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

MRMC purchased a primary-insurance policy from Zurich and excess insurance from AXIS. MRMC filed suit to recover under its primary- and excess-insurance policies after suffering losses in a state lawsuit. The trial court granted AXIS summary judgment. The court held that the AXIS policy unambiguously precludes exhaustion by below-limit settlement. In this case, the AXIS policy is not triggered where MRMC pays the difference between Zurich’s liability limit and a below-limit settlement releasing Zurich of any further obligations. Accordingly, the court affirmed the judgment. View "Martin Resource Mgmt. Corp. v. Zurich Am. Ins." on Justia Law

Plaintiff appealed the district court's grant of summary judgment to State Farm in plaintiff's suit contending that State Farm's breach of its fiduciary duty caused the excess judgment in an underlying lawsuit. The court made an Erie guess that the Mississippi Supreme Court would not impose a duty to timely offer to settle a claim in which the claim amount greatly exceeds the policy limits, absent a settlement offer by the third-party claimant. Further, an insurer has no duty to timely disclose the policy limits to a third-party claimant. The court also concluded that the district court did not err in finding no genuine dispute that the excess judgment was not caused by State Farm’s failure to advise plaintiff of his potential excess exposure and right to retain independent counsel. Accordingly, the court affirmed the judgment. View "Hemphill v. State Farm Mut. Auto. Ins." on Justia Law

Allstate filed suit against telemarketing companies, chiropractic clinics, and affiliated law offices spanning several states, contending that they had violated the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962, by defrauding insurance companies such as Allstate. Defendants would convince persons who had been in vehicle accidents but were not at fault to receive unnecessary chiropractic services. Defendants would then file third-party claims against the at-fault party's insurer. A jury returned a verdict for Allstate, including a sizable award and attorney's fees. Both parties appealed. The court concluded that the jury could reasonably infer that the scheme was fraudulent and that using the mail or wire services was inevitable. Consequently, it makes no difference that Defendants Friedman, Toca, and Plambeck did not take the x-rays at issue. The court also concluded that Allstate presented sufficient evidence to satisfy the unchallenged jury instruction regarding proximate cause; given the court's highly deferential standard of review and the evidence presented to show the inappropriateness and unreasonableness of the entire course of treatments prescribed by the chiropractors, this case does not suffer from the same flaws as did Receivable Finance, where the court concluded that Allstate's damages were too speculative; and the court rejected defendants' claims that the statute of limitations bars certain of Allstate's claims and that the district court erred in admitting Allstate's experts. The court also concluded that the district court did not abuse its discretion in awarding attorney's fees and prejudgment interest. Accordingly, the court affirmed the judgment. View "Allstate Ins. Co. v. Plambeck" on Justia Law

In this breach of contract dispute, a jury found that St. Paul breached its insurance contract with plaintiff by failing to pay plaintiff’s insurance claim for costs associated with the “loss of control” of an oil well that plaintiff operated in Lavaca County, Texas. St. Paul was ordered to pay plaintiff damages and the district court subsequently awarded penalty interest to plaintiff under the Texas Prompt Payment of Claims Statute, Texas Insurance Code 542.051-.061. Both parties appealed. The court rejected St. Paul's contention that the district court misinterpreted and misapplied section 542.056 of the Prompt-Payment Statute when it determined that St. Paul violated that section of the statute. The court affirmed the district court’s factual finding that the few additional items at issue did not operate to nullify application of section 542.056, and that, based on the facts in this case, the district court correctly found that the fifteen-day deadline under section 542.056 began to run on November 6, 2009. As for plaintiff's contentions, the court held that the district court properly granted judgment as a matter of law, because there was no legally sufficient evidentiary basis for a reasonable jury to have found that St. Paul violated section 541. Accordingly, the court affirmed the judgment of the district court in all respects. View "Weiser-Brown Operating Co. v. St. Paul Surplus" on Justia Law

In the underlying tort action, heirs of Mario Garcia filed suit against LCS, alleging claims of medical malpractice under state law and constitutional violations under 42 U.S.C. 1983. LCS then filed this action seeking a declaration that Lexington is required to defend and indemnify LCS in the underlying section 1983 action. The court concluded that the section 1983 claim is excluded from coverage by both the Commercial General Liability (CGL) and the Commercial Umbrella Liability (CUL) policies where the complaint fell within the meaning of the medical services exclusion in the CGL policy and the professional liability exclusion in the CUL policy. The court held that Lexington owes no duty to defend or indemnify LCS under the CGL policy; Lexington owes no duty to defend or indemnify LCS under the CUL policy; the district court did not err in granting summary judgment for Lexington under the CUL policy, but the district court erred in its judgment with respect to the CGL policy. Accordingly, the court affirmed in part, vacated in part, and remanded. View "LCS Corrections Services, Inc. v. Lexington Ins." on Justia Law

Bollinger filed suit against its insurers, seeking to enforce the parties' insurance contract after the United States sued Bollinger over a multimillion dollar contract to upgrade Coast Guard vessels. The district court granted summary judgment for the insurers. The court concluded that the contract between the parties did not require XL to defend Bollinger from the claims the United States brought, and Continental’s excess policy cannot give rise to coverage. The court declined to reach Bollinger's numerous other arguments raised on appeal. Accordingly, the court affirmed the judgment. View "XL Specialty Ins. Co. v. Bollinger" on Justia Law

Century filed suit seeking a declaratory judgment that it is not required to defend or indemnify the insured in an underlying suit. The district court dismissed the declaratory judgment action and all counterclaims. Because Clausen v. Fidelity & Deposit Co. of Md.’s interpretation of the Louisiana Unfair Trade Practices Act (LUTPA), La. Rev. Stat. 51:1406(1), makes clear that the district court was correct in holding that the insured failed to state a claim for unfair trade practices, the court affirmed the district court’s dismissal of that counterclaim; because the district court provided neither notice to the insured that it intended to dismiss all of its claims nor an opportunity to defend the sufficiency of the claims not challenged by Century, the court reversed the dismissal of these three counterclaims and remanded for further proceedings; and the court need not consider whether the district court applied the correct test or applied it correctly because some of the insured’s counterclaims have been remanded. The court vacated the dismissal of the declaratory judgment action and remanded. View "Century Surety Co. v. Blevins" on Justia Law

Plaintiffs filed suit against Liberty Mutual, seeking to recover flood-insurance proceeds after their house was damaged by Hurricane Isaac. Plaintiffs submitted an original signed, sworn proof of loss with the handwritten note “Will send supplement later," and later sought payment from Liberty Mutual for the supplemental amount without providing a second proof of loss.The district court granted summary judgment for Liberty Mutual. Consistent with the First and Eighth Circuits, the court held that a second proof of loss was necessary for plaintiffs to perfect their claim. Therefore, the court concluded that the district court properly granted summary judgment for Liberty Mutual. Because plaintiffs have made no argument that the evidence was indeed “newly discovered” for purposes of Rule 59(e), the court found no abuse of discretion in the district court’s denial of plaintiffs' motion for reconsideration. View "Ferraro v. Liberty Mutual Ins. Co." on Justia Law

Plaintiffs filed suit against Liberty Mutual, seeking to recover flood-insurance proceeds after their house was damaged by Hurricane Isaac. Plaintiffs submitted an original signed, sworn proof of loss with the handwritten note “Will send supplement later," and later sought payment from Liberty Mutual for the supplemental amount without providing a second proof of loss.The district court granted summary judgment for Liberty Mutual. Consistent with the First and Eighth Circuits, the court held that a second proof of loss was necessary for plaintiffs to perfect their claim. Therefore, the court concluded that the district court properly granted summary judgment for Liberty Mutual. Because plaintiffs have made no argument that the evidence was indeed “newly discovered” for purposes of Rule 59(e), the court found no abuse of discretion in the district court’s denial of plaintiffs' motion for reconsideration. View "Ferraro v. Liberty Mutual Ins. Co." on Justia Law

Cox spent millions of dollars cleaning up pollution and debris after Hurricane Katrina caused extensive damage to the oil-and-gas facilities it operated. St. Paul, Cox's liability insurer, reimbursed Cox for $1.4 million and then filed suit seeking a declaration that the remainder of Cox’s costs were not “pollution clean-up costs” covered by the policy. Cox counterclaimed. The district court entered judgment awarding Cox damages for breach of the policy and penalty interest under the Texas Prompt Payment of Claims Act, Tex. Ins. Code Ann. 542.051-.061. The court concluded that the plain language of the Act provides that a violation of any of the Act’s deadlines - including St. Paul’s violation of the section 542.055(a) deadline here - begins the accrual of statutory interest under section 542.060. Therefore, the court rejected St. Paul’s argument that, notwithstanding an insurer’s violation of section 542.055(a), interest cannot begin to accrue until 60 days after the insurer receives sufficient information which would allow the insurer to adjust the claim. Because this argument is the only argument that either party has raised against the district court’s determination of the interest-accrual period, the court found no reversible error in the district court’s award of penalty interest to Cox. Accordingly, the court affirmed the judgment. View "Cox Operating, LLC v. St. Paul Surplus Lines Ins. Co." on Justia Law