Justia Civil Procedure Opinion Summaries

Articles Posted in Insurance Law
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The Supreme Court of the State of Montana affirmed a lower court decision that granted Dr. Gregory S. Tierney's motion to dismiss a medical malpractice lawsuit filed by Janice M. Dodds for insufficient service of process. Dodds initially filed the suit against Dr. Tierney and Benefis Health System in 2013, alleging medical malpractice related to a knee replacement surgery. She failed to serve the defendants in time. Dr. Tierney later filed for bankruptcy, which invoked an automatic stay, halting the lawsuit. After his bankruptcy discharge, Dodds attempted to serve Dr. Tierney but failed to do so within the required 30-day timeframe following the discharge.Dodds further sought to join Dr. Tierney's malpractice insurance company as the real party in interest, but the court denied the motion. Upon review, the Supreme Court found that Dodds had not proven Dr. Tierney's liability, thus the insurer had no duty to indemnify him. The court also rejected Dodds' argument that Dr. Tierney lacked standing after his Chapter 7 discharge. The court held that Dr. Tierney maintained a personal stake in demonstrating he was not liable for medical malpractice and that his insurer would only have a duty to indemnify him once Dodds proved her malpractice claims. View "Dodds v. Tierney" on Justia Law

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The Supreme Court of the State of Colorado has ruled that the notice-prejudice rule applies to occurrence-based, first-party homeowners’ property insurance policies. This rule allows insurance companies to deny coverage based on late notice of a claim only if they can prove they were prejudiced by the delay. The court reached this conclusion after exploring the differences between occurrence policies and claims-made policies, asserting that applying the rule to the former was consistent with precedent. The court's decision was based on three policy considerations: the adhesive nature of insurance contracts, the public policy of compensating victims, and the unfairness of granting the insurer a windfall due to a technicality. This case involved two homeowners, Karyn Gregory and Lisa and Sylvan Runkel, who had filed claims for hail damage to their homes. The insurance companies denied their claims on the grounds that they were filed too late. The court reversed the judgments of the lower courts and remanded the cases for further proceedings, with instructions to allow the insurers an opportunity to establish prejudice from the late notice. View "Gregory v. Safeco Insurance Company of America" on Justia Law

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Margrit Meier, owner of a restaurant called Hartland Inn, filed a coverage request with Wadena Insurance Company after a fire destroyed her business. The policy entitled her to the "actual cash value" of the property at the time of the fire, but the parties disagreed on how to calculate this. Wadena initially paid Meier $775,000, using a method called the "Broad Evidence Rule" to calculate actual cash value. Dissatisfied, Meier hired a third-party adjuster, who estimated a higher value. Wadena then increased its estimate and paid an additional $60,135.79. Still unsatisfied, Meier invoked the policy’s panel appraisal option.The appraisal process was completed, and the umpire arrived at an independent estimate of the building’s actual cash value. However, Meier filed a second lawsuit, alleging breach of contract and bad faith, and sought to set aside the appraisal award as invalid under state law. The district court dismissed the action, observing that Wadena complied with the alternative dispute resolution process and paid out the binding award.The United States Court of Appeals For the Seventh Circuit affirmed the district court's decision, stating there was no breach of contract or bad faith on Wadena's part. The court upheld that the Broad Evidence Rule was correctly applied to calculate the actual cash value of the property. The court also affirmed the district court’s denial of Wadena’s motion for sanctions under Federal Rule of Civil Procedure 11. View "Meier v. Wadena Insurance Company" on Justia Law

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In the case before the United States Court of Appeals for the Sixth Circuit, State Farm Mutual Automobile Insurance Company ("State Farm") brought a lawsuit against Michael Angelo, alleging violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). The lawsuit claimed that Angelo submitted fraudulent bills to the insurance company. Angelo later filed a separate action against State Farm under the False Claims Act ("FCA"), alleging that the insurance company wrongfully avoided paying medical benefits. This action was unknown to State Farm at the time because FCA complaints are required to be filed under seal.The two parties entered into a settlement agreement in February 2021, resolving the RICO action. As part of the agreement, Angelo agreed to take all necessary steps to dismiss certain claims against State Farm. After the settlement agreement was signed, the FCA complaint was unsealed and served on State Farm. State Farm then sought to enforce the settlement agreement, arguing that it required Angelo to dismiss the FCA action as well.Angelo argued that the settlement agreement did not apply to the FCA action because the FCA claims were unrelated to the settled RICO claims. However, the district court disagreed and ordered Angelo to seek the government's consent to dismiss his FCA claims against State Farm. Angelo appealed this decision, claiming it violated his First Amendment rights and the FCA.The Court of Appeals affirmed the district court's decision, stating that the settlement agreement clearly encompassed the FCA action. The court also held that the district court had not erred in requiring Angelo to seek the government's consent to dismiss his FCA claims. Angelo's First Amendment claim was deemed forfeited as it was raised for the first time in a motion for reconsideration and was thus untimely. View "State Farm Mutual Automobile Insurance Co. v. Angelo" on Justia Law

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The case involved an appellant, Jonathan Martins, who filed a lawsuit against Vermont Mutual Insurance Company. Martins' vehicle was involved in an accident with a vehicle insured by Vermont Mutual. He claimed that the insurance company failed to compensate him for the inherent diminished value (IDV) of his vehicle after the accident. The case was first heard in a district court that ruled in favor of Vermont Mutual, stating the standard Massachusetts automobile insurance policy did not provide coverage for IDV damages. Martins appealed this decision to the United States Court of Appeals for the First Circuit.The Court of Appeals reviewed the district court's decision and maintained that the district court correctly ruled in favor of Vermont Mutual. The court held that under Massachusetts law, a third-party claimant such as Martins could not maintain a direct cause of action against an insurer without first obtaining a final judgment against the insured party involved in the accident. The court also rejected Martins' argument that Vermont Mutual was estopped from denying liability for IDV damages because it had paid for other damages related to the accident. The court concluded that the insurer's obligation to make a reasonable settlement offer did not equate to admitting liability. Therefore, the court affirmed the district court's ruling in favor of Vermont Mutual. View "Martins v. Vermont Mutual Insurance Company" on Justia Law

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In a case before the United States Court of Appeals for the First Circuit, an insurance company, Berkley National Insurance Company, sued two of its insureds, Granite Telecommunications, LLC and Atlantic-Newport Realty LLC, seeking restitution for both the payment it had made to settle a personal-injury lawsuit against the insureds and the costs it had incurred to defend them against that suit. The insurer, Berkley, also sought a declaratory judgement that it had no duty to defend or indemnify the insureds with respect to the personal-injury claims that they were facing. The District Court granted partial summary judgment in favor of Berkley, ordering the insureds to pay restitution for both the insurer's defense costs and its settlement payment. The insureds appealed the judgment.The Court of Appeals reversed the District Court's order, concluding that the rulings conflicted with Massachusetts law governing when a liability insurer who has chosen to defend its insureds may seek reimbursement from them. The Court stated that under Massachusetts law, a liability insurer can only seek reimbursement for an amount paid to settle a lawsuit if the insured has agreed that the insurer may commit its own funds to a reasonable settlement with a right to seek reimbursement, or if the insurer secures specific authority to reach a particular settlement which the insured agrees to pay. The Court found that the insurer, Berkley, did not meet any of these conditions, and as a result, it could not seek reimbursement from the insureds. Consequently, the Court vacated the grant of summary judgment to the insurer and dismissed the remainder of the appeal as moot. View "Berkley National Ins. Co. v. Atlantic-Newport Realty LLC" on Justia Law

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In this case, the Court of Appeal, Fourth Appellate District Division One State of California decided on a matter concerning an automobile insurance policy. The plaintiffs, Silvia Escarcega and Alberto Molinar, who are the parents of Tania Molinar, filed a lawsuit against 21st Century Insurance Company (defendant) for refusal to defend or indemnify their daughter in a lawsuit brought against her following a car accident she caused. The insurer denied coverage on the grounds that the policy had been cancelled due to nonpayment of premiums prior to the accident. The plaintiffs argued that the insurer had a duty to give advance notice of cancellation not only to them as policyholders but also to their adult daughter who was named as an insured driver on their policy and whose vehicle was also insured under the policy.The court held that under Insurance Code section 662, subdivision (a), the insurer was required to give advance notice of cancellation to the adult daughter. Because the insurer did not give notice to the adult daughter, the policy was still legally in effect when she got into the accident driving her covered vehicle without knowledge of the purported cancellation. Therefore, the court reversed the trial court's summary judgment in favor of the insurer on claims arising out of its refusal to defend or indemnify the daughter. The court remanded the case for further proceedings. View "Molinar v. 21st Century Insurance Co." on Justia Law

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In this case, a South Carolina court-appointed receiver brought an action against Travelers Casualty and Surety Company and other insurers, alleging breaches of insurance policies issued to a defunct company within a state receivership. Travelers removed the action to federal court, asserting diversity jurisdiction. However, the district court granted the receiver’s motion to remand the case back to state court. The court held that it lacked subject-matter jurisdiction because the case involved property of a state receivership exclusively under the jurisdiction of the state court (based on the doctrine articulated in Barton v. Barbour), and the removal lacked unanimous consent of all defendants due to a forum selection clause in some of the insurance policies issued to the defunct company.Upon appeal, the United States Court of Appeals for the Fourth Circuit dismissed the appeal, holding that the district court's conclusions in support of remand were at least colorably supported. The court found that the district court's reliance on a lack of subject-matter jurisdiction and procedural defect as grounds for remand were colorably supported, and thus, not reviewable under 28 U.S.C. § 1447(d). The court also concluded that it lacked jurisdiction to review the district court's remand order and dismissed the appeal. View "Protopapas v. Travelers Casualty and Surety Co." on Justia Law

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The United States Court of Appeals for the Ninth Circuit upheld a district court's default judgment entered against defendants Akop and Anahit Arutyunyan. The defendants were accused by Transamerica Life Insurance Company of engaging in insurance fraud. The district court found that the defendants persistently failed to obey court orders related to discovery and entered a default judgment against them. In the course of the legal proceedings, the court applied escalating sanctions against the defendants for their repeated non-compliance with court orders, eventually leading to the entry of a default judgment. The defendants contested this decision, but the Ninth Circuit Court found that their appeal was frivolous. The court held that the district court had not abused its discretion in entering a default judgment as a sanction for the defendants' violations of court orders. The Ninth Circuit also ordered the defendants and their counsel to show cause why sanctions should not be imposed under various provisions given the frivolous nature of the appeal and multiple misstatements made by counsel during oral argument. View "TRANSAMERICA LIFE INSURANCE CO V. ARUTYUNYAN" on Justia Law

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In the case of Brett Lane v. the State of Alaska, Department of Family & Community Services, Office of Children’s Services, the Supreme Court of the State of Alaska affirmed the lower court's decision denying the Office of Children's Services's (OCS) post-trial motion for a new trial on liability. The court concluded that the weight of the evidence supported the jury's verdict on Lane's theories of retaliation. However, the court found an error in the jury instruction relating to noneconomic damages caused by a dangerous client, Wilson. As a result, the court vacated the damages judgment and remanded for a new trial solely on noneconomic damages. The court also remanded the matter back to the lower court for an evidentiary hearing on OCS's claim that the jury award duplicated workers’ compensation benefits that Lane received. The court held that OCS should be given the opportunity to prove that the jury award created an impermissible duplication of damages. View "State of Alaska v. Lane" on Justia Law