Articles Posted in Insurance Law

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Plaintiffs Jimmy Larry Beddingfield ("Larry"), his wife, Rebecca, and their adult son, James Cody Beddingfield ("Cody") appealed the grant of summary judgment in favor of the defendants Mullins Insurance Company, Mullins & Company Insurance, Rand Mullins, and David Mullins (referred to collectively as "Mullins"), on the Beddingfields' claims stemming from Mullins's alleged failure to properly procure insurance coverage. In 1997, Larry and Rebecca purchased a homeowners' liability-insurance policy from Rand Mullins that protected Larry and Rebecca's primary residence. In 2001, Larry and Rebecca purchased a second liability-insurance policy that provided coverage for a rental house located in Florence; they later constructed another house in Guntersville and, in 2003, purchased an additional liability-insurance policy for that property. In July 2003, Mullins canceled the insurance policy on the Florence house allegedly based on a belief that "the policy was issued in duplicate." Allegedly unbeknownst to Larry and Rebecca, however, the requested cancellation left the Florence house uninsured. One month later, pursuant to a mortgage refinance on the Beddingfields' residence, Larry and Rebecca paid one year's insurance premium on that residence; the check was endorsed and deposited into Mullins's account. In March 2004, the policy on the Beddingfields' residence was canceled because of nonpayment of the premium; neither Larry nor Rebecca, however, was able to recall receiving notice of the cancellation. After those two events, Larry and Rebecca were without insurance on their residence and the Florence house, leaving them with liability insurance only on their Guntersville house. In July 2004, a minor guest at the Beddingfields' Guntersville house, Trace Linam, suffered a serious eye injury in a fireworks-related incident. In 2008, Linam and his father, Linam, sued the Beddingfields, alleging that they, and particularly Cody (who was a minor at the time), were responsible for the injury. Because the underwriter of the Beddingfields' policy had been placed into receivership in Texas in 2006, the Alabama Insurance Guaranty Association ("AIGA") covered the Beddingfields' legal-defense costs in the Linam litigation; however, the maximum amount of liability coverage available was limited to $100,000 –- the amount of the liability- insurance policy Larry and Rebecca had obtained from Mullins to insure that property -- and not $500,000, the amount they say would have been available had the other two policies not been canceled. In February 2011, a judgment was entered on a $600,000 jury verdict against the Beddingfields in the Linam litigation. The Beddingfields appealed that decision. Because, however, AIGA did not post the requisite supersedeas bond, and the Beddingfields were allegedly unable to obtain a bond, execution of the judgment was not stayed during the pendency of the appeal. In July 2011, while their appeal was pending, the Beddingfields sued Mullins, alleging numerous counts of negligence and wantonness with relation to Mullins's handling of the various insurance policies. After review of the trial court record, the Alabama Supreme Court affirmed summary judgment as to the negligence claims, reversed as to the wantonness claims, and remanded the case for further proceedings. View "Beddingfield et al. v. Mullins Insurance Company et al." on Justia Law

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Nautilus Insurance Company ("Nautilus") and Lyon Fry Cadden Insurance Agency, Inc. ("LFC"), separately petitioned the Alabama Supreme Court for writs of mandamus directing the the trial court to vacate its orders denying their motions to dismiss the action filed against them by Precision Sand Products, LLC ("Precision"). From June 10, 2015, to June 10, 2016, Precision had in place a commercial general-liability insurance policy it had purchased from Nautilus through LFC, an insurance broker. In March 2016, Terry Williams sued Precision seeking recovery for injuries he allegedly suffered on Precision's property during the period the policy was in effect. Pursuant to the terms of the policy, Precision demanded that Nautilus defend and indemnify it against the Williamses' claims. Nautilus agreed, under reservation of rights, to defend Precision against the Williamses' claims. Then Nautilus filed a declaratory-judgment action against Precision and the Williamses at the federal district court, seeking a judgment declaring that, pursuant to an exclusion in the policy, Nautilus was not obligated to defend and indemnify Precision against the Williamses' claims. Precision filed in the Williamses' action a "crossclaim complaint" against Nautilus and LFC ("the state action"), asserting against both Nautilus and LFC various contract and negligence claims. Before the Alabama Supreme Court, LFC argued Precision could not recover against LFC for fraudulently procuring inadequate insurance or for negligently failing to procure adequate insurance unless and until Precision was actually denied coverage for, or a defense against, the Williamses' claims. The Supreme Court found the trial court, as a court of general jurisdiction, clearly had the constitutional and statutory authority to hear the types of claims Precision asserted against LFC. Thus, LFC did not demonstrate it had a clear legal right to dismissal from the state action based on a lack of subject-matter jurisdiction over Precision's claims. Nautilus has demonstrated that, under section 6-5-440 Ala. Code 1975, it had a clear legal right to dismissal from the state action. Accordingly, the Court granted Nautilus's petition and issued the writ directing the trial court to dismiss Nautilus from the state action. Furthermore, the Court determined LFC failed to carry its burden of demonstrating that it had a clear legal right to dismissal from the state action. Accordingly, LFC's petition was also denied. View "Ex parte Nautilus Insurance Company." on Justia Law

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Baldwin Mutual Insurance Company ("Baldwin Mutual") appealed a circuit court’s class certification in a suit filed by Gloria McCain. McCain owned a house insured by Baldwin Mutual. The policy provided that any covered property losses would be settled “at actual cash value at the time of loss but not exceeding the amount necessary to repair or replace the damaged property.” McCain's house was damaged twice, she filed claims and was reimbursed by Baldwin Mutual. In each incident, an independent adjuster examined McCain's damaged property and prepared an estimate. Baldwin Mutual paid McCain's claim in accordance with the estimate prepared by the adjuster. The record contained no allegation or evidence indicating that McCain sought more money from Baldwin Mutual in connection with those claims or that she was unhappy in any way. Nevertheless, McCain’s complaint alleged Baldwin Mutual had wrongfully been reducing the amount paid on claims made on actual-cash-value policies inasmuch as its practice was to deduct some amount for depreciation not only of the damaged materials and the labor costs of initially installing those damaged materials (based on their condition prior to the covered damage and their expected life span), but also of the labor costs associated with the removal of the damaged materials. The trial court certified a class based on McCain's claims, and Baldwin Mutual appealed the certification order. The Alabama Supreme Court reversed the certification order because "the class definition proposed by McCain in her brief submitted after the class-certification hearing was materially different from the class definition offered by McCain in her original complaint." Upon remand, McCain filed a second amended complaint that retained the allegations in her first amended complaint and amended the definition of the proposed class. In response to the amended complaint, Baldwin Mutual moved for motion for a summary judgment, contending that McCain's claims were barred by res judicata based on a final judgment of the trial court in "the Adair litigation," which allegedly involved the same claims and same parties. The Alabama Supreme Court concluded the trial court erred in certifying McCain's action for class treatment because the claims of the purported class representative were subject to res judicata. View "Baldwin Mutual Insurance Company v. McCain" on Justia Law

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Baldwin Mutual Insurance Company ("Baldwin Mutual") appealed a circuit court’s class certification in a suit filed by Gloria McCain. McCain owned a house insured by Baldwin Mutual. The policy provided that any covered property losses would be settled “at actual cash value at the time of loss but not exceeding the amount necessary to repair or replace the damaged property.” McCain's house was damaged twice, she filed claims and was reimbursed by Baldwin Mutual. In each incident, an independent adjuster examined McCain's damaged property and prepared an estimate. Baldwin Mutual paid McCain's claim in accordance with the estimate prepared by the adjuster. The record contained no allegation or evidence indicating that McCain sought more money from Baldwin Mutual in connection with those claims or that she was unhappy in any way. Nevertheless, McCain’s complaint alleged Baldwin Mutual had wrongfully been reducing the amount paid on claims made on actual-cash-value policies inasmuch as its practice was to deduct some amount for depreciation not only of the damaged materials and the labor costs of initially installing those damaged materials (based on their condition prior to the covered damage and their expected life span), but also of the labor costs associated with the removal of the damaged materials. The trial court certified a class based on McCain's claims, and Baldwin Mutual appealed the certification order. The Alabama Supreme Court reversed the certification order because "the class definition proposed by McCain in her brief submitted after the class-certification hearing was materially different from the class definition offered by McCain in her original complaint." Upon remand, McCain filed a second amended complaint that retained the allegations in her first amended complaint and amended the definition of the proposed class. In response to the amended complaint, Baldwin Mutual moved for motion for a summary judgment, contending that McCain's claims were barred by res judicata based on a final judgment of the trial court in "the Adair litigation," which allegedly involved the same claims and same parties. The Alabama Supreme Court concluded the trial court erred in certifying McCain's action for class treatment because the claims of the purported class representative were subject to res judicata. View "Baldwin Mutual Insurance Company v. McCain" on Justia Law

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In 2014, Shaundalyn Elliott, a resident of Montgomery County, was injured in an automobile accident in the City of Hayneville in Lowndes County. On February 23, 2017, Elliott filed this lawsuit at the Lowndes Circuit Court against her automobile insurer, Allstate Insurance Company ("Allstate"), seeking uninsured-motorist benefits related to the accident. Elliot alleged that the accident was caused by a "phantom driver," whose location was unknown. Allstate filed a motion to transfer the action from the Lowndes Circuit Court to the Montgomery Circuit Court. Elliott petitioned the Alabama Supreme Court for a writ of mandamus directing the Lowndes Circuit Court to vacate its order transferring this case to the Montgomery Circuit Court. In this case, the Supreme Court found that Lowndes County and Montgomery County had connections to this action. The accident, injuries, and police investigation occurred in Lowndes County. On the other hand, Elliott resided in Montgomery County, where she sought treatment for her injuries resulting from the accident and where the parties' contractual dealings arose. Under the specific facts of this case, Lowndes County's connection to the accident was not "little" or "weak," and Montgomery County did not have a significantly stronger connection to the case to justify a transfer of this case under the interest-of-justice prong of § 6-3-21.1. Therefore, the Court held the trial court erred in transferring this action to the Montgomery Circuit Court. View "Ex parte Shaundalyn N. Elliott." on Justia Law

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This was the second time this dispute related to benefits provided under the Public Education Employees' Health Insurance Plan ("PEEHIP") went before the Alabama Supreme Court. In the present case, the remaining defendants below, David Bronner, as secretary-treasurer of PEEHIP, and the current members of the PEEHIP Board, petitioned for permission to appeal the trial court's denial of their motion seeking a summary judgment. "When a trial court fails to correctly identify the controlling question of law, a Rule 5 permissive appeal is due to be dismissed." After thoroughly reviewing the record and the arguments presented by the parties, the Supreme Court concluded the permission to appeal under Rule 5, Ala. R. App. P., was improvidently granted, and the Court dismissed the appeal. View "Bronner v. Burks" on Justia Law

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Douglas Ghee, as personal representative of the estate of Billy Fleming, deceased, appealed a circuit court order dismissing his wrongful-death claim against USAble Mutual Insurance Company d/b/a Blue Advantage Administrators of Arkansas ("Blue Advantage"). The Alabama Supreme Court dismissed this appeal as being from a nonfinal order. View "Ghee v. USAble Mutual Insurance Co." on Justia Law

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Douglas Ghee, as personal representative of the estate of Billy Fleming, deceased, appealed a circuit court order dismissing his wrongful-death claim against USAble Mutual Insurance Company d/b/a Blue Advantage Administrators of Arkansas ("Blue Advantage"). The Alabama Supreme Court dismissed this appeal as being from a nonfinal order. View "Ghee v. USAble Mutual Insurance Co." on Justia Law

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Georgia Urology, P.A., and several of its member physicians filed objections to challenge a $124 million attorney fee awarded by the Jefferson Alabama Circuit Court to class counsel as part of the settlement of Johnson v. Caremark Rx, LLC ("the Caremark class action). After the trial court overruled their objections and its judgment approving the settlement became final, the objectors appealed the attorney fee to this Court. Caremark Rx bought MedPartners; MedPartners was the subject of dozens of securities-fraud lawsuits alleging that it had made false statements regarding its financial condition and anticipated future performance. Many of those lawsuits were eventually consolidated into a class action. In 1999, the MedPartners class action was settled for $56 million based on MedPartners' assertions that the negotiated settlement exhausted its available insurance coverage and that it possessed limited other assets it could use to pay a larger award or settlement. Post-settlement, however, it was revealed in unrelated litigation that MedPartners actually held an excess-insurance policy providing unlimited coverage during the period in which the alleged fraud had been committed. In 2003, the Caremark class action was initiated against MedPartners' corporate successor Caremark Rx, and its previous insurer asserting fraud and suppression claims based on the $56 million settlement agreed to in the MedPartners class action. The objectors appealed the fee award to the Alabama Supreme Court, arguing that they had been given insufficient opportunity to object to class counsel's requested attorney fee inasmuch as their objections were due before class counsel's attorney-fee application was filed, and that the attorney fee ultimately awarded was excessive. The Supreme Court vacated the order entered by the trial court awarding class counsel an attorney fee of $124 million. On remand, class counsel may file a new attorney-fee application, including more detailed information regarding the time expended in this case and how that time was spent. The objectors would then be given a reasonable opportunity to review that application and may, if they still have objections to class counsel's new application, file those objections with the trial court. After the trial court considers those objections and enters a new order making an award of attorney fees, any party with a grievance may file a new appeal to the Alabama Supreme Court. View "Walker v. Johnson" on Justia Law

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Defendant Travelers Indemnity Company of Connecticut ("Travelers") appealed a circuit court’s denial of its post-judgment motion seeking to set aside judgment entered on a jury verdict in favor of plaintiff Angela Worthington. Worthington was a passenger in a vehicle being driven by her husband. A friend of the Worthingtons and the Worthingtons' two minor children were also passengers in the vehicle. While the Worthingtons' vehicle was stopped at a nonfunctioning traffic light, it was struck in the rear by a vehicle being operated by Camille Thomas. Worthington and the other occupants in her vehicle were injured as a result of the accident. At the time of the accident, the company Worthington's husband owned had a comprehensive insurance policy with Travelers that included uninsured-motorist ("UM") and underinsured-motorist ("UIM") coverage. The Worthingtons sued Thomas and Travelers; the complaint included a UM/UIM claim against Travelers. After review of the claims Travelers made on appeal, the Alabama Supreme Court determined Travelers did not establish that the trial court erred in denying the post-judgment motion, and affirmed. View "Travelers Indemnity Company of Connecticut v. Worthington" on Justia Law