Justia Insurance Law Opinion Summaries

Employee was injured when he ran from a co-worker on the job site after tricking that co-worker. Employee sought workers’ compensation benefits. Employer and Insurer denied workers’ compensation benefits, asserting that Employee’s injury did not “arise out of” or “in the course of” his employment because Employer specifically prohibited horseplay by its employees. Employee petitioned for a hearing. The Department of Labor concluded that Employee’s injury arose “out of” his employment because, but for his work with Employer” he would not have been at the job site where he was injured, but that the injury did not occur “in the course of” the employment. The circuit court affirmed. The Supreme Court reversed in part, affirmed in part, and remanded for an award of benefits, holding that the Department (1) correctly concluded that Employee’s injury arose “out of” the employment; and (2) erred when it did not consider the effect of the mandatory lull in Employee’s work when it determined that the injury did not occur “in the course of” his employment. Because Employee’s act of horseplay was not a substantial deviation from his employment, it occurred “in the course of the employment.” View "Petrik v. JJ Concrete, Inc." on Justia Law

Reyna Bernard purchased property and executed a promissory note in the principal amount secured by a mortgage on the property. The mortgage was assigned to HSBC Bank, USA, N.A. A fire later destroyed the property. Manuel Rosario entered into an insurance adjusting agreement with an LLC providing that the LLC would assist with the adjustment of the loss in return for a percentage of the total recoverable loss. Thereafter, Bernard defaulted on the note, and the property was sold at a foreclosure sale to HSBC, leaving an unpaid deficiency on the note in the amount of $246,072. Rhode Island Joint Reinsurance Association (RIJRA) subsequently initiated an interpleader action to determine the respective rights of the LLC, Bernard, and Ocwen Loan Servicing, LLC as agent for HSBC with regard to the insurance proceeds. The superior court found that Ocwen was entitled to the entirety of the insurance proceeds pursuant to the language contained in the mortgage. The Supreme Court affirmed, holding (1) Bernard and Rosario failed to demonstrate their entitlement to the insurance proceeds; and (2) the mortgage executed by Bernard was duly acknowledged as statutorily required and was therefore valid. View "R.I. Joint Reinsurance Ass’n v. Rosario" on Justia Law

Avon Bank customer Herdering was contacted by "Gibson," who claimed to be the son of an African associate with whom Herdering had done business; that his father had died, leaving a $9 million estate; that the family wanted to transfer the funds to the U.S.; that the money was tied up in the Netherlands; and that the transfer required up-front payments of taxes and fees. Herdering sent Gibson money and approached Avon Assistant Vice President Carlson, who issued Herdering a loan from Avon, but contributed $60,000 of his own money. Avon’s President expressed concern that the estate might be a scam. Herdering later recruited others, telling them that Avon was making the loans and having both men write checks to Avon. Froseth contributed $405,000; Imdieke contributed $80,000. Carlson wired the money in violation of Avon policy that prohibited wiring money to non-customers. When the scheme fell apart, Avon terminated Carlson and sent the investors letters stating that it viewed their investments as related to Carlson’s personal dealing and not involving the bank. They sued Avon for fraudulent misrepresentation. BancInsure agreed to provide coverage under the Directors’ and Officers’ Liability Policy, rather than simply defend Avon, reserving its rights. A jury found that, in the scope of his employment, Carlson had breached his duty to disclose material information. BancInsure asserted that neither the Policy nor a separate Fidelity Bond covered the loss. The Eighth Circuit affirmed the district court holding that the Bond, but not the Policy, covered the loss, and an award of prejudgment interest. View "Avon State Bank v. BancInsure, Inc." on Justia Law

Guam Industrial owned a dry dock that sunk during a typhoon in Guam. Guam Industrial filed a claim under two insurance policies to cover the cost of damage to the dock and the clean up of oil barrels. The district court granted summary judgment in favor of the insurers. Whether derived from federal admiralty law or state law, the court concluded that the law requires strict compliance with marine insurance policy warranties, even when the breach of the warranty did not cause the loss. In this case, the policies required Guam Industrial to obtain and maintain Navy Certification and Guam Industrial breached the warranty because the dry dock was never Navy Certified. The court concluded that the district court correctly ruled that since there was no actual discharge of pollutants, even though the containers of oil were submerged after the sinking, Guam Industrial’s costs of retrieving the containers from the sea were not covered by the policy’s allowance of coverage for cleanup after the “discharge, dispersal, release, or escape” of pollutants. Accordingly, the court affirmed the judgment. View "Guam Indus. Servs. V. Zurich Am. Ins. Co." on Justia Law

Ramsey applied for $2 million in life insurance from Penn. His application indicated that he was a Cleveland firefighter and had last seen his physician for a checkup in 2006. During a medical examination by a nurse, Ramsey disclosed that he suffered from chronic ulcerative colitis; in 1984 a colorectal surgeon had surgically removed Ramsey’s colon to alleviate his symptoms. After reviewing his medical records, in mid-April, Penn offered him a policy with one of the lowest ratings Penn offers and an above-average premium. On April 28, Ramsey was examined at the Cleveland Clinic. Having had no treatment for 10-12 years, his visit was precipitated by “frequent bloody [bowel movements] and feel[ing] bad.” On June 1, Penn drafted and Ramsey signed amendments, changing the policy value to $500,000. Ramsey stated: I have not had a colon[o]scopy since 2004 and have had no gastrointestinal problems since that time. Ramsey was soon diagnosed with stage IV metastatic rectal cancer and died in September 2011. Penn denied an application for benefits, rescinded the policy, and returned $14,761.45 in premiums. The district court granted Penn summary judgment, finding Ramsey had failed to inform Penn of a change in the status of his health before the delivery of his policy, breaching a representation in the contract. The Sixth Circuit reversed, finding a genuine dispute as to whether Ramsey misrepresented the state of his health by failing to disclose his rectal bleeding and doctor visits. View "Ramsey v. Penn Mut. Life Ins.Co." on Justia Law

The issue this case presented for the Supreme Court's review centered on recovery under an uninsured motorist (UM) insurance policy. Specifically, the issue was whether the burden of proof on summary judgment between the insured and the UM carrier was misallocated. The UM carrier denied coverage based on a claim that the at-fault driver was not "uninsured" as defined in the UM policy at issue here because the drive's liability carrier had not "legally denied" coverage. After review, the Supreme Court concluded the Court of Appeals erred in placing the burden of proof on the UM carrier in this instance, and therefore reversed. View "Travelers Home & Marine Ins. Co. v. Castellanos" on Justia Law

An employee of Progression, Inc. suffered a serious work-related injury. Progression, a corporation headquartered in Massachusetts, had two insurance policies from two different insurers that covered this work-related injury, one with Insurance Company of the State of Pennsylvania (ISOP) and one with Great Northern Insurance Company. Progression tendered the claim only to ISOP. ISOP made payments pursuant to the policy and defended the claim. When ISOP learned of Progression’s policy with Great Northern, ISOP filed suit in federal district court declaring that the Massachusetts doctrine of equitable contribution required Great Northern to share equitably in covering the loss. The district court granted summary judgment to Great Northern, concluding that Progression’s decision to have only ISOP cover the entire loss defeated ISOP’s action for equitable contribution. Because the Massachusetts Supreme Judicial Court (SJC) had not spoken on the issue, the First Circuit certified to the SJC the question of whether, under the circumstances presented in this case, the insured may opt to have one insurer cover the entire loss or whether either insurer may insist that both share equitably in covering the loss. View "Ins. Co. of the State of Penn. v. Great Northern Ins. Co." on Justia Law

Plaintiff filed suit against Metropolitan after the insurance company denied coverage for the loss of her home. After a wildfire swept through Northern Arizona in 2011, flooding and mudslides in the area destroyed plaintiff's house. Plaintiff had a homeowner’s policy with Metropolitan which covered direct loss caused by fire but excluded coverage for loss caused by either water damage or earth movement, including mudslides. Under the Appleman definition of direct and proximate cause as adopted by Arizona, it is possible that the fire directly caused plaintiff's loss in “an unbroken sequence and connection between” the wildfire and the destruction of the house. In this case, a reasonable factfinder could conclude that the destruction of the house was caused by the fire, which likely caused the mudslide, “the operation and influence of which could not be avoided.” Therefore, although an efficient proximate cause analysis is not appropriate under Arizona law, the court need not apply that doctrine in order to find that the damage here could have been directly and proximately caused by the wildfire. The court concluded that the district court erred in determining that, under Arizona law, Metropolitan was entitled to summary judgment because there is a triable issue as to whether the fire directly caused the destruction of plaintiff's home. Accordingly, the court reversed and remanded. View "Stankova v. Metro. Prop. & Cas. Ins. Co." on Justia Law

GTL, Inc. filed suit against John Greytak and Tanglewood Investors Limited Partnership (collectively, Greytak) for non-payment of an obligation arising from a construction project. GTL was insured by Atlantic Casualty Insurance Company under a commercial general liability policy. Greytak filed counterclaims against GTL in the state court action. Atlantic sued GTL and Greytak in federal district court seeking a declaration that it was not required to defend GTL from Greytak’s counterclaims or to pay judgment because GTL had not provided timely notice as required by the policy language. GTL later defaulted. The federal district court granted Atlantic’s motion for summary judgment. The Court of Appeals certified a question of law to the Montana Supreme Court, which answered in the affirmative, holding that an insurer who does not receive timely notice according to the terms of an insurance policy must demonstrate prejudice from the lack of notice to avoid defense and indemnification of the insured. View "Atlantic Cas. Ins. Co. v. Greytak" on Justia Law

After plaintiff was severely injured from falling off a ladder, he brought claims in state court against the ladder's manufacturers (Versa) and the seller of the ladder (Menard). Gulf, Versa's former insurance company, subsequently moved to intervene in the products liability action. Plaintiff and Versa then entered into an agreement in which Versa admitted liability and permitted plaintiff to seek recovery from Gulf. After trial, the jury returned a verdict for Gulf and plaintiff moved for a new trial, or in the alternative, reconsideration of his motion for summary judgment. The court concluded that the district court did not abuse its discretion in rejecting plaintiff's requested spoliation instruction where defendant's destruction of claim files and records was insufficient to show that the files had been destroyed in anticipation of litigation; given that the district court did not abuse its discretion in declining to grant a spoliation instruction, and did not abuse its discretion in admitting evidence of plaintiff's lawyer's disciplinary history, a new trial is not required to prevent a miscarriage of justice; and the court did not review the district court's denial of the motion for summary judgment after the trial on the merits, because plaintiff had a full and fair opportunity to litigate the issue of whether Versa received the March 2003 letter at issue. Accordingly, the court affirmed the judgment. View "Burris v. Gulf Underwriters Ins. Co." on Justia Law