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

Tompkins began working in 1978 and was a participant in the Fund, a multi-employer pension fund established and administered under the Employee Retirement Income Security Act, 29 U.S.C. 1001. In 1999, Tompkins was granted a disability pension based on chronic asthmatic bronchitis, which he attributed to working with cement dust for 22 years. Tompkins’s application included agreement to be bound by all the Fund’s rules and regulations, although he did not inquire about those rules or make any effort to find out what they were. Upon receiving his first monthly payment of $2,115.43, he was required to sign a Retirement Declaration that provided notice of disqualifying employment for plan participants receiving retirement pensions but did not include the rules and regulations specific to disability pensioners. In 2007, the Fund suspended his disability pension, claiming that his full-time employment in 2005 and 2006 indicated that he no longer met the definition of “total and permanent disability.” The district court granted summary judgment in favor of the Fund. The Seventh Circuit affirmed. Although the Fund acknowledged ambiguity, it based its decision on a reasonable interpretation. View "Tompkins v. Cent. Laborers' Pension Fund" on Justia Law

Plaintiff left his senior position in 1996, having participated in the Retirement Income Security Plan for Employees (RISPE), a tax-qualified defined benefits plan that guarantees specified retirement benefits, and in the Excess Benefit Plan, a defined unfunded benefits pension plan under which benefits are paid directly by the employer rather than by a trust funded by the employer. Both plans allowed him to choose between an annuity and an actuarial equivalent lump sum distribution. In 2009 he received his RISPE lump sum, $325,054.28 and his Excess Plan lump sum, $218,726.38. The discount rate used to calculate lump sum RISPE benefits was a “segment rate,” 26 U.S.C. 417(e)(3)(C), of 5.24 percent. The discount rate applied to the Excess Plan lump sum was 7.5 percent. The district court rejected his ERISA claim that the discount rate required by both plans was a rate computed by the Pension Benefit Guaranty Corporation on the basis of annuity premiums charged by insurance companies. The Seventh Circuit affirmed. With respect to the RISPE, the accrued benefit, which cannot be reduced retroactively, is the annuity; the lump sum is not the accrued benefit and can be reduced retroactively. The court rejected a conflict-of-interest argument concerning calculation of the Excess Benefit Plan discount rate. View "Dennison v. MONY Life Ret. Income Sec. Plan for Emps." on Justia Law

The Hancock Center in Chicago is managed by Shorenstein (several related companies). Shorenstein hired an architectural firm, MCA, to design and oversee renovation of windows and exterior walls; MCA hired a general contractor. In 2002, a scaffold fell from the 42nd floor in a high wind and killed three people in cars, severely injuring several others. Shorenstein settled with plaintiffs in 2006 for a total of $8.7 million. MCA’s contract with Shorenstein had required MCA to obtain liability insurance covering the owner, Shorenstein, and any other party specified by the owner. MCA obtained the required insurance policy from AMICO, covering “any person or organization to whom [MCA is] obligated by virtue of a written contract.” There was a dispute concerning which Shorenstein entities were covered. Shorenstein was awarded $959,866.02 by the district court. The Seventh Circuit affirmed in part and reversed in part, holding that the court erred in apportioning the award among the Shorenstein entities. The court rejected AMICO’s arguments that the claim was barred by an exclusion of coverage for injuries “due to rendering or failure to render any professional service” by an insured and that Shorenstein gave up its right to indemnity by AMICO by asking its other insurer for indemnification. View "Nat'l Union Fire Ins. Co. of Pittsburgh v. Am. Motorists Ins. Co." on Justia Law

Hentz is an accountant with a firm employed by pension funds to perform accounting and auditing services. The firm possessed a compact disc containing confidential and protected information, including the names, birth dates, and Social Security numbers of approximately 30,000 participants and beneficiaries of the funds. The firm agreed in writing to ensure that it would safeguard the information on the compact disc. Hentz placed the compact disc in a laptop, put the laptop in her personal vehicle, and parked in the open at her residence. The laptop and disc were stolen. The funds incurred nearly $200,000 in credit monitoring and insurance expenses and sued Hentz, who tendered the defense to Nationwide, which had written her homeowner’s insurance policy. Nationwide obtained a declaration that it had no duty to defend or indemnify Hentz because the policy does not cover damage to property rented to, occupied or used by or in the care of the insured or arising out of or in connection with a business conducted from an insured location or engaged in by an insured, whether or not the business is owned or operated by an insured or employs an insured. The Seventh Circuit affirmed. View "Nationwide Ins. Co. v. Central Laborers' Pension Fund" on Justia Law

Arbor builds homes in Indiana and contracted with Willmez Plumbing, which was to obtain insurance naming Arbor as an additional insured. Willmez subcontracted to Alarcon. After the work was ostensibly completed, the buyers noticed a foul odor and felt ill. Alarcon had not connected the plumbing to the main sewer line. Raw sewage had discharged into the crawl space. Willmez corrected the connection. Arbor contracted for cleanup that required excavation and decontamination and cost about $65,000. The owners demanded replacement of the house. Arbor told Willmez to notify its insurer West Bend. Hearing nothing, Arbor assumed the insurer had no objections and agreed to build a new home, pay closing costs and moving expenses, and to compensate for any increase in mortgage rate. Arbor sued Willmez, alleging negligence, breach of contract, slander of title, and constructive fraud, and sent West Bend a copy. The district court granted West Bend summary judgment, finding that it was relieved of duties to defend or indemnify by “fungi and bacteria exclusion” and “voluntary payments” provisions. The Seventh Circuit affirmed. Although Arbor’s quick and decisive action was laudable, failure to obtain West Bend’s consent to the settlement relieved it of any obligation. View "West Bend Mut.l Ins. Co v. Arbor Homes, LLC" on Justia Law

Enviro-Chem conducted waste-handling and disposal operations at three sites north of Zionsville, Indiana, until it ceased operations in 1982, leaving considerable amounts of pollutants. The U.S. Environmental Protection Agency undertook cleanup and identified potentially responsible parties (PRPs), including former owners, their corporate entities, and their insurers. A trust was established to fund cleanup and trustees sued to recover cleanup costs under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9607(a) (CERCLA), the Indiana Environmental Legal Actions Statute (ELA), and more. Work continues at the site at issue. The district court dismissed, in part, on limitations grounds, construing the complaint as seeking contribution. The Seventh Circuit reversed dismissal of three counts, holding that claims to recover costs incurred pursuant to the 2002 Administrative Order by Consent between the EPA and PRPs and that related claims, including the ELA claim, were not moot. The court upheld denial of an insurer’s motion for summary judgment on preclusion grounds. View "Bernstein v. Bankert" on Justia Law

Northwestern sold an annuity to approximately 36,000 persons: about 3,000 live in Wisconsin. In 1985 Northwestern changed its calculation of the annual dividend. In a 2001 suit by annuitants in Wisconsin state court, the judge declined to certify the class, ruling that a claim for damages creates individual issues that make class treatment imprudent, and a national class is not manageable given differences in applicable state laws. A second suit initially proposed a class limited to Wisconsin annuitants and sought only a declaratory judgment that the 1985 change is invalid. The suit was certified as a class action and the judge declared that Northwestern violated the contracts, breached fiduciary duties, and should pay substantial damages. The class then amended to seek damages for annuitants in every state. Contending that the amendment implicated the Class Action Fairness Act, 28 U.S.C. 1332(d), 1453, Northwestern filed notice of removal. The district court remanded the suit. The Seventh Circuit vacated and remanded, reasoning that the doctrine of law of the case does not apply on appeal and that it will review the state trial court decision on the merits as it would, had the identical decision been made initially by the federal district judge. View "Laplant v. NW Mut. Life Ins. Co." on Justia Law

Raybourne was a quality engineer for 23 years. The employer provided a long-term disability plan that paid benefits for up to 24 months if disability prevented him from performing the duties of his regular job. After 24 months, the plan paid benefits only if he was unable to perform all material duties of any occupation for which he was reasonably qualified. Raybourne suffered degenerative joint disease in his foot, with severe pain. In 2003, he stopped working and underwent the first of the four surgeries. From December 2003 through February 2006, Cigna paid benefits, then determined that he was not disabled under the more stringent standard. Raybourne exhausted administrative remedies, then sued under 29 U.S.C. 1132(a)(1)(B). The district court ruled in favor of Cigna. On remand the court rejected Cigna’s “unconvincing” explanation for how the company determined that Raybourne was not disabled. The court found that Cigna relied on the report of a non-treating physician and on the Social Security Administration’s initial rejections of Raybourne’s claim, failing to consider the SSA’s final determination of disability. The Seventh Circuit affirmed, finding that denial of benefits was based on a conflict of interest rather than on the facts and the terms of the policy. View "Raybourne v. CIGNA Life Ins. Co. of NY" on Justia Law

The insurers provided law enforcement liability coverage to the city of Waukegan and its employees acting within the scope of employment. In 2009, Starks filed a civil rights suit against the city and some current and former police officers, among others, alleging that each played a role in his wrongful conviction for a 1986 crime. The insurers obtained a declaratory judgment that they have no duty to defend or indemnify. The Seventh Circuit affirmed, noting that the policies were not in effect at the time of the crime, that Starks was not exonerated during the period when the policies were in place, and that any outrageous conduct that might be grounds for a claim of intentional infliction of emotional distress also fell outside the policy dates. View "Northfield Ins.Co. v. City of Waukegan" on Justia Law

Blue, a bus driver insured under Hartford group disability plans, stopped working because of chronic headaches in 1998; Hartford approved short-term disability (STD) benefits. Blue was diagnosed with sphenopalatine ganglion neuralgia. Hartford approved long-term (LTD) benefits in 2001. To qualify for STD benefits, Blue needed to show inability to perform his own occupation; for LTD benefits, he needed to show that he could not do “any occupation or work for which he was or could become qualified by training, education or experience.” In 2002, Hartford amended its LTD policy, retroactive to 1993, adopting the more lenient “own occupation” standard. Hartford received annual physician’s reports, and by 2008, his provider indicated that Blue was capable of full-time light or sedentary work. Hartford notified Blue that he was no longer eligible for LTD benefits, quoting the “any occupation” language; it apparently did not send the 2002 retroactive amendment. In 2011, Hartford acknowledged its mistake to the district court, reinstated benefits, and issued a check for retroactive benefits. After granting one, but denying a second, extension of time, the district court ruled without Blue’s response, finding the contract claim was moot and granting Hartford summary judgment on the bad faith claim. The Seventh Circuit affirmed. View "Blue v. Hartford Life & Accident Ins. Co." on Justia Law