Justia Insurance Law Opinion Summaries

Plaintiff Robert Occhifinto filed suit against defendant Robert S. Keppler Mason Contractors, LLC (Keppler) and others seeking damages for alleged defective construction of an addition to his warehouse. In the liability action, Keppler was defended by its insurance carrier, Mercer Mutual Insurance Company, under a reservation-of-rights agreement. Before trial in the liability action, Mercer filed an action for a declaratory judgment challenging its obligation to provide coverage and to defend Keppler in the liability action. Occhifinto, on Keppler s behalf, contested the claims raised by Mercer, and filed counterclaims asserting that Mercer had a duty to defend and indemnify Keppler under the policy, and that Mercer was obligated for the counsel fees incurred in defending the declaratory judgment action. In the declaratory judgment action, the parties filed cross-motions for summary judgment on the insurance coverage question. The trial court held that Mercer was required to indemnify Keppler for damages covered by the insurance policy. The court therefore denied Mercer's motion for summary judgment and granted partial summary judgment to Occhifinto, reserving the claim for counsel fees until conclusion of the liability action. The liability action proceeded, and Occhifinto lost. After trial, Occhifinto sought to recover counsel fees from Mercer pursuant to Rule 4:42-9(a)(6), which authorized an award of counsel fees in an action upon a liability or indemnity policy of insurance in favor of a successful claimant. The trial court denied Occhifinto's motion, holding that he was not a successful claimant in the liability action because he was not entitled to indemnity coverage in the liability action. In an unpublished opinion, the Appellate Division affirmed that determination. The Supreme Court reversed, finding Occhifinto was a successful claimant and therefore was entitled to attorneys' fees. View "Occhifinto v. Olivo Construction Company" on Justia Law

Insurance companies allegedly refused to honor claims for payment of blood-clotting-factor products. After they paid the claims in full, the district court dismissed a complaint under the Employees Retirement Income Security Act (ERISA) and state law. Following dismissal, both the plaintiffs and defendants sought attorney’s fees and costs. The Third Circuit affirmed denial, but remanded one issue: whether the plaintiffs were entitled to interest on the delayed payment of benefits. On remand, they sought interest of $1.5 to $1.8 million, primarily under the Maryland Code, with $68,000 based on the federal Treasury bill rate. The companies agreed to pay $68,000.00 in interest and the district court dismissed the case. Plaintiffs then sought attorney’s fees and costs of $349,385.15. The district court denied the motion, finding that plaintiffs had failed to achieve “some degree of success on the merits” as required for an award of fees under ERISA. The Third Circuit reversed, holding that the court used an incorrect legal standard to evaluate eligibility for attorney’s fees and misapplied the “Ursic” factors. The “catalyst theory” of recovery is available to the plaintiffs and judicial action is not required under that theory in order to establish some degree of success. View "Templin v. Independence Blue Cross" on Justia Law

Jackson claimed to be at work when her house burned. Little Rock Fire Department investigator Baker determined the fire was started by human intervention. Baker detected accelerants in the house; the fire's points of origin were inconsistent with accidental causes. Baker initially believed that Jackson might have been the victim of a hate crime, because he discovered racially derogative graffiti in her garage, but there were no signs of forced entry and the house was largely empty of personal items, food, or furniture. Baker claims that Jackson stated that she was the only person with access to the house and that she was not missing any property. Baker obtained a search warrant for her cell phone records, which indicated that Henson, Jackson's coworker, attempted to call Jackson three times during the period at issue. Henson denied calling Jackson. Baker concluded that Henson may have burned Jackson's home at her request. No criminal charges were filed. Allstate's investigative unit concluded that Henson had burned Jackson's home, noting that Jackson was subject to a divorce decree that ordered her to sell her house and that she tried to sell for several years,. Allstate denied Jackson's insurance claim based on Intentional Acts and Material Misrepresentations Exclusions. A jury found in favor of Allstate. The Eighth Circuit affirmed, rejecting procedural challenges and a challenge to the sufficiency of the evidence. View "Jackson v. Allstate Ins. Co." on Justia Law

Hargis’s Henderson home was insured by State under a standard homeowner’s policy when it burned to the ground in 2007. No one was home during the fire, but investigations determined that the fire was intentionally set. Hargis filed a claim for $866,000. State paid more than $425,000, including a mortgage payoff of $386,720.34, before alleging that Hargis caused or conspired to cause the fire and falsely inflated the loss in breach of “intentional loss” and “concealment or fraud” policy provisions. Hargis claimed breach of contract and bad faith. State’s investigation eventually led to Hargis’s admission that she had solicited a friend to burn down her house to collect the insurance proceeds. Hargis pleaded guilty to conspiracy to use fire to commit wire fraud and was sentenced to 60 months in prison and ordered to pay restitution totaling $672,497.80, which included $195,116.70 for investigation costs and attorney fees. The district court dismissed a “reverse bad faith” claim, finding certification of the issue unnecessary. The Sixth Circuit affirmed. State did not offer a convincing basis to conclude that the Kentucky Supreme Court would adopt a common law cause of action in tort by an insurer against its insured for breach of the implied duty of good faith and fair dealing. View "State Auto Prop. & Cas. Ins. Co. v. Hargis" on Justia Law

The Fifth Circuit Court of Appeals certified a question of Louisiana law to the Louisiana Supreme Court. The questions stemmed from the claims handling by State Farm Fire & Casualty Company following an automobile accident. In 2005, Danny Kelly was injured when the insured, Henry Thomas, and he were traveling in opposite directions. Both Kelly and a witness told police that Thomas had failed to yield to oncoming traffic, but Thomas maintained he was not at fault. Kelly was taken to a hospital by ambulance and treated for a fractured femur. He remained hospitalized for approximately six days. The cost of his medical care totaled $26,803.17. Both questions related to claims that an insurer was liable for subjecting its insured to a court judgment in excess of insurance policy limits. The Louisiana Court responded to the questions: (1) A firm settlement offer was unnecessary for an insured to sustain a cause of action against an insurer for a bad-faith failure-to-settle claim, because the insurer's duties to the insured can be triggered by information other than the mere fact that a third party has made a settlement offer; and (2) an insurer could be found liable under La. R.S. 22:1973(B)(1) for misrepresenting or failing to disclose facts that are not related to the insurance policy’s coverage because the statute prohibits the misrepresentation of “pertinent facts,” without restriction to facts “relating to any coverages.” View "Kelly v. State Farm Fire & Casualty Co." on Justia Law

Across the state, plaintiffs were filing complaints against health care providers from whom they sought treatment following automobile accidents and with whom their health care insurers had contracted reimbursement rates for the services rendered. At issue was the legality of these providers' policy of collecting or attempting to collect the undiscounted rate from the insured if a liability insurer may be liable, implemented through the filing of medical liens against plaintiffs' lawsuits and settlements pursuant to the health care provider lien statute. The Supreme Court granted certiorari to resolve a conflict among the appellate courts of this state on the issue of whether a class action is the superior method for adjudicating actions brought pursuant to the Health Care Consumer Billing and Disclosure Protection Act ("Balance Billing Act"). After review, the Court found plaintiffs in the Third Circuit Court of Appeal proceeded as a class, while plaintiffs in the Second Circuit Court of Appeal were denied class certification. After reviewing the record and the applicable law, the Supreme Court found the class action was superior to any other available method for a fair and efficient adjudication of the common controversy over the disputed billing and lien practices. Accordingly, the Court reversed the judgment of the Second Circuit. Finding all other requirements for class certification properly met, the Court reinstated the judgment of the trial court. View "Baker v. PHC-Minden, L.P." on Justia Law

Plaintiff filed suit against Dr. Cohen seeking a declaration that they properly rescinded his disability insurance policies. The magistrate judge held that Dr. Cohen made material misrepresentations on his policy applications and granted summary judgment to plaintiffs. Applying Maryland law, the court concluded that each of the questions to which Dr. Cohen allegedly gave false answers is subject to more than one reasonable interpretation, and so is ambiguous. Because the language of each question at issue in this case is ambiguous, summary judgment was inappropriate. In regard to the magistrate judge's denial of Dr. Cohen's motion in limine, the court held that a Consent Order suspending a Maryland medical license rendered by the Maryland State Board of Physicians is not admissible in a civil or criminal action absent consent, except for in an action brought by a party aggrieved by a Board decision. Accordingly, the court reversed and remanded. View "Certain Underwriters at Lloyd's v. Cohen" on Justia Law

In 2005, Plaintiff suffered a compensable, work-related injury to his neck and back while employed by Ridco, Inc. Twin City Fire Insurance Company, which insured Ridco for purposes of workers’ compensation, paid temporary disability benefits. Plaintiff subsequently sought additional workers’ compensation benefits, which the administrative law judge granted. In 2010, Plaintiff filed suit against Twin City and Ridco, alleging bad faith handling of his workers’ compensation claim. During the discovery stage, Plaintiff filed a motion to compel Twin City to produce wholly unredacted claim files, personnel files, and privilege logs. The circuit court ordered Twin City to produce the disputed documents in in unredacted form, concluding that Twin City impliedly waived the attorney-client privilege. The Supreme Court reversed, holding that the circuit court erred in concluding that Twin City implied the attorney-client privilege without conducting an in camera inspection of the documents. Remanded for findings as to whether Twin City injected its reliance upon the advice of counsel into the bad faith litigations, thereby making the disputed communications relevant to the case such that would constitute an implied waiver of the attorney-client privilege. View "Andrews v. Ridco, Inc." on Justia Law

In 2001, representatives from the Moody Bible Institute of Chicago and Sysix Financial signed a master agreement, laying the groundwork for future leases of equipment from Sysix to Moody. In 2008, two lease schedules for computer items were executed; they appeared to have been signed by Moody’s vice president and Sysix’s president. Sysix assigned its interest in both leases to Rockwell, which acquired loans from PNB to finance the leases. PNB procured indemnification coverage for those loans from RLI in the form of a financial institution bond. Sysix’s president had forged the signature of Moody’s vice president on both lease schedules. Moody never agreed to either schedule nor did it ever receive any of the promised equipment. PNB notified RLI of its potential loss, but PNB itself soon went under. As receiver for PNB, the FDIC sued RLI. The district court granted summary judgment in FDIC’s favor. The Seventh Circuit affirmed, finding that the plain language of the bond covered FDIC’s losses The Financial Institutions Reform Recovery and Enforcement Act limitations period applies,12 U.S.C. 1821(d)(14), so the suit was timely. View "Fed. Deposit Ins. Corp. v. RLI Ins. Co." on Justia Law

In 2010, Debra Hackett was seriously injured in an accident in Sacramento County in which a tractor and trailer owned by Silva Trucking, Inc. and driven by Elaine McDonold jackknifed and collided with the vehicle being driven by Hackett. In 2012, the Hacketts filed a personal injury action in Sacramento County against Silva Trucking and McDonold. The jury awarded the Hacketts $34.9 million in damages. Silva Trucking was insured by Carolina Casualty Insurance Company (CCIC), who retained the law firm Cholakian & Associates to provide a defense. Silva Trucking had an excess liability insurance policy with Lexington Insurance Company (LIC), who retained the law firm Lewis, Brisbois, Bisgaard & Smith, LLP (Lewis Brisbois) as counsel. In 2014, Silva Trucking and McDonold brought suit in Sacramento County against LIC, CCIC, Cholakian & Associates and individual attorneys Kevin Cholakian and Jennifer Kung (collectively Cholakian), and Lewis Brisbois and individual attorney Ralph Zappala (collectively Lewis Brisbois). As to LIC and CCIC, the complaint alleged bad faith and breach of contract. As to the law firms and attorneys, the complaint alleged legal malpractice. The gravamen of the complaint was that the insurers unreasonably refused to accept the policy limit demand when the insured’s liability was clear and damages were known to be in excess of the policy limit. The attorneys failed to advise their insurer clients to accept the demand and the consequences of failing to do so, and failed to advise Silva Trucking and McDonold of their need for personal counsel. LIC and CCIC responded with demurrers. Lewis Brisbois answered with a general denial and asserted 22 affirmative defenses. Under Code of Civil Procedure section 396b, subdivision (a), where an action has been filed in the “wrong venue,” a defendant may move to transfer the case to the “proper court for the trial thereof.” In such a case, “if an answer is filed,” the court may consider opposition to the motion to transfer and may retain the action in the county where filed to promote the convenience of witnesses or the ends of justice. The question this case presented for the Court of Appeal's review was whether, in a multi-defendant case, an answer must be filed by all defendants before the court may consider opposition to the motion to transfer venue. The Court concluded the answer was yes. In this case, the trial court considered opposition to the motion before all defendants had answered the complaint. Accordingly, the Court issued a preemptory writ of mandate directing the trial court to vacate its order denying the motion to transfer and to issue a new order granting the motion. View "Cholakian & Assoc. v. Super. Ct." on Justia Law