Justia U.S. 1st Circuit Court of Appeals Opinion SummariesArticles Posted in Insurance Law
Troiano v. Aetna Life Insurance Co.
While working at a subsidiary of General Dynamics Corporation (GDC), Plaintiff participated in GDC’s long-term disability (LTD) plan, which was funded and administered by Aetna Life Insurance Company. Plaintiff became disabled in 2003 and applied for plan benefits. Aetna approved her claim until 2010, when it began offsetting Plaintiff’s monthly LTD benefits by her gross Social Security income. Plaintiff sued Aetna and GDC, alleging that Aetna breached its fiduciary duty and seeking a declaration that her past and future LTD benefits should be offset against the Social Security Disability Insurance (SSDI) benefits she was awarded minus any income taxes she was assessed on those benefits. The district court granted summary judgment in favor of Defendants, thus affirming Aetna’s interpretation of the plan’s offset provision. The First Circuit affirmed, holding (1) the plan permits Aetna to offset LTD benefits by the gross amount of SSDI benefits; and (2) the district court did not err in denying discovery. View "Troiano v. Aetna Life Insurance Co." on Justia Law
Sanders v. Phoenix Insurance Co.
The Phoenix Insurance Company refused to defend and/or indemnify its named insured, an attorney referred to as “John Doe,” against claims advanced by Harry Sanders. Suing in his capacity as executor of the estate of Nancy Andersen and as Doe’s assignee, Sanders brought this diversity suit alleging primarily that Pheonix forsook its duty to defend Doe against the claims advanced by Sanders. The district court dismissed Sanders’s complaint for failure to state a claim. The First Circuit affirmed, holding (1) under the circumstances of this case, Pheonix’s duty to defend was never triggered and, thus, never breached; and (2) Sanders’s other theories of liability were unavailing. View "Sanders v. Phoenix Insurance Co." on Justia Law
Pacific Indemnity Co. v. Deming
Defendant was a tenant of condominium unit (Unit 1801) when unit’s bathtub overflowed and leaked into the condominium units below, causing damage. Pacific Indemnity Company, which insured Unit 1601, brought an action seeking to recover the amount it had paid to the owners of Unit 1601. As the unit’s subrogee, Pacific sought to recover damages in the amount of $351,159 as well as pre-judgment interest and costs. The district court granted summary judgment in favor of Deming, determining that Pacific’s rights to subrogation were waived based on a clause in the bylaws of the condominium trust that unit owners “shall carry insurance,” and that “all such policies shall contain waivers of subrogation.” The First Circuit reversed, holding (1) the plain language of the condominium’s Bylaws, Master Deed, and Declaration of Trust is that the required waivers of subrogation do not apply to tenants; and (2) even if the Bylaws did require unit owners to purchase insurance that contains waivers of subrogation as to claims against tenants, because Defendant presented no evidence that Unit 1601’s owners actually waived their insurer’s subrogation rights against tenants, Pacific can pursue its claims. View "Pacific Indemnity Co. v. Deming" on Justia Law
Mount Vernon Fire Ins. Co. v. Visionaid, Inc.
Gary Sullivan filed suit against VisionAid, Inc., his former employer and a Massachusetts-based company, in Massachusetts state court alleging that he was terminated as the result of illegal age discrimination. In its defense, VisionAid alleged that it terminated Sullivan because it discovered that he had misappropriated several hundred thousand dollars of corporate funds. VisionAid sought to have its insurer, Mount Vernon Fire Insurance Company, cover not only the defense against the age discrimination claim but also the prosecution of the state-court misappropriation counterclaim. VisionAid then filed the underlying suit for a declaratory judgment, arguing that it was not required to pay for the prosecution of VisionAid’s proposed misappropriation counterclaim. The district court entered judgment in Mt. Vernon’s favor, concluding that, according to the plain language of the policy, Mt. Vernon was not required to fund an affirmative counterclaim. The First Circuit certified three dispositive state law questions to the Massachusetts Supreme Judicial Court regarding when an insurer may owe a duty to its insured to prosecute and fund the insured’s counterclaim for damages. View "Mount Vernon Fire Ins. Co. v. Visionaid, Inc." on Justia Law
Utica Mut. Ins. Co. v. Herbert H. Landy Ins. Agency, Inc.
Utica Mutual Insurance Company (Utica) insured Herbert H. Landy Insurance Agency (Landy) under a professional liability insurance policy. The policy required Utica to defend Landy in lawsuits arising from Landy’s provision of professional services as an insurance broker and agent. CRES Insurance Services, LLC sued Landy in California state court, alleging negligence and that Landy engaged in unfair business practices. When Landy demanded that Utica defend it in the CRES lawsuit, Utica filed this action in federal district court seeking a declaration that CRES’s negligence claim did not trigger its duty to defend. The district court granted summary judgment to Landy. The First Circuit affirmed, holding (1) CRES’s complaint can be reasonably construed to allege a professional liability claim and is therefore covered by the policy; and (2) Utica failed to meet its burden of establishing that the policy’s exclusion for “unfair competition of any type” applies in this case. View "Utica Mut. Ins. Co. v. Herbert H. Landy Ins. Agency, Inc." on Justia Law
Stephanie C. v. Blue Cross Blue Shield of Mass.
This benefits-denial case related to some charges incurred during M.G.’s stay at a residential/educational mental healthcare facility. Stephanie C., individually and on behalf of M.G., her minor son, brought this action challenging a decision of the claims administrator, Blue Cross Blue Shield of Massachusetts, partially denying her claim for benefits. The district court upheld the partial denial. The First Circuit vacated the district court’s judgment, holding that the district court employed the wrong standard of review when considering the partial denial of benefits, and therefore, the court erred in upholding BCBS’s partial denial of benefits. Remanded. View "Stephanie C. v. Blue Cross Blue Shield of Mass." on Justia Law
Bingham v. Supervalu, Inc.
Appellant, acting in the capacity as the executor of the estate of Marion Bingham, brought this lawsuit against Supervalu, Inc., alleging that Supervalu acted as an insurer of one of its subsidiaries and violated Mass. Gen. Laws ch. 176D and Mass. Gen. Laws ch. 93A by failing to promptly and equitably resolve prior litigation between the subsidiary and the State. Supervalu removed the action to federal court, arguing that it was not in the business of insurance and was thus not subject to regulation under Chapter 176D. The district court granted summary judgment in favor of Supervalu, ruling that Supervalu was not in the business of insurance. The First Circuit affirmed, holding that the district court did not err in concluding that Supervalu was not in the business of insurance. View "Bingham v. Supervalu, Inc." on Justia Law
Peabody Essex Museum, Inc. v. U.S. Fire Ins. Co.
A few decades ago, an oil spill occurred on property in Salem, Massachusetts that was owned by Peabody Essex Museum. The pollution from the spill migrated to the land of a down gradient neighbor, Heritage Plaza. In 2003, Heritage Plaza discovered the subsurface contamination and notified the Museum. The Museum, in turn, gave prompt notice to state environmental authorities and to its insurer, United States Fire Insurance Company (U.S. Fire). The Museum filed a coverage suit against U.S. Fire and, in 2013, secured a judgment requiring U.S. Fire to pay the Museum over $1.5 million, including punitive damages under Mass. Gen. Laws ch. 93A. In this appeal, the parties challenged multiple district court rulings. The First Circuit affirmed the challenged rulings related to insurance coverage but reversed the finding of Chapter 93A liability and vacated the district court’s associated award of punitive damages, holding that U.S. Fire’s conduct under these circumstances was not the kind that the Massachusetts Supreme Judicial Court has condemned as egregious settlement misconduct that is actionable under Chapter 93A. View "Peabody Essex Museum, Inc. v. U.S. Fire Ins. Co." on Justia Law
Wheeling & Lake Erie Ry. v. Keach
Creditor extended to Debtor a line of credit, and Debtor granted Creditor, pursuant to an agreement, a security interest in payments due to Debtor under an insurance policy. The agreement provided that Maine law governed all rights under the agreement. Insurer subsequently issued a commercial property insurance policy to Debtor. After a freight train owned by Debtor derailed, Creditor filed a claim under the policy, which Insurer denied. Debtor then filed for Chapter 11 bankruptcy. Creditor instituted an adversary proceeding seeking a declaration regarding the priority of its asserted security interest in any payments due under the policy. Insurer subsequently settled with Debtor and the trustee requiring Insurer to pay $3,800,000 to Debtor in satisfaction of all claims under the policy. Creditor objected to approval of the proposed settlement, arguing that the agreement granted it a first-priority security interest in the settlement. The bankruptcy court concluded that Debtor was entitled to the settlement proceeds free and clear of Creditor’s asserted interest because Creditor had failed to perfect its interest under Maine law. The bankruptcy appellate panel affirmed. The First Circuit affirmed, holding that the courts below did not err in concluding that Debtor was entitled to the proposed settlement payment free and clear of Creditor’s asserted security interest. View "Wheeling & Lake Erie Ry. v. Keach" on Justia Law
U.S. Liability Ins. Co. v. Benchmark Constr. Servs., Inc.
Homeowners hired Benchmark Construction Services, Inc. to renovate their Massachusetts home. The homeowners hired an architect to design the renovation plans, and the architect hired a decorative painter to apply decorative painting to the interior walls. The painter's employee, Meghan Bailey, was assigned to the task. While Bailey was applying the decorative paint, she fell from a ladder and was injured. Bailey sued Benchmark, alleging negligence. Benchmark sought a defense from its insurer, United States Liability Insurance Company’s (ULSIC). USLIC determined that Bailey’s claims were not covered under Benchmark’s insurance policy and, therefore, USLIC had no duty to defend or indemnify Benchmark against those claims. USLIC then filed a declaratory judgment action to establish that the insurance policy did not provide coverage for Bailey’s claims and that, consequently, USLIC had no duty to defend or indemnify Benchmark against those claims. The district court entered judgment for USLIC, holding that the policy excluded Bailey’s claims. The First Circuit reversed, holding that Bailey’s claims fell within the bounds of insurance coverage, and therefore, USLIC had a duty to defend and indemnify Benchmark in the underlying negligence suit. View "U.S. Liability Ins. Co. v. Benchmark Constr. Servs., Inc." on Justia Law