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

Plaintiff filed a petition for damages in the 19th Judicial District Court in East Baton Rouge Parish. Plaintiff totaled his car in an accident and alleged that GoAuto, his car insurance carrier, paid less in policy benefits than his policy and Louisiana law required. GoAuto filed its notice of removal, Plaintiff received permission from the Louisiana court to amend his complaint again and, as accepted on appeal, filed the amended complaint. This amendment changed the definition of the class from class “residents of Louisiana” to class “citizens of Louisiana.” After removal, the parties filed several competing motions disputing which complaint controlled and the sufficiency of GoAuto’s notice of removal.   The Fifth Circuit affirmed the district court’s order remanding the case to state court, finding that Defendant is a citizen of Louisiana and thus the suit lacks the minimal diversity necessary to vest a federal court with jurisdiction. The court declined Defendant’s request to disregard the Louisiana state court’s pre-removal procedural rulings applying Louisiana law and substituted its own Erie guesses at how a Louisiana court ought to rule on a motion to amend a pleading.   Further, in regards to Defendant’s argument that it is plausible that some class members are not citizens of Louisiana, the court held that none of these individuals, assuming they had relocated to Colorado, Texas, or Florida before the filing of the complaint, qualify as citizens of Louisiana. Finally, the court held that Defendant points to nothing in the text of the statute that would bar Plaintiff’s class definition. View "Turner v. GoAuto Insurance" on Justia Law

Vista Health Plan, Inc., a small health insurance company in Texas, was assessed risk-adjustment fees that exceeded its premium revenue, causing the company to cease operations. The company and its parent, Vista Service Corporation, (collectively, Vista) sued HHS, HHS Secretary, the Centers for Medicare and Medicaid Services (CMS), and CMS Administrator Seema Verma (collectively, the HHS Defendants), challenging the risk-adjustment program and two rules promulgated pursuant to the program.The Fifth Circuit explained that determining whether the district court’s “final judgment” was truly an appealable judgment is necessary to establish whether the court has jurisdiction. The court explained that it has recognized an exception to the general rule and determined it had jurisdiction “when the agency would be unable to later appeal the issue that is the subject of the remand order,” such as when “all that is left for remand is a ministerial accounting.”Here, though the district court denied summary judgment as to Vista’s procedural due process claim, the court then explicitly entered a “Final Judgment” stating “nothing remains to resolve ... the case is hereby CLOSED”— suggesting the court “end[ed] the litigation on the merits.” The court held that the district court, in denying summary judgment on Vista’s procedural due process claim and then remanding it for further proceedings, did not yet fully dispose of the case., Thus, there was no appealable final judgment, and the court lacks jurisdiction to reach the substance of Vista’s appeal. View "Vista Health Plan v. HHS" on Justia Law

BITCO General Insurance Corporation (“BITCO”) and Monroe Guaranty Insurance Company (“Monroe”) issued general liability insurance policies to 5D Drilling & Pump Service Inc. (“5D”). A property owner sued 5D for breach of contract and negligence. BITCO sought a declaratory judgment that Monroe also owed a duty to defend 5D.The parties dispute whether any “property damage” alleged could have occurred during Monroe’s policy period. The magistrate found that damage must have occurred during a period when Monroe’s policy was in force.The court reasoned that under Texas law, courts determine whether an insurer’s duty to defend has been triggered by using the “eight corners” rule. The party seeking coverage has the initial burden of establishing that the underlying claims potentially state a cause of action. When pleadings in the underlying lawsuit have been amended, the court analyzes the duty to defend by examining the “latest, and only the latest, amended pleadings.”Typically, the eight-corners rule prevents courts from considering any extrinsic evidence. Texas law recognizes a limited exception to the eight-corners rule when it is impossible to discern whether coverage is potentially implicated and when the extrinsic evidence goes solely to a fundamental issue of coverage.Monroe contends that even if the owner’s pleading alleges damage within its policy period, it still has no duty to defend because all the damage falls within policy exclusions. The court found that Monroe cannot carry its burden because it cannot show that either exception unambiguously applies. Thus, the court affirmed the district court’s order. View "BITCO Gen Ins v. Monroe Guar Ins" on Justia Law

A water control and improvement district in Harris County, Texas ("the District"), wanted a new headquarters, so it contracted with a construction company to build one. The District required the company to post a performance bond. The company engaged Philadelphia Indemnity Insurance Co. (“Philadelphia”) to provide that bond, which explicitly stated that changes to the construction contract would not void Philadelphia’s obligations. However, the District’s project manager backed out, which led the District to execute a new agreement without Philadelphia’s knowledge or consent. The District sought what was owed under the performance bond and sued for breach of contract.At issue is whether a 2016 Agreement created a new contract between the District and the construction company or merely amended their 2015 Agreement. The court concluded that the 2016 Agreement was an amendment under Texas law. The court reasoned that the Supreme Court of Texas would examine the text of both agreements to identify the parties' objective intent. The court concluded the 2016 Agreement amended—instead of replaced—the 2015 Agreement. Thus, the court reversed and remanded the case, placing no limits on the matters that the district court may address on remand. View "Harris Cty v. Philadelphia Indem" on Justia Law

Tarango Trucking, L.L.C. (“Tarango”) appeals from a judgment declaring that its insurer, Penn-America Insurance Company (“PennAmerica”), owes neither defense nor indemnity concerning third-party claims against Tarango concerning a fatal accident on its property.At the time of the accident, Tarango was insured under a commercial general liability policy issued by Penn-America (“the Policy”). Penn-America defended Tarango but reserved its right to contest coverage. Texas law governs the insurance issues in this diversity case. The Policy contains both a duty to defend and a duty to indemnify. PennAmerica must show that the plain language of an exclusion avoids coverage of all claims within the confines of the eight-corners rule. Penn-America argues that the Policy’s Auto Exclusion satisfies this burden. Because the Parking Exception is an exception to the Auto Exclusion, it is reasonable to interpret it as employing the same “arising-out-of” nexus as the Auto Exclusion.The Fifth Circuit held that the Parking Exception applies to bodily injury and property damage arising out of parking. Because the petition alleges some claims that arise out of parking and are potentially covered by the Policy, Penn-America must defend Tarango. The court also held that it was premature for the district court to decide the indemnity issue. View "Penn-America Ins v. Tarango Trucking" on Justia Law

Q, which operates nine men’s clothing stores, purchased insurance to cover the stores for “direct physical loss of or physical damage to Covered Property at the premises described in the Declarations . . . caused by or resulting from a Covered Cause of Loss.” “Covered Causes of Loss” are defined as “risks of direct physical loss” unless excluded or limited. A Business Income Extension covers loss due to the necessary suspension of operations during a “period of restoration” caused by the direct physical loss of or physical damage to property “caused by or resulting from a Covered Cause of Loss.” A Civil Authority Extension covers “the actual loss of Business Income” sustained when access to the scheduled premises “is specifically prohibited by order of a civil authority as the direct result of a Covered Cause of Loss to property in the immediate area of [the] ‘scheduled premises.’” The policy contains a “Virus Exclusion."Q complied with pandemic shutdown orders, lost business income, and submitted claims, which were denied. The Fifth Circuit affirmed judgment on the pleadings in favor of the insurer. The orders closing nonessential businesses did not qualify as a direct physical loss of or damage to property and no other coverage applied. View "Q Clothier New Orleans, L.L.C. v. Twin City Fire Insurance Co." on Justia Law

The emergency-care physician plaintiffs did not participate in the insurance company’s (UHC) provider network. Doctors must serve all patients requiring emergent care regardless of whether their patient is in-network. Texas law requires that emergency-care providers must be paid their “usual and customary rate[s]” for care provided to out-of-network plan enrollees, Tex. Ins. Code 1271.155(a), 1301.0053(a), and 1301.155(b). The Plaintiff-Doctors alleged that UHC violated those statutes. The district court declined to dismiss all of the claims. UHC sought an interlocutory review of whether the statutes include an implied private right of action and, if so, whether the Employee Retirement Income Security Act preempts the claims.The Fifth Circuit certified the first issue to the Texas Supreme Court after considering the closeness of the question and the existence of sufficient sources of state law; the relevance of considerations of comity; and practical limitations such as delay and framing the issue to produce a helpful response. The court stated that a court could plausibly read the emergency-care statutes to provide an implied right of action but that a Texas appellate court has found to the contrary. Whether there is an implied private right of action either enables or eliminates thousands of claims; the state of Texas has a strong interest. View "ACS Primary Care Physicians Southwest, P.A. v. UnitedHealthcare Insurance Co." on Justia Law

Lereta maintained an ERISA-governed benefits plan, subject to the Employee Retirement Income Security Act (ERISA) that provided short-term disability (STD) and long-term disability (LTD) to its employees, including Newsom. Reliance issued the policies that funded these benefits and served as the benefits claims administrator. Newsom filed suit following Reliance’s determination that he was ineligible for LTD benefits.The district judge entered an order in favor of Newsom, awarding him LTD benefits. The Fifth Circuit affirmed as to Newsom’s eligibility for LTD benefits and alleged date of disability but vacated as to Newsom’s entitlement to LTD benefits. The court remanded with instructions for the district court to remand Newsom’s claim to the administrator for further proceedings. The district court did not err by interpreting the term “full time” and its reference to a “regular work week” to mean the “scheduled workweek” set by Lereta for Newsom. Although that factual record contains medical records Newsom submitted during Reliance’s evaluation of his claim, the merits evidence is at best incomplete and undermines the district court’s benefits determination; the court’s benefits determination does not fully square with the record. View "Newsom v. Reliance Stnrd Life Ins" on Justia Law

After incurring a million-plus-dollar loss for sending gold coins to a thief who forged check payments and intercepted the shipment of those coins, Gage filed an insurance claim. The underwriters denied the claim citing a coverage exclusion for losses incurred “consequent upon” delivering insured property to any third party against payment by a fraudulent check.The Fifth Circuit certified questions to the Texas Supreme Court: Whether Gage's losses were sustained consequent upon delivering insured property to UPS against a fraudulent check, causing the policy exclusion to apply; if yes. whether UPS's alleged errors are considered an independent cause of the losses under Texas law. The Texas Supreme Court concluded the ordinary meaning of “consequent upon” is but-for causation and answered “yes” to the first question. On the second question, the Texas Supreme Court answered “no” by concluding UPS’s alleged negligence was a concurrent cause of loss, dependent upon Gage’s handing over of the gold coins against fraudulent checks. In light of those answers, the Fifth Circuit affirmed the district court. Gage’s losses were excluded from coverage. Gage’s extra-contractual claims were properly dismissed as they were predicated on coverage under the policy. View "Dillon Gage, Inc. v. Certain Underwriters at Lloyds" on Justia Law

CP and Cimarex entered into the Master Service Agreement (MSA). Cimarex hired CP to work at Cimarex’s Oklahoma oil well. CP assigned Trent, an employee of one of its subcontractors, to work at the well. A flash fire occurred at the well. Trent was severely burned Trent sued Cimarex and CP. Cimarex and its insurers settled with Trent for $4.5 million. The Texas Oilfield Anti-Indemnity Act (TOAIA) voids indemnity agreements that pertain to wells for oil, gas, or water or to mineral mines unless the indemnity agreement is supported by liability insurance. The MSA's mutual indemnity provision required Cimarex and CP to indemnify each other; CP was obligated to obtain a minimum of $1 million in commercial general liability insurance and $2 million in excess liability insurance, Cimarex was required to obtain $1 million in general liability insurance and $25 million in excess liability insurance. CP obtained more coverage than the minimum required by the MSA, but its policy limited indemnity coverage. Cimarex sought indemnity from CP, which paid Cimarex $3 million, but refused to indemnify Cimarex for the remaining $1.5 million.The Fifth Circuit affirmed summary judgment for CP. TOAIA contemplates that mutual indemnity obligations will be enforceable only up to the limits of insurance each party has agreed to provide in equal amounts to the other party as indemnitee. CP did not breach the MSA because CP was only required to indemnify Cimarex up to $3 million. View "Cimarex Energy Co. v. CP Well Testing L.L.C." on Justia Law