Justia U.S. 5th Circuit Court of Appeals Opinion SummariesArticles Posted in Insurance Law
Eastern Concrete Materials, Inc. v. ACE American Insurance Co.
GAIC filed suit seeking a declaratory judgment that it was not required to defend or indemnify Eastern Concrete because of a pollution exclusion in its insurance policy. The Fifth Circuit affirmed the district court's denial of Eastern Concrete's motion to dismiss for lack of personal jurisdiction and grant of GAIC's motion for summary judgment. After determining that the district court properly exercised personal jurisdiction over Eastern Concrete, the court held that, under Texas law, an unplanned discharge of "rock fines," pellets produced during the course of quarry operations, is not covered by a company's umbrella insurance policy and is excluded by a pollution exclusion. In this case, rock fines are "contaminants" under the policy at issue and thus GAIC had no duty to defend or indemnify Eastern Concrete. View "Eastern Concrete Materials, Inc. v. ACE American Insurance Co." on Justia Law
Aggreko, LLC v. Chartis Specialty Insurance Co.
These consolidated actions arose from fatal injuries suffered by James Andrew Brenek, II when he was electrocuted by an electrically-energized generator housing cabinet on a rig in Jefferson County, Texas. Brenek was employed by Guichard, which had leased the generator involved in the accident from Aggreko. Guichard had a primary commercial liability policy with Gray and an excess commercial liability policy with Chartis. Aggreko had a primary insurance policy with Indian Harbor. Indian Harbor appealed the district court's grant of summary judgment for Gray, and Gray conditionally appealed the district court's decision to apply Texas, rather than Louisiana, law to the issues before it. The Fifth Circuit affirmed the district court's judgment, concluding that the outcome of the dispute would be the same under both Texas and Louisiana law. Therefore, the court need not engage in a conflict-of-laws analysis and applied Texas law. Under Texas law, the court held that Gray exhausted its policy limit and its duty to defend Aggreko when it paid $950,000—the remainder of its liability coverage limit—to the Breneks in exchange for the Breneks agreement not to execute any judgment against Aggreko and to recognize Aggreko's entitlement to claim a $950,000 damages credit. View "Aggreko, LLC v. Chartis Specialty Insurance Co." on Justia Law
Greenwich Insurance Co. v. Capsco Industries, Inc.
After a subcontractor (Capsco) was held liable, in state court, to a company (Ground Control) with which it had contracted for what the latter had expended for labor and materials on a construction project, the subcontractor's liability insurers (Greenwich) successfully sought a declaration in federal court that it did not owe a duty to indemnify. Applying Alabama law, the Fifth Circuit affirmed, holding that Capsco's obligation was to pay the party with whom it contracted for its work; because of the failure of either party to get a certificate of responsibility, any right to recovery in the litigation shifted from contract to quantum meruit; and thus Capsco was obligated to pay the reasonable value of the services Ground Control provided, rather than for property damage or loss of its use. Finally, the court denied Ground Control's motion to vacate the district court's judgment and dismiss the case without prejudice. View "Greenwich Insurance Co. v. Capsco Industries, Inc." on Justia Law
ADI Worldlink, LLC v. RSUI Indemnity Co.
The Fifth Circuit affirmed the district court's judgment in an action where the insurance company denied the policyholder's claims under a directors and officers liability policy. The district court held that the insured had learned of a related claim when the previous year's policy was in effect. Therefore, under clear policy provisions, the first policy was the one to cover all of the claims. The court affirmed and held that the 2015 claims arising from lawsuits that were related to the others brought in 2014 were governed by the earlier policy. Therefore, the absence of timely notice meant the claims were properly denied. For the same reasons, the court held that there was no relief to Worldlink under the Texas Prompt Payment Claim. View "ADI Worldlink, LLC v. RSUI Indemnity Co." on Justia Law
Smith v. Travelers Casualty Insurance Co.
The Fifth Circuit affirmed the district court's grant of summary judgment for Travelers in an action brought by the insured, alleging contractual and statutory violations arising from the denial of her commercial property insurance claim. The court agreed with the district court that all of Travelers's limitations defenses were raised at a pragmatically sufficient time and that the insured was not prejudiced in her ability to respond. The court held that the insured's injury was inherently discoverable and the court need not reach the question of whether it was objectively verifiable. Therefore, the discovery rule was unavailable in this case. The court held that, because the insured's causes of action accrued on November 13, 2013, her January 25, 2016 suit was untimely. View "Smith v. Travelers Casualty Insurance Co." on Justia Law
Netto v. Atlantic Specialty Insurance, Co.
The Fifth Circuit considered an issue of first impression under Mississippi insurance law: may an insurer rely on a consent-to-settle exclusion in an insurance policy to deny coverage of a claim made by an unnamed additional insured under that policy? The court held that absent evidence that the unnamed insured knew or should have known of the exclusion, the insurer may not enforce its contractual right to deny coverage because it had not consented to the settlement. In this case, there was no evidence that Atlantic attempted to inform plaintiff of the policy terms, and indeed there was testimony that policy was not released to Pearl River County Employees as a matter of county policy. Accordingly, the court affirmed the district court's denial of Atlantic's motion for summary judgment. View "Netto v. Atlantic Specialty Insurance, Co." on Justia Law
Frederking v. Cincinnati Insurance Co.
The district court granted summary judgment to Cincinnati in an insurance coverage dispute action, concluding that the insured's intentional decision to drive while intoxicated meant that the collision was not an "accident" under Texas law. The Fifth Circuit reversed, holding that, as a matter of plain meaning and common usage, the term "accident" plainly includes the drunk driving collision that gave rise to this dispute. The court rejected Cincinnati's arguments to the contrary and held that Texas Supreme Court precedent did not command a different result. Accordingly, the court remanded for further consideration. View "Frederking v. Cincinnati Insurance Co." on Justia Law
SEC v. Stanford International Bank, Ltd.
Appellants challenged the approval of a global settlement between the receiver for Stanford International Bank and related entities, and various insurance company underwriters, who issued policies providing coverage for fidelity breaches, professional indemnity, directors and officers protection, and excess losses. The Fifth Circuit vacated the district court's order approving the settlement and bar orders, holding that the district court lacked authority to approve the receiver's settlement to the extent it nullified the coinsureds' claims to the policy proceeds without an alternative compensation scheme; released claims the estate did not possess; and barred suits that could not result in judgments against proceeds of the underwriters' policies or other receivership assets. Accordingly, the court remanded for further proceedings. View "SEC v. Stanford International Bank, Ltd." on Justia Law
Ekhlassi v. National Lloyds Insurance Co.
42 U.S.C. 4072, which provides for original exclusive jurisdiction in district court and a one-year limitations period, is applicable to actions against Write-Your-Own (WYO) carriers. WYO are private insurers which issue flood insurance policies underwritten by the Government in their own names as part of the National Flood Insurance Program created by the National Flood Insurance Act. The Fifth Circuit affirmed the district court's grant of summary judgment for the insured, holding that this WYO action did not arrive in federal court within one-year of the insured's claim denial and was therefore time-barred under section 4072. View "Ekhlassi v. National Lloyds Insurance Co." on Justia Law
McGlothin v. State Farm Mutual Insurance Co.
Mississippi Code 83-11-101(1) and 83-11-103(c)(vi) of Mississippi's Uninsured Motorist Act are not repugnant. Section 83-11-101(1) requires that automobile insurers provide UM coverage to the extent the insured is "legally entitled to recover" and section 83-11-103(c)(vi) defines "uninsured motor vehicle," as used in the UM Act, to include a vehicle "owned or operated by a person protected by immunity under the Mississippi Tort Claims Act." In this case, the Fifth Circuit held that the insured was not legally entitled to recover from the fireman, the fire department, or the city, and thus was not legally entitled to recover UM benefits from State Farm. Accordingly, the court vacated the district court's grant of summary judgment for the insured and rendered judgment for State Farm. View "McGlothin v. State Farm Mutual Insurance Co." on Justia Law