Justia Insurance Law Opinion Summaries

Tuzzolino and his law firm represented Coletta. Coletta alleged that, in litigation, Tuzzolino failed to timely disclose expert witnesses; failed to retain needed expert witnesses; advised Coletta to settle for an amount far less than Coletta’s losses; told Coletta that negotiations were continuing after dismissal; and signed settlement documents without informing Coletta. According to Coletta, Tuzzolino offered to pay $670,000 to settle any potential malpractice claim, but never paid. Three months later, shortly before the expiration of the firm’s 2007-08 malpractice policy with ISBA Mutual, Tuzzolino completed a renewal application. In response to: “Has any member of the firm become aware of a past or present circumstance(s), act(s), error(s) or omission(s), which may give rise to a claim that has not been reported?” Tuzzolino checked “no.” Mutual issued the policy. Tuzzolino’s partner, Terpinas, learned of Tuzzolino’s malfeasance a month later, when he received a lien letter from Coletta’s attorney. Terpinas reported the claim to Mutual, which sought rescission and other relief. The circuit court entered summary judgment against Tuzzolino and rescinded the policy, finding that Mutual had no duty to defend Terpinas or the firm against Coletta’s action. The appellate court reversed as to Terpinas, citing the common law “innocent insured doctrine.” The Illinois Supreme Court reinstated the rescission, citing 215 ILCS 5/154, which allows rescission in cases involving misrepresentations “made by the insured or in his behalf,” with an actual intent to deceive or that “materially affect the acceptance of the risk or hazard assumed by the insurer.” View "Ill. State Bar Ass'n Mut. Ins. Co. v. Law Office of Tuzzolino & Terpinas" on Justia Law

After a subsurface water main abutting Plaintiffs’ property ruptured, causing water to flood into and damage their home’s basement, Plaintiffs made a claim under their homeowners’ insurance policy issued by Defendant, Allstate Indemnity Company. Allstate disclaimed coverage based on a provision in the policy excluding coverage for loss caused by water on or below the surface of the ground, including water that seeps through any part of the residence premises. Plaintiffs commenced this action alleging that Allstate had improperly disclaimed coverage because their claim fell within the exception to the water loss exclusion. Supreme Court declared that Plaintiffs’ loss was covered under the policy and that Allstate was required to pay the claim. The Appellate Division modified the order by vacating the declaration and otherwise affirmed, concluding that the policy was ambiguous and should be construed in favor of Plaintiffs. The Court of Appeals reversed, holding that the policy’s unambiguous language excluded from coverage the water damage to Plaintiffs’ home, and the exception did not nullify the water loss exclusion or render it ambiguous. View "Platek v. Town of Hamberg" on Justia Law

Horace Mann issued an insurance policy to Richard Chase. Richard signed a form in which he selected reduced uninsured motorist limits. Horace Mann later removed Richard as the sole named insurance from the policy and instead listed Allison Chase, Richard’s daughter, as the named insured on that policy. At no time did Allison reject uninsured/underinsured motorist coverage in writing or select lower limits. After a crash that injured Allison and killed Richard, Allison asserted that she, individually and as personal representative of her father’s estate, was entitled to uninsured motorist (UM) coverage in the amount equal to the policy’s bodily injury limits because she never selected lower UM coverage in writing as required by Fla. Stat. 627.727. The trial court agreed with Allison and determined that Allison and the Estate were entitled to $100,000 of insurance coverage under Allison’s policy. The district court reversed, concluding that Richard’s waiver of high UM coverage bound Allison individually and as personal representative of the Estate. The Supreme Court quashed the decision of the district court, holding that Allison was not subject to Richard’s waiver of benefits, and therefore, Horace Mann did not obtain a valid waiver of benefits from Allison as the named insured of her auto insurance policy. View "Chase v. Horace Mann Ins. Co." on Justia Law

Plaintiff Augustine Badiali was injured when his motor vehicle was rear-ended by an uninsured motorist. Plaintiff filed a UM claim, which proceeded to arbitration and resulted in an award in plaintiff s favor. Plaintiff filed suit against his insurer, defendant New Jersey Manufacturers Insurance Group ( NJM ), after NJM rejected the arbitration award and refused to pay its share. The trial court confirmed the arbitration award in a summary action and found NJM liable for its share of the award. In a subsequent action, plaintiff asserted that NJM litigated in bad faith by advocating that its policy language allowed for a rejection of the arbitration award at issue. The trial court granted summary judgment in favor of NJM. The court agreed that the case was ripe for summary judgment although discovery had not been completed. The court was further persuaded that NJM s position was fairly debatable based on its policy language and on the existence of an unpublished Appellate Division decision involving nearly identical facts, in which NJM was also a party. The Appellate Division affirmed, holding that NJM s position was fairly debatable because it was supported by a prior, unpublished opinion of the court. Plaintiff was thereby barred from recovering counsel fees or any other consequential damages. Finding no reversible error in the appellate court's judgment, the Supreme Court affirmed. View "Badiali v. N.J. Mfg. Ins. Grp." on Justia Law

Plaintiff Kwabena Wadeer suffered injuries in a motor vehicle accident that occurred while he was attempting to avoid an unidentified vehicle. Plaintiff filed a UM claim against New Jersey Manufacturers Insurance Company (NJM), his insurer. The insurance policy provided $100,000 in UM and UIM coverage. NJM made no offers to attempt to settle plaintiff's UM claim and the parties proceeded to private arbitration pursuant to the terms of the policy. The panel determined that plaintiff was 30% liable for the accident, the phantom vehicle was 70% liable, and plaintiff was entitled to a net award of $87,500. NJM rejected the $87,500 arbitration award and demanded a trial. By letter, plaintiff's attorney acknowledged NJM s rejection of the arbitration award and notified NJM that he believed it was acting in bad faith by rejecting that award. Plaintiff submitted an Offer of Judgment to NJM in the amount of $95,000 and reiterated his belief that defendant's conduct was in bad faith. NJM rejected the offer and the case proceeded to trial. The jury determined that the phantom vehicle was 100% liable for the underlying accident and awarded plaintiff $210,000 for pain and suffering and $12,175 in lost wages. Plaintiff thereafter moved to enter judgment for the full amount of the verdict, notwithstanding the $100,000 policy limit, as well as for prejudgment interest on the verdict and attorneys fees. During argument on the motion, plaintiff's counsel raised the issue of bad faith, contending that defendant was on notice of the claim. In response, NJM argued that plaintiff failed to plead bad faith in his complaint. The trial judge entered an order reducing and molding the jury verdict to conform to the insurance policy limit of $100,000 and awarding plaintiff attorneys fees and prejudgment interest. In his accompanying statement of reasons, the trial judge found that NJM s actions did not constitute bad faith because NJM had fairly debatable reasons for denying the benefits of the policy. Plaintiff and NJM filed cross-appeals. Plaintiff contended the trial court should not have molded the verdict to the policy limits because NJM acted in bad faith. The Appellate Division affirmed the trial judge's modified jury verdict, but reversed the award of attorneys fees and expenses. Plaintiff then filed a separate complaint alleging that NJM breached its duty of good faith and fair dealing by failing to make a settlement offer to plaintiff and by failing to settle the claim in a timely manner. NJM moved for summary judgment, arguing that plaintiff's complaint was barred by the entire controversy doctrine, res judicata, and/or collateral estoppel. After review, the Supreme Court agreed that plaintiff's bad faith claim was barred in this action under the principle of res judicata because it was raised, fairly litigated, and determined by the trial court in the first litigation. View "Wadeer v. N.J. Mfrs. Ins. Co." on Justia Law

Don O’Mailia was hired by to install a water heater on the premises of a newly-constructed Famous Dave’s barbecue restaurant. At the time, O’Mailia was covered by a commercial general liability policy issued by Truck Insurance Exchange (TIE). Three years after the water heater was installed, the restaurant’s opening manager noticed a burning smell in the mechanical room. Diamond Plumbing & Heating (Diamond) was called to examine the water heater. A fire subsequently broke out in the restaurant. Famous Dave’s sued Diamond. Diamond sought indemnification from O’Mailia, alleging that the fire was caused by defective installation. O’Mailia asked TIE to provide a defense against the suit. TIE filed a petition for declaratory relief asking the district court to declare that O’Mailia’s policy offered no coverage for claims arising from the fire. The district court granted summary judgment for TIE, concluding that no property damage occurred during the policy period, and therefore, there was no coverage under the policy. The Supreme Court affirmed, holding that O’Mailia’s TIE policy was inapplicable to the present claims resulting from the Famous Dave’s fire. View "Truck Ins. Exch. v. O’Mailia" on Justia Law

The Tenth Circuit Court of Appeals certified a question of Colorado law to the Colorado Supreme Court. An insurer issued a policy that provided directors and officers of a company liability coverage. The policy required the insured to give prompt notice of a claim, specifically, notice "as soon as practicable" after learning of the claim. The policy also required the insured to give notice of the claim by a date certain (not later than 60 days after the expiration of the policy). Near the end of the one-year policy, a company officer was sued for alleged misrepresentations he made during a merger. Unaware of the insurance policy, the officer defended himself against the suit. When he learned of the policy, approximately sixteen months after the policy had expired, he contacted the insurer. The underlying suit was settled. The officer then sued the insurer for denying coverage under the policy. The insurer removed the case to the federal district court, and then moved to dismiss on grounds that the officer's claim was untimely. The issue of Colorado law before the Tenth Circuit centered on the "notice-prejudice" rule to claims-made insurance policies: (1) whether the notice-prejudice rule applied to claims-made liability policies in general; and (2) if so, whether the rule applied to both types of notice requirements in those policies. The Colorado Court answered the certified questions more narrowly than originally presented because the parties agreed that the prompt notice requirement of the claims-made policy in this case was not at issue. The Colorado Court's analysis was restricted to the date-certain notice requirement. The Court held that the notice-prejudice rule did not apply to date-certain notice requirement in a claims-made insurance policy. In a claims-made policy, the date-certain notice defines the scope of coverage ("to excuse late notice in violation of such a requirement would rewrite a fundamental term of the insurance contract.") The Court reframed the certified questions as a single question: whether the notice-prejudice rule applies to the date-certain notice requirement of claims-made policies, to which the Colorado Court answered in the negative. View "Craft v. Phila. Indem. Ins. Co." on Justia Law

Travelers Home and Marine Insurance Company ("Travelers") appealed the grant of summary judgment in favor of Dianne and Martin Gray in the Grays' action arising from injuries Dianne suffered as the result of a motor-vehicle accident. In 2010, Lawana Coker and Dianne were involved in a motor-vehicle accident in Elmore County; Coker was without motor-vehicle insurance at the time of the accident. Two years later, the Grays filed in the trial court a three-count complaint naming as defendants Coker and Travelers and a fictitiously named defendant. Travelers answered the complaint, denying the material allegations therein and asserting certain affirmative defenses. Coker, however, failed to answer the complaint. In 2013, the Grays moved the trial court to enter a default judgment in their favor and against Coker, requesting that the trial court assess damages in the amount of $500,000 for Dianne and $50,000 for Martin. The Grays' motion requested no relief as to Travelers. Shortly thereafter, the Grays filed a new summary-judgment motion in which, for the first time, they sought relief against Travelers. The Grays did not base their summary judgment motion against Travelers on the ground that there was no genuine issue of fact as to whether tortious conduct by Coker caused them to suffer injury. Instead, they based their summary-judgment motion against Travelers solely on the fact that they previously had obtained a default judgment against Coker. In this regard, the Grays argued that they were entitled to a judgment as a matter of law against Travelers because, they said, "Travelers as a party defendant had notice and adequate opportunity to intervene and present any defenses and arguments necessary to protect its position with respect to the entry of or the amount of damages in the Default Judgment. By failing to do so, Defendant Travelers legally is bound by the judgment." After review, the Supreme Court reversed: because Travelers as the Grays' UM carrier, was not bound by the default judgment entered against Coker, Travelers was not required to submit evidence in opposition to a motion for a summary judgment that relied solely on that default judgment. Consequently, the trial court erred in entering a summary judgment in favor of the Grays and against Travelers. View "Travelers Home & Marine Ins. Co. v. Gray" on Justia Law

This case involved an intersection collision between a crop sprayer and a motorcycle. The driver of the crop sprayer was insured through two insurance policies, and the owner of the crop sprayer was insured through a third policy issued by Farm Bureau Mutual Insurance Company. The injured motorcyclists sought damages for their injuries through the insurance policies of the driver and the owner of the crop sprayer. All three insurance companies sought declaratory judgment that they had no duty to defend or indemnify the driver. The circuit court ruled that Farm Bureau had a duty to defend and indemnify the driver on the claims from the collision. The Supreme Court reversed, holding that the language of the Farm Bureau policy unambiguously provided that no coverage existed for the claims against the driver. View "Berkley Reg’l Specialty Ins. Co. v. Dowling Spray Serv." on Justia Law

Lodholtz was injured in the Pulliam factory and sued, seeking compensation. Pulliam filed a claim with its insurer, Granite State, which retained a claims adjuster, York. Pulliam assumed, erroneously, that Granite would provide a defense and defaulted on the state court claim. Neither Granite nor York ever had communicated to Pulliam whether they believed Granite had a duty to defend Pulliam under the terms of the policy. Pulliam subsequently entered into a settlement agreement with Lodholtz, assigning to Lodholtz any claims it had against Granite or its agents for failing to undertake a defense. The agreement also provided that Lodholtz would not seek to recover its damages from Pulliam. Granite sought a declaratory judgment that it had no duty to indemnify Pulliam. Lodholtz later filed a complaint against Granite, alleging breach of contract, bad faith, and negligence, and against York for negligence. The district court consolidated the cases. After the district court entered a final judgment in favor of York, Lodholtz appealed. The Seventh Circuit affirmed. The Court of Appeals of Indiana has held that an insurance adjuster owes no legal duty to the insured, and Lodholtz failed to establish that the Indiana Supreme Court would disagree with that decision. View "Lodholtz v. York Risk Servs. Grp., Inc." on Justia Law