Justia U.S. 5th Circuit Court of Appeals Opinion SummariesArticles Posted in Insurance Law
Talasek v. National Oilwell Varco, LP
The Fifth Circuit affirmed the denial of insurance benefits in an action brought by plaintiff, seeking benefits in the amount of $300,000 following her husband's death. The court concluded that plaintiff's estoppel claim failed where her reliance on NOV's statements and deductions were not reasonable because the provision of the group life insurance policy that required her husband to complete an Evidence of Insurability form before coverage could begin was unambiguous. In this case, plaintiff's husband was on notice that coverage applied for during an annual enrollment period began at midnight following the later of two conditions: (1) the first day of the next plan year; and (2) the date Unum approved his evidence of insurability form for life insurance. Furthermore, the Summary of Benefits made clear that this was also the case for changes in coverage, and that NOV's representations were not Unum's. Therefore, the district court did not err in granting summary judgment to NOV on plaintiff's estoppel claim. View "Talasek v. National Oilwell Varco, LP" on Justia Law
Jung v. Starr Surplus Lines Insurance Co.
The Fifth Circuit reversed the district court's grant of summary judgment in favor of the insurer in an insurance coverage dispute regarding flood damage to the property at issue. The insureds interpreted the flood deductible in the policy as covering most of the damage to the property, but the district court determined that the policy is unambiguous and adopted the insurer's interpretation.The court applied Louisiana law and concluded that the policy is ambiguous. The court explained that the predominant use of "Total Contract Value" to denote the value of the entire project indicates that the policy, read in its entirety, does not provide clarity regarding the term "total insured values at risk . . . as respects flood." The court remanded for the district court to determine whether extrinsic evidence resolves the ambiguity. View "Jung v. Starr Surplus Lines Insurance Co." on Justia Law
HM International, LLC v. Twin City Fire Insurance Co.
The Fifth Circuit reversed the district court's grant of summary judgment in favor of Twin City in an action brought by HMI, alleging that Twin City had breached its duty to indemnify. HMI provides various accounting and financial services for Greg and Kathy Geib. The district court interpreted the policy as not covering settlement payments made after limitations for the underlying negligent conduct had expired.The court concluded that the district court erred for two reasons: first, the district court did not account for the policy's definition of the term "claim," instead treating it as synonymous with "cause of action;" and second, the district court interpreted the phrase "legally liable to pay" to mean effectively that HMI actually lost or would have lost had the Geibs filed suit. With these two clarifications, the court concluded that HMI's settlement payment constitutes a loss because it is an amount that HMI is legally liable—through contract—to pay to the Geibs as a result of the demand letter. Furthermore, the fact that the Geibs never filed their threatened suit and that the limitations period had seemingly run does not change that. Finally, the court rejected Twin City's two alternative arguments. View "HM International, LLC v. Twin City Fire Insurance Co." on Justia Law
Frymire Home Services, Inc. v. Ohio Security Insurance Co.
Plaintiffs filed suit against OSIC after OSIC denied their claim seeking coverage under plaintiffs' policy for damage caused by a hailstorm. The district court ultimately granted OSIC summary judgment.The Fifth Circuit certified the following questions to the Supreme Court of Texas: (1) Whether the concurrent cause doctrine applies where there is any non-covered damage, including "wear and tear" to an insured property, but such damage does not directly cause the particular loss eventually experienced by plaintiffs; (2) If so, whether plaintiffs alleging that their loss was entirely caused by a single, covered peril bear the burden of attributing losses between that peril and other, non-covered or excluded perils that plaintiffs contend did not cause the particular loss; and (3) If so, whether plaintiffs can meet that burden with evidence indicating that the covered peril caused the entirety of the loss (that is, by implicitly attributing one hundred percent of the loss to that peril). View "Frymire Home Services, Inc. v. Ohio Security Insurance Co." on Justia Law
Maxim Crane Works, LP v. Zurich American Insurance Co.
The Fifth Circuit withdrew its prior opinion and substituted the following opinion.In this insurance coverage dispute, at issue is who counts as an "employee" under the Texas Anti-Indemnity Act (TAIA). The Fifth Circuit concluded that Zurich was not required to file a cross-appeal and thus dismissed the cross-appeal. The court also concluded that the Maxim Policy does not assign Maxim's rights to Zurich, and thus Maxim can pursue this claim against Zurich under the Berkel Policy.The court certified the following question to the Supreme Court of Texas: Whether the employee exception to the TAIA, Texas Insurance Code 151.103, allows additional insured coverage when an injured worker brings a personal injury claim against the additional insured (indemnitee), and the worker and the indemnitee are deemed "co-employees" of the indemnitor for purposes of the TWCA. View "Maxim Crane Works, LP v. Zurich American Insurance Co." on Justia Law
Maxim Crane Works, LP v. Zurich American Insurance Co.
In this insurance coverage dispute, at issue is who counts as an "employee" under the Texas Anti-Indemnity Act (TAIA). The Fifth Circuit certified the following question to Supreme Court of Texas: Whether the employee exception to the TAIA, Texas Insurance Code 151.103, allows additional insured coverage when an injured worker brings a personal injury claim against the additional insured (indemnitee), and the worker and the indemnitee are deemed "co-employees" of the indemnitor for purposes of the TWCA. View "Maxim Crane Works, LP v. Zurich American Insurance Co." on Justia Law
Turner v. Cincinnati Insurance Co.
After obtaining a default judgment in state court against defunct entities, six plaintiffs filed this coverage action to collect on that judgment from the entities' insurer. Although the Fifth Circuit disagreed with the district court's determination that plaintiffs lacked standing to sue the insurer without either an adversarial judgment against the entities or a valid assignment from the entities, the court agreed with the district court that plaintiffs' claims against the entities fell outside the scope of the entities' liability insurance coverage. Accordingly, the court affirmed the district court's grant of summary judgment in favor of Cincinnati. Finally, the court concluded that the district court did not abuse its discretion in denying intervenor's motion to intervene. View "Turner v. Cincinnati Insurance Co." on Justia Law
Randel v. Travelers Lloyds of Texas Insurance Co.
Plaintiffs filed a claim on their homeowners' insurance policy with Travelers after a fire at their home. Travelers made some early payments; plaintiffs asserted that much more was owed; the parties agreed to an appraisal; the appraisal award came in closer to plaintiffs' view of the damages; and Travelers paid the additional amount.The Fifth Circuit held that the payment of the appraisal award prevents a plaintiff from continuing to pursue a breach of contract claim against an insurer. The court also held that an insurer can be liable under the Texas Prompt Payment of Claims Act for failing to timely pay the full damages it owed even though it timely made sizeable payments in response to the claim. The court explained that payment and acceptance of an appraisal award means there is nothing left for a breach of contract claim seeking those same damages. But a plaintiff may still have a claim under the prompt payment law after it accepts an appraisal award. Furthermore, the Supreme Court of Texas recently held that even a preappraisal payment that seemed reasonable at the time does not bar a prompt-payment claim if it does not "roughly correspond" to the amount ultimately owed. See Hinojos v. State Farm Lloyds, 619 S.W.3d 651, 658 (Tex. 2021).In this case, the court affirmed the dismissal of the contract claims where there is no evidence that Travelers failed to pay any amounts due and plaintiffs failed to explain why the amount paid was insufficient. However, in light of Hinojos, the court concluded that Travelers' preappraisal payment is not a defense to liability under the Texas Prompt Payment of Claims Act. Therefore, plaintiffs' claim seeking interest for late payment of dwelling coverage must be remanded. View "Randel v. Travelers Lloyds of Texas Insurance Co." on Justia Law
Air Evac EMS, Inc. v. Sullivan
The Texas Workers' Compensation Act (TWCA), Tex. Lab. Code 401.007–419.007, regulates the prices that insurers must pay to providers for various medical services utilized by their beneficiaries, including air transport services. However, those price restrictions conflict with the federal Airline Deregulation Act (ADA), which makes clear that the states "may not enact or enforce a law, regulation, or other provision . . . related to a price, route, or service of an air carrier that may provide air transportation under this subpart." 49 U.S.C. 41713(b)(1).The Fifth Circuit joined its sister circuits, which have unanimously held that the ADA preempts state price caps on air ambulance reimbursements, and that those state price caps are not saved by the McCarran–Ferguson Act. The court disagreed with the Texas Supreme Court, which has reached contrary conclusions by a divided vote. Therefore, in this case, the court affirmed the judgment and held that the TWCA regulations concerning the reimbursement of air ambulance providers like Air Evac are preempted by the ADA, and are not saved by the McCarran–Ferguson Act. View "Air Evac EMS, Inc. v. Sullivan" on Justia Law
Landry’s, Inc. v. The Insurance Company of the State of Pennsylvania
The Fifth Circuit reversed the district court's grant of summary judgment to ICSOP, concluding that the insurance company had a duty to defend its insured, Landry's, in the underlying data-breach litigation with Paymentech. In this case, Paymentech sought to recover amounts it paid to Visa and MasterCard customers, alleging that Landry's was obligated under the parties' agreement to pay the $20,062,206.88 collectively assessed by Visa and MasterCard. Landry's then filed a separate suit against ICSOP.The court applied Texas's eight-corners rule, which compared the four corners of the policy to the four corners of the Paymentech complaint, and concluded that the Paymentech complaint involves a "publication," and that Paymentech's alleged injuries arise from the violations of customers' rights to keep their credit-card data private. Therefore, ICSOP must defend Landry's in the underlying litigation. View "Landry's, Inc. v. The Insurance Company of the State of Pennsylvania" on Justia Law