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

In a 2008 collision on I-40 in West Memphis, McHone, driving a car, was struck by a tractor trailer driven by Whirley. McHone’s State Farm policy included coverage for uninsured motor vehicles with bodily injury limits of $100,000 per person. The trucking company defendants were insured by Gramercy. McHone’s medical bills exceeded $400,000; her physicians estimate future medical care will exceed an additional $400,000. Before trial, Gramercy was placed into Rehabilitation with an automatic stay. In 2013, McHone’s counsel notified State Farm of the problems with Gramercy and demanded $100,000 uninsured motorist benefits. State Farm asserted that no coverage existed. McHone settled her claims against Whirley and the truck’s owner for $300,000 to avoid the claim process with the State Guarantee Fund. Gramercy was liquidated. State Farm again refused to pay uninsured motorist benefits. The district court ruled in favor of State Farm as being entitled to a credit for the settlement proceeds regardless of the date of insolvency. The Eighth Circuit affirmed. State Farm is entitled to a credit for the money McHone received from her settlement. McHone’s argument that the credit is not applicable because the payment was made by the receivership rather than by Gramercy itself is not supported by the policy language nor Tennessee law. View "McHone v. State Farm Mut. Ins. Co." on Justia Law

Jackson claimed to be at work when her house burned. Little Rock Fire Department investigator Baker determined the fire was started by human intervention. Baker detected accelerants in the house; the fire's points of origin were inconsistent with accidental causes. Baker initially believed that Jackson might have been the victim of a hate crime, because he discovered racially derogative graffiti in her garage, but there were no signs of forced entry and the house was largely empty of personal items, food, or furniture. Baker claims that Jackson stated that she was the only person with access to the house and that she was not missing any property. Baker obtained a search warrant for her cell phone records, which indicated that Henson, Jackson's coworker, attempted to call Jackson three times during the period at issue. Henson denied calling Jackson. Baker concluded that Henson may have burned Jackson's home at her request. No criminal charges were filed. Allstate's investigative unit concluded that Henson had burned Jackson's home, noting that Jackson was subject to a divorce decree that ordered her to sell her house and that she tried to sell for several years,. Allstate denied Jackson's insurance claim based on Intentional Acts and Material Misrepresentations Exclusions. A jury found in favor of Allstate. The Eighth Circuit affirmed, rejecting procedural challenges and a challenge to the sufficiency of the evidence. View "Jackson v. Allstate Ins. Co." on Justia Law

The Patient Protection and Affordable Care Act (ACA) creates “navigators,” to assist consumers in purchasing health insurance from exchanges, 42 U.S.C. 18031(i), and authorizes the Department of Health and Human Services to establish standards for navigators and exchanges. HHS regulations recognize: federal navigators, certified application counselors (CACs), and non-navigator assistance personnel. They conduct many of the same activities, but federal navigators have more extensive duties. Plaintiffs, federally-certified counselor designated organizations, employ CACs. The federal government established a Missouri Federally Facilitated Exchange. The Health Insurance Marketplace Innovation Act (HIMIA), Mo. Rev. Stat. 376.2000, regulates “person[s] that, for compensation, provide[] information or services in connection with eligibility, enrollment, or program specifications of any health benefit exchange.” Regulatory provisions dictate what state navigators and cannot do. Plaintiffs challenged: the definition of state navigators; three substantive provisions; and penalty provisions. The district court granted a preliminary injunction, finding that the ACA preempted HIMIA. The Eighth Circuit affirmed in part, finding likelihood of success in challenges to HIMIA requirements that: state navigators refrain from providing information about health insurance plans not offered by the exchange; that in some circumstances, the navigator must advise consultation with a licensed insurance producer regarding private coverage; and that CACs provide information about different health insurance plans and clarify the distinctions. The court vacated the preliminary injunction, holding that ACA does not entirely preempt HIMIA. View "St. Louis Effort For AIDS v. Huff" on Justia Law

Retired seamstress, Joseph, never had annual household income exceeding $40,000; her condominium, worth $169,990, was foreclosure. Joseph was born in Haiti. She did not speak English well. Jean referred Joseph to the Diverse insurance agency for a fee. In 2008, Diverse applied for a $10 million life-insurance policy on Joseph’s life to PHL. The application falsely stated Joseph’s net worth was $11,906,000 and her income was $497,000. The application listed a 2008 Irrevocable Trust as the proposed beneficiary and owner. Joseph signed an agreement establishing the Trust and appointed BNC as the trustee and Jean as the trust protector. Joseph did not know of the misrepresentations and likely signed blank documents. The Trust financed the premiums through a loan from PFG. In 2010, Jean directed BNC to surrender the Policy to PFG in satisfaction of the loan obligations. PHL sought to rescind the Policy for fraud. After Joseph died in 2011, the new policy owner claimed the proceeds. The district court granted rescission and held that PHL could keep the premium. The Eighth Circuit affirmed, rejecting arguments that PHL could not rescind the Policy because its own agent completed the application and that PHL was estopped from rescinding the Policy because it had reason to know of the misrepresentations. View "PHL Variable Ins. Co. v. Midas Life Settlements LLC" on Justia Law

Smart Candle sells light-emitting diode flameless candles and commercial lighting systems internationally. Excell sued under the LanhamAct alleging that Smart Candle’s use of the trade name and trademark “Smart Candle” infringed rights that Excell had over use of that name and trademark. Selective insured Smart Candle during the period in which the Excell suit commenced, but disclaimed coverage, based on exclusion any injury “arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights” that “does not apply to infringement in your ‘advertisement’ of copyright, trade dress or slogan.” Excell won its suit. Selective sought a declaration that it owed no duty to defend or indemnify. Smart Candle counterclaimed breach of contract, arguing that Selective had not conducted “reasonable investigation of Excell’s Claims” including “a review of Smart Candle’s website . . . or any of Smart Candle’s advertising before denying coverage.” The district court granted Selective summary judgment. The Eighth Circuit affirmed, agreeing that no reasonable jury would conclude that Excell was suing for slogan infringement and that Selective had no duty to investigate “beyond the four corners of the complaint” to determine whether other facts could trigger Selective’s duty to defend or indemnify. View "Selective Ins. Co. v. Smart Candle, LLC" on Justia Law

In March, 2004, Harris closed on a home with a mortgage loan from MPI. To be licensed in Missouri, MPI, as obligor and principal, bought two “Missouri Residential Mortgage Brokers Bonds” from Hartford, its surety, RSMo 443.849. The surety bonds stated that the two parties were “jointly and severally” bound for payment to any person “who may have a claim against” MPI. Harris sued MPI for violating the Missouri Merchandising Practices Act, sections 407.010-.1500. Harris obtained a judgment for compensatory damages, punitive damages, and attorney fees. Hartford had notice of the suit against MPI, but chose not to intervene. As surety, Hartford failed to pay the judgment amount due on the bonds. In 2012, Harris sued Hartford for breach of contract, vexatious refusal to pay, and equitable garnishment. The district court granted Hartford summary judgment, rejecting the 10-year statute of limitations in RSMo 516.110(1) in favor of the three-year statute in section 516.130(2). The Eighth Circuit reversed. Harris’s claim against Hartford sought the amount due on the bonds, not a penalty. View "Harris v. Hartford Fire Ins. Co." on Justia Law

In 2007, while operating a truck, Yelder, an employee of Yelder-N-Son Trucking, collided with a Tri-National truck, causing extensive property damage. Tri-National filed a claim with its insurer, Harco, which paid $91,100 and retained a subrogation interest. Yelder was insured by Canal with an MCS-90 endorsement, mandated by the Motor Carrier Act of 1980, 94 Stat. 793. In 2010, Canal sought a declaratory judgment against the Yelder defendants and Harco. An Alabama court entered default judgment against the Yelder defendants only, stating Canal had no duty to defend or indemnify them under the Canal policy. The court made no declaration about whether the MCS-90 endorsement requires a tortfeasor’s insurer to compensate an injured party when the injured party has already been compensated by its own insurer. Tri-National then sued the Yelders in Missouri and obtained a $91,100 default judgment. Tri-National sought equitable garnishment against Canal, apparently on behalf of Harco. Canal removed the action to the federal district court, which granted Tri-National’s motion. The Eighth Circuit affirmed, holding that the MCS-90 does require such compensation. The circumstance of Tri-National carrying its own insurance did not absolve Canal of its obligations under the endorsement View "Tri-National, Inc. v. Canal Ins. Co." on Justia Law

In 2006, Sletten, an orthodontist practicing in Minnesota and Wisconsin, bought general liability and personal injury liability insurance from Continental through Wells Fargo. The next year, Sletten formed S&B, which opened an office in Hudson, Wisconsin and employed Brettin to practice orthodontics there. Sletten notified Wells Fargo that he had opened the Hudson office and requested coverage for the location. Wells Fargo added the Hudson office as an additional insured location but never added S&B as a named insured. In 2012, St. Croix Dental and Wolff sued, that Brettin, acting “on behalf of and with the knowledge and consent of” S&B, used his neighbor’s wireless network to post defamatory comments about St. Croix to the Internet. Brettin allegedly posed as a patient of St. Croix and criticized Wolff’s orthodontia. St. Croix alleged defamation and libel, civil conspiracy, and unfair competition. Continental refused to defend because the policy did not identify S&B as a named insured. S&B and Sletten then sued Continental and Wells Fargo. The Eighth Circuit affirmed dismissal, holding that the policy excluded coverage for acts done with the intent to injure; every claim pleaded that S&B and Brettin acted with the intent to injure. View "Sletten & Brettin Orthodontics, LLC v. Cont'l Cas. Co." on Justia Law

Argonaut sued Audrain County Joint Communications (ACJC) alleging ACJC's negligence in monitoring a security alarm panel caused or contributed to damages arising out of the burglary and fire of a grocery store insured by Argonaut. Public employees at the ACJC call center monitored a private security company's alarm panels. The panels were defective. ACJC argued that it was entitled to sovereign immunity as a Missouri state entity, and to statutory immunity as a 911 call center. The district court denied summary judgment after finding ACJC had waived its sovereign and statutory immunity by purchasing insurance. The Eighth Circuit dismissed part of an interlocutory appeal for lack of jurisdiction, but otherwise affirmed. Missouri Revised Statutes Section 537.600 generally preserves "sovereign or governmental tort immunity as existed at common law" and specifically refers to "the immunity of [a] public entity from liability and suit." Section 190.307, however, does not create a substantive right to be free from the burdens of litigation. There was no clear error in the district court's determination under section 537.600 that ACJC did not prove the existence of a pre-existing agreement between itself and the insurer to include the sovereign immunity endorsement with the original policy. View "Argonaut Great Cent. Ins. Co. v. Audrain Cnty. Joint Commc'ns." on Justia Law

A “viatical” or “life settlement” permits an insured to sell his life insurance policy. Federal tax and some state laws have been amended to accommodate the practice. In 2006, an agent persuaded Close, age 74, to apply for a $5 million life insurance policy. As submitted to PHL, his application falsely stated Close’s net worth and income, and failed to disclose his conviction for receiving illegal kickbacks. Under the agent’s guidance, Close falsely stated his net worth to obtain a two-year, $300,225 premium financing loan from CFC, a PHL-approved funding source. The policy was pledged as collateral; Close personally guaranteed 25 percent of the loan, believing that the policy would be worth $1.3 million in two-years, when it became “incontestable” under Minn. Stat. 61A.03.1(c) and that he would be able to sell it for $500,000. PHL conducted minimal investigation and received premiums of $272,025; CFC received $14,200 in fees; and the agent and a CFC employee split substantial commissions. In 2009, BNC explained Close’s options for repayment: refinancing, selling, or relinquishing the policy to the lender. The secondary market had crashed. Close surrendered the policy. When Close died in 2011, investigation revealed the fraudulent misrepresentations, but rescission was foreclosed by the incontestability statute. PHL sought a declaratory judgment that the policy was void as contrary to public policy for lack of an insurable interest. The district court agreed. The Eighth Circuit reversed, stating that permitting insurers to resist paying based on evidence that an insured used premium financing and planned to sell, is “not a result the Supreme Court of Minnesota would find acceptable in exercising its ‘delicate and undefined power’ to declare a contract void. View "PHL Variable Ins. Co. v. Bank of Utah" on Justia Law