Justia U.S. 4th Circuit Court of Appeals Opinion Summaries

This case involves Jeremy Schulman, a former shareholder at the Maryland law firm Shulman, Rogers, Gandal, Pordy & Ecker. Schulman sued insurance companies AXIS Surplus Insurance Company, Endurance American Specialty Insurance Company, and Prosight Syndicate 1110 at Lloyd’s, for breach of contract, detrimental reliance, and lack of good faith, claiming that they wrongfully denied his claim for coverage under his law firm's professional liability insurance policy. The dispute hinges on whether Schulman's indictment in a criminal case qualifies as a "claim" under his professional liability insurance policy, and whether a letter from the insurance companies promising to cover certain costs relating to a subpoena also covered costs related to the later indictment. Schulman also alleges that the insurers acted in bad faith.The United States Court of Appeals for the Fourth Circuit affirmed the district court's decision, granting summary judgment to the defendants. The court held that Schulman's indictment in the criminal case did not constitute a "claim" under his professional liability insurance policy, and that the insurers' letter did not promise to cover costs related to the indictment. The court also held that Schulman's claim of bad faith could not succeed because he was not entitled to coverage under the policy and the insurers did not breach any tort duty by denying coverage. View "Schulman v. Axis Surplus Ins. Co., Inc." on Justia Law

In the United States Court of Appeals for the Fourth Circuit, the case involved defendant Glenda Taylor-Sanders, a licensed insurance agent, who pleaded guilty to one count of wire fraud. Taylor-Sanders had used her position to defraud several trucking companies and an insurance finance company, BankDirect Capital Finance, by misappropriating funds meant for insurance premiums and obtaining loans under the guise of non-existent insurance policies. She used the funds for personal expenditures, leading to the lapse of some of the trucking companies' insurance policies.In her plea agreement, Taylor-Sanders agreed to pay full restitution to all victims harmed by her relevant conduct, and she waived all rights to contest the conviction and sentence in any appeal, unless it was due to ineffective assistance of counsel or prosecutorial misconduct. However, she later attempted to withdraw her guilty plea, arguing that she didn't fully understand the implications of her plea and that she never acted with the requisite intent to defraud. The district court denied her motion to withdraw the plea, concluding that her claim was not credible and that she had not provided a fair and just reason to withdraw her guilty plea.After being sentenced to 66 months' imprisonment and ordered to pay over $700,000 in restitution, Taylor-Sanders appealed her conviction, sentence, and the restitution order. She argued that her guilty plea wasn’t knowing and voluntary, that the district court miscalculated her offense level, and that the district court made several errors when awarding restitution.The Court of Appeals found that Taylor-Sanders's guilty plea and plea waiver were valid and the issues she raised on appeal fell within the scope of her appeal waiver. The court distinguished between claims that a sentence is "illegal" because the district court lacked the authority to issue the sentence (which remain reviewable despite an appeal waiver) and claims that a sentence was "imposed in violation of law" because it has otherwise merely "been touched by a legal error" (in which case the court will enforce the appeal waiver). The court dismissed Taylor-Sanders's appeal in its entirety. View "US v. Taylor-Sanders" on Justia Law

Plaintiff’s son had a rare heart condition. He died at the age of twenty-seven, awaiting a heart transplant, which Rose says that Defendants—who administered her son’s employer-based health benefits program—wrongfully denied. So she sued on behalf of his estate, seeking monetary relief under both Section 502(a)(1)(B) and Section 502(a)(3). The district court dismissed both claims. As to Plaintiff’s (a)(1)(B) claim, the court held that money was not one of the “benefits” that her son was owed “under the terms of his plan.” And, as to her (a)(3) claim, the court held that her requested monetary relief was too similar to money damages and was thus not “equitable.”   The Fourth Circuit affirmed in part and vacated in part. The court explained that the district court correctly held that money was not one of the “benefits” that Plaintiff’s son was “due” “under the terms of his plan.” So it was right to dismiss her (a)(1)(B) claim. But the court explained that it must vacate its complete dismissal of Plaintiff’s (a)(3) claim. The court explained that while the district court correctly noted that compensatory, “make-whole” monetary relief is unavailable under Section 502(a)(3), it did not consider whether Plaintiff plausibly alleged facts that would support relief “typically” available in equity. The court thus remanded for the district court to decide in the first instance whether Plaintiff can properly allege such a theory based on a Defendant’s unjust enrichment, including whether an unjust gain can be followed to “specifically identified funds that remain in Defendant’s possession” or to “traceable items that the defendant purchased with the funds.” View "Jody Rose v. PSA Airlines, Inc." on Justia Law

Ramaco Resources suffered a coal silo collapse and submitted a claim for losses to Federal Insurance Company. When Federal denied the claim, Ramaco sued. After a twelve-day trial, a jury awarded Ramaco $7.6 million in contract damages and prejudgment interest. The jury also awarded $25 million under West Virginia’s Hayseeds doctrine, which permits an insured party to claim consequential damages when it prevails after suing to collect on its insurance policy. But post-trial, the district court reduced Ramaco’s contract damages and interest to $1.8 million and entirely rejected the Hayseeds damages as a matter of state law. The district court also conditionally granted a new trial on the Hayseeds award, reasoning that—even if Hayseeds damages were theoretically permissible—the jury’s $25 million award was punitive and thus invalid. Ramaco appealed.   The Fourth Circuit reversed in part and affirmed in part. The court reversed the district court’s reduction of contract damages and prejudgment interest because the insurance policy’s plain language and the trial evidence support the jury’s original $7.6 million award. And the court reversed the district court’s wholesale rejection of Hayseeds damages. But the court affirmed its conditional grant of a new Hayseeds damages trial. The court explained that West Virginia law requires courts to give insurance policies their plain, ordinary meaning whenever possible. Here, the policy’s plain language extended the period of restoration until Ramaco’s operations were restored to the level of generating the net profits that would have existed but for the collapse. To determine that level, a court must consider both throughput and expenses. The district court did not. View "Ramaco Resources, LLC v. Federal Insurance Company" on Justia Law

This dispute involves several insurers and one defendant insurer’s alleged duty to defend a lawsuit brought against a general contractor of a residential building project. The district court entered partial summary judgment, holding that the defendant insurer had a duty to defend the general contractor in the underlying action for construction defects. The court also issued a stay of other issues raised by the parties, and administratively closed the case. After the defendant insurer filed the present appeal, the underlying action was resolved in a settlement agreement.   The Fourth Circuit concluded that it lacks jurisdiction to consider the present interlocutory appeal challenging the defendant insurer’s duty to defend the general contractor. Therefore, the court dismissed the appeal. The court explained that while the relief granted in the district court’s order originally may have been prospective in nature, the resolution of the underlying action has eliminated from that order any forward-looking mandate. Thus, the court explained that the order before the court in this appeal currently lacks the character of an injunction and does not require the court to consider any question separate from issues that may be appealed after entry of a final judgment in the district court. View "Westfield Insurance Company v. Selective Insurance Company" on Justia Law

The law firm of Brown Goldstein Levy LLP (“BGL”) and one of its partners (collectively, “Appellants”) filed suit against their insurer, Federal Insurance Company (“Appellee”), when it refused to provide coverage for costs Appellants incurred after the Government investigated the partner, executed a search warrant at BGL’s office, and notified the partner that his representation of certain clients may present a conflict of interest. The district court dismissed Appellants’ complaint, holding that there was no “Claim,” as that term is defined in the insurance policy, and alternatively that any costs Appellants incurred were excluded from the policy’s definition of “loss.”   The Fourth Circuit affirmed, concluding that there is no “Claim.” Neither the search warrant application nor the resulting search warrant is “written demand[s] or written request[s] for . . . nonmonetary relief . . . against an Insured” as required by the Policy. Therefore, the Search Warrant Claim fails because Appellants cannot state a claim for relief. The Target Conflict Letter makes no demand or request for relief against an Insured. The Government’s request to be notified promptly as to how the partner intends to proceed is not a request for “the redress or benefit, esp. equitable in nature (such as an injunction or specific performance), that a party asks of a court.” The Conflict Letters are not “Claims.” The court explained that despite Appellants’ attempts to characterize them as “demands,” they are not. Therefore, Appellants cannot state a claim as to the Partner Claim. View "Brown Goldstein Levy LLP v. Federal Insurance Company" on Justia Law

Plaintiff Moses Enterprises, LLC, sells cars. Moses had an insurance policy issued by defendant Lexington Insurance Company, with Defendant AIG Claims, Inc. serving as the claims administrator. Moses sued Lexington and AIG in federal district court. The complaint made four claims under West Virginia law, including—as relevant here—one for breach of the insurance contract and one for violating the State’s unfair trade practices statute. The district court granted partial summary judgment for Moses on the breach of contract claim but resolved only liability—not damages.   The Fourth Circuit vacated the district court’s judgment and remanded. The court explained that the district court’s later grant of partial summary judgment also did not obviate the need for further work to “obtain payment of the insurance proceeds.” However, at the same time the court rejected Moses’s contention that the district court committed no legal errors in concluding Moses was entitled to “the entire amount of attorney’s fees incurred until the final resolution of the case.” Thus, the court wrote because the district court committed legal error in awarding Moses the full amount of its requested fees without determining whether any of the work was properly attributed only to the Jenkins claim, the court vacated the fee award and remand for further proceedings View "Moses Enterprises, LLC v. Lexington Insurance Company" on Justia Law

After the decedent died, Plaintiff, his surviving spouse, filed suit seeking relief under a provision of the Employee Retirement Income Security Act allowing “a participant or beneficiary” of an employee benefit plan “to recover benefits due” “under the terms of [the] plan.” The parties submitted a joint stipulation of facts and an administrative record and cross-moved for judgment based on those undisputed materials. The district court entered judgment for Prudential. The court concluded Prudential “reasonably denied Plaintiff’s request for benefits” because “decedent received timely notice of his conversion rights” and “did not convert his life insurance to an individual policy during the conversion period.” The district court also rejected Plaintiff’s request to “apply the doctrine of equitable tolling and find that Plaintiff is entitled to the life insurance benefits she seeks.”   The Fourth Circuit affirmed. The court wrote that it agreed with the district court that the plan administrator did not abuse its discretion in concluding Plaintiff was not entitled to benefits under the terms of the plan. The court explained that “Employers have large leeway to design [employee benefit] plans as they see fit,” but “once a plan is established, the administrator’s duty is to see that the plan is maintained pursuant to that written instrument.” Here, Prudential did not abuse its discretion by fulfilling its duty here, and the district court correctly resolved the single claim before it based on the agreed-on facts and consistent with well-established law. View "Kathy Hayes v. Prudential Insurance Company of America" on Justia Law

Plaintiff appealed the district court’s order affirming the Social Security Administration’s (“SSA”) denial of her application for Social Security Disability Insurance (“SSDI”). In her application, she alleged major depressive disorder (“MDD”), anxiety disorder, and attention deficit disorder (“ADHD”). Following a formal hearing, the Administrative Law Judge (“ALJ”) determined that Plaintiff suffered from severe depression with suicidal ideations, anxiety features and ADHD, but he nonetheless denied her claim based on his finding that she could perform other simple, routine jobs and was, therefore, not disabled. Plaintiff contends that the ALJ erred by (1) according to only little weight to the opinion of her long-time treating psychiatrist (“Dr. B”) and (2) disregarding her subjective complaints based on their alleged inconsistency with the objective medical evidence in the record.   The Fourth Circuit reversed and remanded with instructions to grant disability benefits. The court agreed with Plaintiff that the ALJ failed to sufficiently consider the requisite factors and record evidence by extending little weight to Dr. B’s opinion. The ALJ also erred by improperly disregarding Plaintiff’s subjective statements. Finally, the court found that the ALJ’s analysis did not account for the unique nature of the relevant mental health impairments, specifically chronic depression. The court explained that because substantial evidence in the record clearly establishes Plaintiff’s disability, remanding for a rehearing would only “delay justice.” View "Shelley C. v. Commissioner of Social Security Administration" on Justia Law

Appellant American Federation of State, County and Municipal Employees, Council 3 (“Appellant”) filed suit against the State of Maryland alleging that the State breached a statutorily formed contract with current state employees to provide them with certain prescription drug benefits upon retirement. The district court agreed that Maryland law created a contract, it held that the contract was unilateral in nature and that the promised benefits do not vest until an employee retires with sufficient years of service. The district court determined that the current employees represented by Appellant had no vested contractual right to the retirement prescription drug benefits and dismissed the complaint.   The Fourth Circuit affirmed. However, the court did so because it found that the statutory language does not create a contract with state employees. The court explained that in reviewing the language of the statutes at issue, it concluded that they do not create a contract binding upon the State. While Section 2-508 does “entitle” retirees to a subsidy, it does not include any unmistakable contract language. Rather, it only “entitles” a retiree to the “same State subsidy allowed a State employee.” The court explained that nothing in Sections 2-508 or 2-509.1 leaves the court with an unmistakably “clear indication that the legislature intended to bind itself contractually.” Therefore, “all doubts must be resolved in favor of the continuance of the power” of the state legislature to modify or repeal enactments of a previous legislature. View "AFSCME Maryland Council 3 v. State of Maryland" on Justia Law