Justia U.S. 8th Circuit Court of Appeals Opinion Summaries

After Federal issued a Financial Institution Bond to COR, COR paid $2,080,000 to settle claims by investors that a former COR registered representative had conspired with others to defraud investors by carrying out a "pump-and-dump" scheme in a risky penny-stock called VGTel. COR then filed a claim with its liability insurer for VGTel and other settlement payments, which it later settled for $3,625,000 above the policy's deductible. COR also filed a claim under Federal's Bond to recover its losses for the VGTel settlements. Federal denied coverage and filed a declaratory judgment action.The Eighth Circuit agreed with the district court that Auto Lenders Acceptance Corp. v. Gentilini Ford, Inc., 854 A.2d 378 (N.J. 2004), stands for the proposition that, under New Jersey law, COR's payments to settle third-party liability claims based on an employee's dishonest acts directed at the third parties were not a direct loss under Insuring Clause 1.B of the Bond. Furthermore, the district court did not err in dismissing COR's Clause 1.D counterclaim because COR failed to show that admissible evidence would be available at trial to prove that the employee personally committed a covered dishonest act. Accordingly, the court affirmed the district court's judgment. View "Federal Insurance Co. v. Axos Clearing LLC" on Justia Law

The Eighth Circuit affirmed the district court's grant of summary judgment in favor of Meridian in an action brought by Meridian seeking a declaration that it has no obligation to provide underinsured motorist (UIM) benefits to either Lois Schmitt-Selken or the Estate of Donald Selken for injuries or damages arising out of a motor vehicle accident occurring while Lois was a passenger in husband Donald Selken's car.The court held that, under the unambiguous policy language, the "owned-but-not-insured" exclusion in the Meridian policy bars Lois's claim for UIM benefits for the accident occurring while she was a passenger in her husband's vehicle. In this case, Lois's argument that the definition of "you" requires joint ownership of a vehicle before the exclusion applies is neither a reasonable interpretation of the policy language, nor consistent with the purpose of an "owned-but-not-insured" exclusion. View "Meridian Security Insurance Co. v. Schmitt-Selken" on Justia Law

After Primerica filed an interpleader action under Federal Rule of Civil Procedure 22 in order to resolve competing claims to Garvin Reid's life insurance proceeds, the district court awarded summary judgment and the insurance proceeds to Ila Reid, Garvin's widow. However, the district court granted summary judgment in favor of Primerica on Ila's counterclaim against Primerica for breach of contract stemming from the disputed life insurance policy.The Eighth Circuit held that there is a legitimate dispute over the question of fault in creating the competing claims to Garvin's life insurance proceeds, and circuit precedent has not previously required a fault determination in the interpleader context. In this case, there is an active dispute on appeal regarding whether the competing claims to Garvin's insurance proceeds arose because of Primerica's failure to process the 2002 Multipurpose Change Form or because of Garvin's failure to respond when Primerica sought more information in 2002. Accordingly, the court remanded for a fault determination by the district court and further proceedings. View "Primerica Life Insurance Co. v. Reid" on Justia Law

The Eighth Circuit affirmed the district court's grant of Kinsale's motion to dismiss actions brought by TMI for breach of an indemnity policy. TMI bought a liability insurance policy from Kinsale and the policy excluded a "pollution incident" unless properly reported by TMI. The court held that TMI cannot invoke waiver and estoppel because timely notice "modifies coverage" to include pollution incidents. In this case, TMI learned that an employee suffered injury from a pollution incident, but TMI did not timely report the incident per the plain language of the contract. View "Topp's Mechanical, Inc. v. Kinsale Insurance Co." on Justia Law

LM filed suit against Newt Marine for breach of contract, alleging that Newt Marine wrongfully refused to pay premiums owed under three separate workers' compensation insurance policies.The Eighth Circuit affirmed the district court's grant of Newt Marine's motion for summary judgment, because the premiums LM sought from Newt Marine were not merited by the terms of the policies. Therefore, the court held that Newt Marine did not breach its obligations under the workers' compensation insurance policies by refusing to pay. View "LM Insurance Corp. v. Dubuque Barge and Fleeting Service Co." on Justia Law

The Eighth Circuit affirmed the district court's award of summary judgment to Mid-Century in an insurance coverage dispute over the amount Mid-Century owed plaintiff after her husband was struck and killed by an underinsured motor (UIM) vehicle.The court held that the fact that Mid-Century was licensed to write policies in Minnesota, combined with the husband's subsequent move to and residency there, does not dictate that the Mid-Century policy must be reformed to calculate UIM coverage under Minnesota's add-on approach. Consistent with the plain language of the statute, the Minnesota Supreme Court has held that in order for Minnesota law to mandate that an insurer provide uninsured coverage consistent with that required by Section 65B.49 of the Minnesota Statutes, the insurance policy had to be renewed, delivered, or issued for delivery, or executed in Minnesota. Because Mid-Century issued the policy to plaintiff and her husband when they resided in Wisconsin and the policy was not renewed after the husband's move, section 65B.50's add-on approach to calculating UIM coverage is not required. Therefore, the court held that the plain language of the policy controls, which dictates a limits-less-paid approach to calculating UIM coverage. View "Brill v. Mid-Century Insurance Co." on Justia Law

Dunbar, a Service Disabled Veteran Owned Small Business (SDVOSB), was awarded an Army Corps of Engineers ditch and tributary project in Arkansas. Dunbar then hired a subcontractor, Harding Enterprises, to work on the project. After Harding Enterprises defaulted, Dunbar made a demand on the bond guaranteed by Hanover, which Hanover denied. Hanover then filed suit seeking a declaration that it had no obligations under the bond and seeking to have the bond rescinded based on illegality of the subcontract.The Eighth Circuit reversed the district court's grant of summary judgment in favor of Hanover, holding that the district court erroneously concluded that the subcontract was undisputedly in violation of 13 C.F.R. 125.6(b)(2) because the percentage that Dunbar spent on contract performance relative to the prime contract price could not be conclusively ascertained until conclusion of performance of the prime contract. The court also held that the potential that Hanover may have liability under the False Claims Act if it were to perform under the bond does not justify discharging Hanover from its obligations and rescinding the contract. View "Hanover Insurance Co. v. Dunbar Mechanical Contractors, LLC" on Justia Law

Over 25,000 life insurance policyholders filed a class action, alleging that State Farm impermissibly included non-listed factors in calculating Cost of Insurance (COI) fees assessed on life insurance policies. After the jury returned a $34 million verdict in the class's favor, State Farm and the named plaintiff appealed.The Eighth Circuit affirmed the judgment with respect to State Farm's appeal, holding that the phrase "based on" in the COI provision is at least ambiguous and thus must be construed against State Farm. Therefore, the district court did not err in construing the policy language in this manner and granting summary judgment to plaintiff on issues of liability. The court also held that the district court did not err in granting summary judgment to plaintiff on State Farm's affirmative defense of limitations. Furthermore, the court held that the district court did not err in certifying the class or in denying State Farm's motion to decertify the class. The court also held that the district court did not err in denying State Farm's motion for judgment as a matter of law based on the alleged insufficiency of the damages models as evidence of damages suffered by class members. Finally, the court rejected State Farm's claims of evidentiary errors, and challenges to the judgment in favor of the named plaintiff.However, the court reversed and remanded with respect to the named plaintiff's cross appeal, holding that the district court erroneously denied plaintiff's motion for an award of prejudgment interest because the damages model does not include prejudgment interest for the entire time up until judgment. View "Vogt v. State Farm Life Insurance Co." on Justia Law

The Eighth Circuit affirmed the district court's grant of summary judgment in favor of American Family in a declaratory judgment regarding American Family's duty to defend and indemnify Mid-American. American Family had issued a commercial general liability insurance policy (CGL) to Mid-America.The court held that American Family has no duty to defend or indemnify Mid-American, because Mid-American's alleged defective construction work in the underlying suit is not considered an "occurrence" in the policy. Rather, Lehenbauer's damages are all the normal, expected consequence of MidAmerican's allegedly shoddy work and were the foreseeable or expected result of that work as a matter of law. Therefore, the court held that Mid-American's work causing the damages at issue is not "an accident" within the meaning of the CGL under Missouri law. Because there was no "accident" in this case, there is no "occurrence" and no possibility of coverage. View "American Family Mutual Insurance Co. v. Lehenbauer Farms, Inc." on Justia Law

After a truck driver filed claims against his employer's insurer to recover for an injury he suffered when loading a truck, the district court granted summary judgment in favor of the insurer.The Eighth Circuit affirmed, holding that Minnesota law does not invalidate the insurer's "moving property exclusion." In this case, because plaintiff was not occupying, entering into, or alighting from the truck, his injury did not arise out of the "maintenance or use" of the truck. Therefore, Minnesota law did not require the insurer to cover the employer's liability. View "Great West Casualty Co. v. Decker" on Justia Law