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

A $15,000 insurance policy covering the decedent named his brother as beneficiary. The brother was killed in the same accident that killed the decedent. Although the insurer received notice that the decedent's mother (estate administrator) had assigned the policy to pay for the funeral, the company obtained an order from the state court and paid the benefit to decedent's children, applying a "facility-of-payment" clause, which provided: "if the beneficiary he or she named is not alive at the Employeeâs death, the payment will be made at Our option, to any one or more of the following: Your spouse; Your children; Your parents; Your brothers and sisters; or Your estate." The assignee (finance company) filed suit. The federal district court entered judgment in favor of the insurer. The Seventh Circuit affirmed, exercising jurisdiction under the Employee Retirement Income Security Act, 29 U.S.C. 1132. Insurance companies have broad discretion under facility-of-payment clauses and the insurer's decision was not arbitrary. The court declined to award attorney fees.

After a fire at a discount mall, the insurer declined to defend negligence suits by tenants and sought a declaration that the losses fell within a policy exclusion for damage to "property in the care, custody, or control of the insured" because the mall was closed at the time of the fire and tenants did not have access. The district court entered an order to allow the insurer to appeal. The Seventh Circuit dismissed for lack of jurisdiction. That the trial magistrate and parties referred to a final Rule 54(b) order does not make it so; there are numerous other claims pending, such as duty to indemnify and bad faith, the resolution of which is tied to the duty to defend issue.