Justia Civil Procedure Opinion Summaries

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

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

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

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

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

In the case before the Supreme Court of the State of Hawai‘i, the issue was whether a subrogee insurance company, which timely intervened pursuant to HRS § 386-8(b), has an independent right to continue to pursue claims and/or legal theories against a tortfeasor that were not asserted by the subrogor employee, after summary judgment has been granted against the subrogor employee, on the subrogor employee’s claims. This case involved Hyun Ju Park, a bartender who was shot by an off-duty Honolulu Police Department officer while at work. Park sued the City and County of Honolulu, alleging negligence and other claims. Dongbu Insurance Co., Ltd., the workers' compensation insurance carrier for Park's employer, intervened in the case, alleging additional negligence claims that Park had not raised. The City moved to dismiss all of Park’s claims and some of Dongbu's claims, which the court granted, leaving two of Dongbu's claims - negligent supervision and negligent training - remaining. The City then moved for summary judgment against Dongbu, arguing that since Park's claims were dismissed, Dongbu's claims also failed.The Supreme Court of Hawai‘i held that a subrogee insurance company, which timely intervened, does have an independent right to continue to pursue claims and/or legal theories against a tortfeasor that were not asserted by the subrogor employee, even after summary judgment has been granted against the subrogor. The court reasoned that an affirmative answer protects subrogation, aligns with Hawai‘i’s workers’ compensation subrogation law, and does not undermine employers’ and insurers’ intervention rights. The court also rejected the City's claim preclusion argument, stating that Dongbu's remaining claims for negligent supervision and negligent training had not yet been decided and were not barred by res judicata. Therefore, Dongbu may continue to pursue its non-dismissed claims. View "Park v. City and County of Honolulu" on Justia Law

The case in question arose from a multi-million-dollar loss suffered by Westlake Chemical Corporation and Axiall Corporation (the respondents) at their chlorine manufacturing plant in Natrium, West Virginia. The loss occurred when 90 tons of liquid chlorine leaked from a rupture in a railroad tanker car that had been recently repaired by third-party contractors. The liquid chlorine vaporized into a cloud or plume that caused corrosion damage to the equipment at the plant. The respondents claimed the damage costs from their insurance companies (the petitioners). However, the insurance companies denied coverage based on three exclusions in the insurance policies relating to corrosion, faulty workmanship, and contamination. The case reached the Supreme Court of Appeals of West Virginia, which was asked to review three orders of the Circuit Court of Marshall County, West Virginia, Business Court Division. The lower court had granted partial summary judgment to the respondents, finding that none of the three exclusions barred the respondents’ coverage claims. The Supreme Court of Appeals of West Virginia concluded that the lower court's orders were not final orders subject to appeal at this stage of the proceedings. This was due to unresolved issues of causation and damages, and because the orders did not conclusively determine the disputed controversy, resolve an important issue completely separate from the merits of the action, or were effectively unreviewable on appeal from a final judgment. Therefore, the court dismissed the appeal, without prejudice. View "NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. v. WESTLAKE CHEMICAL CORPORATION" on Justia Law

The case involves Susan Harriman and Associated Industries Insurance Company. Harriman was an investment advisor who was sued for defamation by Palmaz Scientific after she shared damaging information about the company with her clients. Harriman sought coverage from Associated, with which her employer had an insurance policy, for her defense against the defamation allegations. Associated, however, denied coverage, arguing that the policy only covered wrongful acts committed in the rendering or failure to render professional services on behalf of the company. The United States Court of Appeals for the Fourth Circuit affirmed the lower court's summary judgment in favor of Associated. The court held that Associated was never obligated to defend Harriman because the claims triggered both its policy and a separate policy Harriman had with Travelers Insurance Company, making Travelers the primary coverage provider. The court also held that Harriman failed to present evidence that would allow a factfinder to conclude that Associated lacked a reasonable basis for its coverage decision, thereby dismissing her bad faith claim. View "Harriman v. Associated Industries Insurance Company, Inc." on Justia Law

In this case, the South Carolina Supreme Court was asked to decide whether the requirement for a witness affidavit under subsection 38-77-170(2) of the South Carolina Code should be considered a condition precedent to filing a "John Doe" civil action. The case arose from a car accident where the plaintiff, Peter Rice, filed a lawsuit against an unidentified driver, referred to as "John Doe." Rice alleged that Doe's vehicle crossed into his friend's lane, causing his friend to swerve and hit a tree. Under South Carolina law, it's possible to recover damages under an uninsured motorist policy for accidents caused by unidentified drivers. However, the law requires that the accident must have been witnessed by someone other than the owner or operator of the insured vehicle and that the witness must sign an affidavit attesting to the truth of the facts of the accident. Doe moved to dismiss the case on the grounds that Rice had failed to comply with the requirement for a witness affidavit at the time of filing his complaint. The lower court initially denied Doe's motion, but later another judge ruled that the affidavit was a condition precedent to the right to bring an action and dismissed the case. The court of appeals reversed this decision, finding that the second judge did not have the authority to overrule the first judge's decision. On review, the South Carolina Supreme Court held that compliance with the witness affidavit requirement is not a condition precedent to filing a "John Doe" civil action. Rather, the court found that the witness affidavit may be produced after the commencement of the lawsuit. However, the court noted that the affidavit should be produced promptly upon request and if it is not, the action could be dismissed pursuant to Rule 56(c) of the South Carolina Rules of Civil Procedure. The Supreme Court therefore affirmed the decision of the court of appeals, albeit on different grounds, and remanded the case for trial. View "Rice v. Doe" on Justia Law

In this case, the plaintiff, William Loomis, a truck driver who was injured in a car accident in New York, sought recovery from his employer's insurance company, ACE American Insurance Company, for his remaining damages after the underinsured driver's insurer paid out their policy limit. Loomis claimed that ACE failed to comply with both New York and Indiana laws requiring an insurer to provide underinsured motorist coverage.The United States Court of Appeals for the Second Circuit had to determine whether New York's laws requiring insurers to offer optional supplemental uninsured/underinsured motorist coverage could make an insurer liable when it fails to offer this coverage, and whether Indiana law requires an insurer to provide underinsured motorist coverage when the insured suffers damages in excess of the tortfeasor’s policy limit and has no other underinsured motorist coverage to cover damages up to a certain limit.The court concluded that under New York law, Loomis was not entitled to relief. While insurers are required to offer supplemental uninsured/underinsured motorist coverage in New York, this coverage is optional. Even if ACE violated New York law by failing to offer this coverage, Loomis's claim seeking to reform the insurance contract to include this coverage was not supported by New York law. Therefore, the court affirmed the lower court's grant of summary judgment on this claim.In terms of the claim under Indiana law, the court could not confidently predict how the Indiana Supreme Court would interpret the relevant statute, and therefore, certified questions to the Indiana Supreme Court. View "Loomis v. ACE American Insurance Company" on Justia Law