Justia U.S. 9th Circuit Court of Appeals Opinion SummariesArticles Posted in Insurance Law
Adir International, LLC v. Starr Indemnity and Liability Co.
The Ninth Circuit affirmed the district court's grant of summary judgment to Starr in an action brought by Adir, seeking insurance defense coverage. The panel held that California Insurance Code section 533.5(b) — which nullifies an insurance company’s duty to defend — does not facially violate a party's due process right to retain counsel. The panel explained that, in civil cases, courts have recognized a denial of due process only if the government actively thwarts a party from obtaining a lawyer or prevents it from communicating with counsel. In this case, Adir has made no such allegation.The panel also rejected Adir's statutory argument that section 533.5 applies to actions involving only monetary relief. Rather, under the plain text of the statute, it applies to actions that seek injunctive relief along with monetary relief. Because it turns out that there is no duty to defend nor to indemnify, the panel affirmed the district court's determination that Starr is entitled to reimbursement under the explicit language of the insurance policy. View "Adir International, LLC v. Starr Indemnity and Liability Co." on Justia Law
Allied Premier Insurance v. United Financial Casualty Co.
The Ninth Circuit certified to the California Supreme Court the following question: Under California's Motor Carriers of Property Permit Act, Cal. Veh. Code 34600 et seq., does a commercial automobile insurance policy continue in full force and effect until the insurer cancels the corresponding Certificate of Insurance on file with the California Department of Motor Vehicles, regardless of the insurance policy's stated expiration date? View "Allied Premier Insurance v. United Financial Casualty Co." on Justia Law
Academy of Country Music v. Continental Casualty Co.
In 2020, the Academy filed suit in state court alleging that Continental breached an insurance policy by denying coverage for a claim asserted against it by a former executive. After removal to the district court, the district court issued a sua sponte order remanding the case to state court.The Ninth Circuit concluded that the district court's transmittal of its sua sponte order remanding this civil action to a state court based solely on the notice of removal does not deprive federal courts of jurisdiction. The panel also concluded that despite the district court's characterization of its order, 28 U.S.C. 1447(d) does not bar the panel's review because jurisdiction could not be determined when the district court issued its sua sponte order. The panel explained that section 1447(d) bars review only of a remand order that is based on a colorable section 1447(c) ground. In this case, the district court's requirement that a notice of removal prove subject matter jurisdiction is contrary to Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 89 (2014), and accordingly, is not a "colorable" ground under section 1447(c). Accordingly, the panel vacated the district court's remand order. View "Academy of Country Music v. Continental Casualty Co." on Justia Law
Alpert v. NationStar Mortgage LLC
The Ninth Circuit filed an order deferring submission and certifying the following questions to the Washington State Supreme Court: 1. Should the filed rate doctrine apply to claims by a Washington homeowner against a loan servicer arising from the placement of lender placed insurance on the Washington homeowner's property where the servicer purchased the insurance from a separate insurance company who filed the insurance product with the Washington State Office of the Insurance Commissioner? 2. In the event the filed rate doctrine does apply to this type of transaction, do the damages requested by plaintiff fall outside the scope of the filed rate doctrine, or rather do they "directly attack agency-approved rates," such that they are barred under McCarthy Finance, Inc. v. Premera, 347 P.3d 872, 875 (Wash. 2015)? View "Alpert v. NationStar Mortgage LLC" on Justia Law
Benson v. Casa de Capri Enterprises, LLC
The Ninth Circuit certified to the Arizona Supreme Court the following questions: 1. In a garnishment action by a judgment creditor against the judgment debtor's insurer claiming that coverage is owed under an insurance policy, where the judgment creditor is not proceeding on an assignment of rights, can the insurer invoke the doctrine of direct benefits estoppel to bind the judgment creditor to the terms of the insurance contract? 2. If yes, does direct benefits estoppel also bind the judgment creditor to the arbitration clause contained in the insurance policy? View "Benson v. Casa de Capri Enterprises, LLC" on Justia Law
AXIS Reinsurance Co. v. Northrop Grumman
The Ninth Circuit reversed the district court's grant of summary judgment to AXIS in an action seeking reimbursement of an insurance payment that it made, as a secondary excess insurer, to Northrop. AXIS argued that underlying insurers paid an uncovered claim arising from Northrop's settlement of alleged Employment Retirement Income Security Act (ERISA) violations, thereby "improperly eroding" their policies' liability limits and prematurely triggering AXIS's excess coverage.The panel held that, consistent with the limited caselaw and secondary sources that have addressed excess insurer claims of "improper erosion," "improper exhaustion," "wrongful exhaustion," and similar challenges to the payment decisions of underlying insurers, an excess insurer may not challenge those decisions in order to argue that the underlying liability limits were not (or should not have been) exhausted absent a showing of fraud or bad faith, or the specific reservation of such a right in its contract with the insured.In this case, the panel held that no reasonable insured in Northrop's position would understand that it might have to justify its underlying insurers' payment decisions as a prerequisite to obtaining excess coverage from AXIS. The district court misapplied the panel's unpublished decision in Shy v. Insurance Company of the State of Pennsylvania, 528 F. App'x 752 (9th Cir. 2013), ignored the weight of authority rejecting "improper erosion" as a valid basis for denying coverage, and misconstrued the "covered loss" provision in AXIS's excess policy as a reservation of the right to second-guess other insurers' payments. Accordingly, the panel remanded for further proceedings. View "AXIS Reinsurance Co. v. Northrop Grumman" on Justia Law
Schmitt v. Kaiser Foundation Health Plan of Washington
Plaintiffs, who have hearing loss severe enough to qualify them as disabled, filed suit claiming that Kaiser's health insurance plan's categorical exclusion of most hearing loss treatment discriminates against hearing disabled people in violation of Section 1557 of the Patient Protection and Affordable Care Act (ACA). The district court ruled that Kaiser's plans do not exclude benefits based on disability because the plans treat individuals with hearing loss alike, regardless of whether their hearing loss is disabling.The Ninth Circuit agreed with the district court that plaintiffs have failed to state a plausible discrimination claim. The panel explained that the ACA specifically prohibits discrimination in plan benefit design, and a categorical exclusion of treatment for hearing loss would raise an inference of discrimination against hearing disabled people notwithstanding that it would also adversely affect individuals with non-disabling hearing loss. However, the exclusion in this case is not categorical. The panel stated that, while Kaiser's coverage of cochlear implants is inadequate to serve plaintiffs' health needs, it may adequately serve the needs of hearing disabled people as a group. Therefore, the panel affirmed the district court's dismissal of the second amended complaint. The panel reversed the district court's dismissal without leave to amend and remanded. View "Schmitt v. Kaiser Foundation Health Plan of Washington" on Justia Law
Zurich American Insurance Co. v. Ironshore Specialty Insurance Co.
The Ninth Circuit certified to the Nevada Supreme Court the following questions: Whether, under Nevada law, the burden of proving the applicability of an exception to an exclusion of coverage in an insurance policy falls on the insurer or the insured? Whichever party bears such a burden, may it rely on evidence extrinsic to the complaint to carry its burden, and if so, is it limited to extrinsic evidence available at the time the insured tendered the defense of the lawsuit to the insurer? View "Zurich American Insurance Co. v. Ironshore Specialty Insurance Co." on Justia Law
Lewis v. Liberty Mutual Insurance Co.
After plaintiffs were awarded more than $45 million in a products liability suit brought against EcoSmart, EcoSmart declared bankruptcy and plaintiffs brought a direct action against EcoSmart's insurer, LMIC, for payment on the judgment. LMIC argued that its policy with EcoSmart had a forum-selection clause designating Australian courts as the exclusive forum. The district court granted LMIC's motion to dismiss on grounds of forum non conveniens.The Ninth Circuit held that, because plaintiffs stand in the shoes of EcoSmart, their third-party creditors' rights are derivative of the rights and limitations held by the bankrupt insured, and thus the forum-selection clause applies. The panel also held that plaintiffs have not shown that the clause violates California public policy or that Australia is an inadequate forum for suit. Accordingly, the panel affirmed the district court's judgment. View "Lewis v. Liberty Mutual Insurance Co." on Justia Law
California Insurance Guarantee Assoc. v. Azar
The Ninth Circuit reversed the district court's judgment in favor of Medicare in an action brought by CIGA, seeking declaratory relief after Medicare paid for and demanded reimbursement from CIGA for medical expenses of certain individuals whose workers' compensation benefits CIGA was administering.The panel held that Medicare, as a secondary payer, was entitled to seek reimbursement from a beneficiary's primary payer, typically private insurance. However, CIGA was not a primary plan, and specifically was not a workmen's compensation law or plan. Rather, the panel held that CIGA was an insolvency insurer of last resort. The panel explained that insurance regulation was a field traditionally occupied by the states, and it must presume that the Medicare secondary payer provisions do not preempt state insurance laws unless Congress clearly manifested its intent to do so. Furthermore, nothing in the Medicare statute or its implementing regulations suggested that Congress meant to interfere with state schemes to protect against insurer insolvencies. View "California Insurance Guarantee Assoc. v. Azar" on Justia Law