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

Articles Posted in Insurance Law
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BP retained the Responders (O’Brien’s and NRC) for nearly $2 billion to assist with the cleanup of the Deepwater Horizon oil spill. Thousands of the Responders' workers filed personal injury lawsuits against BP, which were consolidated and organized into “pleading bundles.” The B3 bundle included “all claims for personal injury and/or medical monitoring for exposure or other injury occurring after the explosion and fire of April 20, 2010.” In 2012, BP entered the “Medical Settlement” on the B3 claims with a defined settlement class. The opt-out deadline closed in October 2012. The Medical Settlement created a new type of claim for latent injuries, BackEnd Litigation Option (BELO) claims. After the settlement, plaintiffs could bring opt-out B3 claims if they did not participate in the settlement, and BELO claims if they were class members who alleged latent injuries and followed the approved process. Responders were aware of the settlement before the district court approved it but neither Responder had control over the negotiations, nor did either approve the settlement.In 2017, BP sought indemnification for 2,000 BELO claims by employees of the Responders. The Fifth Circuit held that BP was an additional insured up to the minimum amount required by its contract with O’Brien’s; the insurance policies maintained by O’Brien’s cannot be combined to satisfy the minimum amount. O’Brien’s is not required to indemnify BP because BP materially breached its indemnification provision with respect to the BELO claims. View "O'Brien's Response Management, L.L.C. v. BP Exploration & Production, Inc." on Justia Law

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Braylon Jordan swallowed small magnets when he was two years old. The magnets shredded his internal organs and necessitated surgery to remove most of his intestines, leaving him severely disabled. At issue in this appeal is whether there is insurance coverage for M&O's defense and for a partial settlement of the Jordans' claims.The Fifth Circuit concluded that, because no claim arising from Braylon Jordan's injuries was timely made against M&O during Evanston's policy period, Evanston is not obligated to provide M&O costs of its defense or coverage for the partial settlement between the Jordans and its then-CEO Craig Zucker. Accordingly, the court affirmed the district court's judgment that Evanston was not obligated to indemnify Zucker. However, the court reversed the district court's denial of Evanston's motion for summary judgment and rendered judgment in Evanston's favor. View "Jordan v. Evanston Insurance Co." on Justia Law

Posted in: Insurance Law
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In 2012, the Archdiocese purchased a roof membrane system from Siplast, for installation at a Bronx high school. Siplast guaranteed that the system would “remain in a watertight condition for a period of 20 years.” In 2016, school officials observed water damage in the ceiling tiles after a rainstorm and notified the installing contractor and Siplast. A designated Siplast contractor unsuccessfully attempted to repair the damage and prevent leaks. The Archdiocese ultimately obtained an estimate for remediation and replacement of approximately $5,000,000.The ensuing lawsuit alleged “Breach of the Guarantee” Siplast submitted a claim to its insurer, EMCC, asserting coverage under commercial general liability policies that covered “property damage” caused by an “occurrence,” defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The policies were subject to exclusions for “Your Product/Your Work” and “Contractual Liability.” The district court granted EMCC summary judgment, finding that while the complaint did allege property damage that was caused by an “occurrence,” the alleged damage fit within the Your Product/Your Work Exclusion. The Fifth Circuit reversed, finding that EMCC had a duty to defend. The underlying complaint contains allegations of damage to property other than Siplast’s roof membrane as part of the claim against Siplast; the exclusion does not apply. View "Siplast, Inc. v. Employers Mutual Casualty Insurance Co." on Justia Law

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TBB filed suit seeking to recoup losses stemming from the limitations on the operations of nonessential businesses during the COVID-19 pandemic through its commercial property insurance policy which covers business interruption losses caused by "direct physical loss of or damage to property."The Fifth Circuit concluded that the suspension of dine-in services during the COVID-19 pandemic is not a direct physical loss of or damage to property. Applying Texas law, the court concluded that the district court correctly determined that TBB's losses are not covered by either the business income and extra expense coverage (BI/EE) or the restaurant extension endorsement (REE) provision. Without coverage, the court need not address whether any policy exclusions also apply. In regard to TBB's extra-contractual claims, the court concluded that they were properly dismissed as abandoned. Finally, the court found no err in the district court's decision to deny TBB leave to amend. Accordingly, the court affirmed the district court's grant of judgment on the pleadings in favor of the insurer. View "Terry Black's Barbecue, LLC v. State Automobile Mutual Insurance Co." on Justia Law

Posted in: Insurance Law
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After a RealPage, Inc. employee clicked a fake link in a seemingly innocuous email and provided login information for RealPage's account with Stripe, Inc., a third party payment processor, phishers stole the login credentials and used them to divert millions of dollars in rent payments from tenants intended for RealPage's property manager clients. RealPage and Stripe recovered some of the stolen funds but lost about $6 million. RealPage reimbursed its clients and filed claims under its commercial crime insurance policies for the stolen funds, but its primary insurer denied coverage.The Fifth Circuit affirmed the district court's grant of summary judgment in favor of the insurer, concluding that the funds RealPage lost were not covered losses because RealPage never "held" them. Therefore, the insurer was within its rights to deny coverage of the stolen funds intended for RealPage's property manager clients. Furthermore, because the insurer's coverage was not exhausted, Beazley Insurance was also within its rights to deny coverage under RealPage's excess policy. Finally, because RealPage is not entitled to coverage under the policies at issue, its arguments that the insurer breached Chapter 541 and 542 of the Texas Insurance Code by not timely paying its claims are similarly without merit. View "Realpage, Inc. v. National Union Fire Insurance Co. of Pittsburgh" on Justia Law

Posted in: Insurance Law
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The Fifth Circuit concluded that Arch, the issuer of a commercial general liability policy, has a duty to defend a highway construction project's general contractor. In this case, the developer's claims against the project's general contractor implicate defective construction of the project's drainage systems; Archer Western constructed those drainage systems; and Archer Western's commercial general liability insurer (Arch) owes a duty to defend the general contractor (CTHC) in its underlying litigation with the developer. Accordingly, the court reversed the district court's judgment to the contrary. View "Zurich American Insurance Co. v. Arch Insurance Co." on Justia Law

Posted in: Insurance Law
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The insured's intended beneficiaries filed suit for breach of contract and violations of the Texas Insurance Code and Texas Prompt Payment of Claims Act in Texas court after the insurer denied coverage. After removal to federal court, the district court granted summary judgment in favor of the insurer.The Fifth Circuit reversed, concluding that the parties' arguments and the record presented to the district court at summary judgment reveal a genuine dispute as to whether the insured's application was amended. In this case, plaintiffs point to more than enough evidence in the record to raise a genuine dispute of fact as to whether there was a meeting of the minds to amend the application. Furthermore, because the district court's grant of summary judgment on plaintiffs' statutory, extracontractual claims was based on the conclusion that the insurer had legitimately denied plaintiffs' claim for benefits, the grant of summary judgment on the statutory, extra-contractual claims must also be reversed. Accordingly, the court remanded for further proceedings. View "Pham v. TransAmerica Premier Life Insurance Co." on Justia Law

Posted in: Insurance Law
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Plaintiffs filed suit alleging that Allstate breached the terms of their insurance policies by not using either the "Cost Approach" or "Comparable Sales Approach" to determine the "Actual Cash Value" (ACV) of their automobiles. The Fifth Circuit affirmed the district court's grant of Allstate's motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), concluding that neither the contract nor Texas state law requires either the Cost or the Comparable Sales Approach. View "Cody v. Allstate Fire and Casualty Insurance Co." on Justia Law

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This appeal stems from a dispute between Great American and Employers Mutual regarding their respective obligations to contribute to a $7 million settlement of a wrongful death suit arising out of a motor-vehicle accident. The district court assumed without deciding that the Employers Mutual policy was required to provide coverage before the Great American policy. However, the district court granted summary judgment in favor of Employers Mutual and concluded that Great American failed to allocate damages between covered and non-covered claims.The Fifth Circuit reversed and remanded, concluding that the district court was correct in its assumption that the EMC Umbrella Policy had priority of coverage but erred in granting summary judgment for Employers Mutual because Great American's evidence created a factual dispute on allocation. In this case, if true, the affidavits at issue established that the covered claims Great American paid on behalf of Employers Mutual were worth at least $7 million—thereby triggering and exhausting the EMC Umbrella Policy. View "Great American Insurance Co. v. Employers Mutual Casualty Co." on Justia Law

Posted in: Insurance Law
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Guzman applied for an Allstate life insurance policy in 2017. In his application, Guzman disclosed his history of seizures but denied using tobacco or nicotine products. After receiving some of Guzman’s medical records and the results of his blood and urine tests, Allstate issued him a $250,000 policy at a “Standard Non-Tobacco” annual premium rate. Guzman, then 28 years old, died in 2019, after suffering a seizure at work. Allstate began a contestable-claims investigation and obtained additional medical records, most of which described Guzman as a smoker. Two underwriting referrals determined that Guzman would not have been issued the same policy as a smoker. Allstate informed Gusman’s wife, Mirna, that it was rescinding the contract and gave her a $433 premium refund.Mirna sued Allstate for breach of contract and violations of the Texas Deceptive Trade Practice–Consumer Protection Act, and the Texas Insurance Code. Mirna denied that her husband was a smoker and submitted an affidavit from Guzman’s sister, Martha. The district court granted Allstate summary judgment. The Fifth Circuit reversed. Mirna’s and Martha’s affidavits are competent summary judgment evidence. Though self-serving, their testimony created a genuine dispute of material fact. Allstate’s evidence was insufficient to carry its summary judgment burden. The medical records were inconsistent and Allstate has not identified definitively the sources of the medical records information. View "Guzman v. Allstate Assurance Co." on Justia Law

Posted in: Insurance Law