Justia U.S. 8th Circuit Court of Appeals Opinion Summaries
Articles Posted in Insurance Law
Secura Ins. v. Weitz Co., et al.
This declaratory judgment action was brought by Secura, an insurer for Horizon, a subcontractor on a troubled construction project. Horizon's two other insurers, State Auto and Federated later joined. Their dispute with Weitz arose out of a construction project in which Weitz was the general contractor for Metropolitan. After Weitz and Metropolitan brought breach of contract claims against each other, both filed third party complaints against Horizon for defective plumbing. Horizon's insurers defended and settled all claims against it and reimbursed Weitz for its defense of claims against Horizon. Weitz then contended that since it was an "additional insured" on Horizon's policies, the insurers should pay for attorney fees and costs it incurred in defending against Metropolitan's entire counterclaim. The insurers filed this action seeking a final judgment that they not be required to pay the attorney fees and costs. Applying Missouri law, the court rejected Weitz's argument that Metropolitan's counterclaim asserted potentially covered losses under the policies. Therefore, the court affirmed summary judgment in favor of the insurers because Metropolitan's counterclaim did not state an "occurrence" giving rise to a possibility of coverage under the policies.
American Guarantee, etc. v. United States Fidelity, etc., et al.
This case involved a dispute between an excess and primary insurer, both of whom insured a trucking company whose tractor trailer was involved in a fatal accident. Parties injured in the accident sued the trucking company and obtained a jury verdict which exposed the excess carrier to a $17 million dollar liability. The excess carrier sued the primary carrier, alleging bad faith in failing to settle the underlying claim within the policy limits. The court held that the district court did not err in applying Missouri law because the excess insurer failed to identify Washington as a state "with a relationship to, or an interest in the issues that approaches Missouri's[.]" The court also held that the excess insurer's bad faith claim failed because its insured never made a demand of the primary insurer to settle the underlying litigation within the policy limits. Accordingly, the court affirmed the district court's grant of summary judgment to the primary insurer.
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.
