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

Georgia-Pacific appealed the district court's declaratory judgment that Kinsale owed no indemnity under a policy it had issued to Georgia-Pacific. The district court found that a policy exclusion applied that related to claims brought by one insured against another. Georgia-Pacific hired Advanced for demolition work on Georgia-Pacific’s idled plywood plant in Gloster, Mississippi. Advanced was covered by a Commercial General Liability policy written by Kinsale. Georgia-Pacific was an additional insured under the policy. Lawsuits arose after a fire occurred at the plant, damaging equipment Advanced leased from H&E for the demolition work. H&E filed suit against Advanced and Advanced filed a third-party demand for indemnification against Georgia-Pacific. Georgia-pacific then filed a claim for coverage under the Kinsale policy for any indemnification it might be found to owe Advanced. Kinsale denied coverage based on a policy exclusion. The court concluded that the insured versus insured exclusion does not apply. In this case, Advanced “brought” a “claim” against another insured, Georgia-Pacific, but it was not one for “property damage.” The plain meaning of the exclusion makes it inapplicable to an indemnity claim. Accordingly, the court reversed and remanded. View "Kinsale Ins. Co. v. Advanced Services, Inc." on Justia Law

Plaintiffs filed a qui tam action under the False Claims Act (FCA), 31 U.S.C. 3729 et seq., claiming that State Farm submitted false claims to the government for payment on flood policies arising out of damage caused by Hurricane Katrina. On appeal, plaintiffs primarily challenged the district court's discovery ruling and State Farm principally challenged the jury verdict. The court concluded that the district court's denial of plaintiffs' request for additional discovery after the verdict in their favor was an abuse of discretion because it affected plaintiffs' substantial rights and therefore, the court reversed the district court’s decision. However, the court affirmed the district court’s decisions with respect to the seal violations, subject matter jurisdiction, and State Farm’s motion for judgment as a matter of law. The court remanded for further proceedings. View "Rigsby v. State Farm Fire & Casualty Co." on Justia Law

TES filed suit against State Farm, seeking a declaratory judgment that State Farm owes TES a duty to defend in an underlying lawsuit with Robin Singh Education Services involving test preparation services. The court concluded that the factual allegations in Singh’s Amended Counterclaim do not potentially include a trade dress infringement claim. Instead, the Amended Counterclaim alleges trademark infringement and false advertising claims. Neither of those claims is covered under the policy. Therefore, the district court was correct to grant summary judgment in favor of State Farm and the court affirmed the judgment. View "Test Masters Educ. Svc. v. State Farm Lloyds" on Justia Law

Plaintiff filed suit against State Farm, seeking damages based on an uninsured motorist claim, bad-faith denial of the claim, and conversion. The district court granted summary judgment to State Farm and granted State Farm's motion to amend the judgment after a jury verdict on compensatory damages. The court concluded that plaintiff has not shown a genuine dispute of material fact that would have justified the denial of summary judgment on the claim of bad faith in refusing to offer payment of the policy limit on his claim; because State Farm has an arguable basis for the denial of plaintiff's claim for policy limits, the court need not consider whether the conduct was sufficiently egregious to rise to the level of an independent tort; and State Farm did not waive its argument that plaintiff's damages could not be more than that of the policy limit because it moved to have evidence of the policy limit excluded at trial. Accordingly, the court affirmed the judgment. View "Dey v. State Farm Mutual Auto Ins. Co." on Justia Law

Endeavor and Basic entered into a master services agreement (MSA) containing an indemnity provision in which they agreed to cover any liability resulting from claims brought by their own employees, even if the other party was at fault. Ironshore, Endeavor's excess insurer, subsequently filed suit against Basic's excess insurers for a declaratory judgment, contending that Basic's insurers are obligated to provide coverage up to the full limits of their policies because the policies do not expressly limit the coverage available to an additional insured like Endeavor. In light of the Supreme Court's decision in In re Deepwater Horizon, the court affirmed the district court's grant of summary judgment to defendants because Basic was only "obliged" to procure $5 million in insurance. The court interpreted Deepwater Horizon to hold that the "Insured Contract" provision, standing alone, was a sufficient ground to incorporate the Drilling Contract's limitation on coverage for above-surface pollution. View "Ironshore Specialty Ins Co. v. Aspen Underwriting" on Justia Law

Plaintiffs filed suit against Fidelity, alleging numerous federal and state law claims after Fidelity denied flood insurance coverage. In this interlocutory appeal, Fidelity sought review of the district court's denial of its motion for summary judgment. In light of binding precedent, the court concluded that plaintiff's state-law causes are not preempted by federal law to the extent that they are insurance procurement claims, but claims that pertain to or arise out of “claims handling” after the policy issued are preempted. The court further concluded that, even though not preempted, certain claims cannot succeed as a matter of law. Accordingly, the denial of Fidelity's motion for summary judgment was erroneous in part and the court remanded for further proceedings. View "Spong v. Fidelity Nat'l Prop. & Cas. Ins." on Justia Law

This case arose from a complicated series of transactions often called “fronting arrangements” in the insurance industry. Lincoln was awarded $16.5 million on its tortious interference claims against CSi and Alpha. The case involved the diversion of funds from a reinsurance arrangement involving insurer Lincoln and a claims administrator, U.S. Auto. Numerous issues were raised on appeal. The court affirmed: (1) the judgment entered against CSi and Alpha; (2) the grant of summary judgment on Lincoln’s conversion claims; (3) the denial of Lincoln’s cross-motion for summary judgment on its fiduciary duty claims; and (4) the denial of the motion to alter the judgment to include ZVN. The court also held that Lincoln forfeited the right to appeal the dismissal of its claims against Doug Maxwell asserting alter ego liability. The court reversed: (1) the refusal to alter the judgment to include Lincoln General’s breach of contract claim against U.S. Auto; (2) the grant of summary judgment on all the fiduciary duty claims that Lincoln appealed, including the claims for aiding and abetting; and (3) the tortious interference claim against Jim Maxwell. Accordingly, the court remanded for further proceedings. View "Lincoln Gen. Ins. Co. v. U.S. Auto Ins." on Justia Law

Arch Specialty Insurance Company appealed the grant of summary judgment in favor of Amerisure Mutual Insurance Company. In 2006, Amerisure issued a Texas Commercial Package Policy to Admiral Glass & Mirror Co. The policy afforded coverage in excess of any coverage afforded by a controlled insurance program policy. Arch issued an Owner Controlled Insurance Program (“OCIP”) policy to Endeavor Highrise, LP and its contractors and subcontractors for bodily injury and property damage arising out of construction of the Endeavor Highrise. Admiral was a subcontractor insured under the OCIP policy. Endeavor sued Admiral and others for faulty work. Amerisure tendered the lawsuit to Arch as the primary insurer. Prior to Arch accepting the defense, Amerisure incurred $23,879.27 in defense fees. In April 2012, Arch withdrew from defense of the Endeavor lawsuit asserting that attorneys’ fees, defense costs, and settlements of $2,000,000.00 from defending Admiral and other subcontractor defendants exhausted policy limits. Amerisure took over the defense and incurred additional fees and costs of $114,957.14 before settling the claims against Admiral. In total, Arch paid a settlement of $1,555,000.00 and defense costs of $159,543.15 under the general coverage limit of the OCIP, and paid settlements totaling $1,472,032.61 and defense costs of $527,967.36 under the products-completed operations coverage of the OCIP policy. Amerisure sued Arch in Texas state court for breach of contract, contending that Arch wrongfully refused to defend and indemnify Admiral. Amerisure argued on appeal that the term “expenses” in the Supplementary Payments provision did not include attorneys’ fees and other costs of defense. It also argued that, even if “expenses” includes defense costs, the effect of the statement “All other terms and conditions of this Policy remain unchanged” read together with the language that the duty to defend expires when “we have used up the [policy limits] in the payment of judgments or settlements” means that the policy limits are eroded only by payment of “judgments or settlements,” not defense costs. For its part, Arch argued that “expenses” included defense costs and that the endorsement controlled over any contrary language such that it converts this policy into an eroding policy. The Fifth Circuit agreed with Arch, concluding that the endorsement transformed the policy into an “eroding limits” policy. The Court affirmed the district court’s judgment regarding the duty to indemnify, reversed the district court’s judgment regarding the duty to defend, and rendered judgment for Arch. View "Amerisure Mutual Ins. Co. v. Arch Specialty Ins. Co." on Justia Law

Plaintiff filed suit against Reliance Standard after she was denied extended long-term disability benefits. The district court granted summary judgment in favor of Reliance Standard and plaintiff appealed. The court concluded that Reliance Standard's decision to deny benefits was supported by substantial evidence where the record demonstrated that plaintiff can perform all of the job duties of a sedentary vocation on a full-time basis before discontinuing benefits; Reliance Standard provided a full and fair review of plaintiff's claim; Reliance Standard's decision was not "procedurally unreasonable;" and Reliance Standard did not improperly fail to allow plaintiff to supplement the administrative record. Accordingly, the court affirmed the judgment. View "Killen v. Reliance Standard Life Ins. Co." on Justia Law

Symetra appealed the district court's refusal to award attorneys' fees under the Texas and Washington State Structured Settlement Protection Acts (SSPAs). Rapid cross appealed the district court's award of attorneys' fees as damages for tortious interference and the district court's permanent injunction, arguing that the injunction relies on an erroneous interpretation of the SSPAs. The court concluded that the district court erroneously held that Symetra could not recover any fees under the SSPAs where specific transfers were challenged throughout this litigation and Symetra can recover some portion of its fees related to some of those transfers. Therefore, remand is appropriate, but Symetra bears the burden of segregating fees and the district court retains discretion to deny Symetra's attorneys' fees request for failure to segregate. The court also concluded that the district court's award of fees incurred in state court with respect to one annuitant as damages for tortious interference under Texas law was proper where the natural and proximate cause of Rapid's conduct toward the annuitant was to drag Symetra into Indiana state court litigation. The district court's requirement that state court transfer orders also list first-refusal rights contravenes the SSPAs. However, the court found no error in the district court's analysis of first refusal rights under the SSPAs. Accordingly, the court affirmed in part, reversed in part, and remanded for further proceedings. View "Symetra Life Ins. Co. v. Rapid Settlements, Ltd." on Justia Law