advanced and Advanced filed a third-party demand for indemnification against Georgia-Pacific. Georgia-pacific then filed a claim for coverage under the Kinsale policy for any indemnification it might be found to owe Advanced. Kinsale denied coverage based on a policy exclusion. The court concluded that the insured versus insured exclusion does not apply. In this case, Advanced “brought” a “claim” against another insured, Georgia-Pacific, but it was not one for “property damage.” The plain meaning of the exclusion makes it inapplicable to an indemnity claim. Accordingly, the court reversed and remanded. View "Kinsale Ins. Co. v. Advanced Services, Inc." on Justia Law

After his car was hit by a car driven negligently by Sheffer, Behlmann was billed $89,884.79 for medical treatment. Behlmann settled with Sheffer for $50,000, the limit of Sheffer’s policy. Behlmann sued his insurer, Century, for underinsured motorist benefits. Century argued that Behlmann’s medical treatment cost less than $50,000 and resulted from pre-existing conditions. The jury found for Century. Behlmann unsuccessfully requested a new trial, challenging the admission of evidence on the value of his medical treatment and the strike of the only African-American venire person. The Eighth Circuit affirmed, noting Missouri law: “Parties may introduce evidence of the value of the medical treatment rendered to a party that was reasonable, necessary, and a proximate result of the negligence of any party.” Behlmann did not establish that Century’s reasons for the strike were pretextual. Juror 4 was a long-time autoworker; he failed to disclose he was an autoworker despite relevant questioning; and he failed to disclose involvement in prior litigation. View "Behlmann v. Century Sur. Co." on Justia Law

McCormick bought a single-premium variable life-insurance policy that permits borrowing against its cash value. Loans are secured by moving an equivalent amount from sub-accounts that the policyholder can invest to a “general account” that draws 4% interest. The policyholder owes 4.7% on any borrowed sums, so the net is 0.7% per annum, plus foregoing the opportunity to exercise discretion about how to invest the borrowed sum. If the owner does not pay the annual interest, “it will be added to the principal of the loan and will bear interest.” McCormick borrowed against cash value and did not pay interest. Independence, the insurer, added the unpaid interest “to the principal of the loan” (which caused additional sums to be moved from investments into the general account) and charged interest on the higher indebtedness. Compound interest has increased the debt by $44,000, which, if not repaid, will reduce the death benefit. McCormick sought a declaration that the $44,000 is not owed, because, when unpaid interest was added to principal and moved to the general account, it was “paid” automatically. The court entered judgment for Independence. The Seventh Circuit vacated with instructions to dismiss. Removal rested on diversity of citizenship, and $75,000 is the minimum amount in controversy for that jurisdiction. View "McCormick v. Independence Life & Annuity Co." on Justia Law

Plaintiffs, borrowers who failed to purchase hazard insurance on their mortgaged properties, as required by the terms of their loan agreements, filed suit alleging that they were fraudulently overbilled. Plaintiffs' loan servicer, GMAC, bought lender-placed insurance (LPI) from Balboa at rates that were approve by regulators. GMAC then sought reimbursement from plaintiffs at the same rates. Plaintiffs alleged that the rates they were charged did not reflect secret "rebates" and "kickbacks" that GMAC received from Balboa through Balboa's affiliate, Newport. The court held that a claim challenging a regulator-approved rate is subject to the filed rate doctrine whether or not the rate is passed through an intermediary. The claim is therefore barred if it would undermine the regulator’s rate-setting authority or operate to give the suing ratepayer a preferential rate. In this case, plaintiffs' claims are barred under the filed rate doctrine and the court reversed and remanded for dismissal of the case. View "Rothstein v. Balboa Ins. Co." on Justia Law

The Pennsylvania Supreme Court granted review to consider an issue of first impression regarding whether an insured forfeits insurance coverage by settling a tort claim without the consent of its insurer, when the insurer defends the insured subject to a reservation of rights, asserting that the claims may not be covered by the policy. In 1994, a class action lawsuit was filed against Appellant-Insureds Babcock & Wilcox Company (B&W) and Atlantic Richfield Company (ARCO) (collectively, Insureds) brought by plaintiffs claiming to have suffered bodily injury and property damage caused by emissions from nuclear facilities owned by Insureds. Over time, the class action grew to include over 500 named plaintiffs, who lived near the nuclear facilities. Insureds denied that the facilities released any emissions or that the harm suffered by plaintiffs resulted from the facilities. While the underlying tort action was pending in federal court, disputes arose between Insureds and their insurers, Appellees American Nuclear Insurers and Mutual Atomic Energy Liability Underwriters (collectively ANI or Insurer). At the outset of the litigation, Insurer acknowledged that it would defend Insureds but contested whether the policy covered aspects of the claims, and thus defended subject to a reservation of rights. While staying various claims for future determination, including the breach of the duty to cooperate claim, the court decided issues regarding the trigger of coverage and held that B&W and ARCO were entitled to separate counsel. During the course of the litigation, Insurer refused consent to any settlement offers presented to it due to its conclusion that the case had a strong likelihood of a defense verdict given the lack of medical and scientific support for plaintiffs’ claims and decisions by the federal trial court regarding procedural and evidentiary issues in the pending retrial, which Insurer viewed as highly favorable to Insureds’ ultimate outcome. After presenting the settlement offers to Insurer and being denied consent, Insureds ARCO and B&W, respectively in 2008 and 2009, settled with the class action plaintiffs for a total of $80 million, which was substantially less than the $320 million of potential coverage. Insureds then sought reimbursement of the settlement amount from Insurer. The Supreme Court found that after an extensive trial where the jury was presented with voluminous evidence relating to the strength of the underlying action and the settlement offer, the jury determined that the settlement was “fair and reasonable from the perspective of a reasonably prudent person in the same position of [Insureds] and in light of the totality of the circumstances,” a standard which the Court adopted as the proper standard to apply in a reservation of rights case where an insured settles following the insurers’ refusal to consent to settlement. The Court concluded that the Superior Court erred by requiring an insured to demonstrate bad faith when the insured accepts a settlement offer in a reservation of rights case. Accordingly, the Superior Court's decision was reversed and the trial court's judgment reinstated. View "Babcock & Wilcox Co. v. American Nuclear Insurers & Mutual Atomic Energy Liability Underwriters" on Justia Law