Insurance Law

Insured trading company was sued by its lender for breach of contract, fraud, and negligent misrepresentation of asset-based loans; and was sued by another lender for defaulting on loan. Insured filed declaratory judgment action alleging that breach of duty to defend. Insured provided services only to a third party and not to Defendants in underlying suit. Allegations in underlying action triggered duty to defend, as defendants alleged that insured completed appraisals with full knowledge and intent that appraisals would be distributed to Plaintiffs, and provided their written consent for Plaintiff to use appraisals.(CONNORS and HOFFMAN, concurring.)

In declaratory judgment action, insured medical school claimed coverage for settlement it paid in underlying suit filed by former patients seeking compensation for school's decision to discontinue experimental cancer vaccine program. Insurer owed duty to pay for school's defense and settlement costs under primary policy and excess policy, as its policies covered liability resulting from medical incident arising out of professional services. Other insurer owes no duty to indemnify school for settlement, as its policy contained specific exclusion for medical malpractice damages. (GORDON and PALMER, concurring.)

Declaratory judgment action filed regarding coverage for multivehicle accident with many fatalities and injuries. Defendant owners of trailer involved in accident filed supplemental fee petition seeking insurer for attorney fees and costs and prejudgment interest. Law of the case doctrine bars parties from relitigating issues already decided in same case, as to questions of law and fact and both explicit and implicit decisions. Court properly denied insurer's discovery request, as insurer was seeking discovery as to issues barred by law of the case doctrine. Insurer bears burden of identifying evidence to be elicited in evidentiary hearing to show that insurer is entitled to evidentiary hearing on fee petition. (PIERCE and LIU, concurring.)

(Court opinion corrected 3/5/14.) Court erred in ruling that insurer was entitled to set off insured's claim for underinsured motorist (UDIM) benefits with amounts insurer paid under bodily injury coverage of same insurance policy, relating to car accident with multiple tortfeasors. UDIM coverage is intended to place insured in same position as if injured by motorist with insurance in same amount as UDIM policy. Where policy has latent ambiguity, insured can seek both bodily injury and UDIM benefits. (ROCHFORD and LAMPKIN, concurring.)

Court properly dismissed with prejudice complaint for bad-faith failure to settle within policy limits. Plaintiff had demanded $20,000 policy limits of adverse driver's insurer for car accident injuries, but insurer rejected demand. Jury awarded Plaitniff net verdict of $47,951 plus costs. As Plaintiff admitted that he made a potentially illegal U-turn in front of other vehicle, and given nature of accident, Plaintiff did not sufficiently plead facts showing reasonable probability of liability against adverse driver at time of settlement demand, which is when duty to settle arises. (HOFFMAN and CUNNINGHAM, concurring.)