Justia Civil Procedure Opinion Summaries

In this case, Christopher C. Brown, through his company Tattooed Millionaire Entertainment (TME), owned a Memphis music studio and insured both the studio and its equipment with Hanover American Insurance Company. John Falls, a musician, leased Studio B and its equipment from Brown and also obtained insurance from Hanover for the equipment and lost business income. In 2015, the studio was damaged by arson, and both Brown and Falls submitted insurance claims. Hanover discovered Brown had forged receipts for equipment purchases and sued to recover advance payments and for a declaratory judgment of no further liability. Brown, Falls, and another lessee counter-sued for breach of contract. After a jury trial in the United States District Court for the Western District of Tennessee, Falls was awarded $2.5 million for equipment loss and $250,000 for business income, while Brown was found to have committed insurance fraud.Hanover moved to set aside the verdict under Rule 50(b), which the district court granted. On appeal, the United States Court of Appeals for the Sixth Circuit reversed, holding Hanover had forfeited its Rule 50(b) motion by failing to make a Rule 50(a) motion as to Falls, and ordered reinstatement of the jury verdict. Subsequent proceedings included a federal interpleader action and a parallel state court action between Falls and TME. The district court enjoined the state action, but the Sixth Circuit reversed the injunction.In the present appeal, the United States Court of Appeals for the Sixth Circuit affirmed the district court’s allocation of the insurance payout, holding that Hanover was precluded by res judicata from challenging Falls’s recovery on grounds that could have been raised earlier. The court found the district court’s error in interpreting the wrong lease was harmless and upheld the allocation of funds based on the value of Falls’s leasehold interest. The court also held that Tennessee public policy barred Brown from recovering his allocated share due to his insurance fraud. The district court’s judgment was affirmed. View "Hanover American Insurance Co. v. Tattooed Millionaire Entertainment" on Justia Law

The case concerns an automobile accident that occurred in rural Tuscaloosa County, Alabama, on January 3, 2024. James Godwin, a resident of Dallas County and employee of Talton Communications, Inc., was driving a company vehicle when he was rear-ended by Desi Bernard Peoples, a resident of Fayette County. Godwin subsequently filed suit in the Dallas Circuit Court against Peoples, his employer Talton, and Penn National Security Insurance Company, which provided uninsured/underinsured motorist coverage. Godwin’s claims included negligence and wantonness, a claim for uninsured/underinsured motorist benefits, and a workers’ compensation claim against Talton. Godwin received all medical treatment for his injuries in Dallas County, where he and his wife reside and work.After the complaint was filed, Penn National moved to sever the workers’ compensation claim and to transfer the remaining claims to the Tuscaloosa Circuit Court, arguing that transfer was warranted for the convenience of the parties and witnesses and in the interest of justice under Alabama’s forum non conveniens statute, § 6-3-21.1. The Dallas Circuit Court denied the motion to sever but ordered the workers’ compensation claim to be tried separately. The court also denied the motion to transfer, finding insufficient evidence that Tuscaloosa County was a significantly more convenient forum or that Dallas County had only a weak connection to the case.The Supreme Court of Alabama reviewed Penn National’s petition for a writ of mandamus seeking to compel transfer. The Court denied the petition, holding that Penn National failed to meet its burden of showing that Tuscaloosa County was significantly more convenient or that Dallas County’s connection to the case was weak. The Court emphasized that the plaintiff’s choice of venue is entitled to deference when both venues are proper and that the evidence presented did not justify overriding that choice. View "Ex parte Penn National Security Insurance Company" on Justia Law

The plaintiff purchased a life insurance policy for her son and consistently paid the required premiums. She alleges that the insurer failed to provide the statutory notices and protections mandated by California law before terminating her policy for nonpayment. After missing a payment in 2016, her policy lapsed, and following reinstatement, it was terminated again in 2018 after another missed payment. The plaintiff contends that the insurer’s failure to comply with statutory notice requirements rendered the termination ineffective and that her experience was representative of many other policyholders in California.The United States District Court for the Eastern District of California granted in part the plaintiff’s motion for class certification. The court found that the prerequisites of Federal Rule of Civil Procedure 23(a) were met and certified a class under Rule 23(b)(2) for declaratory and injunctive relief. The certified class included all policy owners or beneficiaries whose policies lapsed for nonpayment without the required statutory notice. The court appointed the plaintiff as class representative but denied, without prejudice, certification for monetary relief under Rule 23(b)(3).The United States Court of Appeals for the Ninth Circuit reviewed the district court’s class-certification order. Relying on its intervening decision in Small v. Allianz Life Insurance Co. of North America, the Ninth Circuit held that to recover for violations of the relevant California statutes, plaintiffs must show not only a statutory violation but also that the violation caused them harm. The court found that the plaintiff was not an adequate class representative for beneficiaries and that her claims were not typical of class members who intentionally allowed their policies to lapse. The Ninth Circuit reversed the district court’s class-certification order and remanded the case for further proceedings. View "Farley v. Lincoln Benefit Life Co." on Justia Law

Two drivers, McGee and Hudgins, were involved in a road-rage incident that ended with McGee crashing into Green’s vehicle, causing her injuries. Green and her husband sued both drivers. Before filing suit, Green received $100,000 from McGee’s insurer in exchange for a covenant not to execute judgment against McGee. Green’s underinsured motorist (UIM) carrier, Progressive, defended the suit in McGee’s name. The jury found McGee 60% at fault and Hudgins 40% at fault, and determined both acted recklessly, willfully, and wantonly. The jury awarded Green $88,546.78 in actual damages and $35,000 in punitive damages against each defendant.The Circuit Court for Spartanburg County combined the actual and punitive damages for a total of $158,546.78, subtracted the $100,000 payment from McGee’s insurer, and allocated the remaining $58,546.78 between McGee and Hudgins based on their respective percentages of fault. On appeal, the South Carolina Court of Appeals altered the setoff calculation, allocating the $100,000 payment first to McGee’s share, then applying any remainder to Hudgins’ share, resulting in a net judgment of $58,546.78 against Hudgins and $0 against McGee.The Supreme Court of South Carolina reviewed the setoff calculation. It held that, because the jury found both defendants acted recklessly, willfully, and wantonly, joint and several liability applied to the actual damages, making the percentage allocation of fault irrelevant. The court further held that the $100,000 payment could only be set off against the actual damages, not the punitive damages, as punitive damages are not for the “same injury.” The court reversed the Court of Appeals, holding Green is entitled to a net judgment of $23,546.78 against McGee and $35,000 against Hudgins, and remanded for entry of judgment in those amounts. View "Green v. McGee" on Justia Law

Bernard Perez, an ophthalmologist, entered into a disability insurance contract with MONY Life Insurance Company in 1988. After being diagnosed with throat cancer in 2011, Perez began receiving monthly disability benefits. MONY later suspected Perez of dishonesty in his disability claims and financial information, leading to the discontinuation of payments in February 2018. MONY sued Perez for unjust enrichment, and Perez counterclaimed for breach of contract.The Middle District of Florida held a nine-day trial where evidence showed Perez's deceitful conduct, including misrepresenting his ownership in his medical practice and overstating his physical ailments. The jury found in favor of MONY on the unjust enrichment claim, awarding $388,000, and rejected Perez's breach of contract counterclaim.The United States Court of Appeals for the Eleventh Circuit reviewed the case. The court held that under Florida law, an unjust enrichment claim cannot proceed when an express contract covers the same subject matter. Therefore, the district court erred in allowing the unjust enrichment claim to go to the jury. The Eleventh Circuit set aside the jury's verdict on this claim and directed the district court to vacate the judgment awarding MONY $448,930.06.Regarding Perez's breach of contract counterclaim, the Eleventh Circuit found that the district court erred in failing to interpret the ambiguous term "acceptable proof of loss" in the insurance contract. However, this error was deemed harmless because the evidence overwhelmingly showed Perez's dishonesty in his proofs of loss. Thus, the jury's verdict against Perez on his breach of contract counterclaim was affirmed. The court also affirmed the district court's evidentiary rulings and denial of sanctions. View "MONY Life Insurance Co. v. Perez" on Justia Law

A property insurance dispute arose between a church in Albany, Georgia, and its insurer following storm damage in 2014. The church's property, which included asbestos tile roofs, was insured under an all-risks policy. After the storm, the insurer's adjuster estimated repair costs at $2,300, but the church's contractor estimated over $1.3 million for full roof replacement. The church sued for breach of contract and bad faith. In 2018, Hurricane Michael caused further damage, and the church filed a claim with a different insurer, obtaining a lower repair estimate. The original insurer argued that the church's failure to disclose this second claim constituted a material misrepresentation.The United States District Court for the Middle District of Georgia excluded evidence of the alleged misrepresentation, finding it irrelevant. The jury awarded the church $1.75 million in damages, and the insurer's motion for a new trial was denied. The insurer appealed, arguing that the exclusion of misrepresentation evidence was erroneous and that the damages award was speculative and contrary to the policy terms.The United States Court of Appeals for the Eleventh Circuit reviewed the case. It found that the insurer had waived its misrepresentation defense by not objecting during trial and by explicitly withdrawing the defense. The court also held that the jury's award, which included increased construction costs due to delays, was supported by sufficient evidence and did not constitute double recovery when combined with prejudgment interest. The court affirmed the district court's rulings and the jury's verdict. View "Central Baptist Church of Albany Georgia Inc v. Church Mutual Insurance Co." on Justia Law

Jason Rahimzadeh was injured while riding his bicycle and sought underinsured motorist (UIM) coverage from his employer's commercial automobile insurance policy with Ace American Insurance Company. Ace denied the claim, stating that Rahimzadeh did not qualify as an insured under the policy. Rahimzadeh then filed a lawsuit in Illinois state court, alleging breach of the insurance contract. Ace removed the case to the United States District Court for the Northern District of Illinois, which granted Ace's motion to dismiss for failure to state a claim.The district court found that the terms of the insurance policy were unambiguous and that Rahimzadeh did not meet the policy's requirement of "occupying" a covered vehicle to qualify as an insured. The court also rejected Rahimzadeh's argument that the occupancy requirement was unenforceable as contrary to public policy, distinguishing the case from Galarza v. Direct Auto Insurance Co., which involved a personal automobile insurance policy. The court relied on Stark v. Illinois Emcasco Insurance Co., which upheld occupancy requirements in commercial policies.The United States Court of Appeals for the Seventh Circuit reviewed the district court's decision de novo. The court affirmed the district court's judgment, holding that the occupancy requirement in the commercial automobile insurance policy was permissible and did not violate Illinois public policy. The court distinguished the case from Galarza, noting that the public policy concerns in personal insurance policies do not apply to commercial policies. Therefore, Rahimzadeh was not entitled to UIM coverage under his employer's policy. The court also declined to certify the question to the Supreme Court of Illinois, finding no genuine uncertainty about the state law issue. View "Rahimzadeh v. Ace American Insurance Co." on Justia Law

William Navarre purchased a house that had been damaged by two hurricanes in 2020. The previous owners, Bal and Rita Sareen, had received insurance payments from AIG Property Casualty Company but had not assigned their post-loss insurance rights to Navarre at the time of the sale. Navarre filed a lawsuit against AIG, claiming he had been assigned these rights as of the purchase date. However, the formal assignment document was not executed until January 2023, well after the lawsuit was filed and after the prescriptive period for the claims had expired.The United States District Court for the Western District of Louisiana granted summary judgment in favor of AIG, concluding that Navarre lacked standing to file the lawsuit because the assignment of rights had not been executed at the time he filed the suit. The court also noted that the prescriptive period for the claims had expired by the time the assignment was executed.The United States Court of Appeals for the Fifth Circuit reviewed the case and affirmed the district court's judgment. The appellate court agreed that the documents Navarre relied on (Addendum A and the Side Letter) did not constitute a present assignment of rights but rather contemplated a future assignment. Since the formal assignment was not executed until January 2023, Navarre did not have standing to sue when he filed the lawsuit in June 2022. Additionally, the court held that the prescriptive period for the claims had expired by the time the assignment was executed, and thus, Navarre could not retroactively cure the deficiency in his original petition. View "Navarre v. AIG Prop Cslty" on Justia Law

Best Inn Midwest, LLC (Best Inn) owned and operated a hotel in Indianapolis, Indiana, which faced numerous issues, including health code violations and criminal activity. In 2017, Best Inn purchased a commercial property insurance policy from Ohio Security Insurance Company (Ohio Security). The policy excluded coverage for vandalism if the building was vacant for sixty consecutive days or more. Best Inn filed a claim for vandalism to air conditioning units on the hotel’s roof, which Ohio Security denied, citing vacancy. Ohio Security requested information about the hotel's occupancy, which Best Inn failed to provide, leading Ohio Security to file a suit seeking a declaration that the policy did not cover the claim.The United States District Court for the Southern District of Indiana granted Ohio Security's motion for summary judgment on Best Inn's counterclaim for bad faith. The court found that Best Inn had failed to comply with discovery requests and court orders, leading to a sanction declaring the hotel vacant during the relevant period. This finding was based on Best Inn's repeated failure to provide requested documents and information, despite numerous attempts by Ohio Security to obtain them.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court's decision. The appellate court held that the district court did not abuse its discretion in imposing sanctions and declaring the hotel vacant. This declaration meant that the insurance policy did not cover the vandalism claim, and thus, Ohio Security was entitled to summary judgment on Best Inn's bad faith counterclaim. The appellate court concluded that the sanctions were appropriate and proportionate to Best Inn's conduct, and there were no remaining disputes as to any material fact. View "Ohio Security Insurance Company v Best Inn Midwest, LLC" on Justia Law

Nancy Stark, as the legal guardian and mother of Jill Finley, an incapacitated person, filed a lawsuit against Reliance Standard Life Insurance Company. Finley, who suffered a hypoxic brain injury in 2007, was initially approved for long-term disability benefits by Reliance. However, in 2022, Reliance terminated her benefits, claiming recent testing did not support her total disability. Stark appealed, and Reliance reinstated the benefits in 2023. Stark then sued, seeking a surcharge for financial harm caused by the wrongful termination, claiming breach of fiduciary duty for not providing internal records, and contesting the deduction of social security payments from Finley's disability payments.The United States District Court for the Western District of Oklahoma granted Reliance's motion to dismiss under Rule 12(b)(6) for failure to state a claim. The court found that Stark did not plausibly allege a claim for equitable relief under ERISA, nor did she demonstrate that Reliance's actions violated the terms of the insurance policy or breached fiduciary duties.The United States Court of Appeals for the Tenth Circuit reviewed the case. The court affirmed the district court's dismissal, holding that Stark was not entitled to attorney’s fees incurred during the administrative appeal under ERISA’s § 1132(a)(3) or § 1132(g). The court also found that Stark's claims regarding the SSD offset were time-barred and waived due to failure to exhaust administrative remedies. Additionally, the court concluded that Stark did not allege any concrete harm resulting from Reliance's alleged failure to provide requested records during the administrative appeal. Consequently, the Tenth Circuit affirmed the district court's decision to dismiss all of Stark's claims. View "Stark v. Reliance Standard Life Insurance Company" on Justia Law