Justia U.S. 8th Circuit Court of Appeals Opinion Summaries
Articles Posted in Insurance Law
Palmer, et al. v. Illinois Farmers Ins. Co.; Kluessendorf, et al. v. Progressive Preferred Ins. Co.; Hara, et al. v. USAA Casualty Ins. Co.; Johnson, et al. v. American Family Mutual Ins.
Insureds, Minnesota residents, filed class action complaints against their automobile insurers alleging violations of a Minnesota statute, Minn. Stat. 65B.285, requiring insurers to provide a discount for cars which have antitheft devices and breach of contract claims based on the failure to apply the statutory discount. The court affirmed the district court's dismissal of the insureds' amended complaints, rejecting their attempts here, particularly in the absence of any indication that Minnesota's administrative remedies were inadequate, to circumvent Minnesota's administrative remedies in order to create a private right of action.
Badami v. Sears
Robert A. Sears appealed from a bankruptcy court order finding that the bankruptcy estate of AFY was contractually and equitably entitled to receive the cash value of a life insurance policy, owned by Sears and paid for by AFY, to reimburse AFY for policy premiums paid. The court held that the bankruptcy court possessed the jurisdiction and constitutional authority to enter final judgment and AFY was not contractually or equitably entitled to the cash value of the policy. Accordingly, the decision of the bankruptcy court was reversed.
Carrow v. Standard Ins. Co.
Appellant appealed the district court's adverse grant of summary judgment in favor of Standard Insurance in this Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., benefits case. The court held that the Plan administrator did not abuse its considerable discretion in this case where substantial evidence supported the administrator's decision.
Bjornestad v. Progressive Northern Ins.
Plaintiff brought suit against her insurer, asserting claims of breach of contract and bad faith. After a jury awarded plaintiff the full amount of her underinsured motorist (UIM) coverage, but denied her bad faith claim, the district court found the insurer's refusal to pay was "vexatious or without reasonable cause" and awarded plaintiff attorney's fees pursuant to S.D. Codified Laws 58-12-3. The insurer appealed arguing that the jury's rejection of plaintiff's bad faith claims should preclude an award of fees under the statute. The court affirmed the judgment and held that the district court did not err when it determined it could consider whether plaintiff was entitled to attorney's fees on her successful contract claim, notwithstanding the defense verdict on the bad faith claim. The court also held that the district court did not err in finding the insurer's refusal to pay was vexatious or without reasonable cause.
Tripp, et al. v. Western Nat’l Mutual Ins.
Plaintiff brought suit against her insurer, asserting claims of breach of contract and bad faith. After a jury awarded plaintiff the full amount of her underinsured motorist (UIM) coverage, but denied her bad faith claim, the district court found that the insurer's refusal to pay was "vexatious or without reasonable cause" and awarded plaintiff attorney's fees pursuant to S.D. Codified Laws 58-12-3. The insurer appealed arguing that the jury's rejection of plaintiff's bad faith claim should preclude an award of fees under the statute. The court affirmed the judgment and held that the district court did not err when it determined the statutory fee award did not hinge on the outcome of the bad faith claim and the district court did not err in finding the insurer's refusal to pay was vexatious or without reasonable cause.
U.S. Bank Nat’l Assoc. v. Federal Insurance Co., et al.
Plaintiff, as trustee for a creditors' trust, held a $56 million stipulated judgment against Paul Yarrick, a former officer of Interstate Bakeries. Interstate emerged from a voluntary Chapter 11 bankruptcy reorganization. In the bankruptcy proceedings, the Trust obtained the right to bring the action that later resulted in the judgment against Yarrick. The Trust received this right in exchange for certain concessions, including an agreement to execute only against potentially liable insurers. After the Trust obtained the judgment against Yarrick, the Trust brought the present action against defendants in an attempt to collect against several director and officer policies that named Yarrick as an insured. The court held that, because the Assignment Agreement that transferred to the Trust the limited right to sue Yarrick for insurance proceeds "absolved" Yarrick from "payment," the $56 million judgment was not a "Loss" as required by the plain language of the policy. The court also rejected the abandoned-insurance argument and held that Missouri law did not allow estoppel to extend coverage over otherwise uncovered claims. Accordingly, the judgment of the district court finding no coverage and granting summary judgment in favor of the insurers was affirmed.
Penford Corp., et al. v. Natl. Union Fire Ins. Co., et al.
Plaintiff brought suit seeking declaratory judgment and asserted claims for breach of contract and bad faith when its insurers asserted that certain sublimits in plaintiff's policy capped reimbursement for damages caused by flood and that those sublimits applied to both property damage and business interruption losses. Plaintiff claimed that the sublimits only applied to property damage. The court concluded that there was no factual dispute regarding whether an insurance brokerage employee shared the same understanding as the underwriters and whether that understanding bound plaintiff. Consequently, the interpretation of the contract did not depend "on the credibility of extrinsic evidence or on a choice among reasonable inferences that can be drawn from the extrinsic evidence," and thus the district court did not err when it granted insurers' judgment as a matter of law on the declaratory judgment and breach of contract claims.
KAAPA Ethanol, LLC v. Affiliated FM Ins. Co.
KAAPA managed a facility that distilled corn into ethanol. KAAPA commenced a diversity action after Affiliated denied KAAPA's claim to recover the cost of extensive repairs and business interruption losses. A jury found that some losses were caused by "collapse" of storage tanks, awarded KAAPA property damage, but denied its claim for business interruption losses. Both sides appealed raising various issues. Applying Nebraska law, the court affirmed the district court's denial of Affiliated's motion for judgment as a matter of law. The court held, however, that the district court committed reversible error in instructing the jury on the meaning of the term "collapse" and remanded for a new trial. The court did not decide the loss-mitigation and other post-trial issues raised in KAAPA's cross-appeal.
Riley v. Sun Life and Health Ins., et al.
Appellant appealed the district court's grant of summary judgment in favor of Sun Life in an Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., benefits case. At issue was whether Sun Life was entitled to offset from appellant's employer-provided long-term disability benefits the amount that appellant received in Department of Veterans Affairs (VA) benefits each month. The court held that VA benefits, for a wartime service-related disability, as a matter of statutory construction, did not derive from an act that was "similar to" the SSA or RRA, which were both federal insurance programs based upon employment and the amount of an award under their terms depended upon how much had been paid in. Accordingly, the court reversed and remanded to the district court with directions to enter judgment in favor of appellant.
Tactical Stop-Loss, LLC, et al. v. Travelers Casualty and Surety Co.
Plaintiffs commenced a diversity action against defendant, asserting claims for breach of the insurance contract and for vexatious refusal to pay. Applying Missouri law, the district court granted defendant summary judgment, concluding that the insurance policy at issue unambiguously excluded losses caused by plaintiffs' CEO, a shareholder, and by plaintiffs' COO, a non-shareholder, acting in collusion with the CEO. The court affirmed and held that the Officer-Shareholder exclusion was consistent with Missouri public policy, and in the alternative, the Officer-Shareholder exclusion was unambiguous and excluded plaintiffs' claim.
