Justia U.S. 5th Circuit Court of Appeals Opinion Summaries

A passenger, after being injured in a hit-and-run rear-end collision while riding in a vehicle arranged through a rideshare application, sought damages for bodily injuries. The passenger alleged that the rideshare company, its subsidiary, and its insurer either provided or were required by law to provide uninsured motorist (UM) coverage, and that their rejection of such coverage violated Louisiana law.The action began in Louisiana state court, initially naming only the insurer as a defendant. The passenger later amended the complaint to add the rideshare company and its subsidiary, arguing that they were not permitted to reject UM coverage. With all defendants’ consent, the insurer removed the case to the United States District Court for the Eastern District of Louisiana, citing diversity jurisdiction. Multiple motions followed, including motions to dismiss by the rideshare entities and a motion for summary judgment by the insurer. The district court found that Louisiana statutes allow transportation network companies to reject UM coverage and that the defendants had properly done so. Accordingly, the district court dismissed all claims with prejudice and denied the passenger’s request to certify a question to the Louisiana Supreme Court.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the statutory interpretation de novo. The court concluded that Louisiana Revised Statute § 45:201.6 incorporates, by general reference, the provisions of § 22:1295, including the right to reject UM coverage. The court found support for this interpretation in state appellate decisions and statutory context. The Fifth Circuit affirmed the district court’s judgment and denied the motion to certify the question to the Louisiana Supreme Court. The holding is that transportation network companies in Louisiana may reject uninsured motorist coverage if they follow the procedures in § 22:1295. View "Guerrera v. United Financial Casualty Co." on Justia Law

A young man named Christoffer suffered a severe spinal cord injury in a friend’s home after ingesting what he believed to be LSD and a THC gummy. The incident occurred after he fell off a bed, followed by several hours during which he received no medical attention. Later, he was moved by his friends without stabilizing his neck or spine, which medical testimony suggested may have contributed to the severity of his injury, ultimately leaving him a quadriplegic. The circumstances involved both the use of alleged controlled substances and subsequent actions by others in the house.Christoffer and his family sued the homeowner’s son in Texas state court, prompting Occidental Fire & Casualty Company, the homeowner’s insurer, to seek a declaratory judgment in the U.S. District Court for the Southern District of Texas, arguing that their policy excluded coverage for injuries arising from the use of controlled substances. The parties settled the state lawsuit and stipulated that the sole fact issue for the federal jury was whether Christoffer’s injuries “arose out of the use by any person” of a controlled substance, as defined by federal law.The jury in the district court found that Christoffer’s injuries did not arise out of the use of a controlled substance, indicating that the policy exclusion did not apply. However, the district judge set aside the jury’s verdict and granted judgment as a matter of law for Occidental, concluding the evidence was insufficient to support the jury’s finding. On appeal, the United States Court of Appeals for the Fifth Circuit held that the district court erred, as there was a legally sufficient basis for a reasonable jury to find that the injury did not arise from drug use. The Fifth Circuit reversed the district court’s judgment and reinstated the jury’s verdict in favor of coverage. View "Occidental Fire v. Cox" on Justia Law

The dispute centers on insurance policies purchased by several Louisiana public entities, including the Town of Vinton, from a group of foreign and American insurers. The policies included an arbitration clause and a contract endorsement stating that each policy is a “separate contract” between the insured and each insurer. After alleged breaches, the insured entities sued all participating insurers in Louisiana state court. Subsequently, the insureds dismissed the foreign insurers with prejudice, leaving only American insurers as defendants.Following the dismissal of the foreign insurers, the remaining American insurers removed the cases to the United States District Court for the Western District of Louisiana. They sought to compel arbitration under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the Federal Arbitration Act. The district court denied these motions, holding that the contract endorsement created separate agreements between each insurer and the insured, and, since the foreign insurers were no longer parties, no agreement involved a non-American party. The court also rejected the American insurers’ equitable estoppel argument, finding it precluded by Louisiana law, which expressly bars arbitration clauses in insurance contracts covering property in the state.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed the district court’s decision. The Fifth Circuit held that the Convention does not apply because no foreign party remains in any agreement to arbitrate. The court further concluded that Louisiana law prohibits enforcement of arbitration clauses in these insurance contracts and that equitable estoppel cannot override this prohibition. Lastly, the court determined that the delegation clause in the arbitration agreement could not be enforced because Louisiana law prevents the valid formation of an arbitration agreement in this context. View "Town of Vinton v. Indian Harbor" on Justia Law

Three individuals, two of whom were former insureds of an insurance company, financed their insurance premiums through a separate premium finance company. Under the financing agreements, the finance company paid the full premium to the insurer and the insureds made monthly payments to the finance company. Each agreement authorized the finance company to cancel the insurance policy if the insured defaulted on payments. After defaults occurred, the finance company initiated cancellation of the policies. The plaintiffs alleged that the insurer’s procedures for cancellation did not comply with Louisiana law, resulting in ineffective cancellation and breach of good faith.The plaintiffs initially filed a class action in Louisiana state court against the insurer and the finance company, claiming that the insurer had not properly cancelled their policies and had failed to act in good faith. The case was removed to the United States District Court for the Middle District of Louisiana. Both sides moved for summary judgment on whether the insurer’s cancellation procedures satisfied Louisiana statutory requirements. The district court granted summary judgment for the insurer, finding that its procedures complied with state law, and dismissed all claims with prejudice.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed whether the insurer’s procedures strictly adhered to Louisiana law governing cancellation of financed insurance policies. The court held that Louisiana law does not require a signature on the notice of cancellation sent by the premium finance company to the insurer, and that the insurer’s receipt of notice via its computer system satisfied the statutory requirement of “receipt.” The court declined to certify questions of statutory interpretation to the Louisiana Supreme Court and affirmed the district court’s judgment. View "Williams v. GoAuto Insurance" on Justia Law

Fieldwood Energy LLC, an oil and gas company, contracted with Island Operating Company, Inc. (IOC) through a Master Services Contract (MSC) to provide workers for oil and gas production services on offshore platforms in the Gulf of Mexico. The MSC defined the work as “Lease Operators,” and a subsequent work order requested “A Operators” to perform tasks such as compliance testing and equipment checks on the platforms. The contract required Fieldwood to provide marine transportation for workers and equipment, which it did by hiring Offshore Oil Services, Inc. (OOSI) to transport IOC employees, including Tyrone Felix, to the platforms. Felix was injured while disembarking from OOSI’s vessel, the M/V Anna M, and subsequently made a claim against OOSI.OOSI filed a complaint for exoneration or limitation of liability in the United States District Court for the Eastern District of Louisiana. OOSI also sought indemnification from IOC under the MSC’s indemnity provision. IOC moved for summary judgment, arguing that Louisiana law, specifically the Louisiana Oilfield Anti-Indemnity Act (LOAIA), rendered the indemnity provision unenforceable. The district court agreed, finding that the MSC was not a maritime contract because vessels were not expected to play a substantial role in the contract’s performance, and thus Louisiana law applied. The court granted summary judgment for IOC on indemnity and insurance coverage, and later on defense costs after OOSI settled with Felix.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s summary judgment de novo. The Fifth Circuit held that the MSC was not a maritime contract because neither its terms nor the parties’ expectations contemplated that vessels would play a substantial role in the contract’s completion. As a result, Louisiana law applied, and the LOAIA barred enforcement of the indemnity provision. The Fifth Circuit affirmed the district court’s summary judgment in favor of IOC. View "Offshore Oil Services, Inc. v. Island Operating Co." on Justia Law

Two insurance companies entered into a quota share reinsurance agreement in 2014, under which one company (the reinsurer) agreed to indemnify the other (the reinsured) for a portion of claims arising from short-term medical insurance policies. The agreement required the reinsured to provide prompt notice to the reinsurer of any claims that might result in a covered loss and developments that could materially affect the reinsurer’s position. In 2017, the reinsured was sued in Montana by policyholders alleging underpayment of claims, and the litigation later expanded into a class action. The reinsured did not notify the reinsurer of the lawsuit until after the district court had entered summary judgment for the plaintiffs, certified the class, and the Ninth Circuit denied interlocutory appeal. The reinsured eventually settled the case for $8 million and sought indemnification from the reinsurer, which was refused on grounds of late notice.The United States District Court for the Northern District of Texas, with the parties’ consent, ruled on cross-motions for summary judgment. The court granted summary judgment for the reinsured, holding that the notice provision in the reinsurance treaty was triggered only by the reinsured’s subjective belief that a claim might arise, and that the reinsurer had not shown evidence of the reinsured’s subjective intent. Alternatively, the court found that even if there was a breach, the reinsurer was not prejudiced by the late notice and remained obligated to indemnify, including for attorneys’ fees.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the case de novo. The Fifth Circuit held that the notice provision required an objective standard—what a reasonable reinsured would believe might result in a claim—rather than a purely subjective belief. The court found that the reinsured’s notice was unreasonably late as a matter of law and that this delay materially prejudiced the reinsurer by depriving it of its contractual right to participate in the defense. The Fifth Circuit reversed the district court’s judgment, holding that the reinsurer was absolved of its duty to indemnify due to the material breach. View "US Fire Ins v. Unified Life Ins" on Justia Law

William Navarre purchased a house that had been damaged by two hurricanes in 2020. The previous owners, Bal and Rita Sareen, had received insurance payments from AIG Property Casualty Company but had not assigned their post-loss insurance rights to Navarre at the time of the sale. Navarre filed a lawsuit against AIG, claiming he had been assigned these rights as of the purchase date. However, the formal assignment document was not executed until January 2023, well after the lawsuit was filed and after the prescriptive period for the claims had expired.The United States District Court for the Western District of Louisiana granted summary judgment in favor of AIG, concluding that Navarre lacked standing to file the lawsuit because the assignment of rights had not been executed at the time he filed the suit. The court also noted that the prescriptive period for the claims had expired by the time the assignment was executed.The United States Court of Appeals for the Fifth Circuit reviewed the case and affirmed the district court's judgment. The appellate court agreed that the documents Navarre relied on (Addendum A and the Side Letter) did not constitute a present assignment of rights but rather contemplated a future assignment. Since the formal assignment was not executed until January 2023, Navarre did not have standing to sue when he filed the lawsuit in June 2022. Additionally, the court held that the prescriptive period for the claims had expired by the time the assignment was executed, and thus, Navarre could not retroactively cure the deficiency in his original petition. View "Navarre v. AIG Prop Cslty" on Justia Law

Pamela Edwards, owner of Allure Salon in Starkville, Mississippi, was diagnosed with cancer in 2019 and passed away in 2022. After her death, her husband, Jimmy Edwards, sought payment from her life insurance policy with Guardian Life Insurance. Guardian denied the claim, stating the policy had been canceled because the number of insured employees at Allure dropped to one, triggering their right to cancel the policy. Jimmy Edwards was unaware of the policy until informed by the insurance agent, Debbie Jaudon, who also did not receive a cancellation notice from Guardian.Jimmy Edwards sued Guardian in the Northern District of Mississippi, bringing claims under Mississippi common law and arguing that ERISA entitled him to recover benefits. Guardian moved for partial summary judgment, asserting that ERISA governed the plan and preempted the common-law claims. The district court granted Guardian’s motion, and Jimmy Edwards appealed.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court determined that ERISA applied to the Allure policy, as the salon technicians were considered employees under federal common law. The court found that Guardian had waived its right to cancel the policy by continuing to accept premium payments for 26 months after the right to cancel vested. The court held that Guardian could not avoid its obligation to pay the claim after accepting premiums for such an extended period. Consequently, the Fifth Circuit reversed the district court's judgment and rendered judgment in favor of James Edwards. View "Edwards v. Guardian Life Insurance" on Justia Law

Emergency air medical providers challenged award determinations made under the No Surprises Act (NSA). The NSA, enacted in 2022, protects patients from surprise bills for emergency services from out-of-network providers by creating an Independent Dispute Resolution (IDR) process for billing disputes between providers and insurers. Guardian Flight transported a patient in Nebraska, and a dispute arose with Aetna over the service value. Similarly, Guardian Flight and its affiliates provided emergency services to patients insured by Kaiser, leading to disputes over payment amounts. Both disputes were submitted to Medical Evaluators of Texas (MET) as the IDR entity, which sided with the insurers.The United States District Court for the Southern District of Texas consolidated the cases. The court dismissed Guardian Flight’s claims against Aetna and Kaiser, ruling that the providers failed to plead sufficient facts to trigger vacatur of the awards. However, the court denied MET’s motion to dismiss based on arbitral immunity, leading to MET’s cross-appeal.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court held that the NSA does not provide a general private right of action to challenge IDR awards, incorporating Federal Arbitration Act (FAA) provisions that allow courts to vacate awards only for specific reasons. The court affirmed the district court’s dismissal of the providers’ claims against Aetna and Kaiser, finding that the providers did not allege facts sufficient to show that the awards were procured by fraud or undue means under the FAA.Additionally, the Fifth Circuit addressed MET’s claim of arbitral immunity. The court concluded that MET, functioning as a neutral arbiter in the IDR process, is entitled to the same immunity from suit typically enjoyed by arbitrators. Consequently, the court reversed the district court’s judgment on this point and remanded with instructions to dismiss the providers’ claims against MET. View "Guardian Flight, L.L.C. v. Aetna Health, Inc." on Justia Law

Casey Cotton rear-ended Caleb Crabtree, causing significant injuries. Cotton, insured by Allstate, faced potential liability exceeding his policy limit. Allstate allegedly refused to settle with Crabtree and failed to inform Cotton of the settlement negotiations or his potential liability, giving Cotton a potential bad-faith claim against Allstate. The Crabtrees sued Cotton, who declared bankruptcy. The bankruptcy court allowed the personal-injury action to proceed, resulting in a $4 million judgment for the Crabtrees, making them judgment creditors in the bankruptcy proceeding. Cotton’s bad-faith claim was classified as an asset of the bankruptcy estate. The bankruptcy court allowed the Crabtrees to purchase Cotton’s bad-faith claim for $10,000, which they financed through Court Properties, Inc.The Crabtrees sued Allstate, asserting Cotton’s bad-faith claim. The United States District Court for the Southern District of Mississippi dismissed the action for lack of subject matter jurisdiction, holding that the assignments of Cotton’s claim to Court Properties and then to the Crabtrees were champertous and void under Mississippi law. Consequently, the court found that the Crabtrees lacked Article III standing as they had not suffered any injury from Allstate.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court certified a question to the Supreme Court of Mississippi regarding the validity of the assignments under Mississippi’s champerty statute. The Supreme Court of Mississippi held that the statute prohibits a disinterested third party engaged by a bankruptcy creditor from purchasing a cause of action from a debtor’s estate. Based on this ruling, the Fifth Circuit held that the assignment of Cotton’s claim to Court Properties was void, and thus, the Crabtrees did not possess Cotton’s bad-faith claim. Therefore, the Crabtrees lacked standing to sue Allstate, and the district court’s dismissal was affirmed. View "Crabtree v. Allstate Property" on Justia Law