Justia Insurance Law Opinion Summaries

A fatal motor vehicle accident occurred after a patron, Bailey, was served alcohol at two establishments, including one operated by the appellants. Bailey drove the wrong way on an interstate, resulting in a collision that killed himself and five members of the Abbas family. The Abbas family’s estates sued the restaurant operators (collectively “Roosters”) for dram shop liability and negligent training. At the time, Roosters held both a businessowners policy (BOP) and a commercial umbrella policy (CUP) with Grange Insurance Company. The BOP provided $1,000,000 in liquor liability coverage, which was undisputed. The dispute centered on whether the CUP also provided liquor liability coverage, particularly in light of an endorsement (CU 47) that replaced the liquor liability exclusion in the CUP.The Fayette Circuit Court found the language of the CUP and CU 47 ambiguous when considered alongside the BOP, reasoning that umbrella policies are intended to supplement underlying coverage. The court granted summary judgment to Roosters, holding that the CUP provided additional coverage. Grange appealed, and the Kentucky Court of Appeals reversed, finding CU 47 unambiguously replaced the liquor liability exclusion and precluded coverage under the CUP. The appellate court remanded for entry of a declaratory judgment in Grange’s favor.The Supreme Court of Kentucky reviewed the case de novo. It held that CU 47 unambiguously replaced the liquor liability exclusion in the CUP, leaving no basis for additional coverage. The court enforced the policy as written, declining to consider extrinsic evidence or arguments not preserved below. The Supreme Court of Kentucky affirmed the Court of Appeals, holding that the commercial umbrella policy does not provide liquor liability coverage for the claims at issue. View "GEORGETOWN CHICKEN COOP, LLC V. GRANGE INSURANCE COMPANY" on Justia Law

Two former customers of an insurance company filed suit after their vehicles were declared total losses and the insurer paid out claims based on the vehicles’ “actual cash value” (ACV). The insurance policy defined ACV as the “market value, age, and condition of the vehicle at the time the loss occurs.” The insurer calculated market value using a system that included a “projected sold adjustment” (PSA), which reduced the list prices of comparable vehicles to reflect typical consumer negotiation. The plaintiffs alleged that the PSA always resulted in an artificially low valuation, breaching the policy’s requirement to pay true market value.The United States District Court for the District of Arizona found that the plaintiffs met the requirements of numerosity, commonality, typicality, and adequacy under Federal Rule of Civil Procedure 23(a). However, the court determined that individual questions about how each vehicle’s ACV was calculated predominated over common questions, as required by Rule 23(b)(3), and therefore denied class certification. The plaintiffs appealed this decision.The United States Court of Appeals for the Ninth Circuit reviewed the district court’s denial of class certification for abuse of discretion. The appellate court held that the PSA was not facially unlawful and that determining whether each class member was harmed would require individualized inquiries into each person’s vehicle valuation. Because liability and injury could not be established through common evidence, individual issues would predominate over common ones. The Ninth Circuit therefore affirmed the district court’s order denying class certification, holding that class certification was inappropriate under Rule 23(b)(3) due to the predominance of individualized questions. View "AMBROSIO V. PROGRESSIVE PREFERRED INSURANCE COMPANY" on Justia Law

The plaintiffs purchased a one-year homeowners insurance policy through an insurance broker, after previously having a long-term relationship with that broker, which had been interrupted for two years when the plaintiffs used a different broker. After the policy was issued, the insurer inspected the plaintiffs’ home and found a defect in the siding, requiring repairs as a condition for continued coverage. The insurer communicated this requirement and the risk of nonrenewal to the broker, but the parties disputed whether the broker relayed this information to the plaintiffs. The insurer did not receive proof of repair and sent a nonrenewal notice to the plaintiffs by certified mail, which the plaintiffs claimed they never received. The policy expired without renewal, and shortly thereafter, the plaintiffs’ home was destroyed by fire. The insurer denied coverage because the policy had lapsed.The plaintiffs sued the broker and the brokerage firm in the Superior Court, alleging, among other claims, that the broker negligently failed to notify them of the insurer’s communications and the impending nonrenewal. The trial court granted summary judgment in favor of the broker, finding no legal duty to notify the plaintiffs of nonrenewal after procuring the policy. The Appellate Court affirmed, holding that the broker’s duty ended once the policy was procured, absent evidence of an agreement to assist with renewal or maintain coverage, and that the plaintiffs’ long-standing relationship with the broker was insufficient to create such a duty.The Supreme Court of Connecticut affirmed the Appellate Court’s judgment. It held that, under Connecticut law, an insurance broker generally owes no duty to notify clients of an insurer’s intent not to renew a policy after the broker has procured the requested coverage, unless the broker has expressly or impliedly agreed to assist with renewal. The Court found no evidence of such an agreement or ongoing duty in this case. View "Deer v. National General Ins. Co." on Justia Law

Peterson’s Oil Service, Inc. supplied heating fuel to customers in Massachusetts between 2012 and 2019. The fuel contained higher-than-standard levels of biodiesel, averaging 35% between 2015 and 2018, exceeding the 5% industry standard for ordinary heating oil. Customers alleged that this biodiesel-blended fuel was incompatible with conventional heating systems, caused repeated heat loss, and resulted in permanent damage to their equipment. They brought a class action in Massachusetts state court against Peterson’s and its officers, asserting claims for breach of contract, fraud, and negligence, including allegations that Peterson’s continued supplying the fuel despite customer complaints and only later disclosed the high biodiesel content.United States Fire Insurance Company and The North River Insurance Company had issued Peterson’s a series of commercial general liability and umbrella policies. The insurers initially defended Peterson’s in the class action under a reservation of rights, then filed suit in the United States District Court for the District of Massachusetts seeking a declaration that they owed no duty to defend or indemnify Peterson’s. The insurers moved for summary judgment, arguing that the claims did not arise from a covered “occurrence” and that policy provisions limiting or excluding coverage for failure to supply applied. The district court denied summary judgment, finding a genuine dispute as to whether Peterson’s actions were accidental and holding that the failure-to-supply provisions were ambiguous and did not apply.On appeal, the United States Court of Appeals for the First Circuit affirmed. The court held that the underlying complaint alleged a potentially covered “occurrence” because it was possible Peterson’s did not intend or expect the property damage alleged. The court also held that the failure-to-supply provisions were ambiguous and, under Massachusetts law, must be construed in favor of coverage. The district court’s summary judgment rulings were affirmed. View "United States Fire Insurance Company v. Peterson's Oil Service, Inc." on Justia Law

Adir International, LLC operates a chain of retail stores, Curacao, which primarily serves low-income, Spanish-speaking immigrants in California, Nevada, and Arizona. Curacao offers store credit to customers, with over 90 percent of sales made on store credit. Since at least 2012, Curacao has offered optional “account protection” services (AGP Basic and AGP Plus) to credit customers, with AGP Plus including a credit property insurance component. Curacao was licensed as a credit insurance agent, but its sales associates, who were not licensed or endorsed, received bonuses for selling these insurance products. The AGP program allowed customers to defer payments under certain circumstances, but the fees for AGP often exceeded finance charges, and the program was highly profitable for Curacao.The People of the State of California filed a civil enforcement action in the Superior Court of Los Angeles County, alleging that Adir and its owner, Ron Azarkman, violated the Unfair Competition Law (UCL) through predicate violations of the Insurance Code and the Unruh Retail Installment Sales Act (Unruh Act). After a bench trial, the Superior Court found that Adir and Azarkman violated the Insurance Code by selling insurance through unlicensed employees, failing to use approved training materials, and providing required disclosures only after enrollment. The court held Azarkman personally liable due to his control and knowledge of the practices. However, the court ruled that the sale of account protection services did not violate the Unruh Act.On appeal, the California Court of Appeal, Second Appellate District, Division Eight, affirmed the trial court’s findings regarding the Insurance Code violations and Azarkman’s personal liability, rejecting arguments about primary jurisdiction, statutory interpretation, and statute of limitations. The appellate court reversed the trial court’s ruling on the Unruh Act, holding that the Act limits all permissible fees to those specifically authorized, and remanded for further proceedings on that claim. In all other respects, the judgment was affirmed. View "P. v. Adir Internat., LLC" on Justia Law

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