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

Plaintiffs filed suit in state court against Allstate after it denied coverage for damages caused by Hurricane Irene to plaintiffs' waterfront home. Allstate removed to federal court, raising a statute of limitations defense. The district court did not address the limitations issue and ultimately entered judgment for plaintiffs. The Fourth Circuit concluded that plaintiffs' breach of contract claim was time barred because they did not file the complaint within one year of the denial of coverage, as required by the National Food Insurance Act of 1968 (NFIA), 42 U.S.C. 4001(a), and its regulations. Plaintiffs' argument that the statute should be tolled by their filing of a complaint in state court is foreclosed by Shofer v. Hack Co. Furthermore, the facts neither support a forfeiture or a waiver on behalf of Allstate. The Fourth Circuit also concluded that plaintiffs' claim for bad faith handling of their insurance claim under the North Carolina Unfair and Deceptive Trade Practices Act N.C. Gen. Stat. 75-1.1 et seq., was preempted by federal law and therefore barred. Accordingly, the Fourth Circuit reversed the judgment of the district court. View "Woodson v. Allstate Insurance Co." on Justia Law

Favorite Healthcare Staffing is an employment agency that provides nurses and other health care professionals to Laurel Regional Hospital. The contract between the Agency and the Hospital (the “Staffing Agreement”) states that the Agency-provided practitioners assigned to the Hospital are the employees of the Agency, not the Hospital. At issue in this case is whether a nurse employed by a staffing agency and assigned to work at a hospital qualifies as an “employee” of the hospital under the hospital’s insurance policy (the "Dimensions Policy"). The district court answered in the negative and granted summary judgment in favor of the hospital's insurer. The court concluded, however, that the term “employee” as used in the Dimensions Policy is not ambiguous and that it includes those workers who qualify as employees under the right-to-control test. Therefore, Dimensions has an independent obligation to provide coverage to those workers who meet the definition of “employee,” without regard to how those workers may be classified under the Staffing Agreement executed by the Hospital and the Agency. Because the evidence contained in the record establishes that the nurse is the Hospital’s employee under the right-to-control and the borrowed-servant standards, the court concluded that she is a “protected person” who qualifies for coverage under the professional-liability portion of the Dimensions Policy. Accordingly, the court vacated and remanded. View "Interstate Fire and Casualty v. Dimensions Assurance Ltd." on Justia Law

Because of an internal oversight, American Bank failed to respond to a summons and the state court entered a $98.5 million default judgment against it. Eight months after receipt of the summons, American Bank notified its insurer, St. Paul, of the lawsuit and St. Paul denied coverage due to late notice. American Bank was subsequently able to have the default judgment vacated and the suit dismissed, but at an expense of $1.8 million. St. Paul now seeks a declaratory judgment that it had no duty to pay for American Bank's defense, and American Bank counterclaims. The court affirmed the district court's entry of judgment for St. Paul where, among other things, American Bank did not provide St. Paul with notice as soon as practicable, as required by the terms of its insurance policy, and because the late notice caused St. Paul prejudice. Therefore, St. Paul was within its right to deny coverage. View "St. Paul Mercury Ins. Co. v. American Bank Holdings, Inc." on Justia Law

Citizens Insurance appealed the district court's ruling that it had a duty to defend Liberty University in an underlying action. In the underlying action, Janet Jenkins filed suit against Liberty University, alleging that the school participated in a scheme to kidnap Jenkin's daughter in order to disrupt the parent-child relationship. The court concluded that the district court erroneously interpreted the Jenkins Complaint, the Separation of Insureds provision, and Virginia law. In this case, the Jenkins Complaint does not allege an "occurrence," and it triggers the policy's coverage exclusions. Accordingly, Citizens Insurance has no duty to defendant Liberty University. The court vacated and remanded. View "Liberty Univ. v. Citizens Ins. Co." on Justia Law

Timothy B. Johnson, a member of the Hunt Club, unintentionally shot and injured Danny Ray Marks, Jr. Marks filed suit against Johnson and the Hunt Club. Scottsdale, the insurer of the Hunt Club under a general liability policy, denied coverage, contending that the policy does not cover the Club members for their personal recreational activities but only for liability arising from some official action of the Club or actions undertaken on behalf of the Club. The magistrate judge granted summary judgment for Scottsdale. The court concluded that the policy unambiguously covered the Club members only with respect to their vicarious liability for the activities of the Club as an entity. In this case, Scottsdale has no duty to defend or indemnify Johnson where Marks alleges only that Johnson, a member of the Club, was on land leased by the Club and regularly used by Club members when he negligently fired his gun. As Marks concedes, that is not enough to bring his claim under the policy's Endorsement’s second clause, for member activities "on [the Club's] behalf." Nor does the complaint seek to hold Johnson vicariously liable "for [the Club's] activities" so as to trigger coverage under the first clause. Accordingly, the court affirmed the judgment. View "Marks, Jr. v. Scottsdale Ins. Co." on Justia Law

Capital City filed suit against Underwriters, seeking a declaration that Underwriters were obligated to defend and indemnify it against a negligence suit. The district court granted summary judgment in favor of Underwriters. The court concluded, however, that the plain language of the Endorsement to the policy creates a duty to defend Capital City where Capital City is being held liable for the acts or omissions of a subcontractor; the allegations in the underlying complaint create a potentiality of coverage; and therefore, the court vacated the district court’s order granting summary judgment to the Underwriters and remanded for further proceedings. View "Capital City Real Estate v. Certain Underwriters at Lloyd's London" on Justia Law

Plaintiff filed suit against Dr. Cohen seeking a declaration that they properly rescinded his disability insurance policies. The magistrate judge held that Dr. Cohen made material misrepresentations on his policy applications and granted summary judgment to plaintiffs. Applying Maryland law, the court concluded that each of the questions to which Dr. Cohen allegedly gave false answers is subject to more than one reasonable interpretation, and so is ambiguous. Because the language of each question at issue in this case is ambiguous, summary judgment was inappropriate. In regard to the magistrate judge's denial of Dr. Cohen's motion in limine, the court held that a Consent Order suspending a Maryland medical license rendered by the Maryland State Board of Physicians is not admissible in a civil or criminal action absent consent, except for in an action brought by a party aggrieved by a Board decision. Accordingly, the court reversed and remanded. View "Certain Underwriters at Lloyd's v. Cohen" on Justia Law

The Club is a non-profit provider of protection and indemnity insurance. The Club's Rules include a choice-of-law provision selecting New York law and a two-year statute of limitations for claims against the Club. The Club filed a civil action against defendant alleging that it breached the insurance contract by failing to reimburse the Club for a shortfall and by failing to pay the overdue insurance premiums. The court agreed with the district court, and precedent, that an otherwise valid choice-of-law provision in a maritime contract is enforceable and may require application of a jurisdiction's statute of limitations, in lieu of the doctrine of laches, to govern issues regarding the timeliness of claims asserted under that agreement. Accordingly, the court held that the district court correctly applied New York's six-year statute of limitations to the Club's claims arising under its maritime insurance contract with plaintiff. Therefore, the court affirmed the judgment of the district court. View "American Steamship Owners v. Dann Ocean Towing, Inc." on Justia Law

Plaintiff filed suit under the West Virginia Unfair Trade Practices Act (WVUTPA), W. Va. Code 33-11-4(9)(f), based on IOF's allegedly unlawful conduct in connection with its handling of her insurance claim. The court held that plaintiff's WVUTPA claim sounds in tort and not in contract; West Virginia governed the underlying lawsuit pursuant to the lex loci delicti approach and the Restatement choice-of-law approach; and, insofar as the Supreme Court of Appeals of West Virginia has previously entertained questions regarding an action brought under the WVUTPA against an insurer subsequent to settlement, where the cause of action was limited to unfair settlement practices, plaintiff's complaint stated a claim upon which relief could be granted. Accordingly, the court reversed the district court's dismissal of the complaint. View "Kenney v. Indep. Order of Foresters" on Justia Law

Millennium, processor of titanium dioxide, filed suit contending that the Insurers had wrongfully denied Millennium's claim for coverage under contingent business interruption provisions of commercial liability insurance policies issued by the Insurers. After an explosion occurred at Apache's, a gas producer, Varanus Island facility, it notified Alinta, a retail gas supplier, which in turn sent a notice of "force majeure" to Millennium and other customers. On appeal, National Union and the Insurers challenged the district court's grant of partial summary judgment in favor of Millennium. The court found the term "direct" to be clear as used in the Policies and without ambiguity and, therefore, rejected Millennium's claim to the contrary. The court concluded that, on the plain language of the Policies, Apache could not be considered a direct contributing property to Millennium. The court rejected Millennium's alternative argument that it could also receive coverage under the "for the account of" clause of the Endorsements because coverage was triggered only by damage to or destruction of contributing properties. Accordingly, the court reversed and remanded where Millennium presented no plausible reading of the Policies under which it could receive coverage for its contingent business interruption losses. View "Millennium Inorganic Chemicals v. National Union Fire Ins." on Justia Law