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

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

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

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

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

After plaintiff filed suit under the Employee Retirement Income Security Act (ERISA) to recover long-term disability benefits from MetLife, the district court severed the coverage issue from the remaining issues. At issue in regards to coverage was whether Standard, the carrier for calendar year 2016, or MetLife, the carrier for 2017, provided coverage. The district court concluded that Standard, which had been previously dismissed, covered this claim.The Fifth Circuit reversed, concluding that the court's reading of the Standard and MetLife policies lead it to conclude that Standard provided no coverage and coverage was afforded to plaintiff under MetLife's policy. The court explained that the Standard and MetLife policies outline how to transition coverage between old and new policies, as well as provide special rules for employees who temporarily recover during a transition. In this case, the plain language of the policies make it clear that plaintiff's benefits coverage for his alleged long-term disability shifted from Standard to MetLife. Accordingly, the court remanded for further proceedings. View "Talamantes v. Metropolitan Life Insurance Co." on Justia Law

After plaintiff filed suit against Reliance for denying his long-term disability claim, the district court granted summary judgment in favor of Reliance. The district court concluded that plaintiff's absence on medical leave at the time Reliance took over his group policy created a gap in his coverage and rendered his complained-of disability an excluded preexisting condition.The Fifth Circuit reversed and rendered judgment in favor of plaintiff, concluding that the district court misread the policy. The court held that the insurance plan's Transfer Provision, which determines whether employees covered under the group's previous plan with Prudential remained continuously insured when Reliance's policy took effect, applies to plaintiff. Therefore, the plan covered plaintiff when it took effect on September 1, 2015, during his leave, and thus Reliance wrongly denied his disability claim. Accordingly, the court remanded for determining the amount of plaintiff's benefit. View "Miller v. Reliance Standard Life Insurance Co." on Justia Law

The Fifth Circuit certified the following questions to the Supreme Court of Texas: 1. Whether Dillon Gage's losses were sustained consequent upon handing over insured property to UPS against a fraudulent check, causing the policy exclusion to apply. And if that answer is yes: 2. Whether UPS's alleged errors are considered an independent cause of the losses under Texas law. View "Dillon Gage, Inc. v. Certain Underwriters at Lloyds" on Justia Law

Hall filed various contract, statutory, and common-law claims against Old Republic in federal district court for failing to indemnify Hall under its title insurance policies. The district court concluded that, although the unpaid Penta pre-policy-date work is a defect under Covered Risk 2 and an encumbrance under Covered Risk 10, coverage is precluded by Exclusions 3(a) and 3(d), which bar claims for liens and work performed after the policy date. The district court found that Hall had not raised a genuine dispute of material fact that Penta's liens were for unpaid work before the policy date, and granted Old Republic's motion for summary judgment and denied Hall's motion for partial summary judgment.The Fifth Circuit concluded that the insuring clauses do not cover Hall's Penta lien losses. The court explained that any doubt about whether Covered Risks 2 and 10 could possibly be read to cover the Penta lien losses at issue here is removed by the fact that the parties also signed standard ALTA Form 32-06. In so doing, the parties specifically contracted to eliminate one coverage provision of the standard-form insurance policy—Covered Risk 11(a). Even assuming arguendo that the 32-06 endorsements and the Covered Risks conflict or result in an ambiguity about whether the Penta lien losses are covered, the court explained that it is the more general provisions that suggest that there may be coverage (under Hall's theory), while the more specific provisions instruct that there is no such coverage. Under basic principles of contract interpretation, the specific controls the general. Therefore, the court need not review the district court's conclusions regarding Exclusions 3(a) and 3(d) to affirm the judgment.The court also affirmed the district court's grant of Old Republic's motion for summary judgment on Hall's bad-faith and Texas Insurance Code claims. The court explained that, because Hall is not entitled to indemnification for the Penta lien losses, Hall cannot show that Old Republic acted in bad faith in denying its claim. Furthermore, because Hall alleges no other harm apart from the Penta lien losses, Hall cannot demonstrate that Old Republic caused it any harm in violating the Texas Insurance Code—assuming arguendo that the Texas Insurance Code applies, and that Old Republic ran afoul of its provisions. Finally, the court affirmed the district court's grant of Old Republic's motion for summary judgment on Hall's independent-counsel (or duty-to-defend) claim. View "Hall CA-NV, LLC v. Old Republic National Title Insurance Co." on Justia Law

After a Texas condo association suffered property damage during Hurricane Harvey, it filed a property-damage claim against its insurer. When the insurer refused to pay, the association filed suit for breach of its insurance contracts.The Fifth Circuit affirmed the district court's grant of summary judgment in favor of the association, holding the insurer liable. Applying de novo review, the court held that the association established coverage and that the insurer failed to prove that an exclusion applies. In this case, the association met its burden to show that its boat slips are covered in the absence of an applicable exclusion. Furthermore, in the face of an affidavit tending to establish that the boat slips were not destroyed by a "flood," the insurer could not carry its legal burden to prove one of the "flood" exclusions by submitting nothing. The court explained that this is particularly true where the policy exclusions on their face do not apply to the loss of the association's boat slips. Finally, the insurer conceded in the district court that the association's boat slips are covered by the storage provision, and the insurer cannot rely on the governmental-body exclusion. View "Playa Vista Conroe v. Insurance Company of the West" on Justia Law

After Mark Braswell died when his road bike collided with a stopped truck, his survivors filed suit against the truck's owner, the Brickman Group. Brickman was primarily insured by ACE and secondarily insured by AGLIC. ACE rejected plaintiffs' three settlement offers before and during trial. The jury ultimately awarded plaintiffs nearly $28 million, plaintiffs and Brickman settled for nearly $10 million, and AGLIC paid nearly $8 million of the amount. AGLIC then filed suit against ACE, arguing that because ACE violated its Stowers duty to accept one of the three settlement offers for the primary policy limits, ACE had to cover AGLIC's settlement contribution. The district court agreed.The Fifth Circuit affirmed the district court's judgment and held that ACE's Stowers duty was triggered by plaintiffs' third offer, and that ACE violated this duty. In this case, the offer generated a Stowers duty because it "proposed to release the insured fully" and it was not conditional. Furthermore, the evidence was sufficient to support that ACE violated its Stowers duty by failing to reevaluate the settlement value of the case and accept plaintiffs' reasonable offer. View "American Guarantee & Liability Insurance Co. v. ACE American Insurance Co." on Justia Law