Jordan v. Evanston Ins. Co.
| Decision Date | 17 January 2022 |
| Docket Number | No. 20-60716,20-60716 |
| Citation | 23 F.4th 555 |
| Parties | Meaghin JORDAN, individually; Jonathan Jordan, Individually; Meaghin and Jonathan Jordan, on behalf of their minor son, Braylon Jordan, Plaintiffs—Appellants/Cross-Appellees, v. EVANSTON INSURANCE COMPANY, Defendant—Appellee/Cross-Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Carl Victor Welsh, III, Esq., Attorney, Ann Russell Chandler, Crymes Morgan Pittman, Pittman, Roberts & Welsh, P.L.L.C., Jackson, MS, for Plaintiffs—Appellants/Cross-Appellees.
Jonathan D. Hacker, Bradley Garcia, Grace Leeper, O'Melveny & Myers, L.L.P., Washington, DC, Mark David Morrison, Williams & Associates, Hartford, CT, for Defendant—Appellee/Cross-Appellant.
Before King, Higginson, and Wilson, Circuit Judges.
When he was just about two years old, Braylon Jordan swallowed small magnets, "Buckyballs," manufactured by Maxfield & Oberton Holdings (M & O). Once ingested, the magnets shredded his internal organs, necessitating surgery to remove most of his intestines, leaving Braylon severely disabled for the rest of his life, and consigning his parents to provide near constant care for their son for the rest of theirs. This heart-rending situation comes to this court for the second time; today's appeal involves not the merits of the Jordans' claims but a dispute over whether there is insurance coverage for M & O's defense and for a partial settlement of the Jordans' claims. The answer turns on whether a claim was made during the policy period, as necessary to trigger coverage. And the answer to that question is no. Accordingly, we REVERSE the district court's holding to the contrary and RENDER judgment in favor of the insurer.
The ordeal that Braylon Jordan and his family have endured is chronicled in this court's prior opinion in their action against M & O, Jordan v. Maxfield & Oberton Holdings, L.L.C. , 977 F.3d 412, 414-15 (5th Cir. 2020). Below, we lay out the procedural history particular to this dispute over coverage for M & O's costs of defense and for a partial settlement between the Jordans and M & O's then-CEO, Craig J. Zucker, reached while the Jordans' liability claims were pending.
As discovery proceeded in the underlying case, Evanston Insurance Company, one of M & O's excess liability insurers, confirmed that it denied coverage for the Jordans' claims against M & O and declined to defend M & O against the Jordans' suit. Evanston's declination led the Jordans to file this action for declaratory relief to determine whether Evanston's insurance policy, as well as several other policies held by M & O at relevant times,1 covered their claims against M & O. The evidence adduced in this action focused primarily on three things: news reporting of Braylon Jordan's story, reactions to several articles by M & O and its insurers, and the insurance policies themselves.
On April 23, 2012, WWL TV in New Orleans ran an article detailing Braylon's surgeries and the dangers posed by high-powered magnets. Zucker saw this article and forwarded it, along with one about a teenager in Oregon, to M & O's primary insurer the next day. Zucker told the insurer that the A day later M & O forwarded the WWL article to its excess insurers, including Evanston. M & O's primary insurer acknowledged receipt of Zucker's message, responding that it "reserve[d] all rights, including the right to deny coverage for this claim[.]"
For its part, Evanston opened an internal "Claim/Occurrence" file. It included an initial file notation: "Claim setup and forward to [agent] to assignment." On April 30, 2012, Evanston added a comment that it had "[r]eceived notice of the filing of a consumer complaint regarding the insured product, Buckyballs." That same day Evanston noted that it had "[r]eceived e-mail from underlying advised they have also received notice of this new loss." In June 2012, Evanston added a note to the file that stated "[n]o claim or lawsuit file[d]." In October 2012 Evanston again noted "[n]o claim or lawsuit file[d]."
Additional news articles were published about Braylon. On April 24, 2012, a Denver CBS-affiliate published an article that discussed a blood clot
found in his small intestine as well as the experiences of a Colorado pediatrician who treated children who ingested magnets. On May 23, 2012, a New Orleans FOX-affiliate published an article that discussed Braylon's recovery from the surgery needed to remove the vast majority of his intestines. CNN also published two articles, one in June and another in July 2012. The June article detailed Braylon's story and concluded by quoting his mother, Meaghin Jordan: The July article reported on M & O's history with various regulatory bodies and again quoted Meaghin Jordan as saying she was pleased that federal regulators were acting to restrict M & O's ability to market and sell the magnets.
M & O's various insurance policies were claims-made policies. Generally, claims-made policies provide coverage for claims made against insured parties within a defined policy period. "Under claims made policies, the mere fact that an insured loss-causing event occurs during the policy period is not sufficient to trigger insurance coverage of the loss." FDIC v. Mijalis , 15 F.3d 1314, 1330 (5th Cir. 1994). "Such policies also typically require the insured to give prompt notice to the insurer of any claims asserted against the insured, as well as of any occurrences that have caused or will potentially cause an insured loss." Id.
The Evanston policy provided that Evanston agreed "to pay on behalf of the Insured ... up to an amount not exceeding [Evanston's] Limit of Liability ... as a result of claims first made against the Insured and reported to the Company during the policy period." The policy period was July 25, 2011 to July 25, 2012. Coverage was explicitly conditioned on M & O providing Evanston timely notice of any "claim or suit[.]" Specifically, M & O was obligated to provide "1) [h]ow, when and where the accident or occurrence took place; 2) [t]he Insured's name and address; 3) [t]he names and address of any injured persons and witnesses; and 4) [t]he nature and location of any injury or damage arising out of the accident or occurrence."
Because the Evanston policy was an excess policy, it also incorporated the limitations of M & O's underlying insurance policy. That policy provided that the insurer would pay amounts "that the Insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ ...." The underlying policy conditioned coverage on "a claim for damages" for " ‘bodily injury’ or ‘property damages’ ... [being] made against any insured ... during the policy period ...." The policy provided that a claim would be deemed to have been made "when notice of such claim is received and recorded by any insured or by us, whichever comes first ...."
The parties ultimately filed cross-motions for summary judgment. Evanston, overlaying the provisions of its policy and M & O's underlying policy, argued in its motion that there were two baseline requirements for coverage during the policy period: (1) a claim made against M & O and (2) notice of that claim being given to the insurers. Because the Jordans had not made a claim against M & O, and Evanston had "received no reported claim" during the coverage period, "there [was] simply no coverage for the claim[.]"
In their opposing motion for summary judgment, the Jordans did not squarely address whether they had made a timely claim against M & O but instead focused on the news articles about Braylon. They argued that M & O treated these articles as if a claim had been made against it and had then forwarded at least some of them to its insurers, notifying them of a claim. The Jordans also asserted that based on the insurers' internal references to the articles as a "claim," the insurers had treated M & O's correspondence as notice of a claim. The Jordans argued that coupling the articles with the fact that the insurers "received, recorded, and treated the Braylon Jordan matter as a ‘claim’ during the Policy Period" was enough to demonstrate that M & O's insurers had received notice of a claim sufficient to trigger coverage.
Shortly after the motions for summary judgment were filed, the Jordans reached an agreement with Zucker and M & O's underlying insurer to settle their claims against both. The underlying insurer tendered its policy limits, and Zucker agreed to pay an additional $20 million to the Jordans, contingent on that amount being funded by M & O's excess insurers. Evanston refused to fund this settlement.
The district court ...
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Applying Mississippi Law, Fifth Circuit Reverses And Renders Summary Judgment To Excess Insurer Based On Insured's Failure To Comply With Policy Claim And Notice Provisions
...of an excess insurer due to the absence of an actual 'claim' made under the excess insurer's policy. See Jordan v. Evanston Ins. Co., 23 F.4th 555 (5th Cir. 2022). After a child ingested small magnets resulting in lifelong disability, the minor's parents sued the magnet manufacturer. The ma......