Justia Insurance Law Opinion Summaries

In 1987, two men were wrongfully convicted of arson and the brutal murders of two residents of Paris, Illinois and were sentenced to death. After years of pursuing post-conviction remedies, they were released in 2004 and 2008. They filed 42 U.S.C. 1983 and malicious prosecution claims against the city, police officers, and prosecutors. Defendants sought defense and indemnification from their insurers, which sought a declaratory judgment to clarify the duty to defend. In 2010, the district court granted two insurers summary judgment, but denied a motion by an excess insurer, which had issued policies that were in effect from 1985 to 1996--encompassing the wrongful investigations and prosecutions but not the exonerations. The district court held that malicious prosecution claims “occur” for insurance purposes when prosecution is instituted. The Seventh Circuit subsequently held that, under Illinois law, a claim for malicious prosecution “occurs” for insurance purposes on the date that the underlying conviction either is invalidated or terminated. In 2012, 33 months after the judgment, Defendants sought reconsideration. The district court denied the motion. The Seventh Circuit affirmed. Defendants were too late to use Rule 59(e), and “Rule 60(b) cannot be used to reopen the judgment in a civil case just because later authority shows that the judgment may have been incorrect.” View "Selective Ins. Co. v. City of Paris" on Justia Law

Ellena filed a complaint against Standard Insurance Company and the Department of Insurance, alleging that Standard failed to provide benefits under a group insurance policy issued through her employer (Sonoma County) after she stopped working due to her lupus disease. She asserted that the Department approved the policy without complying with its mandatory duty to review the policy form in accordance with established criteria. The trial court dismissed, finding that she did not sufficiently allege in her pleading that the Department violated a specific mandatory duty. The appeals court reversed, holding that Ellena stated a viable mandamus claim because, as alleged, the commissioner violated the mandatory duty under Insurance Code sections 12921.5(a), 12926, and 10291.5(b) to review a new group disability insurance policy form for compliance with the law prior to approving the policy for distribution in the state. View "Ellena v. Dept. of Ins." on Justia Law

An insurer refused to defend its insured against a third party’s tort claims. The third party, standing in the insureds’ shoes, brought a declaratory judgment action against the insurer for indemnification and failure to defend. Prior to the instant suit, an Arizona state court entered default judgment against the insureds that was entered pursuant to a Damron agreement that stipulated facts determinative of both liability and coverage. In the instant case, a federal district court granted summary judgment for the insurer. Applying Arizona law, the district court concluded that the default judgment did not preclude the insurer from litigating the question of whether coverage existed under the policy and that, as a matter of law, the insured did not own the vehicle involved in the accident at the time of the accident. The Supreme Court accepted certification and held (1) insurers are generally not precluded from litigating pure coverage issues in a default judgment action; (2) an insurer in a coverage action may not, in the guise of a coverage defense, litigate what are essentially and solely liability issues resolved by the default judgment; and (3) the insurer here was not precluded from litigating, for coverage purposes, who owned the vehicle at issue at the time of the accident.View "Quihuis v. State Farm Mut. Auto. Ins. Co." on Justia Law

Plaintiffs filed suit against Scottsdale for breach of its insurance contract and tortious breach of the implied covenant of good faith and fair dealing. At issue was whether plaintiffs can pursue a claim for preforeclosure damage to the property at issue deliberately caused by the purchaser under an insurance policy issued by Scottsdale containing a mortgage coverage provision. The court concluded that plaintiffs' full faith and credit bid at the foreclosure sale under the second deed of trust precluded them from making a claim on the insurance proceeds. Further, the trial court did not abuse its discretion in finding that a defense offer to compromise under Code of Civil Procedure section 998 was reasonable. Accordingly, the court affirmed the judgment of the trial court.View "Najah v. Scottsdale Ins. Co." on Justia Law

In 2010, Baldwin Mutual Insurance Company (BMIC) filed an "Application for Temporary Restraining Order, Motion for a Preliminary Injunction and Complaint for Declaratory Judgment" against 122 individuals who were insured under various insurance policies issued by BMIC. According to the complaint, the insureds, through their legal counsel, had sent a letter requesting BMIC provide copies of the policy file for each of the insureds, and the letter accused BMIC of "bad faith" as to its treatment of the insureds. According to BMIC's complaint, the various insurance policies at issue provided that BMIC or an insured could invoke an appraisal process if BMIC and the insured could not reach an agreement as to the amount of compensation due the insured for a loss covered under the insured's policy. BMIC asked that the restraining order "enjoin[] the [insureds] from engaging in the appraisal process and stay[] the time in which [BMIC] has to identify an appraiser or otherwise participate in said process." Also, BMIC asserted that "it will be caused immediate and irreparable injury, loss or damage should it be required to engage in the appraisal process demanded prior to determining whether [the insureds] separately and severally are entitled to invoke the appraisal process." BMIC appealed the Circuit Court's order modifying a previous order granting BMIC injunctive relief. Based on its review of the record, the Supreme Court concluded the circuit court erred by ordering BMIC to engage in the appraisal process before the insureds satisfied their respective post-loss obligations and before BMIC had sufficient information on which it could decide whether it disagreed with the respective claims of the insureds. Accordingly, the Court reversed the circuit court and remanded this matter for further proceedings. View "Baldwin Mutual Insurance Company v. Adair et al. " on Justia Law

Nationwide, with 32,000 employees in 49 states, has an ERISA employee-benefits plan that provides short-term disability (STD), long-term disability (LTD), and “Your Time” benefits. An employee can receive Your Time benefits for personal reasons, such as vacation or illness. To receive STD benefits, an employee must be “STD Disabled,” which means “a substantial change in medical or physical condition due to a specific illness that prevents an Eligible Associate from working their current position.” Specific rules govern maternity leave. The first five days of paid maternity leave come out of an associate’s Your Time benefits. Thereafter, a new mother is considered STD Disabled and entitled to STD benefits for six weeks following a vaginal delivery, or eight weeks following a cesarean section. Wisconsin’s Family Medical Leave Act requires that employers allow six weeks of unpaid leave following “[t]he birth of an employee’s natural child[.]” The Act’s “substitution provision” requires employers to allow an employee to substitute “paid or unpaid leave of any other type provided by the employer” for the unpaid leave provided by the statute. A Wisconsin Nationwide employee had a baby. She received six weeks of STD benefits under Nationwide’s plan. She then requested an additional period of STD benefits pursuant to the substitution provision. The plan denied the request, finding that she was no longer short-term disabled under the plan. The Wisconsin Supreme Court had held that, ERISA did not preempt the Wisconsin Act. The district court held that, under the Supremacy Clause, the administrator was required to comply with ERISA rather than the Wisconsin Act. The Sixth Circuit affirmed.View "Sherfel v. Newson" on Justia Law

Electric Insurance Company petitioned the Supreme Court for a writ of mandamus to direct the Circuit Court to allow Electric, an uninsured-motorist insurer, to "opt out" of the trial of the underlying case. The issue presented by this petition was whether Electric asserted its right to opt out within a reasonable time. Upon review, the Supreme Court concluded that it did; thus, it granted the petition and issued the writ. View "Bolt v. Electric Insurance Company" on Justia Law

The excess insurer filed suit under a theory of subrogation, seeking to recover from the primary insurer the amount that it paid on the insured's behalf to settle excess claims in an underlying lawsuit after the primary insurer had settled its own liability with the underlying plaintiff by paying its policy limit. The district court held that the excess insurer could not maintain the suit because there had been no adjudicated excess judgment against the insured in the underlying case. The court reversed and remanded, holding that no excess judgment is required if the primary insurer's alleged bad faith failure to defend exposed the insured to excess liability and caused the excess settlement.View "RSUI Indemnity Co. v. American States Ins. Co." on Justia Law

Pennsylvania National Mutual Casualty Insurance Company ("Penn National") was sued by Jacob Walker, an employee of its named insured, seeking underinsured-motorist ("UIM") benefits following an automobile accident. After settling the claims against it, Penn National filed a cross-claim against Michael Bradford, the alleged tortfeasor, asserting a subrogation theory of recovery. The trial court dismissed the cross-claim on the ground that it was barred by the statute of limitations, and Penn National appealed. Finding no reversible error, the Supreme Court affirmed the trial court's judgment. View "Pennsylvania National Mutual Casualty Insurance Company v. Bradford " on Justia Law

Mercury Casualty Company filed an action seeking declaratory relief regarding its obligation to students Hung Chu and his roommate Tu Pham. Mercury issued an automobile policy to Chu insuring his 1995 Honda Accord. Chu was driving, and Pham was a passenger, when Chu collided with a vehicle driven by Krystal Nguyen Hoang. Pham filed a personal injury action against Chu and Hoang and obtained a $333,300 judgment against Chu. Mercury sought a judicial determination confirming Mercury’s decision Chu’s policy excluded coverage for Pham’s judgment under a “resident exclusion.” Mercury also sought an order requiring Chu to reimburse Mercury the fees and costs it incurred in defending him against Pham’s lawsuit. Chu cross-complained against Mercury for breach of contract, bad faith, and general negligence. Mercury prevailed on the issue of whether the policy provided coverage for Pham’s judgment. The court determined Mercury had no duty to indemnify Chu with respect to the judgment. It granted Mercury’s motion for judgment on the pleadings (JOP) on Chu’s cross-complaint but determined Mercury could not seek reimbursement of its attorney fees and costs in defending Chu because such damages were not sought in the JOP. Both parties appealed. Chu and Pham appealed the determination that Mercury’s policy excluded coverage for Pham’s personal injury lawsuit against Chu. Mercury appealed the court’s ruling Chu was not required to reimburse Mercury for the defense fees and costs. After its review of the record, the Court of Appeal reversed, concluding the policy provision excluding Pham from coverage was an overbroad expansion of the statutorily permitted exclusion and was also contrary to public policy. Based on this ruling, the Court did not address the issue raised in Mercury’s cross-appeal regarding its entitlement to defense costs and fees.View "Mercury Casualty v. Chu" on Justia Law