Justia Insurance Law Opinion Summaries

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

Mesco Manufacturing, LLC ("Mesco") held a business insurance policy from Motorists Mutual Insurance Company ("Motorists Mutual") covering direct physical loss or damage caused by covered causes, including hail. After a storm in August 2018, Mesco claimed hail damage to its manufacturing facility roofs. Motorists Mutual initially adjusted the claim for $7,806.75, but Mesco disagreed and invoked the policy's appraisal provision. The appraisers selected an umpire who determined that the modified bitumen roofs were hail damaged, awarding $1,020,490.32 in replacement cost value. Motorists Mutual only paid $265,296.21, excluding the modified bitumen and EPDM roofs from the award.Mesco filed a complaint in the United States District Court for the Southern District of Indiana, alleging breach of contract and bad faith under Indiana law. The district court granted Mesco's motion for summary judgment, concluding that Motorists Mutual breached the contract by not paying the full appraisal award. The court relied on the precedent set in Villas at Winding Ridge v. State Farm Fire & Casualty Co., which held that a similar appraisal provision was binding and unambiguous. The court found no exceptional circumstances to set aside the appraisal award and denied Motorists Mutual's motion for reconsideration.The United States Court of Appeals for the Seventh Circuit reviewed the case de novo. The court affirmed the district court's judgment, holding that the appraisal award was binding and that Motorists Mutual breached the insurance contract by not paying the full award. The court determined that the appraisal process properly included determining the extent of hail damage, and Motorists Mutual's "right to deny" clause did not permit it to set aside the binding appraisal award. The court emphasized that the purpose of the appraisal process is to provide a speedy and inexpensive means of settling disputes. View "Mesco Manufacturing, LLC v. Motorists Mutual Insurance Co." on Justia Law

In early 2019, G.K. and K.K. purchased a homeowners insurance policy from Travelers Home and Marine Insurance Company for their residence. The policy included an anti-assignment clause prohibiting assignment without the insurer's consent. In May 2020, after the policy expired, the Policyholders reported roof damage from a 2019 storm and hired Featherfall Restoration, LLC to repair it. Travelers denied the claim, citing wear and tear. The Policyholders then assigned their claim to Featherfall, which Travelers refused to recognize due to the anti-assignment clause.Featherfall filed a complaint with the Maryland Insurance Administration (MIA), asserting its right to act in place of the Policyholders. The MIA upheld Travelers' denial, stating the anti-assignment clause invalidated the assignment. Featherfall requested a hearing, arguing the clause should not apply to post-loss assignments. The MIA Commissioner granted summary decision in favor of Travelers, finding the assignment invalid and Featherfall not entitled to a hearing.Featherfall sought judicial review in the Circuit Court for Baltimore City, which affirmed the MIA's decision and denied declaratory relief. The Appellate Court of Maryland also affirmed, holding that anti-assignment clauses apply to post-loss assignments and that Featherfall lacked standing.The Supreme Court of Maryland reviewed the case and held that the anti-assignment clause did not prohibit the assignment of a post-loss claim. The court distinguished between the policy itself and a claim arising under it, noting that a claim is a chose in action and thus assignable. The court reversed the lower courts' decisions and remanded the case to the MIA for further proceedings consistent with this opinion. View "In re Petition of Featherfall Restoration" on Justia Law

Plaintiffs initiated a class action against National General Insurance Company and Integon National Insurance Company, alleging that the defendants improperly denied their car accident claims and rescinded their automobile insurance policies. The plaintiffs claimed that the defendants retroactively denied insurance claims and rescinded policies based on the plaintiffs' failure to disclose household members. The plaintiffs sought class certification for 1,032 insureds who had their policies rescinded under similar circumstances.The Superior Court of San Bernardino County denied the plaintiffs' motion for class certification, citing the lack of a palpable trial plan for resolving damages. The court noted that the plaintiffs admitted most of the available damages were inherently individualized and expressed concern that the plaintiffs wanted to make the case more manageable by forfeiting certain categories of damages. The court concluded that class treatment would not be a substantial benefit to the litigants.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case. The appellate court disagreed with the defendants' contention that common questions of law and fact did not predominate on the issue of liability. The court found that the trial court had relied on improper legal criteria by denying certification based on individualized damages and by not considering the potential benefits of class certification. The appellate court held that individualized proof of damages does not preclude class certification when common issues of liability predominate. The court reversed the order denying class certification and remanded the case, directing the trial court to certify, at minimum, a liability-only class and to consider whether any subclasses are necessary. View "Cobos v. National General Insurance Co." on Justia Law

Heather Schroeder and Misty Tanner, representing a class of Indiana car owners insured by Progressive Paloverde Insurance Company and Progressive Southeastern Insurance Company, filed a lawsuit claiming that Progressive breached its contractual duty by applying "Projected Sold Adjustments" to the list prices of comparable cars when determining the actual cash value of totaled cars. The insurance policy in question specifies that the actual cash value is determined by the market value, age, and condition of the vehicle at the time of the loss.The United States District Court for the Southern District of Indiana, Indianapolis Division, recognized that whether Progressive paid each class member the actual cash value of their car is not susceptible to classwide proof. However, it concluded that common evidence could establish that Progressive employed an unacceptable method for calculating actual cash value payments by applying Projected Sold Adjustments. The court certified a class on this basis.The United States Court of Appeals for the Seventh Circuit reviewed the case and concluded that Progressive’s policy does not preclude the use of Projected Sold Adjustments in calculating actual cash value payments, as long as the insureds are ultimately paid the actual cash value of their totaled cars as defined under the policy and Indiana law. The court found that individual questions about whether Progressive failed to pay each class member the actual cash value of their car would overwhelm any common ones. Consequently, the Seventh Circuit reversed the district court’s class certification decision and remanded the case for further proceedings. View "Schroeder v. Progressive Paloverde Insurance Co." on Justia Law

The case involves the California Insurance Company (CIC), which attempted to merge with a newly-formed New Mexico corporation, CIC II, without obtaining the required consent from the California Insurance Commissioner. As a result, the trial court appointed the commissioner as CIC’s conservator. The trial court later approved a rehabilitation plan proposed by the commissioner, which included terms for ending the conservatorship. CIC appealed, arguing that the conservatorship was unlawfully imposed and should be vacated, and that the rehabilitation plan was an abuse of discretion.The San Mateo County Superior Court initially granted the commissioner’s application to be appointed as CIC’s conservator due to the unauthorized merger attempt. CIC’s motion to vacate the conservatorship was denied, and their subsequent petition for writ of mandate was also denied by the California Court of Appeal. CIC II and an affiliate filed federal actions to vacate the conservatorship, but these were dismissed, and the dismissals were affirmed by the Ninth Circuit Court of Appeals.The California Court of Appeal, First Appellate District, reviewed the case and affirmed the trial court’s order. The court held that the conservatorship was lawfully imposed under Insurance Code section 1011(c) due to CIC’s unauthorized merger attempt. The court also found that the rehabilitation plan, which included reinsurance and assumption of CIC’s California policies and settlement options for pending litigation, was not an abuse of discretion. The court concluded that the plan was reasonably related to the public interest and necessary to address the issues that led to the conservatorship. View "Lara v. California Insurance Co." on Justia Law