Justia Insurance Law Opinion Summaries

Linda Nunley was killed while working for a charcoal manufacturer. Plaintiffs, Nunley’s three children and her mother, obtained a judgment for wrongful death against Junior Flowers, the company’s sole owner, director, and executive officer. Flowers requested a defense from his insurer (ILM), but ILM refused to defend Flowers. Flowers subsequently assigned his insurance claims to Plaintiffs. Plaintiffs sued ILM for breach of duties to defend and indemnify under commercial general liability (CGL) and umbrella policies. The circuit court granted summary judgment for ILM after applying the policies’ employees exclusions, which prevented coverage for work-related injuries to employees of the insured. The Supreme Court affirmed, holding that the policies barred Plaintiffs’ claims through unambiguous language that excluded liability to employees. View "Piatt v. Ind. Lumbermen's Mutual Ins. Co." on Justia Law

In 2009, George Lawrence, while employed by Schneider National Inc., suffered a work-related injury when he slipped and fell in a parking lot leased by Domtar Paper Company, and allegedly owned and maintained by Commercial Net Lease Realty Services, Inc., Commercial Net Lease Realty Trust, Commercial Net Lease Realty, Inc., National Retail Properties, Inc., and National Retail Properties Trust. As a result of this injury, Schneider's workers' compensation carrier, Liberty Mutual Insurance Company, paid Lawrence $33,929.23 in workers' compensation benefits. The issue this case presented for the Supreme Court's review centered on whether section 319 of the Pennsylvania Workers' Compensation Act (WCA) conferred on employers or their workers' compensation insurers a right to pursue a subrogation claim directly against a third-party tortfeasor when the injured employee took no action against the tortfeasor. Based on established precedent, the Superior Court held that Section 319 did not permit employers/insurers to commence an action directly against the third-party tortfeasor, and affirmed the trial court's grant of preliminary objections in favor of the tortfeasors. Agreeing with that reasoning, the Supreme Court affirmed. View "Liberty Mutual Ins. Co. v. Domtar Paper Co." on Justia Law

JAW The Pointe, LLC obtained insurance to cover an apartment complex located in Galveston from an insurer that purchased several policies providing multiple layers of coverage for the 300 complexes it insured. Lexington Insurance Company provided the primary coverage layer. Hurricane Ike struck, causing substantial damage to The Pointe apartments. Under city ordinances, JAW was required to be brought into compliance with current code ordinances. The insurance policy covered the costs of complying with city ordinances but only if the policy covered the property damage that triggered the enforcement of the ordinances. In this case, the property damage that triggered the ordinances resulted from wind, which the policy covered, and flooding, which the policy expressly excluded. Lexington informed JAW that the policy did not cover the losses JAW incurred to comply with the ordinances. JAW sued Lexington, asserting claims for violations of the Texas Insurance Code and the Texas Deceptive Trade Practices Act. The jury returned a verdict in JAW’s favor. The court of appeals reversed, concluding that the policy excluded coverage for JAW’s code-compliance losses. The Supreme Court affirmed, holding that the policy did not cover JAW’s losses, and thus JAW could not recover for Lexington’s bad faith failure to effectuate a prompt and fair settlement of the claim. View "JAW The Pointe, LLC v. Lexington Ins. Co." on Justia Law

Plaintiffs Doug and Gayle Mellin brought a declaratory judgment action asserting, in relevant part, that their homeowner’s insurance policy with defendant Northern Security Insurance Company, Inc. required Northern to reimburse them for losses to their condominium caused by cat urine odor. Plaintiffs' downstairs neighbor kept two cats in her condominium. They surmised that the smell entered their unit from the downstairs condominium through an open plumbing chase servicing the kitchen. In December 2010, plaintiffs filed a claim under their homeowner’s insurance policy, which was denied. Epping's building/health inspector examined the unit and sent a letter to plaintiffs stating that they "have a health problem existing" and the odor "is such that [they] need to move out of[] the apartment temporarily and have a company terminate the odor." Remediation proved unsuccessful. Plaintiffs continued to reside in the unit until February 1, 2011. They claimed that, after that time, they "could [not] have tenants," although they occasionally occupied the unit. Ultimately, they sold their condominium. They claimed that the sale price for the unit was significantly less than that for a comparable condominium in the area which was unaffected by cat urine odor. The Superior Court granted summary judgment in favor of Northern. The Supreme Court vacated the Superior Court's grant of summary judgment: plaintiffs were not required to demonstrate a "tangible physical alteration" to the unit to prove that the unit was rendered permanently uninhabitable. "Rather, to demonstrate a physical loss under Coverage A, they must establish a distinct and demonstrable alteration to the unit." The Court also reversed with regard to a "pollution exclusion clause" found in plaintiffs' policy: "pollution exclusion clause is ambiguous when applied to the facts of this case and, as such, does not preclude coverage for the plaintiffs’ claims." And with regard to "Coverage D," the Court concluded that the trial court erred in granting Northern judgment as a matter of law. This was vacated, and the entire case remanded for further proceedings. View "Mellin v. Northern Security Insurance Company, Inc." on Justia Law

Illinois requires that motor carriers of property, conducting intrastate operations, obtain a license from the Illinois Commerce Commission, which requires appropriate insurance or surety coverage. A carrier complies by submitting proof of insurance or bond coverage and is then issued a public carrier certificate, stating that the holder “certifies to the Commission that it will perform transportation activities only with the lawful amount of liability insurance in accordance with 92 Ill. Admin. Code 1425.” Drivers must have a copy of the license with them at all times. It is a Class C misdemeanor offense for an operator not to produce proof of registration upon request. Three carriers were cited by the ICC police for conducting regulated activity without a license. During a follow-up investigation, the carriers refused to comply, reasoning that documents sought by the ICC would reveal their rates, routes, and services, so the requirement was preempted by the Federal Aviation Administration Authorization Act, 49 U.S.C. 14501(c). The ICC rejected the argument. The Seventh Circuit affirmed summary judgment in favor of the ICC, concluding that the document requests had no significant economic impact on rates, routes or services and, alternatively, that efforts to enforce the licensing requirement are exempted from preemption. View "Nationwide Freight Sys., Inc. v. Ill. Commerce Comm'n" on Justia Law

Appellant, a large managed health care organization, settled certain federal multi-district litigation without admitting liability. At all times relevant to this litigation, Appellant was was its own primary and excess insurer for errors and omissions liability, with a certificate of reinsurance on its primary policy issued by one reinsurer and numerous certificates of reinsurance on its excess policies issued by additional reinsurers. Appellant sought indemnification from its reinsurers. Some of those reinsurers denied coverage, whereupon Appellant filed the instant suit claiming professional liability coverage under the policies. The trial court granted summary judgment in favor of the reinsurers. The Supreme Court reversed and in large part granted summary judgment for Appellant, holding that Appellant was largely entitled to coverage for defense costs under its policies with the reinsurers. View "WellPoint, Inc. v. Nat’l Union Fire Ins. Co." on Justia Law

Arch Specialty Insurance Company appealed the grant of summary judgment in favor of Amerisure Mutual Insurance Company. In 2006, Amerisure issued a Texas Commercial Package Policy to Admiral Glass & Mirror Co. The policy afforded coverage in excess of any coverage afforded by a controlled insurance program policy. Arch issued an Owner Controlled Insurance Program (“OCIP”) policy to Endeavor Highrise, LP and its contractors and subcontractors for bodily injury and property damage arising out of construction of the Endeavor Highrise. Admiral was a subcontractor insured under the OCIP policy. Endeavor sued Admiral and others for faulty work. Amerisure tendered the lawsuit to Arch as the primary insurer. Prior to Arch accepting the defense, Amerisure incurred $23,879.27 in defense fees. In April 2012, Arch withdrew from defense of the Endeavor lawsuit asserting that attorneys’ fees, defense costs, and settlements of $2,000,000.00 from defending Admiral and other subcontractor defendants exhausted policy limits. Amerisure took over the defense and incurred additional fees and costs of $114,957.14 before settling the claims against Admiral. In total, Arch paid a settlement of $1,555,000.00 and defense costs of $159,543.15 under the general coverage limit of the OCIP, and paid settlements totaling $1,472,032.61 and defense costs of $527,967.36 under the products-completed operations coverage of the OCIP policy. Amerisure sued Arch in Texas state court for breach of contract, contending that Arch wrongfully refused to defend and indemnify Admiral. Amerisure argued on appeal that the term “expenses” in the Supplementary Payments provision did not include attorneys’ fees and other costs of defense. It also argued that, even if “expenses” includes defense costs, the effect of the statement “All other terms and conditions of this Policy remain unchanged” read together with the language that the duty to defend expires when “we have used up the [policy limits] in the payment of judgments or settlements” means that the policy limits are eroded only by payment of “judgments or settlements,” not defense costs. For its part, Arch argued that “expenses” included defense costs and that the endorsement controlled over any contrary language such that it converts this policy into an eroding policy. The Fifth Circuit agreed with Arch, concluding that the endorsement transformed the policy into an “eroding limits” policy. The Court affirmed the district court’s judgment regarding the duty to indemnify, reversed the district court’s judgment regarding the duty to defend, and rendered judgment for Arch. View "Amerisure Mutual Ins. Co. v. Arch Specialty Ins. Co." on Justia Law

Blackstone International, Ltd. was insured by Insurers for commercial general liability insurance. The policy included coverage for personal advertising injury liability. Blackstone was sued for breach of contract, among other causes of action, after disputes arose regarding a joint business venture to market and sell lighting products. Blackstone requested coverage and litigation defense under the personal and advertising injury provisions of the policy. Insurers filed a complaint for declaratory judgment seeking a judgment that they had no duty to defend the claims because the complaint did not allege that Blackstone had engaged in advertising, that the plaintiff had suffered an advertising injury, or that there was any causal connection between the plaintiff’s claimed damages and any advertising conducted by Blackstone. The circuit court entered summary judgment for Insurers. The intermediate appellate court reversed. The Court of Appeals reversed, holding that Insurer had no duty to defend Blackstone where Blackstone did not show an advertising injury suffered by the plaintiff. View "Md. Cas. Co. v. Blackwell Int'l Ltd." on Justia Law

In 2004 the law firm was engaged to bring a medical malpractice action on behalf of a 14-year-old girl who had become paralyzed after surgery. The firm filed two complaints in Virginia state court. Each was dismissed: the first without prejudice for failure to correctly caption a pleading; the second with prejudice for filing outside the statute of limitations. Shortly thereafter, the firm applied for and obtained a new professional liability insurance policy. Asked whether there were “any circumstances which may result in a claim being made,” the firm responded “no.” The firm informed the insurer of the incident in 2009, but represented that it had occurred in 2008. In 2011, the insurance company noticed that the firm had made the caption error in 2006, before the policy period. In 2012, it notified the firm that it reserved its rights to deny coverage under the known risk exclusion. The girl filed a legal malpractice action in 2012, and was awarded $1,750,000 in 2013. The court found, as a matter of law and without expert testimony, that the firm was on notice of the potential malpractice claim and rejected arguments that the insurer had forfeited or waived its right to deny coverage. The D.C. Circuit affirmed. View "Chicago Ins. Co. v. Paulson & Nace, PLLC" on Justia Law

Piedmont Office Realty Trust, Inc. purchased two insurance policies: a primary policy issued by Liberty Surplus Insurance Company and an excess coverage policy issued by XL Specialty Insurance Company ("XL"). The excess policy provided that XL will only pay for a "loss" which Piedmont became "legally obligated to pay as a result of a securities claim." The policy also contains a "consent to settle" clause. In addition, the policy contains a "no action" clause which read: "No action shall be taken against the insurer unless, as a condition precedent thereto, there shall have been full compliance with all of the terms of this policy, and the amount of the insureds’ obligation to pay shall have been finally determined either by judgment against the insureds after actual trial, or by written agreement of the insureds, the claimant and the insurer." Piedmont was named as a defendant in a federal securities class action suit in which the plaintiffs sought damages exceeding $150 million. Relatively early in the litigation, Piedmont moved for summary judgment. The district court denied Piedmont’s motion. Thereafter, following years of discovery and litigation, Piedmont renewed its summary judgment motion. The district court granted the renewed motion and dismissed the class action suit. Plaintiffs appealed. While the plaintiffs’ appeal was pending, plaintiffs and Piedmont agreed to mediate plaintiffs’ claim. By that time, Piedmont had already exhausted its coverage limit under its primary policy and another $4 million of its excess policy simply by defending itself. Anticipating a settlement with plaintiffs, Piedmont sought XL’s consent to settle the claim for the remaining $6 million under the excess policy. XL agreed to contribute $1 million towards the settlement, but no more. Without further notice to XL and without obtaining XL’s consent, Piedmont agreed to settle the underlying lawsuit with plaintiffs for $4.9 million. The district court approved the settlement and Piedmont demanded XL provide coverage for the full settlement amount. XL refused. Piedmont filed suit against XL for breach of contract and bad faith failure to settle. XL moved to dismiss the complaint; the district court granted XL’s motion; and Piedmont appealed. The 11th Circuit certified three questions to the Georgia Supreme Court: (1) Under the facts of this case, was Piedmont "legally obligated to pay" the $4.9 million settlement amount, for purposes of qualifying for insurance coverage under the Excess Policy?; (2) In a case like this one, when an insurance contract contains a "consent-to-settle" clause that provides expressly that the insurer's consent "shall not be unreasonably withheld," can a court determine, as a matter of law, that an insured who seeks (but fails) to obtain the insurer's consent before settling is flatly barred from bringing suit for breach of contract or for bad-faith failure to settle?; and (3) In this case, under Georgia law, was Piedmont's complaint dismissed properly? The Georgia Supreme Court responded: absent XL’s consent to the settlement, under the terms of the policy, Piedmont could not sue XL for bad faith refusal to settle the underlying lawsuit in the absence of a judgment against Piedmont after an actual trial. It follows that the district court did not err in dismissing Piedmont’s complaint. View "Piedmont Realty Office Trust v. XL Specialty Insurance Co." on Justia Law