Appellate Law & Practice

CA1: is it a warranty provision and is it breached? (and a Bottomry book)

ING Insurance SA v. Pagan-Sanchez, No. 07-1709 (8/21/08). A guy gets his boat insured.  He doesn’t seem to take care of it too well, and they don’t put fire extinguishers where they should.  It gets wrecked.  His insurers seek a declaratory judgment saying that they don’t have to pay. 

The dispute resolves around the language of the contract and the provisions of the contract dealing with maintenance and fire extinguishers are “warranty” provisions, the breach of which by the insured party is a breach of the contract.  The First says that they are.  The first says that the “prevailing view” is that performance under a maritime insurance contract is excused if the insured parties breach the warranty. The First admits that there is no Puerto Rican law on the subject. 

Strangely, the First condemns counsel for the insurers for talking too much about New York law.  But what really seems to be going on is that counsel for the insurers, during the litigation consented to the substantive law of Puerto Rico, even though the language of the contract includes a provision naming New York as the “choice of law.”  So, the First says, “We are not certain that counsel, as a matter of litigation strategy, may vary the express terms of a choice of law clause.”  So, we know that is an open issue in the First.

If you have enjoyed reading about this case (as an ethical and detail-oriented lawyer would), you may enjoy James Allan Park, A System of the Law of Marine Insurances: With Three Chapters on Bottomry, on Insurances on Lives, and on Insurances Against Fire, available on Google Books here. 

Welcome Insurance Coverage Law in Massachusetts

A big welcome to blogosphere to the ambiguously-named “Insurance Coverage Law in Massachusetts.”

This blog is neat, because not only does it cover an area of law that is almost as neat as the law of rape and “Disturbing the Peace” but it also provides directions about how to read an insurance policy.  It is written by Nina Kallen.  The most interesting post of general interest is: Change In Citation Rule Can Have A Big Impact.  This is an opportunity to expound on something that some folks have been thinking about recently.

This post, explains how the Massachusetts Courts, by virtue of a “Thou Shalt not Cite Unpublished Opinions” rule worked a substantive changes in the law of insurance coverage.  But, believe it or not I have a few thoughts on these rules.

1. A “Thou Shalt not Cite” rule can only apply to a court that is bound by either the same rules, or derives its rule-making authority from the same source.  So, for example, no Federal Court can ever force a state court to adhere to its “Thou Shalt not Cite” rule.  Indeed, no litigant need follow such rules.  (In light of R. 32.1" It is now a moot point whether the FRAP can bind a District Court.  Based on the plain language of Fed. R. App. P. 1, I don't think they can or do in light (except insofar as filing a Notice of Appeal or something like that) but some people, without explanation have insisted otherwise.)
2. There is an ongoing debate as to whether “Thou Shalt not Cite” rules are even constitutional.  In the wake of the E-Government Act, nobody can seriously claim that litigants don’t have access to unpublished opinions.  Of course, demanding that a litigant provide a copy of an unpublished opinion is fair game.
3. Even though the Federal Courts have eliminated the “Thou Shalt not Cite” rules (thanks, Howard) some state courts adhere to them.  There is an ongoing debate as to whether such rules are unconstitutional as a First Amendment matter, or, on a greater level, whether they are unconstitutional as state and federal constitutions enshrine incorporate stare decisis into their structure, and therefore any rule-making authority can’t be used to weasel out of that doctrine.

CA1: another ERISA standing case

Evans v. Akers, 07-1140 (7/18/08).  This is an ERISA case.  I will read it in more detail later.  But it comes down to this holding:

hold that former employees who allege that fiduciary breaches reduced their lump-sum distribution from a defined contribution plan have standing to sue as "participants" under [§ 502(a)(2) of ERISA, 29 U.S.C. § 1132(a)(2)].

The appellees argue that the plaintiffs are not seeking “benefits” but “damages.”  The First figures that “the full ‘benefit’ to which the participant is entitled by a defined contribution plan is ‘the value of [her] account unencumbered by any fiduciary impropriety.’”  Then, they justify their conclusion with a bunch of cites to other circuits and policy reasons.  So, whatever the case, the plaintiffs have standing and the District Court has jurisdiction. 

The backstory involves the fact that the plan invested in the employer, W.R. Grace’s stock.  This stock wasn’t doing too well because of the asbestos-related product-liability litigation. 

CA1: fishing disaster ends in insurance disaster

AGA Fishing Group v. Brown & Brown, Inc., No. 07-2408.  This is a post-judgment insurance-coverage dispute which ends with the choice words “AGA presents no facts evincing a duty on Defendants’ part to ensure that AGA was adequately covered, we affirm.”  It notes that depending on economic conditions, fishermen (some of whom have not been to law school) make over $100,000 per year.  Because these guys are making adequate salaries, should suffer debilitating injuries, the potential for liability increases.  So, one of the fishermen was injured.  Unfortunately, the guys that owned the fishing boat didn’t carry enough insurance for his damages and they had to sell the boat.  They sued the agent for not recommending enough insurance (it would have cost $5,000 to upgrade the policy from $1,000,000 to $5,000,000.)  Alas, in Massachusetts  “There is no general duty of an insurance agent to ensure that the insurance policies procured by him provide coverage that is adequate for the needs of the insured.”  So, the plaintiffs (the ex-boat-owners) argue “special circumstances” (such as their lack of education), but because they can’t really show how the agent was always making recommendation as to insurance this fails.

CA1: More briefing in Denmark v. Liberty Life

Denmark v. Liberty Life, No. 05-2877.  The First dismisses a petition for rehearing en banc as moot, because the Supreme Court in MetLife v. Glenn, No. 06-923 (June 19, 2008), seems to have rejected the First’s view on standards of review in ERISA cases where the administrator has a conflict.   The parties now have to brief how Glenn changes things.  The First's original opinion is here and our coverage of that is here.

CA1: First writes preachy opinion on drinking and driving in ERISA context

Stamp v. Metropolitan Life, No. 07-1061.  This case is one of a line of disturbing cases that hold that people that die in drunk driving accidents for purposes of his Accidental Death and Dismemberment ("AD&D") life insurance policies.  The First says that it is “Carefully” considering the issue, but really, it is not.  The context is an ERISA case, where it is reviewing the plan administrator’s determination.

Anyway, this seems like a decision made out of political fear.  Applying Wickman v. Northwestern Nat'l Ins., 908 F.3d 1077, 1084 (1st Cir. 1990), The First says that people that drink and drive are so aware (i.e. reasonably foresee) of the risks of drinking and driving that they know how dangerous it is, and therefore, anything that results isn’t an accident.  Then they cherry-pick dicta about drinking and driving.  Whatever. 

Torruella dissents, and gives a nice point-by point rebuttal.  However, I am just too angry at the majority.  Maybe this is something that should go en banc.  Maybe we should stop pretending that people that drive drunk intend to kill themselves, but are merely not thinking.

CA1: Justice O’Connor writes on ERISA

McGill v. Minnesota Mutual, No. 07-2668 (unpublished).  In this ERISA case, the plaintiff argues that the actual policy differed from the policy he applied for, and therefore they were guilty of fraud and misrepresentation, and a breach of a fiduciary duty.  Applying Virginia law and basic contract principles, the Justice O’Conner write that applications for insurance are not insurance, and therefore, even though he claims he never saw the policy, he can’t argue that it was altered.

CA1: a fun insurance coverage case ending in certification

Boston Gas Company v. Century Indemnity, No. 07-1452.  Certification order.  This is a really fun insurance coverage case.  I don’t really have time to go into details, but take a look.

Before getting to the fun insurance stuff, let’s talk about an exclusion of an expert report.  It seems like an expert changed his position about an issue right before trial  The District Court struck the report.  But, the First said that although this wasn’t an abuse of discretion, the issue will come up if there is a new trial.

Secondly, let’s talk about declaratory judgments.  After a jury verdict, the District Court granted a declaratory judgment for prospective damages pursuant to an insurance policy.  The First seems to say that these things are unwieldy, but doesn’t go so far as to condemn them, saying that the District Court can resolve any future disputes that arise, and “The district court will be able to determine the scope of litigation when a dispute arises, using doctrines like collateral estoppel, waiver, and the like to prevent relitigation of matters that have been, or could have been, decided.”

Third, prejudgment interest.  In Massachusetts its runs from the date of breach and a demand.  However, the facts (in the form of invoices) don’t indicate a demand as early as Boston Gas claims it was.

Fourth, missing policies.  One was over 50 years old.  The First says that this isn’t fatal, so long as the jury can figure out what they said.

Anyway, now to the fun insurance stuff.  Oh wait.  I put it below the fold.

CA1: Puerto Rican insurance liquidation fight ends

MRCo, Inc. v. Juarbe-Jimenez , No. 07-1614.  The plaintiff sued Banco Popular and the insurance commissioner of Puerto Rico as “liquidator of the Plan de Salud de la Federación de Maestros de Puerto Rico.”  The plaintiff then settled with Banco Popular. The underlying facts are fairly complicated.  I find them interesting, but they would bore most people. But, what you need to know, is that there were proceedings in Puerto Rico’s “liquidation court” and “P.R. Law Ann. tit. 26, § 4021 precluded actions against the Commissioner during the pendency of the proceeding in the Liquidation Court.”  The District Court denied a motion for summary judgment, but granted a motion to dismiss under Puerto Rican law. 

A translation of the relevant statute reads:

Upon issuance of an order appointing a liquidator of a domestic insurer or of an alien insurer domiciled in Puerto Rico, no action at law shall be brought against the insurer or the liquidator, whether in Puerto Rico or elsewhere, nor shall an action of that nature be maintained or entered after issuance of such order.

The most important thing is that the plaintiff argues that the Puerto Rican statute attempts to divest a federal court of jurisdiction.  But the First say that the statute only impacts substantive rights and not actual jurisdiction. 

The First also reproduces the statute it in the original Spanish.  The first concludes that this statute bar equitable actions as well as legal ones (it discusses the meaning of “equity” in Spanish).  It also rejects the argument that since the plaintiff claims to be seeking monies from the liquidator (rather than the proceeding), that it claims are its own, this doesn’t apply.

CA1: DOJ employee loses ERISA claim on procedural and ERISA grounds

Serreze Desrosiers v. Hartford Life, No. 06-2609.  Starting at the top with a garden-variety denial-of-long-term disability benefits ERISA case.  What sets this apart is the plaintiff is an attorney that worked at the US Trustees’s Office. She enrolled in the Federal Employee Group Long Term Disability Plan ("the Plan"), which is sponsored by the Department of Justice Recreation Association ("DJRA").  Got it.  The “recreation” is a “Long Term Disability Plan.”    Whatever the case, the First makes it clear: this person is a real person with a real job.  Yet, they still affirm the District Court’s grant of summary judgment.  Anyway, she fell off a swing, was hit by the door of a car, and cut her hand.  This seemingly minor injuries, according to her, caused major neurologic damage.