Justia Insurance Law Opinion Summaries

The plaintiff, after her vehicle was declared a total loss in a collision, received a payment from her insurer based on the “actual cash value” of her car, as determined by a third-party valuation system. This system used comparable vehicle listings and, when actual sales prices were unavailable, applied a “Projected Sold Adjustment” to estimate market value. The plaintiff accepted the insurer’s offer, paid her deductible, and did not contest the valuation or invoke the policy’s appraisal process. Despite this, she filed suit alleging breach of contract, claiming the insurer’s use of the adjustment resulted in underpayment, and sought to represent a class of similarly situated South Carolina policyholders.The United States District Court for the District of South Carolina certified a class of individuals who received total loss payments calculated using the Projected Sold Adjustment. The court found that the plaintiff’s claims were typical of the class and that common questions predominated, thus meeting the requirements for class certification under Federal Rule of Civil Procedure 23.On interlocutory appeal, the United States Court of Appeals for the Fourth Circuit reversed the class certification order. The Fourth Circuit held that the plaintiff lacked standing because she did not suffer a concrete injury—she accepted the insurer’s payment, was not out-of-pocket beyond her deductible, and never demonstrated that her vehicle’s value exceeded the amount paid. The court further held that, even if standing existed, class certification was improper because determining whether the insurer breached its obligation to pay actual cash value would require individualized inquiries into each class member’s vehicle and circumstances. Thus, the requirements of commonality and predominance under Rule 23 were not met. The district court’s order certifying the class was therefore reversed. View "Freeman v. Progressive Direct Insurance Company" on Justia Law

CVS Health Corporation sought insurance coverage from its insurers for thousands of lawsuits brought by government entities, hospitals, and third-party payors. These lawsuits alleged that CVS’s opioid dispensing practices contributed to the opioid epidemic, resulting in significant public health and economic costs. CVS’s insurance policies, issued by Chubb and AIG, generally covered damages that CVS became legally obligated to pay “because of bodily injury or property damage” caused by an “occurrence.” Some policies included endorsements related to pharmacist or druggist liability, which CVS argued broadened coverage.The insurers filed a declaratory judgment action in the Superior Court of the State of Delaware, seeking a declaration that they owed no duty to defend or indemnify CVS in these lawsuits. The Superior Court granted summary judgment in favor of the insurers, holding that the underlying lawsuits did not seek damages for specific, individualized bodily injury or property damage as required by the policies. Instead, the court found that the lawsuits sought recovery for the plaintiffs’ own economic losses, such as increased public spending and general harm to public health systems. The court also determined that the policy endorsements did not alter the requirement that damages must be “because of” bodily injury or property damage. The court further held that the insurers had no duty to indemnify CVS, as the underlying claims did not depend on proof of personal injury or property damage.On appeal, the Supreme Court of the State of Delaware affirmed the Superior Court’s decision. The Supreme Court held that the insurance policies and their endorsements did not provide coverage for the lawsuits at issue because the claims did not allege specific and individualized bodily injury or property damage. The court also concluded that the duty to indemnify was not triggered, as there were no unresolved factual issues that could lead to coverage. The judgment of the Superior Court was affirmed. View "In Re: CVS Opioid Insurance Litigation" on Justia Law

Two insurance companies entered into a quota share reinsurance agreement in 2014, under which one company (the reinsurer) agreed to indemnify the other (the reinsured) for a portion of claims arising from short-term medical insurance policies. The agreement required the reinsured to provide prompt notice to the reinsurer of any claims that might result in a covered loss and developments that could materially affect the reinsurer’s position. In 2017, the reinsured was sued in Montana by policyholders alleging underpayment of claims, and the litigation later expanded into a class action. The reinsured did not notify the reinsurer of the lawsuit until after the district court had entered summary judgment for the plaintiffs, certified the class, and the Ninth Circuit denied interlocutory appeal. The reinsured eventually settled the case for $8 million and sought indemnification from the reinsurer, which was refused on grounds of late notice.The United States District Court for the Northern District of Texas, with the parties’ consent, ruled on cross-motions for summary judgment. The court granted summary judgment for the reinsured, holding that the notice provision in the reinsurance treaty was triggered only by the reinsured’s subjective belief that a claim might arise, and that the reinsurer had not shown evidence of the reinsured’s subjective intent. Alternatively, the court found that even if there was a breach, the reinsurer was not prejudiced by the late notice and remained obligated to indemnify, including for attorneys’ fees.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the case de novo. The Fifth Circuit held that the notice provision required an objective standard—what a reasonable reinsured would believe might result in a claim—rather than a purely subjective belief. The court found that the reinsured’s notice was unreasonably late as a matter of law and that this delay materially prejudiced the reinsurer by depriving it of its contractual right to participate in the defense. The Fifth Circuit reversed the district court’s judgment, holding that the reinsurer was absolved of its duty to indemnify due to the material breach. View "US Fire Ins v. Unified Life Ins" on Justia Law

A construction worker employed by a subcontractor was injured when a scaffold collapsed at a Manhattan worksite. The worker sued the property owner and general contractor in New York Supreme Court, alleging negligence and violations of state labor laws. The owner’s insurer, Liberty Insurance Corporation, sought a declaration in federal court that the subcontractor’s insurer, Hudson Excess Insurance Company, was obligated to defend and indemnify the owner as an additional insured under the subcontractor’s commercial general liability policy. The subcontract between the general contractor and the subcontractor required the latter to provide insurance coverage for the owner and general contractor.In the New York Supreme Court, summary judgment was granted to the injured worker on some claims, while other claims remained pending. The court denied summary judgment to the owner on its contractual indemnification claim against the subcontractor, finding factual questions about the scope of the subcontractor’s work. Later, after the federal district court’s decision, the state court dismissed all third-party claims against the subcontractor, finding the indemnity provision in the subcontract invalid due to lack of a meeting of the minds.The United States Court of Appeals for the Second Circuit reviewed the case. It affirmed the district court’s finding, after a bench trial on stipulated facts, that the subcontractor’s actions proximately caused the worker’s injuries and that Hudson owed a duty to indemnify the owner under the policy. The Second Circuit held that the later state court decision did not alter this result. However, the Second Circuit reversed the district court’s award of attorney’s fees to Liberty, holding that Hudson was entitled to a statutory safe harbor under New York Insurance Law, and thus was not required to pay Liberty’s attorney’s fees for the federal action. View "Liberty Insurance Corp. v. Hudson Excess Insurance Co." on Justia Law

Two drivers, McGee and Hudgins, were involved in a road-rage incident that ended with McGee crashing into Green’s vehicle, causing her injuries. Green and her husband sued both drivers. Before filing suit, Green received $100,000 from McGee’s insurer in exchange for a covenant not to execute judgment against McGee. Green’s underinsured motorist (UIM) carrier, Progressive, defended the suit in McGee’s name. The jury found McGee 60% at fault and Hudgins 40% at fault, and determined both acted recklessly, willfully, and wantonly. The jury awarded Green $88,546.78 in actual damages and $35,000 in punitive damages against each defendant.The Circuit Court for Spartanburg County combined the actual and punitive damages for a total of $158,546.78, subtracted the $100,000 payment from McGee’s insurer, and allocated the remaining $58,546.78 between McGee and Hudgins based on their respective percentages of fault. On appeal, the South Carolina Court of Appeals altered the setoff calculation, allocating the $100,000 payment first to McGee’s share, then applying any remainder to Hudgins’ share, resulting in a net judgment of $58,546.78 against Hudgins and $0 against McGee.The Supreme Court of South Carolina reviewed the setoff calculation. It held that, because the jury found both defendants acted recklessly, willfully, and wantonly, joint and several liability applied to the actual damages, making the percentage allocation of fault irrelevant. The court further held that the $100,000 payment could only be set off against the actual damages, not the punitive damages, as punitive damages are not for the “same injury.” The court reversed the Court of Appeals, holding Green is entitled to a net judgment of $23,546.78 against McGee and $35,000 against Hudgins, and remanded for entry of judgment in those amounts. View "Green v. McGee" on Justia Law

Victory Insurance Company, a Montana property and casualty insurer, issued workers’ compensation policies to several businesses in 2019. Later that year, Victory entered into an agreement with Clear Spring Property and Casualty Company to reinsure and then purchase Victory’s book of business, including the relevant policies. Victory notified its insureds by phone and sent a single email on December 31, 2019, stating that their policies would be “upgraded” to Clear Spring policies effective January 1, 2020. All policies were rewritten under Clear Spring as of that date.The Montana Commissioner of Securities & Insurance (CSI) initiated an enforcement action in December 2022, alleging that Victory had illegally cancelled its policies and could be fined up to $2.7 million. After discovery, both parties moved for summary judgment before a CSI Hearing Examiner. The Hearing Examiner found that Victory committed 165 violations of Montana’s insurance code and recommended summary judgment for the CSI. The CSI adopted this recommendation, imposing a $250,000 fine with $150,000 suspended, payable only if further violations occurred within a year. Victory sought judicial review in the First Judicial District Court, Lewis and Clark County, which affirmed the CSI’s decision.The Supreme Court of the State of Montana reviewed the case, applying the same standards as the district court. The Court held that the Hearing Examiner properly granted summary judgment because Victory’s actions constituted cancellations under the insurance code, regardless of whether they could also be considered assignments. The Court also held that Victory’s due process rights were not violated during the fine imposition process, that the statutory delegation of fine authority to the CSI was constitutional, and that Victory was not entitled to a jury trial because there were no material factual disputes. The Supreme Court affirmed the district court’s order. View "Victory Insurance v. State" on Justia Law

A corporate parent acquired several subsidiaries that had previously developed and sold earplugs, which later became the subject of extensive products-liability litigation. The lawsuits, consolidated in federal multidistrict litigation and Minnesota state court, alleged hearing injuries from defective earplug design. While defending these suits, the subsidiaries and the parent incurred substantial legal costs. During the litigation, the subsidiaries filed for Chapter 11 bankruptcy, but the bankruptcy court found they were financially healthy and dismissed the petitions. Subsequently, the parent and subsidiaries reached a global settlement of the lawsuits.After the bankruptcy dismissal, the subsidiaries and their parent sought insurance coverage from the subsidiaries’ insurers for defense costs. The relevant insurance policies, issued by Twin City Fire Insurance Company, ACE American Insurance Company, and MS Transverse Specialty Insurance Company, contained self-insured retention (SIR) provisions requiring the “Named Insured” to pay a specified amount before coverage was triggered. The parent company was not a “Named Insured” under any policy. The Superior Court of the State of Delaware held that only payments made by the “Named Insured” could satisfy the SIRs, and payments made by the parent did not trigger the insurers’ coverage obligations. The court also rejected the argument that the policies’ maintenance clauses entitled the insureds to coverage for all defense costs minus the SIR, finding those clauses inapplicable.On appeal, the Supreme Court of the State of Delaware reviewed the Superior Court’s summary judgment decision and interpretation of the insurance contracts de novo. The Supreme Court affirmed, holding that the policies unambiguously required the “Named Insured” to satisfy the SIRs and that the parent’s payments did not trigger coverage. The Court further held that the maintenance clauses did not apply to excuse satisfaction of the SIRs or create a setoff in this context. The judgment for the insurers was affirmed. View "In Re Aearo Technologies LLC Insurance Appeals" on Justia Law

A woman and her former husband divorced in 2011, entering into a detailed stipulation that was incorporated into a final divorce order by the Vermont family division. The order awarded her sole legal parental rights for their three minor children and required the husband to pay spousal maintenance for a set period. It also required him to maintain a $400,000 life insurance policy naming her as the sole beneficiary for at least fifteen years or until his maintenance obligation was paid in full, whichever was later. After remarrying, the husband obtained new life insurance policies naming his new wife as beneficiary and assigned part of one policy to a lender as collateral. Upon his death, the ex-wife discovered she was not a beneficiary on these policies and sued, seeking the insurance proceeds based on the divorce order.The Vermont Superior Court, Bennington Unit, Civil Division, denied the ex-wife’s motion for summary judgment and granted summary judgment and judgment on the pleadings to the defendants. The court found that Vermont law prohibited courts from ordering postmortem spousal maintenance or requiring life insurance to secure such maintenance, and concluded the life-insurance provision in the divorce order was invalid and unenforceable. The court ordered the insurance proceeds to be distributed to the new wife and the lender, and granted interpleader relief to one insurer.The Vermont Supreme Court reviewed the case and held that Vermont law recognizes an equitable cause of action to recover life insurance proceeds based on a divorce order, and that parties may agree to secure maintenance with life insurance, even if the court could not impose such a requirement unilaterally. The Court affirmed the interpleader relief but reversed the remainder of the judgment, remanding for further proceedings to determine the ex-wife’s equitable entitlement to the insurance proceeds and the priority of competing claims. View "diMonda v. Lincoln National Corp." on Justia Law

A hailstorm damaged the roof of Hector Campbell’s home, which was insured under a replacement cost insurance policy by Great Northwest Insurance Company. Campbell hired a contractor to replace the damaged shingles. The contractor discovered that the roof’s decking had gaps larger than permissible under the state code for shingle installation. Consequently, the contractor installed a new layer of sheathing before affixing the new shingles. Great Northwest denied coverage for the sheathing installation and the contractor’s overhead and profit costs, citing policy exclusions.The district court determined that Great Northwest’s denial of coverage for the sheathing violated Minnesota Statutes section 65A.10, subdivision 1, which mandates that replacement cost insurance cover the cost of replacing or repairing damaged property in compliance with the minimum code requirements. However, the court granted summary judgment to Great Northwest on the overhead and profit issue, concluding that Campbell’s policy clearly excluded coverage for those costs. Both parties appealed.The Minnesota Supreme Court reviewed the case. The court held that Minnesota Statutes section 65A.10, subdivision 1, requires Great Northwest to cover the cost of installing the new sheathing because it was necessary to replace the damaged shingles in accordance with the state building code. Therefore, the policy exclusion for sheathing was invalid under the statute. However, the court also held that Great Northwest could deny coverage for the contractor’s overhead and profit because Campbell failed to establish that these costs were part of the “cost of replacing, rebuilding, or repairing any loss or damaged property in accordance with the minimum code as required by state or local authorities.” The court affirmed the decision of the court of appeals on both issues. View "Great Northwest Insurance Company vs. Campbell" on Justia Law

In January 2015, Paula Appleton was severely injured in a car accident when a pickup truck struck her vehicle from behind. Appleton filed an insurance claim against the driver, whose policy was administered by AIG Claims, Inc. Over four years, Appleton and AIG exchanged settlement offers and attended three mediations but failed to reach a settlement. In March 2019, a Massachusetts state court jury awarded Appleton $7.5 million in damages. Appleton then sued AIG and National Union Fire Insurance Company in federal court, alleging they failed to conduct a reasonable investigation and did not extend a prompt and fair settlement offer as required by Massachusetts law.The United States District Court for the District of Massachusetts granted summary judgment in favor of the defendants. The court concluded that the defendants conducted a reasonable investigation and that their duty to extend a prompt and fair settlement offer was not triggered because the value of Appleton's damages never became clear.The United States Court of Appeals for the First Circuit reviewed the case. The court determined that a reasonable jury could find that Appleton's damages became clear in early 2018 and that the defendants failed to extend a prompt and fair settlement offer afterward. Consequently, the court vacated the district court's summary judgment ruling in part and remanded for trial on Appleton's settlement claim. However, the court affirmed the district court's grant of summary judgment on Appleton's claim that the defendants failed to conduct a reasonable investigation. View "Appleton v. National Union Fire Insurance Co." on Justia Law