Insurance Law

Dist. Ct. did not err in granting plaintiff-insurance company’s motion for summary judgment in action seeking declaration that defendant-insurance company’s policy covered underlying section 1983 action alleging that insureds (County and State’s Attorney) subjected two individuals to false imprisonment and malicious prosecution on murder charges, such that defendant was required to reimburse plaintiff for costs in defending insureds in section 1983 action. Defendant’s policy specifically mentioned County as named insured, and State’s Attorney was covered as elected official of political subdivision located within County as contemplated under policy. Moreover, plaintiff could assert successful unjust enrichment theory against defendant where: (1) plaintiff accepted representation of County and State’s Attorney in section 1983 action under reservation of rights; (2) defendant’s predecessor eventually refused to contribute to defense costs of both County and State’s Attorney even though both County and State’s Attorney were covered under defendant’s policy; (3) plaintiff continued to pay defense costs up until Ct. of Appeals in earlier decision found that plaintiff was not liable for said costs under its policy; and (4) plaintiff’s contributions for said costs would constitute improper benefit to defendant.

Dist. Ct. erred in granting plaintiffs-insurance companies’ motion for summary judgment in actions seeking declaration that they owed no duty to pay defendant-insured on underlying tort action alleging false advertising against defendant concerning defendant’s statements regarding competitor’s less expensive infant formula, where Dist. Ct. believed that defendant violated timely notification clause in both polices by failing to notify both plaintiffs of existence of underlying lawsuit until after conclusion of trial on underlying claim that resulted in $13.5 million jury verdict in competitor’s favor. Under Indiana law, while instant late notice created rebuttable presumption of harm to plaintiffs that would have allowed them to disclaim coverage, plaintiffs could disclaim coverage only if there was prejudice caused by said late notice. Moreover, remand was required to establish whether either plaintiff had incurred any harm where: (1) one plaintiff’s policy limit was only $2 million, such that it was not obvious how said plaintiff could have obtained either jury verdict or settlement that was less than $2 million had it been in control of defense in underlying lawsuit; and (2) although other plaintiff’s excess insurance policy provided coverage up to $25 million, said plaintiff suggested that it would have used same law firm/tactics that defendant had used in underlying lawsuit.

Dist. Ct. erred in granting defendant-insurance company’s motion for summary judgment in action by plaintiff-insured seeking declaration that defendant owed plaintiff for replacement cost insurance payments, even though plaintiff had sold apartment complex that had incurred damages that was subject of policy prior to filing instant lawsuit. While defendant argued that it did not owe any such payments because plaintiff had lost its insurable interest when it sold damaged property to third-party, and where plaintiff had not actually repaired property prior to said sale, Mississippi law does not require insured to continue to hold its interest in damaged property up to filing of lawsuit since insurable interest is measured either at time of policy formation or at time of loss, and plaintiff satisfied both time frames in instant case. Moreover, fact that plaintiff had not repaired property by time it filed lawsuit did not defeat claim for payments since policy language did not require that plaintiff personally make such repairs. On remand, defendant may pursue defense that property was not repaired within reasonable time.

Dist. Ct. erred in granting defendant-insurance company’s motion for summary judgment in action by plaintiffs-insured homeowners seeking declaration that insurance policy issued by defendant covered fire damage to plaintiffs’ house, even though defendant denied coverage on ground that plaintiffs did not reside at time of fire in “residence premises” as that term was used in policy, but rather resided in nearby trailer. Plaintiffs were entitled to coverage where term “residence premises” in policy was ambiguous since: (1) policy’s definition of said term did not pertain to any particular address, but rather pertained to particular “location” that could have multiple buildings; and (2) plaintiff’s trailer was located on same parcel of land as house covered by policy. Moreover, while Dist. Ct. believed that insureds’ residency in trailer precluded house’s coverage under policy because trailer had different mailing address than house, which in turn meant that plaintiffs could not satisfy residency requirement in policy, policy did not define “residence premises” in terms of mailing address.

Dist. Ct. erred in granting plaintiff’s motion to remand to state court plaintiff’s action seeking declaration that defendant-insurance company owed insured duty to defend and indemnify in underlying class action lawsuit that assessed $18 million judgment against insured in claim under Telephone Consumer Protection Act, where instant declaratory judgment action had been removed to federal court. Although plaintiff, which was class representative in underlying action, alleged in instant action that it was suing defendant on its own behalf, plaintiff had standing to pursue instant declaratory judgment action only in its capacity as class representative. Thus, instant action was in substance class action that was otherwise eligible for removal under Class Action Fairness Act. Ct. further noted that, due to plaintiff’s status as class representative in underlying action, it still owed continuing fiduciary obligation to class regardless of whether it sued defendant in its individual or representative capacity.