Justia Civil Procedure Opinion Summaries

Current and former policyholders filed a class action lawsuit in Illinois against Country Mutual and 46 of its current and former officers and directors. Every member of the proposed class is an Illinois citizen under the Class Action Fairness Act, CAFA, 28 U.S.C. 1332(d)(2), as are Country Mutual and 45 of the individuals. The 46th defendant, Bateman, is a citizen of Massachusetts. The plaintiffs alleged that the firm accumulated and retained excess surplus of over $3.5 billion from premium revenues exceeding the cost of claims and thereby failed to supply those policies at cost. They claimed breach of contract, violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, unjust enrichment, and breach of fiduciary duty.Based on putative class size, the amount in controversy, and the minimal diversity created by Bateman, Country Mutual removed this case to federal district court, 28 U.S.C. 1332(d); 1453(b). The Seventh Circuit remanded to state court. Under CAFA’s internal affairs exception, each claim sounds in allegations of corporate mismanagement that cannot be adjudicated without immersion into the boundaries of the discretion afforded by Illinois law to officers and directors of a mutual insurance company to set capital levels and make related decisions about surplus distributions to policyholder members. The case is also within CAFA’s home-state controversy exception, 28 U.S.C. 1332(d)(4)(B), as Bateman, who creates minimal diversity, is not a “primary defendant.” View "Sudholt v. Country Mutual Insurance Co." on Justia Law

In this case, the parties consented to have their commercial dispute tried before a United States magistrate judge. But, allegedly unbeknownst to Defendant, the judge was longtime family friends with the lead trial lawyer for the plaintiff. Specifically, the lawyer had been a groomsman in the judge’s own wedding, and the judge officiated the wedding of the lawyer’s daughter three months before this lawsuit was filed. None of this information was disclosed to Defendant. After a twenty-day bench trial, the magistrate judge rendered judgment for the Plaintiff, awarding $124.5 million, including over $100 million in trebled damages. After the issuance of the judgment and award, Defendant learned about the undisclosed longstanding friendship and sought to have the magistrate-judge referral vacated. The district judge denied the request and denied discovery on the issue. Defendant appealed.   The Fifth Circuit vacated. The court concluded that the facts asserted here, if true, raise serious doubts about the validity of Defendant’s constitutionally essential consent to have its case tried by this magistrate judge. Further, the court explained remand was necessary because the facts were not sufficiently developed for the court to decide whether Defendant’s consent was validly given or whether vacatur of the referral was otherwise warranted. Accordingly, the court remanded for an evidentiary inquiry. View "I F G Port Hold v. Lake Charles Harbor" on Justia Law

After suffering personal injuries and property damage in a multi-car collision with an underinsured motorist, Kelly Lynn Christmann filed suit against her insurer, State Farm Mutual Automobile Insurance Company (“State Farm”). Christmann was seeking to obtain the underinsured motorist benefits provided under her contract of insurance, which she claimed State Farm failed to pay in an amount justly due under her policy. She also alleged that certain terms of her insurance agreement violate public policy. State Farm argued that Christmann waived her rights to additional benefits by failing to comply with the contractual obligations of her insurance policy, thereby prejudicing State Farm’s right to subrogation against the underinsured motorist. The district court awarded summary judgment to State Farm in determining it had been prejudiced by Christmann’s conduct and that the terms of the insurance policy were valid. The court also denied Christmann’s motion for reconsideration and her Rule 60(b) motion for relief. Christmann appealed. Because the record showed State Farm fully settled its claims against the underinsured motorist and waived its subrogation rights, the Idaho Supreme Court concluded it suffered no actual prejudice from Christmann’s actions. Accordingly, the judgment was reversed. View "Christmann v. State Farm Mutual Automobile Insurance Co." on Justia Law

After Plaintiff’s home sustained water damage in a hailstorm, he asked his insurer Allstate to cover the loss; consequently, Steamatic was hired to perform water abatement and mold remediation services. Plaintiff claimed that the mold was not remediated properly and that he developed a severe and permanent lung condition as a result. New Mexico does not permit a civil plaintiff to recover duplicate compensatory damages for the same injuries. The collateral source rule presents an exception to the prohibition of double recovery, permitting a plaintiff to recover the same damages from both a defendant and a collateral source. The New Mexico Supreme Court has held that the payor of the prejudgment settlement of a claim qualifies as a collateral source and that the payment does not reduce the same damages the plaintiff may recover from an adjudicated wrongdoer. The issue this case presented for review centered on whether a payment in postjudgment settlement of a claim by an adjudicated wrongdoer qualified as a collateral source. The Court clarified that the collateral source rule had no application to a postjudgment payment made by an adjudicated wrongdoer. Here, the Court held that the payment, which Plaintiff received in a postjudgment settlement with Allstate satisfied a portion of Plaintiff’s damages and extinguished Plaintiff’s right to recover the same damages from Steamatic. The Court explained that the share of damages fully satisfied by Allstate must offset the damages Plaintiff may recover from Steamatic. View "Gonzagowski v. Steamatic of Albuquerque" on Justia Law

In a previous action between these parties, the Delaware Supreme Court addressed whether the exclusive-remedies provision in the workers’ compensation act precluded an injured employee from pursuing recovery from an uninsured motorist policy. After the Court held that the exclusive-remedies provision did not apply, the employer and its workers’ compensation carrier sought a declaratory judgment that they were permitted to assert a lien against any recovery the employee might obtain for injuries already compensated under the workers’ compensation act. The employee and the uninsured motorist insurer contended that any such lien was barred by statute, relying on the Court’s decision in Simendinger v. National Union Fire Insurance Co., 74 A.3d 609 (Del. 2013). The superior court followed that binding precedent as it was required to do and dismissed the declaratory judgment claim. After review however, the Delaware Supreme Court concluded Simendinger was decided in error. The Court therefore reversed the superior court’s decision and held that the workers’ compensation act expressly allowed the employer and its workers’ compensation carrier to assert a subrogation lien against benefits paid to the employee under the employer’s uninsured motorist policy. View "Horizon Services, Inc. v. Henry" on Justia Law

Defendant Alex Herrgott, was driving a four-seat Polaris all-terrain vehicle at night down a gravel road when he “overcorrected” trying to avoid a pothole. The ATV overturned, and Joseph MacNabb, a passenger, was severely injured. Since MacNabb was a state employee in the course and scope of his employment, he received workers’ compensation benefits from the Mississippi State Agencies Self-Insured Workers’ Compensation Trust. The Trust later initiated this litigation in an attempt to recover more than $300,000 in benefits paid for MacNabb’s injury. The circuit court ultimately granted summary judgment to Herrgott because the Trust’s Mississippi Rule of Civil Procedure 30(b)(6) representative could not articulate a legal theory entitling it to recover. The Mississippi Supreme Court found there was sufficient evidence of Herrgott’s negligence for the case to go to trial, and the deposition testimony of a lay witness should not have bound the Trust as to which legal theories it could pursue. The Supreme Court therefore reversed the summary judgment and remanded the case for trial. View "Mississippi State Agencies Self-Insured Workers' Compensation Trust v. Herrgott" on Justia Law

Husband Steven McAnulty was married twice: once to Plaintiff Elizabeth McAnulty, and once to Defendant Melanie McAnulty. Husband's first marriage ended in divorce; the second ended with his death. Husband’s only life-insurance policy (the Policy) named Defendant as the beneficiary. But the Missouri divorce decree between Plaintiff and Husband required Husband to procure and maintain a $100,000 life-insurance policy with Plaintiff listed as sole beneficiary until his maintenance obligation to her was lawfully terminated (which never happened). Plaintiff sued Defendant and the issuer of the Policy, Standard Insurance Company (Standard), claiming unjust enrichment and seeking the imposition on her behalf of a constructive trust on $100,000 of the insurance proceeds. The district court dismissed the complaint for failure to state a claim. Plaintiff appealed. By stipulation of the parties, Standard was dismissed with respect to this appeal. The only question to be resolved was whether Plaintiff stated a claim. Resolving that issue required the Tenth Circuit Court of Appeals to predict whether the Colorado Supreme Court would endorse Illustration 26 in Comment g to § 48 of the Restatement (Third) of Restitution and Unjust Enrichment (Am. L. Inst. 2011) (the Restatement (Third)), which would recognize a cause of action in essentially the same circumstances. Because the Tenth Circuit predicted the Colorado Supreme Court would endorse Illustration 26, the Court held Plaintiff has stated a claim of unjust enrichment, and accordingly reversed the previous dismissal of her case. View "McAnulty v. McAnulty, et al." on Justia Law

M.P.N. manufactures radiators in Philadelphia. Mercer worked at M.P.N. from 2015-2017. In 2019, Mercer sued., alleging that M.P.N. concealed blood test results showing that he had dangerously high levels of zinc and lead after he was exposed to lead and cadmium on the job. A physician advised M.P.N. to remove Mercer from work but M.P.N. ignored the advice. As a result, Mercer continued working at M.P.N. and suffered permanent, avoidable brain damage. The Pennsylvania Workers’ Compensation Act is the “exclusive” source of employer liability for suits relating to workplace injuries suffered by employees. Mercer argued that he could recover from M.P.N. under a “fraudulent misrepresentation” exception recognized by the Pennsylvania Supreme Court.Zenith Insurance sought a declaration that it was not contractually obligated to defend M.P.N., against a workplace liability lawsuit. In a partial summary judgment, the district court declared that Zenith has a duty to defend M.P.N. The Third Circuit dismissed an appeal. Because the district court did not rule on all of the claims before it, that order is not final and cannot be appealed under the usual source of jurisdiction, 28 U.S.C. 1291. Zenith argued the court could consider its challenge under 28 U.S.C. 1292(a)(1), which permits appeals from non-final orders that relate to injunctive relief but the Third Circuit rule is that purely declaratory orders are not injunctive and cannot be enforced by contempt. View "Zenith Insurance Co. v. Newell" on Justia Law

Plaintiff and appellant Rhonda S. is the conservator, appointed pursuant to section 5350 of the Lanterman-Petris Short Act (LPS), of her adult son David S. Plaintiff sued Defendants and respondents Kaiser Foundation Health Plan, Inc. and Kaiser Foundation Hospitals for a declaration of their obligations, under LPS and the terms of David’s health plan, to transport and accept for “assessment and evaluation” (each as defined in LPS) conservatees like David upon their conservators’ demand. The trial court sustained Kaiser’s demurrer.
The Second Appellate District affirmed. The court explained that it rejects Plaintiff’s implication that an LPS conservatee is per se suffering from an “Emergency Medical Condition” at all times following the judicial determination of grave disability. The purposes of LPS conservatorship include providing treatment to the conservatee. (Section 5350.1.) To assume a conservatee’s condition remains static following the conservatorship order is to assume treatment is always ineffectual. We are offered no basis for such an assumption. For a mental health condition to be an “Emergency Medical Condition” under the plan, “acute symptoms of sufficient severity” must result in an “immediate” specified danger or mental health disorder-induced disability. Second, even if conservatees were in a state of perpetual “Emergency Medical Condition” within the meaning of the plan, Plaintiff’s requested declaration would eliminate the coverage requirement that a “reasonable person would have believed that the medical condition was an Emergency Medical Condition which required ambulance services.” View "Rhonda S. v. Kaiser Foundation Health Plan" on Justia Law

Allstate Insurance Company and several of its affiliates (collectively, Allstate) brought qui tam actions on behalf of the State of California alleging insurance fraud under the California Insurance Frauds Prevention Act (IFPA) (and the Unfair Competition Law (UCL) against three medical corporations, a medical management company and its parent company, four physicians, and Sattar Mir, an individual. The trial court found the complaints failed to state causes of action under the IFPA and the UCL because they were not pled with requisite specificity, the business models alleged were lawful, and one of the actions was time-barred.   The Second Appellate District reversed the orders sustaining the demurrers and judgments of dismissal. The court explained that the trial court found the complaints failed to state causes of action under the IFPA and the UCL because they were not pled with requisite specificity, the business models alleged were lawful, and one of the actions was time-barred. The court concluded that the operative complaints adequately plead causes of action under both statutes. View "P. ex rel. Allstate Ins. Co. v. Discovery Radiology etc." on Justia Law