Justia Contracts Opinion Summaries

The Pennsylvania Supreme Court granted allowance of appeal in this case to determine when the statute of limitations begins to run on an uninsured motorist (UM) claim under an insurance policy. Specifically, the issue reduced to whether the statute of limitations begins to run on an insured’s ability to initiate a court action to enforce a UM claim in a policy containing an arbitration agreement. The Superior Court held that, for the purpose of UM and underinsured motorist (UIM) claims, the statute of limitations begins to run when a claimant injured in an automobile accident first learns that the other driver is uninsured or underinsured. However, the Supreme Court determined this conclusion was not adequately grounded in the pertinent statutory text, prevailing statute of limitations doctrine, or significant public policy concerns. Accordingly, the Court held that statute of limitations principles attending contract claims apply, and that the running of the statute was commenced upon an alleged breach of a contractual duty, which in this case would be occasioned by the insurer’s denial of coverage or refusal to arbitrate. The Court therefore reversed the Superior Court’s order to the contrary. View "Erie Insurance Exchange v. Bristol" on Justia Law

Plaintiffs filed suit against Allstate after the insurance company denied their homeowner's insurance claim. The Eighth Circuit affirmed the district court's grant of Allstate's motion for judgment as a matter of law. In regard to the breach of contract claim, the court held that plaintiffs failed to present sufficient evidence of the home's value and the personal property's value before or after the fire. Furthermore, a bankruptcy filing was insufficient to establish value. In this case, plaintiffs could have submitted an estimate of the personal property's value immediately before the fire, but they did not. Values on their proof-of-loss list were estimates of original purchase prices and it did not account for deterioration, obsolescence, or other depreciation as required by the policy and under Missouri law. Because plaintiff's vexatious refusal claim was derivative of their breach of contract claim, the court affirmed as to that claim. View "Aziz v. Allstate Insurance Co." on Justia Law

McMillin Management Services, L.P. and Imperial Valley Residential Valley Residential Builders, L.P. (collectively "McMillin") filed suit against numerous insurance companies, including respondents Lexington Insurance Company (Lexington) and Financial Pacific Insurance Company (Financial Pacific). McMillin alleged that it had acted as a developer and general contractor of a residential development project in Brawley and hired various subcontractors to help construct the Project. As relevant here, McMillin alleged that Lexington and Financial Pacific breached their respective duties to defend McMillin in a construction defect action (underlying action) brought by homeowners within the Project. McMillin alleged that Lexington and Financial Pacific each owed a duty to defend McMillin in the underlying action pursuant to various comprehensive general liability (CGL) insurance policies issued to the subcontractors that named McMillin as an additional insured. The trial court granted Lexington's motion for summary judgment, reasoning, that there was no possibility for coverage for McMillin as an additional insured under the policies "[b]ecause there were no homeowners in existence until after the subcontractors' work was complete[ ] . . . ." On appeal, McMillin contended that the fact that the homeowners did not own homes in the Project at the time the subcontractors completed their work did not establish that its liability did not arise out of the subcontractors' ongoing operations. The trial court granted Financial Pacific's motion for summary judgment, finding McMillin did not establish homeowners in the underlying action had sought potentially covered damages arising out of the subcontractors' drywall installation. The Court of Appeal reversed as to Lexington, and affirmed as to Financial Pacific. View "McMillin Management Services v. Financial Pacific Ins. Co." on Justia Law

To seek redress for an opioid epidemic, characterized by the Court of Appeal as having placed a financial strain on state and local governments dealing with the epidemic’s health and safety consequences, two California counties sued (the California Action) various pharmaceutical manufacturers and distributors, including the appellants in this matter, Actavis, Inc., Actavis LLC, Actavis Pharma, Inc., Watson Pharmaceuticals, Inc., Watson Laboratories, Inc., and Watson Pharma, Inc. (collectively, “Watson”). The California Action alleged Watson engaged in a “common, sophisticated, and highly deceptive marketing campaign” designed to expand the market and increase sales of opioid products by promoting them for treating long-term chronic, nonacute, and noncancer pain - a purpose for which Watson allegedly knew its opioid products were not suited. The City of Chicago brought a lawsuit in Illinois (the Chicago Action) making essentially the same allegations. The issue presented by this appeal was whether there was insurance coverage for Watson based on the allegations made in the California Action and the Chicago Action. Specifically, the issue was whether the Travelers Property Casualty Company of America (Travelers Insurance) and St. Paul Fire and Marine Insurance Company (St. Paul) owe Watson a duty to defend those lawsuits pursuant to commercial general liability (CGL) insurance policies issued to Watson. Travelers denied Watson’s demand for a defense and brought this lawsuit to obtain a declaration that Travelers had no duty to defend or indemnify. The trial court, following a bench trial based on stipulated facts, found that Travelers had no duty to defend because the injuries alleged were not the result of an accident within the meaning of the insurance policies and the claims alleged fell within a policy exclusion for the insured’s products and for warranties and representations made about those products. The California Court of Appeal concluded Travelers had no duty to defend Watson under the policies and affirmed. View "The Traveler's Property Casualty Company of America v. Actavis, Inc." on Justia Law

In 2009, Bancorp, which provides checking and savings accounts to individuals, purchased a bankers’ professional liability insurance policy from Federal. The policy stated: [Federal] shall pay, on behalf of an Insured, Loss on account of any Claim first made against such Insured during the Policy Period … for a Wrongful Act committed by an Insured or any person for whose acts the Insured is legally liable while performing Professional Services, including failure to perform Professional Services" but that Federal “shall not be liable for Loss on account of any Claim … based upon, arising from, or in consequence of any fees or charges” (Exclusion 3(n)). The 2010 Swift Complaint sought damages for Bancorp's "unfair and unconscionable assessment and collection of excessive overdraft fees.” Swift sought to represent a class of all U.S. BancorpSouth customers who "incurred an overdraft fee as a result of BancorpSouth’s practice of re-sequencing debit card transactions from highest to lowest.” In 2016, Bancorp agreed to pay $24 million to resolve all the claims, $8.4 million of which was for attorney’s fees, plus $500,000 in class administrative costs. Federal denied coverage. The Seventh Circuit agreed that Exclusion 3(n) excluded from coverage losses arising from fees and affirmed the dismissal of breach of contract claims and a bad faith claim. View "BancorpSouth Inc. v. Federal Insurance Co." on Justia Law

The Supreme Court affirmed the order of the district court granting summary judgment to State Farm Mutual Automobile Insurance Company on Kilby Butte Colony, Inc.’s complaint filed after State Farm declined the Colony’s underinsured motorist (UIM) claim submitted on behalf of Mary Ann and Ivan Stahl. The Stahls, members of the Kilby Butte Hutterite Colony, were injured in an automobile accident. Hutterite colony members own assets of the community collectively, and therefore, the Stahls could not own a vehicle in their individual capacities. All of the Colony’s auto insurance policies were purchased through State Farm, and no individual Colony members were listed as named insureds on any vehicle owned by the Colony. The district court determined the the Stahls did not qualify for UIM coverage because they did not satisfy the definition of an “insured” within the terms of the policy. The Supreme Court affirmed, holding that the district court did not err in finding that the Stahls did not satisfy the unambiguous definition of “insured” under UIM coverage in the policy and that they were therefore not entitled to those benefits. View "Kilby Butte Colony, Inc. v. State Farm Mutual Automobile Insurance Co." on Justia Law

In this dispute concerning a liability insurance policy, the Supreme Court granted relief in prohibition to State Auto Property Insurance Companies, holding that State Auto was entitled to a dismissal of CMD Plus, Inc.’s third-party complaint as a matter of law.When Plaintiffs filed an action against CMD, a residential construction company, seeking recovery for damages to their house and property, CMD filed a third-party complaint against State Auto, its insurer, alleging that State Auto delayed investigating Plaintiffs’ claim, settling Plaintiffs’ lawsuit, and indemnifying CMD. In this petition for a writ of prohibition, State Auto challenged the circuit court’s denial of its motion for summary judgment. The Supreme Court held that relief in prohibition was warranted because the record showed that State Auto defended and indemnified CMD throughout the lawsuit as required by the commercial general liability policy, and the terms of the policy provided no coverage to CMD for damage to its own property. View "State ex rel. State Auto Property Insurance Cos. v. Honorable James C. Stucky" on Justia Law

In this subrogation action filed by Educators Mutual Insurance Association (EMIA) against a tortfeasor in a personal injury case, the Supreme Court reversed the court of appeals’ dismissal for lack of standing. The court of appeals ruled that an insurer may file suit for subrogation only in the name of its insured, and not in its own name. The Supreme Court upheld EMIA’s standing to sue for subrogation in its own name under the terms of the insurance policy where the terms of the insurance policy at issue in this case expressly recognized EMIA’s authority “to pursue its own right of subrogation against a third party” without regard to whether the insured “is made whole by any recovery.” View "Wilson v. Educators Mutual Insurance Ass’n" on Justia Law

In this discretionary appeal, and in a matter of first impression, the Pennsylvania Supreme Court considered the elements of a bad faith insurance claim brought pursuant to Pennsylvania’s bad faith statute, 42 Pa.C.S. section 8371. In 1992, while working for the United States Postal Service (“USPS”) Appellee LeAnn Rancosky purchased a cancer insurance policy as a supplement to her primary employer-based health insurance. The cancer policy was issued by Appellant Conseco Health Insurance Company (“Conseco”). To pay for the policy, Rancosky’s employer automatically deducted bi-weekly payments of $22.00 from her paycheck. The policy contained a waiver-of premium provision, which excused premium payments in the event Rancosky became disabled due to cancer. In 2003, Rancosky was diagnosed with ovarian cancer and underwent surgery and chemotherapy. Though, Rancosky did not return to her job with USPS following her hospital admission, she remained on her employer’s payroll for several months because she had accrued unused vacation and sick days. Consequently, Conseco continued to receive payroll deducted premiums from Rancosky until June 24, 2003, when Rancosky went on disability retirement. Premium payments were made in arrears; the final premium payment extended coverage under her policy to May 24, 2003. Unbeknownst to Rancosky, her physician statement inaccurately specified her date of disability as beginning on April 21, 2003, rather than on February 4, 2003. 5 Believing that the premiums had been waived and that no further premiums were due on the policy because of her disability from cancer, Rancosky’s final premium payment came from her June 24, 2003, payroll-deducted premium. Over the next two years, as Rancosky experienced several recurrences of her cancer, she continued to submit claims to Conseco. Conseco eventually started denying Rancosky’s claims for further benefits based upon her failure to pay premiums. The Supreme Court adopted the two-part test articulated in Terletsky v. Prudential Property & Cas. Ins. Co., 649 A.2d 680 (Pa. Super. 1994) in order for a plaintiff to recover in a bad faith action; proof of an insurance company’s motive of self-interest or ill-will is not a prerequisite to prevailing in a bad faith claim under Section 8371, as was argued by Appellant. The Court affirmed the superior court, which partially vacated the trial court’s judgment and remanded for further proceedings on Appellee’s bad faith claim. View "Rancosky v. Washington National Ins. Co." on Justia Law

Defendant Arch Specialty Insurance Company (Arch) appealed multiple superior court orders granting summary judgment to defendants Triage Staffing, Inc. (Triage), Exeter Hospital, Inc. (Exeter), and American Healthcare Services Association (AHSA) on their petitions for declaratory judgment, and denying Arch’s cross-motion for summary judgment. The court ruled that Arch was required to defend and indemnify Triage, Exeter, and AHSA, pursuant to two insurance policies that Arch issued to Triage, for claims asserted against the defendants by patients of Exeter who contracted Hepatitis C (Exeter Patients). On appeal, Arch argued the trial court erred in finding inapplicable certain exclusions found in the insurance policies and in determining that the claims involved multiple occurrences under the policies. After review, the New Hampshire Supreme Court reversed the superior court’s grant of summary judgment in favor of Triage and Exeter regarding Arch’s duty to defend and indemnify them pursuant to the general liability coverage forms; the Court reversed the trial court’s grant of summary judgment in favor of Exeter regarding Arch’s duty to defend and indemnify it pursuant to the umbrella coverage forms; reversed in part and vacated in part the trial court’s grant of summary judgment in favor of Triage regarding Arch’s duty to defend and indemnify it pursuant to the umbrella coverage forms, and remanded all matters to the trial court for further proceedings. View "Massachusetts Bay Insurance Company v. American Healthcare Services Association" on Justia Law