Justia Insurance Law Opinion Summaries

Thomas Warner filed a complaint against Robert and Rebecca Hanke for conversion and negligence after Robert Hanke asserted ownership over some personal property Warner was storing on the Hanke's property. At the time the action was filed, Robert and Rebecca Hankes maintained home insurance coverage from a subsidiary of Horace Mann Insurance Company. The Hankes filed a claim with Horace Mann to request a defense against Warner's suit. Horace Mann filed a declaratory judgment action requesting a determination whether the insurance policy required Horace Mann to defend the Hankes. The district court concluded that Horace Mann did not owe coverage to the Hankes for the Warner dispute. The Supreme Court affirmed in part, reversed in part, and remanded, holding that the district court (1) properly determined that the Hankes' insurance policy failed to cover the Warner dispute; (2) correctly determined that Horace Mann's decisions to provide a defense and to pay the settlement of Warner's claims nevertheless allowed Horace Mann to pursue reimbursement for the Hankes' share of the settlement; and (3) abused its discretion in awarding attorney's fees to Horace Mann. View "Horace Mann Ins. Co. v. Hanke" on Justia Law

Mead Johnson, purchased a primary Commercial General Liability policy from National Union, with a limit of $2 million for liability for “personal and advertising injury” and an excess liability policy from Lexington, with a limit of $25 million. Mead’s main product, Enfamil infant formula, is sold worldwide. Mead’s competitor, PBM, sued Mead for false advertising and consumer fraud and Mead sued PBM for trade dress infringement. PBM claimed that Mead had falsely asserted that PBM’s generic formula lacked key fats that promote brain and eye development. The suit sought $500 million in damages for product disparagement, a tort that the policies cover as a form of “advertising injury.” Mead did not notify the insurers of the suit until December 2009, after the suit ended in the $13.5 million verdict against Mead. Mead wanted its insurers to pay that judgment, plus a $15 million settlement that it made to resolve the class action suit. The insurers obtained declaratory judgments that they were not required to pay. The Seventh Circuit reversed the summary judgment in favor of the insurers in the suit relating to the PBM litigation, but affirmed the judgment in favor of National Union in the suit arising from the class action against Mead. View "Nat'l Union Fire Ins. Co. v. Mead Johnson & Co., LLC" on Justia Law

Hess Oil Company asserted an unfair trade practices claim against two insurance companies. The jury returned a verdict against the insurance companies and awarded punitive damages. The circuit court, however, reduced the amount of the award by means of remittitur. The insurance companies appealed, contending that the trial court erred by giving conflicting jury instructions, introducing improper evidence of future remediation costs, and awarding punitive damages. Hess also appealed, challenging the court's reduction of its punitive damages award. The Supreme Court set aside the jury verdict and remanded for a new trial, holding that the trial court committed multiple errors, and the errors affected the jury's verdict in a manner prejudicial to the insurance companies. View "AIG Domestic Claims, Inc. v. Hess Oil Co., Inc." on Justia Law

The Gulfport Mississippi apartment complex was damaged in Hurricane Katrina. Its insurer, RSUI paid actual-cash-value proceeds. The parties began negotiating for additional replacement-cost proceeds. During negotiations, the named-insured contracted to sell the property in its unrepaired state to Edgewood and notified RSUI of its intention to assign the claim for replacement-cost proceeds. RSUI responded that if the property was sold before repair, there could be no recovery of replacement-cost proceeds. The sale closed. The seller and Edgewood sought a declaration that the insurer was obligated to pay the claim with a related breach-of-contract action. Edgewood repaired the property. The litigation continued for years until it became clear that there had been no assignment. The district court dismissed the claims. The Seventh Circuit affirmed in part and reversed in part. Absent an assignment, Edgewood lacks standing; the seller still owns the claim and remains a proper plaintiff. The seller had an insurable interest when the policy issued and at the time of the loss; the sale of the property in its unrepaired state did not extinguish its right to recover. Although the policy specifies that replacement-cost proceeds will not be paid until the property is repaired, it does not require that the insured complete the repairs itself. View "Southland Mgmt. Corp. v. RSUI Indem. Co." on Justia Law

After Mr. Greenfield unsuccessfully filed criminal charges against Petitioner, Petitioner filed a complaint against Mr. and Mrs. Greenfield (Respondents) alleging, inter alia, defamation and false light/invasion of privacy. The circuit court granted summary judgment to Respondents as to all claims. Respondents subsequently moved for an award of attorney's fees and costs while acknowledging that their attorney's fees and costs had been paid by their insurance carrier (Insurer). The circuit court denied the motion as to Mr. Greenfield but granted it as to Mrs. Greenfield, finding that she had been joined in the action without substantial justification and that she had "incurred" the costs of her defense within the meaning of Maryland Rule 1-341, even though Insurer had paid the costs of litigation on her behalf. The court of special appeals affirmed. The Court of Appeals affirmed, holding that a party compelled to defend him or herself against abusive litigation may recover the costs associated with that litigation under Rule 1-341, regardless of the individual or entity that actually pays such expenses. View "Worsham v. Greenfield" on Justia Law

Plaintiff, a school, was sued by two of the school's donors who sought a return of a monetary gift to the school, claiming that the gift had been induced by misrepresentations. The case settled, and Plaintiff sought defense costs and indemnity under a directors and officers liability insurance policy issued by Defendant. The district court granted summary judgment for Defendant based on a provision in the policy excluding from coverage any losses involving any matter disclosed in connection with "Note 8" of the school's financial statement. Note 8 set forth a description of the gift. Plaintiff appealed. The First Circuit Court of Appeals affirmed, holding that because the language of the policy clearly excluded coverage "in any way involving" the disputed gift, Plaintiff had no reasonable expectation of coverage. View "Clark Sch. for Creative Learning, Inc. v. Philadelphia Indem. Ins. Co." on Justia Law

In 2000, the Schuchmans purchased homeowner’s insurance from State Auto to insure a residence in Junction City, Illinois. About 10 years later, a fire severely damaged the insured house and the Schuchmans made a claim against the homeowner’s policy. After a lengthy investigation, State Auto denied the claim on the basis that the Schuchmans were not residing on the “residence premises,” as that term is defined by the policy, and were maintaining a residence other than at the “residence premises,” in violation of the policy’s Special Provisions. The district court entered summary judgment in favor of State Auto. The Seventh Circuit reversed, agreeing that the term “residence premises” is ambiguous and should be liberally construed in favor of coverage. View "Schuchman v. State Auto Prop. & Cas.Ins. Co." on Justia Law

An Oklahoma worker was killed at Employer's jobsite in Texas. The employer's insurer paid the worker's Widow death benefits provided by Texas workers' compensation law. The widow also recovered damages in a wrongful death tort action in Texas. When the Insurer sought subrogation from the widow's wrongful death damages as allowed by Texas law, she filed suit in Oklahoma to prevent subrogation. She sought a declaratory judgment that the rights of Oklahoma workers and their dependents were governed by Oklahoma's Workers' Compensation Act, notwithstanding the worker's injury or death in another state, and any benefits that may be paid under another state's workers' compensation law. In particular, Widow asked the Oklahoma court to enforce the provision in Oklahoma law that forbids subrogation in cases of death benefits. The trial court granted the declaratory relief sought by the widow. On appeal by the Insurer, the Court of Civil Appeals reversed. The Court of Civil Appeals ruled that the widow had to commence a proceeding by filing a claim with Oklahoma's Workers' Compensation Court before Oklahoma could exercise jurisdiction over the benefits due the widow, including enforcement of the anti-subrogation provision in death benefit cases. Because she never filed a claim with Oklahoma's Workers' Compensation Court, the Court of Civil Appeals held subrogation was proper. Upon review, the Supreme Court affirmed the trial court's judgment and vacated the appellate court in this case. View "Holley v. ACE American Ins. Co." on Justia Law

After Dolly Romprey was involved in an accident, Romprey and her husband (Plaintiffs) sought to recover from their insurer (Defendant) under the uninsured/underinsured motorist provisions of their automobile insurance policy. The trial court granted summary judgment in favor of Defendant, concluding that Plaintiffs' action was time-barred under the relevant statute of limitations, and the tolling provision did not apply in this case because Plaintiffs failed to satisfy the threshold requirement that their claim involved an underinsured vehicle. The Supreme Court reversed, holding (1) a genuine issue of material fact existed concerning whether Plaintiffs had met the statutory tolling provisions of the relevant statute; and (2) therefore, the trial court erred in requiring Plaintiffs to submit evidence that they had met the requirements of the statutory tolling provision. Remanded. View "Romprey v. Safeco Ins. Co. of Am." on Justia Law

After Larry Sewell fell into a service pit at Xpress Lube, Sewell filed suit against Xpress Lube. A process server left copies of the summons and complaint with an Xpress Lube employee. Bruce Anderson, the sole proprietor of Xpress Lube, later found the summons and complaint and sent them to his insurance agent, who, in turn, attempted to fax the complaint to Travelers Insurance, Anderson's insurance carrier. Travelers, however, never received the fax. Sewell later filed a motion for default judgment. The district court granted the motion and entered judgment against Xpress Lube. The Supreme Court vacated the default judgment, holding (1) there was no proper service on Xpress Lube because the sole proprietor was not served in this case, and therefore, the default judgment was void for lack of jurisdiction; (2) the district court erred in failing to vacate the default judgment due to mistake, inadvertence, or excusable neglect; and (3) the district court erred when it failed to hold an evidentiary hearing on unliquidated damages. View "Sewell v. Xpress Lube" on Justia Law