Justia Insurance Law Opinion Summaries

Customers of a heating oil company in Massachusetts brought a state court class action alleging that, starting in 2012, the company sold home heating oil with excessive biodiesel content, which damaged their heating equipment. The company received a demand letter and complaint in March 2019, before it was insured by the plaintiff insurance company. The insurance company began providing coverage in July 2019 under a commercial general liability policy and an umbrella policy. The policy included provisions excluding coverage for property damage known to the insured before the policy period began.After being asked to defend the company in the state class action, the insurer refused, arguing that the company’s prior knowledge of the alleged damage—based on the demand letter, complaint, and media coverage—triggered the policy’s known loss and loss-in-progress exclusions. The insurer then filed a declaratory judgment action in the United States District Court for the District of Massachusetts, seeking a ruling that it had no duty to defend or indemnify. The state court class had two subclasses: customers who received oil before July 5, 2019, and those who first received oil after that date.The district court found that the insurer had no duty to defend claims by customers who received oil before the policy period, but did have a duty to defend claims by customers who first received oil after coverage began, since the company could not have known of damage that had not yet occurred. Applying the “in for one, in for all” rule, the court held the insurer must defend the entire suit. The court denied summary judgment for the insurer on the duty to defend and granted partial summary judgment to the insured.The United States Court of Appeals for the First Circuit affirmed, holding that the policy’s known loss and loss-in-progress provisions did not bar coverage for claims by customers whose property damage began after the policy period commenced, and thus the insurer has a duty to defend the entire class action. View "Federated Mutual Insurance Co. v. Peterson's Oil Service, Inc." on Justia Law

During the COVID-19 pandemic, two individuals who held automobile insurance policies with a major insurer in California alleged that the insurer’s rates became excessive due to a significant reduction in driving and traffic accidents. They claimed that the insurer was required by statute to refund a portion of the premiums collected during this period, even though the rates had previously been approved by the state’s insurance commissioner. The insurer did provide partial refunds in response to directives from the insurance commissioner, but the plaintiffs argued these refunds were insufficient and sought further restitution on behalf of a class of similarly situated policyholders.The Superior Court of Alameda County initially allowed the plaintiffs to amend their complaint after sustaining a demurrer. In their amended complaint, the plaintiffs continued to assert claims under California’s Unfair Competition Law and for unjust enrichment, maintaining that the insurer’s failure to provide full refunds violated Insurance Code section 1861.05(a). The trial court, however, sustained the insurer’s subsequent demurrer without leave to amend, holding that the statutory scheme did not require insurers to retroactively refund premiums collected under previously approved rates, even if those rates later became excessive due to changed circumstances.The California Court of Appeal, First Appellate District, Division One, reviewed the case on appeal. The court held that Insurance Code section 1861.05(a) does not impose an independent obligation on insurers to retroactively refund premiums collected under rates approved by the insurance commissioner, even if those rates later become excessive. The court reasoned that the statutory scheme provides for prospective rate adjustments through the commissioner’s review process, not retroactive modifications. The court also found that the insurer’s conduct was affirmatively permitted under the statutory “prior approval” system, and thus not actionable under the Unfair Competition Law. The judgment in favor of the insurer was affirmed. View "Davis v. CSAA Insurance Exchange" on Justia Law

Lawrence Rudolph was convicted for the fatal shooting of his wife, Bianca Rudolph, during a 2016 hunting trip in Zambia. The couple, married for nearly thirty-five years, had substantial marital assets and maintained significant life insurance policies. Their marriage was troubled by infidelity, including Mr. Rudolph’s long-term affair with Lori Milliron, a partner at his dental practice. After Bianca’s death, which Mr. Rudolph claimed was accidental, he collected nearly $4.8 million in life insurance proceeds and purchased several high-value assets. Less than two weeks after returning to the United States, he arranged for Ms. Milliron to join him in Arizona, and they began living together.The Federal Bureau of Investigation in Denver initiated an investigation in 2019, reviewing the Zambian authorities’ findings and conducting its own forensic analysis. In December 2021, Mr. Rudolph was arrested in Denver after being deported from Mexico, and indicted by a grand jury in the United States District Court for the District of Colorado on charges of foreign murder and mail fraud. He moved to dismiss for improper venue and to sever his trial from Ms. Milliron’s, arguing that the government engaged in forum shopping and that a joint trial would prejudice his defense. The district court denied both motions, admitted certain statements by Bianca under the forfeiture-by-wrongdoing exception, and ordered forfeiture of assets purchased with the insurance proceeds.The United States Court of Appeals for the Tenth Circuit reviewed the case. It held that venue in Colorado was proper under 18 U.S.C. § 3238, as Mr. Rudolph was both “arrested” and “first brought” to the district in connection with the charges. The court found no abuse of discretion in denying severance, admitting Bianca’s statements under Rule 804(b)(6), or ordering forfeiture of the assets, including interest and appreciation. The Tenth Circuit affirmed the district court’s judgment and forfeiture order. View "United States v. Rudolph" on Justia Law

Fieldwood Energy LLC, an oil and gas company, contracted with Island Operating Company, Inc. (IOC) through a Master Services Contract (MSC) to provide workers for oil and gas production services on offshore platforms in the Gulf of Mexico. The MSC defined the work as “Lease Operators,” and a subsequent work order requested “A Operators” to perform tasks such as compliance testing and equipment checks on the platforms. The contract required Fieldwood to provide marine transportation for workers and equipment, which it did by hiring Offshore Oil Services, Inc. (OOSI) to transport IOC employees, including Tyrone Felix, to the platforms. Felix was injured while disembarking from OOSI’s vessel, the M/V Anna M, and subsequently made a claim against OOSI.OOSI filed a complaint for exoneration or limitation of liability in the United States District Court for the Eastern District of Louisiana. OOSI also sought indemnification from IOC under the MSC’s indemnity provision. IOC moved for summary judgment, arguing that Louisiana law, specifically the Louisiana Oilfield Anti-Indemnity Act (LOAIA), rendered the indemnity provision unenforceable. The district court agreed, finding that the MSC was not a maritime contract because vessels were not expected to play a substantial role in the contract’s performance, and thus Louisiana law applied. The court granted summary judgment for IOC on indemnity and insurance coverage, and later on defense costs after OOSI settled with Felix.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s summary judgment de novo. The Fifth Circuit held that the MSC was not a maritime contract because neither its terms nor the parties’ expectations contemplated that vessels would play a substantial role in the contract’s completion. As a result, Louisiana law applied, and the LOAIA barred enforcement of the indemnity provision. The Fifth Circuit affirmed the district court’s summary judgment in favor of IOC. View "Offshore Oil Services, Inc. v. Island Operating Co." on Justia Law

Malcolm Wiener purchased $16 million in permanent life insurance from AXA Equitable Life Insurance in the 1980s. In 2013, his policy lapsed after he failed to pay premiums on time. When Wiener sought reinstatement, AXA erroneously determined he had four serious medical conditions and reported these to the Medical Information Bureau (MIB), a consortium used by insurers to assess applicants. As a result, Wiener was unable to obtain comparable life insurance from other companies at standard rates; most rejected him outright, and two offered only limited coverage at much higher premiums. Wiener then brought a negligence claim against AXA, alleging that the false MIB report rendered him uninsurable.The case was tried in the United States District Court for the Western District of North Carolina. The jury found AXA liable for negligence and awarded Wiener $16 million in damages, reduced to $8 million for failure to mitigate. AXA moved for judgment as a matter of law under Rule 50(b), arguing that Wiener had not provided sufficient evidence to support the damages award. The district court initially dismissed the case for lack of subject matter jurisdiction, but the United States Court of Appeals for the Fourth Circuit reversed and remanded, instructing the district court to address the sufficiency of the evidence for damages. On remand, the district court found the evidence insufficient to support the jury’s damages calculation and reduced the award to $1 in nominal damages.On appeal, the United States Court of Appeals for the Fourth Circuit affirmed the district court’s decision. The court held that, although there was sufficient evidence that AXA’s negligence caused Wiener to become uninsurable at a reasonable cost, there was not enough evidence for the jury to calculate the amount of damages with reasonable certainty, particularly because Wiener failed to provide evidence of his expected remaining lifespan. As a result, only nominal damages were appropriate. View "Wiener v. AXA Equitable Life Insurance Co." on Justia Law

Molly and Mark Johnson were involved in a motor vehicle accident for which they were insured by State Farm. State Farm paid for most of their property losses, except for certain items. After making these payments, State Farm asserted its subrogation rights and was reimbursed by the at-fault driver’s insurer, GEICO. The Johnsons later settled with the at-fault driver and GEICO for the remaining property damage not covered by State Farm, but had to pay attorney fees from this recovery. The Johnsons then sued State Farm, alleging that State Farm’s subrogation violated the made whole doctrine by collecting from GEICO before the Johnsons were fully compensated, including attorney fees, and also brought a claim for conversion.The United States District Court for the District of Montana initially remanded the case to state court for lack of standing, finding the Johnsons had not shown a substantial risk of injury. In the Montana Eleventh Judicial District Court, the Johnsons’ amended complaints were dismissed for lack of standing, as the court found they had not sufficiently alleged that State Farm’s subrogation prevented them from being made whole. The court also dismissed the conversion claim, finding it preempted by statute and lacking standing. The Johnsons’ attempt to further amend their complaint was denied, and their petition for supervisory control to the Montana Supreme Court was also denied.The Supreme Court of the State of Montana reviewed the case and affirmed the district court’s dismissal. The Court clarified that the made whole doctrine requires an insured to be fully compensated, including attorney fees, before an insurer may subrogate. However, it held that because the Johnsons’ remaining losses were not covered by their State Farm policy, State Farm’s subrogation did not violate the made whole doctrine. The Court also affirmed dismissal of the conversion claim, as the Johnsons lacked standing. View "Johnson v. State Farm Insurance" on Justia Law

The plaintiff purchased a life insurance policy for her son and consistently paid the required premiums. She alleges that the insurer failed to provide the statutory notices and protections mandated by California law before terminating her policy for nonpayment. After missing a payment in 2016, her policy lapsed, and following reinstatement, it was terminated again in 2018 after another missed payment. The plaintiff contends that the insurer’s failure to comply with statutory notice requirements rendered the termination ineffective and that her experience was representative of many other policyholders in California.The United States District Court for the Eastern District of California granted in part the plaintiff’s motion for class certification. The court found that the prerequisites of Federal Rule of Civil Procedure 23(a) were met and certified a class under Rule 23(b)(2) for declaratory and injunctive relief. The certified class included all policy owners or beneficiaries whose policies lapsed for nonpayment without the required statutory notice. The court appointed the plaintiff as class representative but denied, without prejudice, certification for monetary relief under Rule 23(b)(3).The United States Court of Appeals for the Ninth Circuit reviewed the district court’s class-certification order. Relying on its intervening decision in Small v. Allianz Life Insurance Co. of North America, the Ninth Circuit held that to recover for violations of the relevant California statutes, plaintiffs must show not only a statutory violation but also that the violation caused them harm. The court found that the plaintiff was not an adequate class representative for beneficiaries and that her claims were not typical of class members who intentionally allowed their policies to lapse. The Ninth Circuit reversed the district court’s class-certification order and remanded the case for further proceedings. View "Farley v. Lincoln Benefit Life Co." on Justia Law

Jessica De'Andrea, a patrol officer with the Montgomery Police Department, was involved in a motor vehicle collision while on duty. The driver of the other vehicle, Clint Walters, later sued De'Andrea individually for negligence, resulting in a $550,000 judgment against her after a jury trial. De'Andrea alleged that the City of Montgomery, which had procured liability insurance and acted as a self-insurer for its employees, failed to properly defend her, did not communicate settlement or appeal options, and refused to satisfy the judgment. She claimed these failures led to her bankruptcy and brought multiple claims against the City, including breach of contract, bad faith, fraudulent misrepresentation, and violations of the Alabama Legal Services Liability Act.The Montgomery Circuit Court denied the City's motions to dismiss, finding it was not apparent beyond doubt that De'Andrea could prove no set of circumstances entitling her to relief. The City then petitioned the Supreme Court of Alabama for a writ of mandamus, seeking dismissal of all claims on the basis of statutory immunity and other defenses.The Supreme Court of Alabama reviewed only the City's immunity defense as to the fraudulent misrepresentation claim, because the City had not preserved immunity arguments for the other claims in the lower court. The Court held that municipal immunity under § 11-47-190, Ala. Code 1975, does not automatically bar all fraudulent misrepresentation claims, as such claims can be based on innocent or mistaken misrepresentations, not just intentional torts. The Court denied the City's petition for a writ of mandamus, allowing De'Andrea's claims to proceed. The City may raise its other defenses on appeal if necessary. View "De'Andrea v. City of Montgomery" on Justia Law

A fire occurred on September 27, 2018, at a multi-building apartment complex in Birmingham, Alabama, owned by Maxus Metropolitan, LLC. The fire destroyed one building and damaged others, including causing soot and water damage. Maxus was insured by Travelers Property Casualty Company of America under a policy covering physical loss or damage and lost business income. After the fire, Maxus and Travelers disagreed over the extent of coverage, particularly regarding remediation costs for microscopic soot and water damage. Maxus hired experts who found widespread soot contamination, prompting evacuation and remediation. Travelers disputed the necessity of remediation and delayed coverage decisions.Maxus sued Travelers in Missouri state court for breach of contract and vexatious refusal to pay, and Travelers removed the case to the United States District Court for the Western District of Missouri. At trial, the jury found for Maxus, awarding substantial damages, additional damages for vexatious refusal, and attorneys’ fees. The district court granted Maxus’s motions for attorneys’ fees and prejudgment interest, including fees for pre-suit work and paralegal support. Travelers moved for judgment as a matter of law and for a new trial, arguing issues with coverage, sufficiency of evidence, jury instructions, and calculation of damages and fees.The United States Court of Appeals for the Eighth Circuit reviewed the case. It affirmed the district court’s denial of Travelers’ motions for judgment as a matter of law and for a new trial, holding that microscopic soot can constitute “direct physical loss or damage” under Missouri law if it renders property uninhabitable, and that sufficient evidence supported the jury’s findings on coverage and vexatious refusal. The court also affirmed the attorneys’ fees award. However, it vacated the prejudgment interest award, finding the calculation method improper, and remanded for recalculation based on the dates payment was demanded from Travelers. View "Maxus Metropolitan, LLC v. Travelers Property Casualty Co." on Justia Law

A dispute arose when an insurance company denied coverage to an entity listed as an "Additional Insured" under a claims-made insurance policy. The insurer had issued the policy to a company operating an elder care facility. The plaintiff, a commercial real estate lender, had provided a loan secured by a mortgage on the property and later sought the appointment of a receiver after the operator defaulted. In January 2022, several residents were removed from the facility, leading to lawsuits alleging wrongful eviction and other claims against entities involved in financing and controlling the facility, including the plaintiff.The United States District Court for the District of Massachusetts reviewed the plaintiff’s suit seeking a declaration that the insurer had a duty to defend it in two underlying lawsuits. The district court granted summary judgment in part to each party, holding that the insurer had a duty to defend the plaintiff in one action (the Frost action) based on a claim related to the collection of an administrative fee, but not in the other (the Salie action), due to the plaintiff’s failure to provide timely notice as required by the policy. The court also granted summary judgment to the insurer on the plaintiff’s state-law claims for unfair and deceptive practices, finding insufficient evidence of bad faith.On appeal, the United States Court of Appeals for the First Circuit reversed the district court’s decision regarding the Frost action, holding that the insurer did not have a duty to defend because the claims did not allege liability solely attributable to the original insured, as required by the policy’s endorsement. The court affirmed the district court’s decision as to the Salie action and the state-law claims, concluding that the plaintiff’s failure to comply with the policy’s notice requirements and the insurer’s reasonable denial of coverage precluded recovery. The case was remanded for further proceedings. View "BI 40 LLC v. Ironshore Specialty Insurance Company" on Justia Law