Justia Insurance Law Opinion Summaries

The question this case presented for the Supreme Court's review was whether certain provisions of The Governmental Tort Claims Act (GTCA), specifically 51 O.S. 2011 sections 158(E) & 162(D), permitted the State of Oklahoma or a political subdivision to set off from liability amounts previously paid to a GTCA tort claimant from the claimant's own insurer, thereby abrogating the collateral source rule for claims arising under the GTCA with respect to these insurance benefits. Plaintiff-appellee Carolyn Mariani was injured when her vehicle was struck by a tractor-trailer operated by an employee of defendant-appellant Oklahoma ex rel. Oklahoma State University. Mariani filed suit under the GTCA, alleging the driver's negligence, that the driver was an employee of the State of Oklahoma, and that the employee was acting within the scope of his employment when the negligent acts occurred. Mariani admitted that her insurer, AAA, had compensated her in underinsured/uninsured (UM) motorist benefits and medical payment coverage. The State moved for an interlocutory order ruling it had the right to set off Mariani's insurance receipts from its total liability pursuant to 51 O.S. 2011 sections 158(E) & 162(D). Mariani objected, and the trial court issued an interlocutory order denying the State's motion for the right to a setoff. The trial court certified its order for immediate review and the State filed a Petition for Certiorari. The Supreme Court denied the State's petition to review the interlocutory order. At trial, the State once again asserted it was entitled to a setoff of Mariani's insurance benefits pursuant to the GTCA. The State renewed its motion for a setoff at the conclusion of evidence, but the trial court denied the State's renewed motion. The Supreme Court, after review, affirmed the trial court: "[a]n interpretation that Sections 158(E) and 162(D) serve to abrogate the collateral source rule for claims under the GTCA, allowing the State to set off collateral source benefits received by claimants from those claimants' own insurers, punishes those claimants for their foresight in procuring coverage. Such an interpretation is also contrary to the plain meaning of the sections when read in their entirety and in the context of the GTCA itself. We will not carve out an exception to the collateral source rule where the plain and clear language of the law does not provide for one." View "Mariani v. Oklahoma ex rel. Oklahoma State Univ." on Justia Law

At issue in this appeal was section 1571, subdivision (a) of the Unclaimed Property Law (UPL): "The [State] Controller may at reasonable times and upon reasonable notice examine the records of any [entity] if the Controller has reason to believe that the [entity] is a holder [of property] who has failed to report property that should have been reported pursuant to [the UPL]." Pursuant to this section, the trial court granted a preliminary injunction to plaintiff, the State Controller (the Controller), to examine the records of defendant American National Insurance Company, a life insurance company. American National appealed, contending that the trial court abused its discretion by ignoring the irreparable injury American National would suffer from a preliminary injunction that granted the Controller the ultimate relief the Controller sought in its lawsuit; in short, says American National, the trial court's decision deprived it of an opportunity to defend itself on the merits. The Court of Appeal essentially agreed: (1) the trial court erred in granting the preliminary injunction because the court did so without a trial on the merits; (2) the standard of "reason to believe" in section 1571(a) meant specific articulable facts that would justify a belief by a reasonable person, knowledgeable in the field of unclaimed property, that an entity was not reporting property as the UPL requires (and one way in which this standard can be met was if the suspected holder of unreported property has been chosen for record examination pursuant to a general administrative plan to enforce the UPL that is based on specific neutral sources); and (3) that if the Controller proved, at trial on the merits, the significant facts underlying its preliminary injunction request, the Controller will have met this "reason to believe" standard with respect to examining the records of American National's in-force policies. Accordingly, the Court of Appeal reversed the preliminary injunction order and remanded for further proceedings. View "Yee v. American National Insurance Co." on Justia Law

In March, 2004, Harris closed on a home with a mortgage loan from MPI. To be licensed in Missouri, MPI, as obligor and principal, bought two “Missouri Residential Mortgage Brokers Bonds” from Hartford, its surety, RSMo 443.849. The surety bonds stated that the two parties were “jointly and severally” bound for payment to any person “who may have a claim against” MPI. Harris sued MPI for violating the Missouri Merchandising Practices Act, sections 407.010-.1500. Harris obtained a judgment for compensatory damages, punitive damages, and attorney fees. Hartford had notice of the suit against MPI, but chose not to intervene. As surety, Hartford failed to pay the judgment amount due on the bonds. In 2012, Harris sued Hartford for breach of contract, vexatious refusal to pay, and equitable garnishment. The district court granted Hartford summary judgment, rejecting the 10-year statute of limitations in RSMo 516.110(1) in favor of the three-year statute in section 516.130(2). The Eighth Circuit reversed. Harris’s claim against Hartford sought the amount due on the bonds, not a penalty. View "Harris v. Hartford Fire Ins. Co." on Justia Law

First State Insurance Company and New England Reinsurance Corporation (collectively, First State) entered into several reinsurance and retrocession agreements with a reinsurer, National Casualty Company (National). First State demanded arbitration under eight of these agreements to resolve disputes about billing disputes and the interpretation of certain contract provisions relating to payment of claims. The arbitrators handed down a contract interpretation award that established a payment protocol under the agreements. First State filed a petition pursuant to the Federal Arbitration Act to confirm the contract interpretation award, and National filed a cross-petition to vacate the award. A federal district court summarily confirmed both the contract interpretation award and the final arbitration award. After noting that “a federal court’s authority to defenestrate an arbitration award is extremely limited,” the First Circuit affirmed, holding that the arbitrators “even arguably” construed the underlying agreements and, thus, acted within the scope of their contractually delineated powers in confirming the contract interpretation award. View "First State Ins. Co. v. Nat’l Cas. Co." on Justia Law

Plaintiffs, David Miller and Miller’s Auto Body, alleged that they were subject to a malicious investigation into suspected insurance fraud that Defendants, three insurance companies, believed was taking place at Plaintiffs’ auto-body shop. Miller was charged with, among other charges, four counts of insurance fraud. The criminal information was dismissed by the Attorney General, but the dismissal was conditioned on an agreement between Miller and the Attorney General requiring Miller to execute a general liability release in favor of Defendants. More than one year after executing the release, Plaintiffs filed a complaint against Defendants. The trial court granted pretrial summary judgment for Defendants on the majority of Plaintiffs’ claims. Only Plaintiffs’ abuse-of-process claim went to trial. The jury returned verdicts in favor of Plaintiff against the two remaining defendants. The trial court subsequently granted judgment as a matter of law in favor of one defendant but denied the other defendant’s motion for judgment as a matter of law. The Supreme Court affirmed in part and reversed in part, holding that the release executed by Miller before he initiated suit barred all his claims against the defendants. View "Miller v. Metro. Prop. & Cas. Ins. Co." on Justia Law

Amish Connection Inc. purchased a business insurance policy from State Farm Fire and Casualty Company that only insured damage “caused by rain” if an insured event first ruptured the roof or exterior walls to allow the rain to enter. The policy covered a store Amish Connection operated in a leased space in a shopping mall. The store was damaged when an interior drainpipe failed, allowing rain from the evening’s rainstorm to flood the store. Amish Connection submitted a claim under its policy. State Farm declined the claim based on the rain limitation of the property. Amish Connection filed suit against State Farm for breach of its insurance contract. The district court granted summary judgment for State Farm based on the rain limitation. The court of appeals reversed, concluding that to the extent the limitation of coverage for damage “caused by rain” was ambiguous, it must be construed against State Farm. The Supreme Court vacated the judgment of the court of appeals and affirmed the judgment of the district court, holding that under the unambiguous terms of State Farm’s policy, damage from rainwater released by a breaking drainpipe during a rainstorm is not an insured loss because the damage was caused by rain within the meaning of the rain limitation. View "Amish Connection, Inc. v. State Farm Fire & Cas. Co." on Justia Law

In 2007, while operating a truck, Yelder, an employee of Yelder-N-Son Trucking, collided with a Tri-National truck, causing extensive property damage. Tri-National filed a claim with its insurer, Harco, which paid $91,100 and retained a subrogation interest. Yelder was insured by Canal with an MCS-90 endorsement, mandated by the Motor Carrier Act of 1980, 94 Stat. 793. In 2010, Canal sought a declaratory judgment against the Yelder defendants and Harco. An Alabama court entered default judgment against the Yelder defendants only, stating Canal had no duty to defend or indemnify them under the Canal policy. The court made no declaration about whether the MCS-90 endorsement requires a tortfeasor’s insurer to compensate an injured party when the injured party has already been compensated by its own insurer. Tri-National then sued the Yelders in Missouri and obtained a $91,100 default judgment. Tri-National sought equitable garnishment against Canal, apparently on behalf of Harco. Canal removed the action to the federal district court, which granted Tri-National’s motion. The Eighth Circuit affirmed, holding that the MCS-90 does require such compensation. The circumstance of Tri-National carrying its own insurance did not absolve Canal of its obligations under the endorsement View "Tri-National, Inc. v. Canal Ins. Co." on Justia Law

Petitioners purchased an insurance policy from Allstate Insurance Company for their rental property. The rental property subsequently suffered fire damage, rendering the home uninhabitable. Petitioners submitted a claim to Allstate, but Allstate refused to pay the full amount of the policy limits. Petitioners filed a complaint against Allstate asserting causes of action for, inter alia, breach of contract and specific performance. A jury found in favor of Petitioners. The federal district court denied Petitioners’ request for an award of the twelve-percent penalty, statutory interest, and attorneys’ fees under Ark. Code Ann. 23-79-208 but then awarded attorneys’ fees pursuant to Ark. Code Ann. 16-22-308. The district court entered an order certifying the attorneys’ fee issue. The Supreme Court answered that the recovery of attorneys’ fees to an insured in an insurance-contract action is exclusively available pursuant to section 23-79-208, precluding an award of attorneys’ fees pursuant to section 16-22-308. View "Gafford v. Allstate Ins. Co." on Justia Law

Naser was the founder, 20 % co-owner, and chief executive of Michigan Orthopedic Services. The other co-owner was MOS, a private equity firm. In 2009, new Medicare regulations required the company to obtain surety bonds. The co-owners applied to Lexon, which responded with an indemnity agreement: “I agree to indemnify Lexon. . . in connection with any bond executed on behalf of the person or entity named as ‘applicant’ below.” There were three signature blocks. The first appeared under the named “applicant”: “Michigan Orthopedic Services.” The last two appeared under: “In consideration of the execution by the Surety of the bond herein applied for, the undersigned owners, jointly and severally, join the foregoing indemnity agreement. MUST BE SIGNED BY A CORPORATE OFFICER.” One was for the “Authorized Corporate Officer” of “MOS.” The other was for Naser. Naser signed the first and third blocks under the “applicant” and “undersigned owners” sections. Higgins signed the other on behalf of MOS. Lexon issued the bonds. Michigan Orthopedic Services filed for bankruptcy. Lexon turned to the “undersigned owners” for indemnification when the Centers for Medicare & Medicaid Services issued claims against its bonds. The district court found Naser liable for breaching the agreement. The Sixth Circuit affirmed, rejecting Naser’s denial of personal liability. View "Lexon Ins. Co. v. Naser" on Justia Law

In 2006, Sletten, an orthodontist practicing in Minnesota and Wisconsin, bought general liability and personal injury liability insurance from Continental through Wells Fargo. The next year, Sletten formed S&B, which opened an office in Hudson, Wisconsin and employed Brettin to practice orthodontics there. Sletten notified Wells Fargo that he had opened the Hudson office and requested coverage for the location. Wells Fargo added the Hudson office as an additional insured location but never added S&B as a named insured. In 2012, St. Croix Dental and Wolff sued, that Brettin, acting “on behalf of and with the knowledge and consent of” S&B, used his neighbor’s wireless network to post defamatory comments about St. Croix to the Internet. Brettin allegedly posed as a patient of St. Croix and criticized Wolff’s orthodontia. St. Croix alleged defamation and libel, civil conspiracy, and unfair competition. Continental refused to defend because the policy did not identify S&B as a named insured. S&B and Sletten then sued Continental and Wells Fargo. The Eighth Circuit affirmed dismissal, holding that the policy excluded coverage for acts done with the intent to injure; every claim pleaded that S&B and Brettin acted with the intent to injure. View "Sletten & Brettin Orthodontics, LLC v. Cont'l Cas. Co." on Justia Law