Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

Thomas T.D. Polk and his wife, Katarzyna Kurek-Polk, were struck by a vehicle while assisting another motorist, resulting in serious injury to Thomas and Katarzyna’s death. They recovered $100,000 from the at-fault driver’s insurance and sought additional compensation under three separate underinsured motorist (UIM) policies: $1,000,000 from AMCO Insurance Company, $500,000 from Progressive Northern Insurance Company, and $500,000 from Secura Supreme Insurance Company. Each policy included a proportionate liability clause and an “Other Insurance” anti-stacking provision, which limited the total UIM recovery to the highest coverage available under a single policy.After receiving $800,000 from the AMCO policy and rejecting a $220,000 offer from Secura, Polk filed a breach of contract suit against Secura and Progressive in the United States District Court for the Northern District of Illinois. The district court granted summary judgment in favor of the insurers. It held that the anti-stacking provisions were unambiguous and limited Polk’s maximum recovery to $1,000,000—the highest limit among the policies—regardless of the number of insureds or policies. Since Polk had already received $900,000 from the tortfeasor and AMCO, the court ordered Secura to pay $100,000 to bring the total to $1,000,000, and ruled that Progressive owed nothing.On appeal, the United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. It held that the anti-stacking provisions in both the Progressive and Secura policies were clear and enforceable under Illinois law, and that the insurers’ liabilities were properly offset by the amounts already received, thus capping total recovery at $1,000,000. The court also rejected Polk’s arguments regarding policy ambiguity and statutory interpretation. View "Polk v Progressive Northern Insurance Company" on Justia Law

An individual purchased a long-term care insurance policy that covered expenses incurred at nursing or assisted living facilities. During the COVID-19 pandemic, at age 94, the insured fractured her hip and, due to concerns about contracting COVID-19 in a communal setting, received post-surgical care at home as prescribed by her physician. When she submitted a claim for these home health care expenses, the insurance company denied coverage, stating that her policy did not include home care benefits. The insured had selected a policy that covered only institutional care, though an alternative plan of care provision allowed for non-institutional benefits if certain conditions were met, including mutual agreement between the insured, her provider, and the insurer.The insured, through her successor trustees, filed a breach of contract action in the United States District Court for the Northern District of Illinois, Eastern Division. Both parties moved for summary judgment. The district court found in favor of the insurer, holding that the policy did not provide home health care benefits, and that the denial of coverage under the alternative plan of care provision was not in bad faith because the insured had not met the necessary conditions to trigger that provision.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the grant of summary judgment de novo. The court held that the policy did not provide for home health care benefits, as required for the relevant Illinois insurance regulation to apply. The court also determined that the alternative plan of care provision was discretionary and did not guarantee coverage for home care. Additionally, the insurer did not breach the implied covenant of good faith and fair dealing by enforcing the explicit terms of the policy. The Seventh Circuit affirmed the district court’s judgment. View "Hartnett v Jackson National Life Insurance Company" on Justia Law

A fire severely damaged a church building in southeastern Indiana. The church promptly notified its insurer, which had issued a policy covering actual cash value (subject to depreciation) and additional replacement-cost benefits if the property was repaired or replaced “as soon as reasonably possible.” The parties disputed the cost of rebuilding, but the insurer paid the church nearly $1.7 million—the undisputed actual cash value and additional agreed amounts—while the church continued to contest the estimates and did not begin repairs or replacement. About two years after the fire, the church sued the insurer for breach of contract and bad faith denial of replacement-cost benefits.The insurer removed the case to the United States District Court for the Southern District of Indiana and moved for summary judgment, arguing that the church had not complied with the policy’s requirement to repair or replace the property promptly. The church, represented by counsel, responded with arguments about factual disputes over estimates and the credibility of insurance adjusters, but did not address the legal basis concerning the contractual precondition for replacement-cost benefits. The district court granted summary judgment to the insurer, finding the church had failed to engage with the insurer’s core argument.On appeal, with new counsel, the church raised for the first time that ongoing disputes over replacement-cost estimates excused its failure to begin repairs, citing two Indiana Court of Appeals cases. The United States Court of Appeals for the Seventh Circuit held that this argument was waived because it was not presented to the district court. The Seventh Circuit further held that plain-error review in civil cases is available only in extraordinary circumstances not present here. The court affirmed the district court’s judgment in favor of the insurer. View "Crothersville Lighthouse Tabernacle Church v. Church Mutual Insurance Company" on Justia Law

A fatal collision occurred near Sycamore, Illinois, when a tractor-trailer driven by an agent of Deerpass Farms Trucking, LLC-II struck a vehicle operated by Patrick J. Brennan, resulting in Brennan’s death. Deerpass Trucking, an interstate motor carrier, leased the tractor from Deerpass Farms and hauled a trailer owned by Conserv FS, Inc. Both the tractor and trailer were covered by commercial auto liability insurance: Great West Casualty insured the tractor, and Nationwide Agribusiness insured the trailer. After Brennan’s estate filed a wrongful death suit in state court, both insurers agreed their policies covered the entities involved but disputed which policy had to pay first for defense and liability costs.Great West filed a declaratory judgment action in the United States District Court for the Northern District of Illinois to resolve the payment priority dispute. Great West argued its policy provided only excess coverage, not primary, and further claimed its excess coverage was “excess over” Nationwide’s excess coverage. Nationwide counterclaimed, seeking a declaration that Great West’s coverage was primary. Applying Illinois law, the district court held that both policies were excess and that the insurers must share costs proportionately according to their policy limits. The court found the relevant lease and indemnity agreements did not render Great West’s coverage primary and rejected both parties’ alternative arguments about payment priority.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s grant of summary judgment de novo. The Seventh Circuit affirmed, holding that both Great West’s and Nationwide’s policies provide excess coverage and that neither is “super excess” to the other. The court found no basis in Illinois law to recognize a distinct “super excess” tier and ordered the insurers to share costs proportionately to their coverage limits. The district court’s judgment was affirmed. View "Great West Casualty Co. v Nationwide Agribusiness Insurance Co." on Justia Law

Atlanta Gas Light Company and Southern Company Gas contracted with United States Infrastructure Corporation (USIC) to locate and mark gas lines in Georgia. In 2018, USIC failed to mark a line, leading to a gas explosion that seriously injured three people. The injured parties settled with USIC but not with Atlanta Gas Light. After being sued in Georgia state court, Atlanta Gas Light sought defense and indemnification under USIC’s excess liability policy issued by Navigators Insurance Company, claiming status as an additional insured. Navigators denied coverage, asserting Atlanta Gas Light was not an additional insured for these claims because they were based solely on Atlanta Gas Light's conduct.Before the United States District Court for the Southern District of Indiana, Atlanta Gas Light sued Navigators for breach of contract, breach of fiduciary duty, and bad faith. The district court dismissed claims related to Navigators’s conduct prior to USIC’s primary policy exhaustion but allowed the breach of contract claim to proceed. On summary judgment, the district court ruled that Atlanta Gas Light was an additional insured under the excess policy and denied Navigators's motion as to breach of contract. The court entered final judgment for Atlanta Gas Light, and both parties appealed aspects of the ruling.The United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. It held that, under Indiana law and the policies’ language, Atlanta Gas Light was an “additional insured” because its liability in the underlying suits arose, at least in part, from USIC’s acts or omissions. The court also held that Navigators had no duty to defend or indemnify Atlanta Gas Light before the primary policy was exhausted, and that Navigators’s denial of coverage, based on a nonfrivolous interpretation of the policy, did not constitute bad faith or breach any fiduciary duty. View "Atlanta Gas Light Company v Navigators Insurance Company" on Justia Law

Fayez Dahleh purchased a flexible premium universal life insurance policy originally issued to Gilda Perlas. Dahleh had no known prior relationship with Perlas, but acquired the policy as an investment after Perlas designated him as owner in July 2019. The policy allowed the holder to vary premium amounts and payment schedules, and policy charges were assessed monthly. After becoming owner, Dahleh frequently maintained the policy by making payments at the end of grace periods triggered by insufficient account funds. In February 2022, Dahleh failed to make the required payment before the grace period expired, resulting in Minnesota Life cancelling the policy.Dahleh filed suit in the United States District Court for the Northern District of Illinois, Eastern Division, seeking a declaratory judgment that the policy remained in force. He argued that Minnesota Life failed to provide the statutory notice and six-month grace period required by 215 Ill. Comp. Stat. 5/234 before cancelling the policy. Both parties moved for summary judgment. The district court granted summary judgment in favor of Minnesota Life, holding that proper notice was given and no six-month grace period was required.Reviewing the case de novo, the United States Court of Appeals for the Seventh Circuit considered whether the policy’s required monthly charges constituted “premiums” under Section 234 and whether the policy was exempt from statutory notice and grace-period requirements. The appellate court held that the charges were premiums, but that the policy was exempt from the statutory requirements because premiums were payable monthly, fitting the exception in Section 234(2). Therefore, Minnesota Life was not required to provide additional notice or a six-month grace period before termination. The Seventh Circuit affirmed the judgment of the district court. View "Dahleh v. Minnesota Life Insurance Co." on Justia Law

Mesco Manufacturing, LLC ("Mesco") held a business insurance policy from Motorists Mutual Insurance Company ("Motorists Mutual") covering direct physical loss or damage caused by covered causes, including hail. After a storm in August 2018, Mesco claimed hail damage to its manufacturing facility roofs. Motorists Mutual initially adjusted the claim for $7,806.75, but Mesco disagreed and invoked the policy's appraisal provision. The appraisers selected an umpire who determined that the modified bitumen roofs were hail damaged, awarding $1,020,490.32 in replacement cost value. Motorists Mutual only paid $265,296.21, excluding the modified bitumen and EPDM roofs from the award.Mesco filed a complaint in the United States District Court for the Southern District of Indiana, alleging breach of contract and bad faith under Indiana law. The district court granted Mesco's motion for summary judgment, concluding that Motorists Mutual breached the contract by not paying the full appraisal award. The court relied on the precedent set in Villas at Winding Ridge v. State Farm Fire & Casualty Co., which held that a similar appraisal provision was binding and unambiguous. The court found no exceptional circumstances to set aside the appraisal award and denied Motorists Mutual's motion for reconsideration.The United States Court of Appeals for the Seventh Circuit reviewed the case de novo. The court affirmed the district court's judgment, holding that the appraisal award was binding and that Motorists Mutual breached the insurance contract by not paying the full award. The court determined that the appraisal process properly included determining the extent of hail damage, and Motorists Mutual's "right to deny" clause did not permit it to set aside the binding appraisal award. The court emphasized that the purpose of the appraisal process is to provide a speedy and inexpensive means of settling disputes. View "Mesco Manufacturing, LLC v. Motorists Mutual Insurance Co." on Justia Law

Heather Schroeder and Misty Tanner, representing a class of Indiana car owners insured by Progressive Paloverde Insurance Company and Progressive Southeastern Insurance Company, filed a lawsuit claiming that Progressive breached its contractual duty by applying "Projected Sold Adjustments" to the list prices of comparable cars when determining the actual cash value of totaled cars. The insurance policy in question specifies that the actual cash value is determined by the market value, age, and condition of the vehicle at the time of the loss.The United States District Court for the Southern District of Indiana, Indianapolis Division, recognized that whether Progressive paid each class member the actual cash value of their car is not susceptible to classwide proof. However, it concluded that common evidence could establish that Progressive employed an unacceptable method for calculating actual cash value payments by applying Projected Sold Adjustments. The court certified a class on this basis.The United States Court of Appeals for the Seventh Circuit reviewed the case and concluded that Progressive’s policy does not preclude the use of Projected Sold Adjustments in calculating actual cash value payments, as long as the insureds are ultimately paid the actual cash value of their totaled cars as defined under the policy and Indiana law. The court found that individual questions about whether Progressive failed to pay each class member the actual cash value of their car would overwhelm any common ones. Consequently, the Seventh Circuit reversed the district court’s class certification decision and remanded the case for further proceedings. View "Schroeder v. Progressive Paloverde Insurance Co." on Justia Law

Jason Rahimzadeh was injured while riding his bicycle and sought underinsured motorist (UIM) coverage from his employer's commercial automobile insurance policy with Ace American Insurance Company. Ace denied the claim, stating that Rahimzadeh did not qualify as an insured under the policy. Rahimzadeh then filed a lawsuit in Illinois state court, alleging breach of the insurance contract. Ace removed the case to the United States District Court for the Northern District of Illinois, which granted Ace's motion to dismiss for failure to state a claim.The district court found that the terms of the insurance policy were unambiguous and that Rahimzadeh did not meet the policy's requirement of "occupying" a covered vehicle to qualify as an insured. The court also rejected Rahimzadeh's argument that the occupancy requirement was unenforceable as contrary to public policy, distinguishing the case from Galarza v. Direct Auto Insurance Co., which involved a personal automobile insurance policy. The court relied on Stark v. Illinois Emcasco Insurance Co., which upheld occupancy requirements in commercial policies.The United States Court of Appeals for the Seventh Circuit reviewed the district court's decision de novo. The court affirmed the district court's judgment, holding that the occupancy requirement in the commercial automobile insurance policy was permissible and did not violate Illinois public policy. The court distinguished the case from Galarza, noting that the public policy concerns in personal insurance policies do not apply to commercial policies. Therefore, Rahimzadeh was not entitled to UIM coverage under his employer's policy. The court also declined to certify the question to the Supreme Court of Illinois, finding no genuine uncertainty about the state law issue. View "Rahimzadeh v. Ace American Insurance Co." on Justia Law

Best Inn Midwest, LLC (Best Inn) owned and operated a hotel in Indianapolis, Indiana, which faced numerous issues, including health code violations and criminal activity. In 2017, Best Inn purchased a commercial property insurance policy from Ohio Security Insurance Company (Ohio Security). The policy excluded coverage for vandalism if the building was vacant for sixty consecutive days or more. Best Inn filed a claim for vandalism to air conditioning units on the hotel’s roof, which Ohio Security denied, citing vacancy. Ohio Security requested information about the hotel's occupancy, which Best Inn failed to provide, leading Ohio Security to file a suit seeking a declaration that the policy did not cover the claim.The United States District Court for the Southern District of Indiana granted Ohio Security's motion for summary judgment on Best Inn's counterclaim for bad faith. The court found that Best Inn had failed to comply with discovery requests and court orders, leading to a sanction declaring the hotel vacant during the relevant period. This finding was based on Best Inn's repeated failure to provide requested documents and information, despite numerous attempts by Ohio Security to obtain them.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court's decision. The appellate court held that the district court did not abuse its discretion in imposing sanctions and declaring the hotel vacant. This declaration meant that the insurance policy did not cover the vandalism claim, and thus, Ohio Security was entitled to summary judgment on Best Inn's bad faith counterclaim. The appellate court concluded that the sanctions were appropriate and proportionate to Best Inn's conduct, and there were no remaining disputes as to any material fact. View "Ohio Security Insurance Company v Best Inn Midwest, LLC" on Justia Law