Barry Zalma, Inc. on Insurance Law

Multiple Attempts to Obtain Workers' Additional Compensation Benefits Fails For Failure to Follow Rules IT DOES NOT PAY TO ANNOY A COURT OF APPEAL In Marty D. Foust v. Lawrence Brothers, Inc. And American Interstate Insurance Company, No. 1146-21-3, Court of Appeals of Virginia (December 13, 2022) Marty D. Foust challenged a September 22, 2021 opinion of the Virginia Workers' Compensation Commission denying his request for certain medical and disability benefits. BACKGROUND On appeal from a decision of the Workers' Compensation Commission, the evidence and all reasonable inferences that may be drawn from that evidence are viewed in the light most favorable to the party prevailing below. Prior Litigation Foust suffered a compensable injury by accident when he sustained second and third degree burns to his chest, left elbow, abdomen/flank area, and left upper extremity. The parties stipulated that Foust was entitled to temporary total disability benefits and that his pre-injury average weekly wage was $605. Accordingly, on January 5, 2012, a deputy commissioner awarded Foust lifetime medical benefits and $403.33 per week in temporary total disability benefits based on his stipulated average weekly wage. In June 2015, employer filed a request for a hearing seeking the termination of Foust's temporary total disability benefits because he was capable of returning to his pre-injury work. Foust filed a competing request for a hearing seeking to recognize "Dr. Karvelas" as his "authorized treating physician" and for the Commission to approve certain treatments and "studies ordered by Dr. Karvelas." In addition, Foust asserted that he had suffered a stroke in May 2012, which "should be recognized as a compensable consequence" of his work-related injury. After a hearing, a deputy commissioner held that: Foust was incapable of returning to his pre-injury employment, Dr. Karvelas was not an authorized treating physician, and Foust's May 2012 stroke was not a compensable consequence of his work-related injury. In May 2016, Foust filed a request for a hearing seeking a new treating physician. The Commission "treat[ed]" the letter "as a claim for a change in treating neurologists" and referred the matter to the "Claims Services Department for processing." Following that ruling, Foust filed additional requests for hearings on December 5, 2016, February 21, 2017, and April 26, 2017. In the requests, he again asserted that he suffered "strokes" and "mini-strokes" that were compensable consequences of his work-related injury. In addition, Foust requested: a change in his treating neurologist, raises and vacation pay he would have received but for his injury, permanent disability benefits for scarring and disfigurement, and medical benefits for his "chronic pain" and "scar neuroma or tumors from [his] burn injury that caused [an] injury to [his] spine called 'thoracic arachnoid web with cord compression.'" After a hearing on the above claims, a deputy commissioner: found that Foust's claim that his stroke was a compensable consequence was barred by res judicata, denied as non-compensable Foust's claims for benefits due to chronic pain, lost vacation pay, and lost raises, denied Foust's claim for benefits to treat his thoracic arachnoid web with spinal cord compression, dismissed his claim for permanent disability benefits as "not ripe for adjudication," granted his request for panels of neurologists and pain management physicians, and granted his request for medical treatment of his symptomatic scar neuroma. On review, the Commission affirmed the deputy commissioner's judgment. Foust appealed to the Virginia Court of Appeals which summarily affirmed the Commission's judgment. Present Proceedings The present proceedings arise from additional requests for hearings. Foust's assertion that his accident was "responsible for everything that is wrong with him because nothing was wrong with him before he got hurt" was insufficient as a matter of law. ANALYSIS Where a party fails to develop an argument in support of his or her contention or merely constructs a skeletal argument, the issue is waived. Foust's opening brief contained no standards of review or legal authority supporting his assignments of error. Instead, much of his brief is devoted to general arguments that his former attorney, employer, and the Commission conspired to deny him due process, "murder" him, and "defraud" him of benefits through insurance fraud, misrepresentation, hate crimes, white collar crimes, and racketeering. Foust’s argument is filled with factual assertions and allegations, some of which are unsupported by the record and left the Court without a legal prism through which to view his alleged errors. Thus, the Court of Appeal found Foust's failure to comply with the court’s rules in this case is significant, his arguments were waived and the order was affirmed. ZALMA OPINION Every litigant has the right to appeal the decision of a court or a Workers' Compensation Board. However, in doing so the person appealing must actually comply with the rules of the Court of Appeals, make claims that are compensable, and accept the fact that when an appellate court rules against the litigant he has no right to try again using ridiculous claims like that the insurer and employer are attempting to murder him. The court ruled without oral argument because the appeal was totally without merit. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Denial of Claims Without Malice Not Defamatory Plaintiffs SmileDirectClub and Smile of Tennessee, PC (SDC), sued Delta Dental and argued that they made sufficient allegations of malice based on Delta Dental's knowledge of the falsity and/or reckless disregard of the truth of statements about the do-it-yourself nature of plaintiffs' clear aligner therapy. In SmileDirectClub, LLC, and Smile Of Tennessee, P.C. v. Delta Dental Plans Association, 2022 IL App (1st) 220208-U, No. 1-22-0208, Court of Appeals of Illinois, First District, Fourth Division (December 8, 2022) the Illinois Court of Appeals resolved the dispute. BACKGROUND Plaintiffs offer dental support organization services and a "med tech platform" that enable licensed dentists and orthodontists to treat patients with mild to moderate malocclusion with clear aligner therapy using a teledentistry platform. Defendant Delta Dental is a nonprofit association of 39 member companies that provide Delta Dental-branded dental insurance and dental plan administrative services to insureds and employers. Delta Dental, by and through its affiliated member companies, provides insurance for approximately 75 million people nationwide, and approximately 25% of SDC's customers were insured by Delta Dental affiliates. Plaintiffs offered the dental service of aligner therapy as a remote alternative to traditional in-office orthodontics. They advertised their product in part by emphasizing the convenience they provided to customers by offering a dental care solution that did not require visits to a traditional dentist's office. In 2017, the American Dental Association (ADA) passed resolution 50, which "strongly discourage[d] the practice of do-it-yourself orthodontics because of the potential harm to patients." The ADA argued that self-made dental impressions were "almost inherently of little clinical value" because it was "difficult for a trained, experienced professional to make good dental impressions of a patient's teeth even in the controlled environment of an office equipped to take and retake such impressions, and it is important to be able to see and examine the patient while the impressions are being taken." Delta Dental some time after the ADA statements issued a policy directive to its members for the denial of all claims for coverage of SDC clear aligners. Accordingly, Delta Dental members issued insurance claim denial letters to insureds seeking coverage for treatment with SDC's clear aligners. The denial letters referenced, in varying terms, the self-application and mail-order nature of SDC's services as the reason for coverage denial. In 2020, plaintiffs sued. Ultimately, plaintiffs filed a seven-count, third amended complaint against Delta Dental only, alleging (relevant to the appeal) that Delta Dental and its member companies wrongfully denied insurance benefits to their insureds for the cost of plaintiffs' dental aligner therapy as part of a conspiracy to defame, disparage and interfere with plaintiffs' teledentistry business. Plaintiffs' allegations that Delta Dental acted with malice are based on Delta Dental's and its members' alleged knowledge that the aligner therapy was overseen by licensed dentists, and SDC's argument that the ADA has a history of anti-competitive behavior. On January 25, 2022, the circuit court dismissed counts I to VI of the third amended complaint with prejudice, ruling that a qualified privilege applied to the member companies' statements about the self-administered nature of plaintiffs' aligner therapy because those companies had a legal duty to explain to their insureds the reasons for the companies' denials of the insureds' insurance claims. The court also ruled that plaintiffs failed to sufficiently allege malice to overcome the qualified privilege given the evidence of the public controversy over the safety and efficacy of plaintiffs' aligner therapy ANALYSIS A motion to dismiss requires the court to accept all well-pleaded facts in the complaint as true and draw all reasonable inferences from those facts in favor of the nonmoving party. The court may consider only those facts apparent from the face of the pleadings, matters of which the court can take judicial notice, and judicial admissions in the record. Civil Conspiracy to Defame and Disparage Plaintiffs first argued that the statements in the insurance coverage claim denial letters that members of Delta Dental issued to insureds were defamatory and disparaging. They claimed that because the statements gave the do-it-yourself or self-application nature of the aligner therapy as the reason for the coverage denial even though Delta Dental and its members knew that licensed dentists supervised the aligner therapy. Delta Dental responded that the parties' dispute involves the extent to which licensed dentists were involved in the care of insureds who bought plaintiffs' remote access, self-administered orthodontic therapy. Delta Dental argued that the challenged statements were substantially true. Truth, of course, is always an absolute defense to a defamation action. To show a defamation claim, a plaintiff must present facts showing that the defendant made a false statement about the plaintiff, that the defendant made an unprivileged publication of that statement to a third party, and that this publication caused damages. Disparagement is defined as statements about a competitor's goods which are untrue or misleading and are made to influence or tend to influence the public not to buy. The definition of disparagement can be broken down into three elements. The statement must be about a competitor's goods or services, must be untrue or misleading, and must have been made to influence or tend to influence the public not to buy those goods or services. Defamatory statements may not be actionable if immunized by an absolute privilege if shielded under the innocent construction rule, if safeguarded as an expression of opinion, or if protected by a qualified privilege. Whether or not an allegedly defamatory statement is protected by an absolute or qualified privilege is a question of law to be determined by the court. Because the Court of Appeals found that the statements included in the insurance claim coverage denial letters to the insureds are protected by a qualified privilege, there was no need to address Delta Dental's alternative arguments. The qualified privilege serves to enhance a defamation plaintiff's burden of proof. The privilege may protect the speaker from liability regardless of the statement's contents. To overcome the privilege, the plaintiff must show not just that the statements are untrue, but that the defendant abused the privilege by intentionally publishing false material or by displaying a reckless disregard as to its truth or falsity-meaning that the defendant entertained serious doubts about the truth of the statement but failed to properly investigate the truth. Plaintiffs presented no evidence that Delta Dental or its members abused the qualified privilege, either by intentionally making false statements or by acting with reckless disregard as to the truth of the challenged statements. Delta Dental and its members were entitled to disagree with plaintiffs regarding the sufficiency of the level of dentist supervision in SDC's alignment therapy. The court concluded that plaintiffs failed to allege malice sufficient to show that Delta Dental and its members abused the qualified privilege and affirmed the trial court's dismissal of plaintiffs' claims regarding defamation and disparagement with prejudice. Civil Conspiracy to Interfere with Business Relations To state a cause of action for tortious interference with business relations, a plaintiff must allege: the existence of a valid business relationship (not necessarily evidenced by an enforceable contract) or expectancy, knowledge of the relationship or expectancy on the part of the interferer, an intentional interference inducing or causing a breach or termination of the relationship or expectancy, and resultant damage to the party whose relationship or expectancy has been disrupted. Plaintiffs' attempts to plead malice were insufficient. They failed to provide supporting details beyond conclusory statements of malicious intent to sustain their claims. CONCLUSION Plaintiffs' amended complaint alleging civil conspiracy to defame, disparage, and tortiously interfere with plaintiffs' business relations was properly dismissed with prejudice based on plaintiffs' failure to sufficiently allege malice and thereby defeat defendant's qualified privilege regarding the challenged statements. ZALMA OPINION In a creative way to sue an insurer who refused to pay claims for dental services by claiming that the letters the insurer issued denying the claims were defamatory and maliciously damaged the plaintiffs. The plaintiffs were unable to establish that the statements made in the denial letter were not true so the defamation claim failed. They were also unable to show a malicious intent because they only issued conclusory statements of malicious intent. The plaintiffs tried to get around the meaning of the contracts that Delta Dental had with its insured and tried to compel payment of claims not covered by the wording of the policy. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.

EXCLUSION FOR LOSSES WHEN DRIVER UNLICENSED IS ENFORCED Great West Casualty Company; DTAK, LLC; and Matthew Ehlen (at times collectively referred to as "Great West") appeal the grant of summary judgment in favor of Founders Insurance Company ("Founders") declaring that Founders is not obligated to provide coverage under an automobile insurance policy procured by Brian K. Gates, Jr. ("Gates") in Great West Casualty Company, DTAK, LLC, and Matthew Ehlen v. Founders Insurance Company, No. 22A-PL-1771, Court of Appeals of Indiana (December 9, 2022) the dispute was resolved. FACTS On June 24, 2020, Gates applied to Founders for automobile insurance coverage. In the application form, Gates indicated that his driving privileges were suspended in the State of Indiana, and he was seeking SR 22 insurance coverage as required by the State during the driver's license reinstatement process. Founders issued an SR 22 policy, which included an exclusionary provision applicable if Gates failed to obtain a valid driver's license within sixty days ("the Policy"). Seventy-six days later, on September 8, Gates was driving his insured vehicle when it collided with a tractor-trailer driven by Ehlen. The tractor-trailer was owned by DTAK, LLC and insured by Great West. At that time, Gates had no valid driver's license. Gates had paid premiums to Founders in the amounts of $117.00 on June 24, 2020 and $83.40 on August 10, 2020. On September 14, Founders cancelled the Policy for non-payment of premiums. Great West sued Gates for damages resulting from the collision. Shortly thereafter Founders sued for Declaratory Judgment seeking a declaration that it was not obligated to provide insurance coverage for Gates, pursuant to an exclusion in the Policy, because Gates had been driving without a valid driver's license at the time of the collision. The trial court entered summary judgment in favor of Founders and directed the entry of final. Great West appealed. Discussion and Decision Summary judgment is appropriate if the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. The interpretation of an insurance policy is primarily a question of law for the court, and it is therefore a question which is particularly suited for summary judgment. Although ambiguities are construed in favor of the insured, clear and unambiguous policy language must be given its ordinary meaning. There is no dispute of fact. Rather, the appeal seeks a decision whether Founders is entitled to summary judgment as a matter of law based upon an exclusionary clause in the Policy. The policy exclusion provided that: “No coverage is afforded under any Part of this policy if, at the time of the accident, your insured car or a temporary substitute car is being operated by a person who: a. Is not a licensed driver; or b. Is without a valid driver's license; or c. Whose driver's license is revoked or suspended; d. Whose driver's license has been expired for more than 30 days; or e. Is in violation of any condition of their driving privileges; or f. Is not legally entitled to drive under Indiana law. ...” Gates was driving without a valid driver's license on the date of the collision. The trial court concluded that, by the plain terms of the Policy, insurance coverage was excluded. Great West does not argue that the exclusionary clause of the Policy is ambiguous but rather that it should be given no effect under the circumstances. Specifically, Great West argues that Founders waived its right to enforce the exclusionary clause because it conducted no investigation as to the status of Gate's driver's license before taking his final premium payment. The Court of Appeal noted that the general rule is that if a party to a contract performs acts that recognize the contract as still subsisting, such as accepting rent payments, specific performance of the terms of the contract is waived and there can be no forfeiture. This rule is founded on principles of common honesty: a landlord cannot take the position a lease is valid for one purpose, e.g., collection of rent, and yet declare it invalid for other purposes. Great West has identified no like circumstances and indeed, no dispute of material fact. It is uncontested that at the time Gates tendered his August premium the Policy remained in full force and effect. Founders did not contend otherwise. Founders had issued no notice of cancellation at that time and did not do so until Gates failed to tender a September premium payment. The right of a third party to recover through liability insurance is not absolute. The source and means of recovery is grounded in the insurance contract itself. Since the Policy contains an unambiguous exclusionary clause plainly applicable to the uncontested facts the Court of Appeal could discern no basis upon which the plain language of the exclusionary clause should be disregarded and concluded that Founders is entitled to judgment as a matter of law, and there is no genuine dispute of material fact. ZALMA OPINION Insurance policies are contracts. The terms and conditions of the policy, if unambiguous, it must be applied as written. Since Gates was unlicensed at the time of the accident the clear and unambiguous language of the policy and the injured party has no rights against Gates' insurer. They can, of course, get a judgment against Gates and collect from his assets. An injured party has no right to recover from the tortfeasor's insurer only the opportunity to do so if the policy provides insurance coverage for the injuries claimed. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Building Must Actually Fall Down for Collapse to be Covered Windcrest Owners Association filed a lawsuit against Allstate Insurance after the company declined a claim for property damage to a building in its condominium development. Allstate moved for summary judgment, alleging that the property damage was not covered as a "collapse" and was excluded from coverage because it resulted from faulty construction and maintenance. The trial court granted summary judgment dismissing Windcrest's claims. In Windcrest Owners Association, a Washington nonprofit corporation v. Allstate Insurance Company, an Illinois company, State Farm Fire And Casualty Company, an Illinois company, No. 82836-3-I, Court of Appeals of Washington, Division 1 (December 12, 2022) Windcrest sought payment to repair a building in severe distress as a result of wear, tear, and defective construction under a "collapse" coverage. The Court of Appeals read the full policy and applied its language to the facts presented by construction experts. FACTS Windcrest Condominiums, which consists of 15 units in two buildings, was completed in 1995. Allstate provided a commercial property insurance policy from November 2002 through 2017. In October 2018, Windcrest notified Allstate of a property damage claim based on a structural report prepared by Dibble Engineers. The report noted decay consistent with substantial impairment of structural integrity to one of the buildings. Specifically, it noted, "The capacity of the building's lateral- and gravity-force-resisting systems are compromised by decay that has been hidden by the exterior siding." Allstate, conducting a good faith investigation of the claim, retained construction consultants from Madsen, Kneppers & Associates, Inc. (MKA) to conduct an inspection and evaluation of causation of the damage at Windcrest. MKA concluded that there were sites of noted decay of structural components but no evidence of collapse "defined as an abrupt falling down or caving in," as required for coverage by Allstate's policy. Windcrest sued Allstate, alleging breach of contract and bad faith. Allstate moved for summary judgment; the trial court granted the motion and dismissed the claims with prejudice. ANALYSIS Determining whether coverage exists is a 2-step process. The insured must show the loss falls within the scope of the policy's insured losses. To avoid coverage, the insurer must then show the loss is excluded by specific policy language. An insured has the burden of proving that coverage is triggered, while the insurer has the burden of proving that an exclusion applies. Collapse Coverage Windcrest made a claim under the Allstate insurance policy. The coverage provided under an Additional Coverage Collapse applies only to an abrupt collapse as described and limited. The Allstate policy defines "collapse" as follows: “With respect to buildings: a. Collapse means an abrupt falling down or caving in of a building, or any part of a building, with the result that the building or part of a building cannot be occupied for its intended purpose; b. A building or any part of a building that is in danger of falling down or caving in is not considered to be in a state of collapse.” In addition to the lack of suddenness, Windcrest failed to provide evidence that the building or parts of the building fell down, fell to pieces, or caved in. Rather it still stood and was occupied. In addition the MKA study noted that there was damage to the buildings and that "there is no evidence to indicate that any parts of the building are currently . . . in a state of collapse as defined as an abrupt falling down or caving in." Indeed, a Windcrest resident and board member confirmed that no part of the building had caved in or abruptly fallen down. Windcrest produced no evidence that the structures were no longer habitable. A Windcrest resident and board member confirmed that Dibble never informed the board that the buildings were unsafe or unfit to occupy. The Court of Appeal concluded that the Windcrest buildings have not collapsed such that they can no longer be occupied for their intended purpose. In addition, the Court of Appeal noted that Windcrest had not demonstrated a collapse as defined by the Allstate insurance policy and that the collapse coverage does not apply. The evidence from both Allstate and Windcrest demonstrated that defective construction and maintenance initiated the chain of causation resulting in the loss. Allstate submitted both a report and deposition testimony from expert David VanDerostyne to support a coverage exclusion due to defective construction. The report stated conclusively that decay and deterioration occurred over an extended number of years due to "defective original construction in combination with lack of repairs and/or maintenance" in addition to a lack of a collapse. Since the evidence showed no abrupt or sudden falling down of any part of a building such that it could not be occupied for its intended purpose. As a result the policy coverage for collapse did not apply. Based on the evidence properly before the trial court, the damage to the condominium originated with faulty construction and maintenance. The Allstate policy explicitly excluded coverage for faulty construction and maintenance, as well as for any loss initiated by those excluded perils. Therefore, the Court of Appeal concluded that the trial court properly granted summary judgment for Allstate and dismissed Windcrest's claims. ZALMA OPINION Allstate provided coverage to insured's whose property collapses. However, it provided a clear and unambiguous definition of the word "collapse." Although Windcrest's expert used a technical definition of "collapse" that fit engineering practices it did not fit the definition of "collapse" in the Allstate policy. Once a contract is written an accepted by an insured the wording cannot be changed by a court to provide the coverage the insured would like and must apply the coverage written in the policy. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.

Insurer's $25,000 Assault and Battery Limit Applied to Stabbing on Hotel Property Great American E & S Insurance Company obtained a trial court judgment that it is only obligated to provide coverage up to a limit of $25,000 under a policy of insurance issued to the defendant Commack Hotel, LLC, doing business as Howard Johnson, in an underlying action where Stanley Earl Davis, Jr. was stabbed to death at the hotel property. In Great American E & S Insurance Company v. Commack Hotel, LLC, etc., et al., Stanley Davis, etc., No. 2019-13798, Index No. 615088/16, 2022 NY Slip Op 06915, Supreme Court of New York, Second Department (December 7, 2022) the appellate court resolved the dispute. Stanley Davis appealed from an order of the Supreme Court, Suffolk County (David T. Reilly, J.), dated October 21, 2019. The order granted the plaintiff's motion for summary judgment on the complaint and the plaintiff appealed FACTS On November 13, 2010, the defendant Stanley Davis's son (hereinafter the decedent) was stabbed to death by the defendant Carlos Rodriguez during a party in a room at a hotel owned by the defendant Commack Hotel, LLC, doing business as Howard Johnson (hereinafter Howard Johnson). In an underlying action entitled Davis v Commack Hotel, LLC, the defendant Stanley Davis, as administrator of the decedent's estate, was awarded summary judgment on the issue of liability against, among others, Howard Johnson, the plaintiff's insured. Following that determination, the plaintiff commenced this action for a judgment declaring that it owes no obligation to indemnify Howard Johnson in excess of $25,000 under the assault and battery limits of liability endorsement of its insurance policy and moved for summary judgment on the complaint. In an order dated October 21, 2019, the Supreme Court granted the plaintiff's motion, finding that the plaintiff's obligation to pay damages on behalf of Howard Johnson in connection with the underlying action was limited to the assault and battery sublimit set forth in the endorsement. DUTY TO DEFEND The duty to defend is triggered whenever the allegations of a complaint, liberally construed, suggest a reasonable possibility of coverage, or the insurer has actual knowledge of facts establishing a reasonable possibility of coverage. An insurance carrier can be relieved of its duty to defend if it establishes, as a matter of law, that there is no possible factual or legal basis on which it might eventually be obligated to indemnify its insured under any policy provision. Policy exclusions are subject to strict construction and must be read narrowly, and any ambiguities in the insurance policy are to be construed against the insurer. However, unambiguous provisions of insurance contracts will be given their plain and ordinary meaning. An exclusion for assault and/or battery applies if no cause of action would exist but for the assault and/or battery. The appellate court determined that negligence claims arising from an assault and battery also fall under assault and battery endorsements that limit coverage for damages. Here, the plaintiff established its prima facie entitlement to judgment as a matter of law by demonstrating that the assault and battery endorsement's limitation is applicable to the claims asserted against Howard Johnson by Davis in the underlying action. Accordingly, the trial court, the Supreme Court, properly granted the plaintiff's motion for summary judgment on the complaint, which sought a judgment declaring that the plaintiff is only obligated to provide insurance coverage up to a limit of $25,000 under the policy in the underlying action. ZALMA OPINION Most insurers of public properties will exclude defense or indemnity for an assault or battery. Some, attempting to provide better coverage will insure against claims of assault and/or battery but limit the amount the insurer is willing to pay to indemnify its insured. Commack Hotel, LLC, doing business as Howard Johnson obtained a policy with a $25,000 limit. The appellate court agreed that the limitation was appropriate and enforceable. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com. Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

To Allege IFPA Fraud Plaintiff Need only Plead the Defendants Knowledge, Falsity, and Materiality of Insurance Claim Stephen J. Conte, D.O. (“Dr. Conte”), and various other health care providers (collectively, the “Defendants”) moved the court to dismiss plaintiffs Aetna, Inc. and Aetna Life Insurance Company's (collectively, the “Plaintiffs”) Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). In Aetna, Inc. et al. v. Open MRI And Imaging Of Rochelle Park, P.A. et al., Civil Action No. 21-20043, United States District Court, D. New Jersey (November 23, 2022) the USDC applied the New Jersey Insurance Frauds Prevention Act (IFPA) to resolve the motions. BACKGROUND This case arises out of allegations that Defendants engaged in fraudulent billing schemes to profit from administering to patients COVID-19 rapid tests. General Practices Plaintiffs alleged that at the outset of the COVID-19 pandemic, Open MRI and Vestibula, radiology laboratories, with the other defendants, began providing COVID-19 rapid tests to patients at their joint practice location in New Jersey. Plaintiffs asserted that in taking a rapid test at Open MRI or Vestibula, a patient “would have their temperature taken, answer a series of screening questions regarding their symptoms, receive a nasal swab, and shortly thereafter be provided with test results." Plaintiffs contended that the entire interaction would last “no more than a few minutes and involved minimal interaction with a physician.” Defendants allegedly charged their patients $35 for a rapid test, but then “submitted significantly higher charges” to Plaintiffs for reimbursement. Plaintiffs alleged that to profit from the administration of COVID-19 rapid tests Defendants implemented four fraudulent schemes: 1) billing for COVID-19 tests performed without required licenses and authorizations; 2) billing for specimen handling services not rendered; 3) inflating charges for services provided, a tactic known as “upcoding”; and 4) submitting claims through various businesses to avoid Plaintiff's fraud detection protocols. Upcoding In addition to allegedly billing for services not rendered, like specimen handling, Plaintiffs also contend that Defendants “upcoded” their claims that is, Defendants allegedly inflated their bills by submitting claims requesting compensation for more involved medical services than were actually provided when administering a COVID-19 rapid test. Plaintiffs allege that due to this upcoding, Plaintiff overpaid Defendants in excess of $500,000 for claims misrepresenting the services Defendants rendered. Avoiding Detection by Plaintiffs' Fraud Department Last among the purported fraudulent schemes, Plaintiffs allege Defendants submitted claims from other defendants, Universal and Integrated, to conceal their improper billing practices. DEFENDANTS' MOTION TO DISMISS Defendants challenged the sufficiency of Plaintiffs' Complaint on two grounds. First, as it relates to Plaintiff's fraud-based claims insurance fraud, common law fraud, and negligent misrepresentation Defendants argue that Plaintiffs' allegations are not pleaded with the specificity required by Federal Rule of Civil Procedure 9(b) Fraud-Based Claims Under New Jersey law, to establish a common law fraud claim, a plaintiff must demonstrate: a material misrepresentation of a presently existing or past fact; knowledge or belief by the defendant of its falsity; an intention that the other party rely on it; reasonable reliance thereon by the other party; and resulting damages. In contrast to common law fraud and negligent misrepresentation, the Insurance Fraud Prevention Act does not require proof of reliance on the false statement or resultant damages, nor proof of intent to deceive. Instead, to sustain a fraud claim under the Insurance Fraud Prevention Act, a plaintiff must only allege knowledge, falsity, and materiality. A plaintiff must support its fraud allegations by demonstrating the “who, what, when, where and how of the events at issue. However, a plaintiff need not allege every material detail so long as it pleads the circumstances of the fraud with sufficient particularity to place a defendant on notice of the precise misconduct with which it is charged. The USDC concluded that Plaintiff adequately alleged its fraud-based claims with the requisite specificity by asserting that Defendants engaged in a series of fraudulent schemes to induce Plaintiffs to pay Defendants for services Defendants were not authorized to render or were not rendered at all. Moreover, Plaintiffs alleged that Defendants submitted these claims knowing that they were false, and further knowing that Plaintiffs would rely on Defendants' representations regarding what services were rendered as being true and accurate. These allegations establish each element of Plaintiffs' fraud-based claims, and taken together, are sufficiently particular to place Defendants on notice of the conduct giving rise to Plaintiffs' claims, in satisfaction of Rule 9(b)'s heightened pleading standard. Accordingly, Defendants' motion to dismiss for failure to satisfy Rule 9(b) was denied and the parties will be required to go to trial to either prove the health care provider defendants acted fraudulently or the defendants are able to prove they did not commit fraud. ZALMA OPINION Aetna should be commended for recognizing an attempted or actual fraud and acting, proactively, to sue on behalf of the state of New Jersey under the IFPA to punish those they believed had committed fraud and obtain damages for the insurers and the state from those who perpetrated fraud. Insurance fraud is a crime in the state of New Jersey but may not be a crime the state is willing to pursue. The IFPA allows insurers to act on behalf of the state to deter or defeat insurance fraud. If the allegations prove true the conduct of the health care providers to profit from a pandemic is a clear violation of the Hippocratic oath and is, in my opinion, evil. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com

ZIFL Volume 26 Number 24 Merry Christmas, Happy Hanukah & May The Winter Solstice be Peaceful & Mild A Christmas Fable of Fraud ZIFL Publishes This Story At Christmas Time Every Year. I Hope You Like It Again. The story that follows is fiction based, in part, on a true case worked on by me. Any similarity to real people is unintentional. It is meant only to educate fraud professionals about how some unscrupulous people use the crime of insurance fraud for fun and profit during the Christmas season. Raymond Alexander had no religion. He cared only for himself and the money he could take from good-hearted people. Raymond loved the Christmas season. The marks were in such a kind and giving mood it wasn’t even work to take their money. Read the full ZIFL English Solicitor Jailed For 12 Years After Private Prosecution for Fraud Stephen Jones, 63, senior partner at London firm Jirehouse Partners, pleaded guilty at Southwark Crown Court to two counts of fraud by abuse of his position of trust as a solicitor in relation to money intended to be used by his clients to buy a Scottish castle. Sentencing Jones at Southwark Crown Court this week, Judge Martin Griffith said he had acted with ‘rank dishonesty’ and caused immense damage.The judge said that Jones’s conduct was ‘obviously prosecutable’ and crying out for a prosecution that the police and CPS had left for the private prosecutor to conduct. Read the full ZIFL Editorial – Anti-Fraud Resolutions In 2009 ZIFL posted an editorial with New Year’s Resolutions for every person involved in the business of insurance. I repeat it again, with some modification, in this issue and add some thoughts for 2023. Insurance fraud of all types continues to grow to epidemic levels. It is perpetrated by people of every race, religion, national origin, financial situation, sexual orientation, age, or physical condition. Read the full Newsletter here. How to Defeat Insurance Fraud An Article I Wrote for the CPCU Society’s “Insights” Magazine The preponderance of attempted insurance fraud is staggering and costly. But perhaps even more startling, and certainly more avoidable, is the often-muted response to such crime. The Coalition Against Insurance Fraud estimates that insurance fraud costs the industry more than $308 billion a year. No one knows the full amount because most insurance fraud attempts succeed. Read the full story at CPCUSociety_INSIGHTS_Winter2022_Insurance_Fraud Good News from The Coalition Against Insurance Fraud My client duped me, a banker desperately contended in court after helping disbarred personal-injury attorney Alex Murdaugh steal money from insurance settlements of clients in South Carolina. Russell Laffitte was convicted anyway. He was CEO of Palmetto State Bank, and the embattled Murdaugh’s personal banker. Laffitte loaned Murdaugh and himself money stolen from the insurance settlements — diverting the money from personal injury or death cases. Lafitte lied in court that he just followed the instructions of one of his biggest clients, who lied to and manipulated him. Except that Murdaugh gave Laffitte checks written to the bank instead of clients. This allowed Murdaugh to divert the clients’ insurance funds to others to whom he owed money — his law firm, clients he cheated, or family members. Laffitte was convicted and could spend decades in federal prison when sentenced. Murdaugh is the scion of a prominent legal family in South Carolina. Read the full Newsletter here. Florida Session Agenda Calls for Claims Process Changes, More Oversight of Insurers Florida legislative leaders, working with the proclamation from Sen. President Kathleen Passidomo and House Speaker Paul Renner notes that the five-day special session of the Florida Legislature will consider ways to reduce the cost of property insurance claims litigation, improve the availability of reinsurance, limit assignment-of-benefits agreements, and reduce the size of the state-created Citizens Property Insurance Corp. Read the full Newsletter here. Suspended Florida Claim Center Lawyer Agrees to Interim Probation Jennifer Perez, a partner with the Gauthier Murphy & Houghtaling law firm, agreed to the terms of an “interim probation” imposed by the Florida Bar, according to court records. She closed down the tent and trailer that the firm had set up in the parking lot of a defunct North Fort Meyers motel and agreed to provide the bar with a copy of a signed lease agreement for the law firm’s Florida office. Perez, a Florida lawyer whose law license was suspended after setting up a “mobile claim center” near Fort Myers is now able to resume the practice of law under the terms of an agreement she reached with the Florida Bar. Read the full Newsletter here. Health Insurance Fraud Convictions Settlement Against Contra Costa Facility Resolving Allegations of Patient Abuse and Neglect San Miguel Villa subjected its patients to poor care due to understaffing and effectively rendered a number of its services useless. Today’s settlement amounts to a total of $2.3 million, with California receiving $1.2 million. California secured a settlement against the Contra Costa County skilled nursing facility resolving allegations of understaffing and patient abuse and neglect. The settlement resolves claims that for five years, corporate profits should never be placed above patient needs and care. Every patient is entitled to humane care, and skilled nursing facilities should always have the appropriate level of staffing to ensure this standard of dignity is met. Read the full Newsletter here. Other Insurance Fraud Convictions Guilty of Life Insurance Fraud Daniel Banete a man living in Coventry, U.K. was sentenced to three years imprisonment after fraudulently trying to claim £520,000 in life insurance payments after his brother died from Covid-19. Just eight days after his brother died in hospital in Romania on July 8, 2020, 30-year-old Daniel Banete took out four different life insurance policies in his brother’s name between July 16 and 21. The City of London Police’s Insurance Fraud Enforcement Department said Banete provided fake death certificates to the insurance companies with different dates of death between November 2020 to January 2021 to try and claim the settlements. Read the full Newsletter here. Coalition Against Insurance Fraud Hall of Shame Dentist Kills Wife On Safari. A rich, unscrupulous Pennsylvania dentist planned to murder his wife during a safari trip in Africa without her having a clue, such a nice husband indeed. Why, you ask? Take a wild guess. If you thought money, then you are correct. It was silly since he really did not need a $5 million insurance payout, but the “loving” husband’s premeditated cover plan was that they were hunting a leopard in Kafue National Park in 2016 so his wife could attain her goal of shooting a leopard, husband of the year… NOT! And Nine more fraudsters. Read the full Newsletter here. (c) 2022 Barry Zalma & ClaimSchool, Inc. Go to the last two issues of Zalma's Insurance Fraud Letter at https://zalma.com/zalmas-insurance-fraud-letter-2/ Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Innocent Wife Has No Right to Recover for Criminal Conduct of Husband Causing Damage Public Policy of State Requires Exclusion of Criminal Conduct On October 14, 2019-while the Safeway policy was in effect-Mr. Moon backed the Vehicle into a police vehicle while attempting to flee from the police (the “Incident”). In Kristen Moon v. Safeway Insurance Company Of Louisiana, No. 2022-CA-0455, Court of Appeals of Louisiana, Fourth Circuit (December 6, 2022). FACTUAL BACKGROUND Safeway issued an automobile liability policy to Ms. Moon covering a vehicle that she personally owned (the “Vehicle”). Ms. Moon’s husband, Herbert Moon, was listed on the policy as a permissive user. The following day, the police informed Ms. Moon that her husband had been arrested and that the Vehicle had been towed. Thereafter, Ms. Moon filed a claim with Safeway for the property damages to the Vehicle that occurred as a result of the Incident. Safeway denied Ms. Moon’s claim based on the criminal and intentional acts exclusions (the “Exclusions”) in its policy. Following Safeway’s denial of her claim, Ms. Moon sued Safeway. Ms. Moon prayed for not only property damages, but also penalties for bad faith refusal to pay her claim. After answering the suit, Safeway filed a summary judgment motion based on the Exclusions. Safeway supported its summary judgment motion with an affidavit from its representative, Rhonda Marshall; and a copy of the deposition of the investigating officer, Christopher Bassil. Attached to Ms. Marshall’s affidavit was a certified copy of Safeway’s policy. The criminal charges included aggravated criminal damage to property, a violation of La. R.S. 14:55, for striking the police vehicle. DISCUSSION Whether an insurance policy provides for-or precludes-coverage as a matter of law is an issue that can be resolved within the framework of a summary judgment motion. In analyzing insurance policies, the following elementary legal principles apply: An insurance policy is a contract between the parties and should be construed by using the general rules of interpretation of contracts set forth in the Civil Code.[3] The parties’ intent as reflected by the words in the policy determine the extent of coverage. Such intent is to be determined in accordance with the general, ordinary, plain and popular meaning of the words used in the policy, unless the words have acquired a technical meaning. LSA-C.C. Art. 2047. An insurance policy should not be interpreted in an unreasonable or a strained manner so as to enlarge or to restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve an absurd conclusion. Absent a conflict with statutory provisions or public policy, insurers, like other individuals, are entitled to limit their liability and to impose and to enforce reasonable conditions upon the policy obligations they contractually assume. [I]f the policy wording at issue is clear and unambiguously expresses the parties’ intent, the insurance contract must be enforced as written. LSA-C.C. Art. 2046 (providing that when the words of a contract are clear, no further interpretation may be made to determine the parties’ intent). When the language of an insurance policy is clear, courts lack the authority to change or alter its terms under the guise of interpretation. The determination of whether a contract is clear or ambiguous is a question of law. THE POLICY The Safeway policy language at issue provides that under Part IV-Physical Damages-the policy does not apply to, among other things, the following: “(q) to damage intended by, or which may reasonably be expected to result from the intentional or criminal acts or omissions of, any Insured person or any other person residing with the Insured at the time of the loss. This exclusion applies even if: (1) such insured person lacks the mental capacity to govern his or her own conduct (2) such damage is of a different kind or degree than Intended or reasonably expected; or (3) such damage is sustained by a different person than Intended or reasonably expected. This exclusion applies regardless of whether or not such insured person is actually charged with, or convicted of a crime. … (s) to damage arising out of the ownership, maintenance or use of any automobile while being operated or used in the preparation to commit a crime, commission of a crime and/or flight from a crime, other than a traffic violation, regardless of whether or not such insured person is actually charged with, or convicted of a crime.” The Incident was the result of Mr. Moon’s act of backing the Vehicle into a police vehicle in an attempt to flee from the police. Mr. Moon’s act was both criminal and intentional. Mr. Moon was listed on the policy as a permissive user, and he was a resident relative. The Exclusions, as Safeway contends, apply regardless of who was operating the Vehicle when it was being used in the commission of a crime or to flee from the police. Ms. Moon’s damage claim arises out of her ownership of the Vehicle. Her claim is solely for property damages. The Exclusions, as applied are clear and unambiguous; and the applicability of the Exclusions to the facts on which the suit is based – the Incident – is not in dispute. Rather, Ms. Moon’s contention is that the Exclusions are contrary to public policy and, for that reason, should not be enforced because she was innocent and had nothing to do with the criminal conduct of Mr. Moon. Safeway’s Exclusions Do Not Violate Public Policy Ms. Moon contends that the state’s jurisprudence has recognized a policy against excluding coverage for an innocent insured who acts in in good faith. Although coverage exclusions generally do not comport with the policy of granting protection for injured persons, the exclusions here serve a separate public policy interest of prohibiting persons from insuring themselves against their own intentional or criminal acts. Withholding insurance coverage for intentional or criminal acts helps to disincentivize such conduct, which in turn serves the purpose of eliminating reckless and irresponsible drivers from the highways. The exclusion is designed to prevent an insured from acting wrongfully with the security of knowing that his insurance company will pay the piper for the damages. The purpose of the exclusion is a recognition of a long-standing public policy against insuring illegal activities and thus, promoting their commission Mr. Moon was a permissive user of the Vehicle that he was driving during the commission of a crime. The Court of Appeal found the Exclusions are clear, unambiguous, and enforceable-the Exclusions do not violate public policy. ZALMA OPINION The court of appeals dealt with the state’s public policy of not depriving an innocent co-insured of the right to recover for acts of a criminal co-insured and the public policy refusing to allow a person to insure against his or her criminal conduct. Finding that the public policy against encouraging criminal conduct trumps the policy of protecting the innocent co-insured. Mr. Moon’s conduct was clearly intentional and criminal and could not be encouraged by allowing his spouse to collect for the damage he caused to their vehicle. Other courts should emulate Louisiana and recognize that the public policy against insuring criminal or intentional conduct should trump the policy protecting innocent co-insureds. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Courts Must Read the Full Policy to Determine Coverage Plaintiffs Joshua and Rachel Dow purchased their home at 1017 Moss Creek Drive in Hurricane, WV in March of 2018. This property is contiguous to the Valley Park Wave Pool. After Plaintiffs purchased the home, they entered into a contract for first party insurance with Defendant Liberty Insurance Company. As of June 2018, Plaintiffs noticed water entering their property and leaking into the crawl space of their home. In Joshua Dow and Rachel Dow v. Liberty Insurance Company, Civil Action No. 3:19-0486, United States District Court, S.D. West Virginia, Huntington Division (December 1, 2022) the Plaintiffs sued their insurer who refused to pay their claim and the District Court dealt with the issue of coverage for damage caused by the water entering their property. BACKGROUND The water flowed from the edge of a ditch on an adjoining property into their yard. This ditch ended 2030 feet from Plaintiffs' property and had carried water downhill toward the river for several years, even before the nearby Wave Park was built. For many years, this ditch carried water without damaging Plaintiffs' home. However, the Putnam County Commission built a maintenance building on the property at the Wave Park in 2018, which raised the elevation of the land. Construction on the maintenance building ended in March of 2018. Because of the elevation change, heavy rain and water problems at the Wave Park overwhelmed the ditch and forced water into Plaintiffs' yard, which entered the crawl space of their home. Liberty's Claims Specialist was advised that the County was in litigation over the matter and would not discuss anything with the insurer. Defendant formally denied the claim November 28, 2018. In the denial email, the Claims Specialist said that the claim was denied because water had “traveled through the ground,” which was excluded under the policy. Defendant attached a full copy of Plaintiffs' policy to their Motion to Dismiss. The full policy excluded “Flood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these, whether or not driven by wind; (2) release of water held by a dam, levee, dike or by a water or flood control device or structure; b. Water below the surface of the ground, including water which exerts pressure on or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool or other structure.” Plaintiffs sued. An engineering expert retained by the Plaintiffs opined that the topography as it currently lays forces and directs the water from this water course onto the Plaintiffs property and into the crawl space of the Plaintiffs' home. DISCUSSION Inherent in the claims is the issue of whether the damage sustained by Plaintiffs is covered by the terms of the policy. When a policyholder shows that a loss occurred while an insurance policy was in force, an insurance company seeking to avoid liability through the operation of an exclusion has the burden of proving the facts necessary to the operation of that exclusion. The insurer must also prove that the allegedly applicable exclusion is valid, unambiguous, and substantiated. Validity of the Water Damage Exclusion Defendant specifically identified additional exclusions that would further limit the number of cognizable water damage claims. Further, there already existed a broad exclusion for water damage in the base policy, demonstrating Defendant's intent to widely exclude coverage for water damage in its insurance policies. Although Defendant omitted the particular phrase “water control device or structure” from its Summary filing, it is essentially synonymous with the specifically stated sources of water damage, such as “dam,” “levee,” and “dike,” and the court concluded that the exclusion utilized by Defendant to preclude coverage for the water damage to Plaintiffs' home is valid. Ambiguity of the Water Damage Exclusion A court interpreting an insurance policy should give the language of the policy its plain, ordinary meaning. Where the words of the policy are clear and unambiguous, it is not the role of the court to judicially construct or interpret meaning, but rather, give full effect to the plain meaning intended. It was clear to the Court that the plain, ordinary meaning of the words leaves the meaning of this exclusionary policy language clear. First, the reference to a “water device or structure” must be read in conjunction with the other, specific terms in the exclusion: “dam,” “levee,” and “dike.” Standing alone, the phrase “water control device or structure” may be ambiguous, but the Court must read the phrase in the context of the entire exclusionary provision, including the underlying base policy's water damage exclusion. Since Plaintiffs' expert described the water damage to Plaintiffs' home resulting from water flowing from upland of Plaintiffs' property the channel was designed to capture water on the hillside and control it. The purpose of its creation was to gather the water into the watercourse to stop it from inundating the surrounding properties. It was clear to the District Court that the water course described by Plaintiffs' expert is a “water control device or structure.” The water causing the damage is external to Plaintiffs' property; it was channeled and controlled; and ultimately, it was released from the watercourse and damaged Plaintiffs' property. Defendant Proving Facts The fact that it is Plaintiffs' expert's testimony that supports the exclusion of coverage has no bearing on the application of that testimony to the analysis of summary judgment. The Court can, and properly did, consider Plaintiffs' expert testimony, and the expert testimony supported the exclusion of coverage. This Court was sympathetic to Plaintiffs and the hardships they've experienced due to the damage to their property. Unfortunately for the plaintiffs, coverage for these water damages was not afforded under their insurance policy. ZALMA OPINION RTFP: Read the Full Policy is the key to the interpretation of an insurance contract. The court did so and applied the full policy and its meaning was clear when read in its entirety. The case established that it is improper to try to change the meaning of a policy by taking a part of the policy out of context and ignoring the full wording of the exclusion and the policy. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

No Good Deed Goes Unpunished GEICO Advantage Insurance Company and GEICO Choice Insurance Company (collectively "GEICO") appealed a decision of the Circuit Court of the City of Richmond granting summary judgment to Liosha Miles ("Miles") on the issue of whether each of the two insurance policies at issue provided separate tranches of insurance for uninsured motorist ("UM") coverage and underinsured motorist ("UIM") coverage. GEICO contended that the statute and each of the applicable policies provide only a single tranche of coverage applicable to both UM and UIM claims. In GEICO Advantage Insurance Company And GEICO Choice Insurance Company v. Liosha Miles, No. 220004, Supreme Court of Virginia (December 1, 2022) the Supreme Court interpreted the statute and the policies wording. BACKGROUND On April 18, 2019, Miles sustained extensive personal injuries in a single automobile accident caused by the negligence of two different drivers. One driver, Carlos Figuero, was insured under an automobile insurance policy issued by Integon General Insurance Company ("Integon") with a liability limit of $25,000. The second driver ("Doe") did not stop at the scene of the accident and was never identified, and thus, is considered an uninsured motorist pursuant to Code § 38.2-2206(B). At the time of the accident, Miles was insured under two policies: she was the named insured under a GEICO Advantage policy covering her vehicle and also was a covered insured under her brother's GEICO Choice policy by virtue of her being a "resident relative" of the named insured. Each of the GEICO policies contained UM/UIM coverage with bodily injury limits of $50,000 per person and $100,000 per occurrence. GEICO concedes that Miles' injuries from the accident resulted in damages that exceeded all available insurance coverage, "no matter how that is calculated." On behalf of Figuero, Integon tendered its policy limit of $25,000. The two GEICO policies paid, quickly, what they believed in good faith, was the limits of liability of the policies. Claiming a $25,000 credit as a result of Integon's tender, GEICO Advantage tendered $25,000 related to Miles' claim against Figuero. GEICO Advantage also tendered an additional $25,000 related to Miles' claim against Doe, the unknown, and hence, uninsured motorist. Thus, GEICO Advantage tendered a total of $50,000 as a result of Miles' UM/UIM claims. As a result of these tenders, GEICO Advantage asserted that it had exhausted the limits of its policy's UM/UIM coverage. Separately, GEICO Choice tendered $50,000 to Miles related to her claim against Figuero. GEICO Choice made no tender related to Miles' claim against Doe. As a result of its good faith tender of its limits, GEICO Choice asserted that it had exhausted the limits of its policy's UM/UIM coverage. Miles asserted that neither GEICO entity had exhausted its limits of UM/UIM coverage. Contending that each policy provided both a $50,000 limit for UM claims and another $50,000 limit for UIM claims entitling her to an additional $50,000. Miles sued seeking a declaration that each policy contained separate $50,000 limits for UM and UIM coverage. GEICO countered asserting that each policy provided a single $50,000 limit for both UM and UIM claims. The circuit court granted Miles' motion for summary judgment and denied GEICO's cross-motion. ANALYSIS Addressing questions of statutory interpretation, the Supreme Court’s primary objective is to ascertain and give effect to legislative intent, as expressed by the language used in the statute. Code § 38.2-2206(A) The parties agree that the dispositive question in this appeal is whether Virginia law requires an insurance company to provide separate UM and UIM coverage in an automobile liability policy or if the UIM coverage is properly understood as a component part of the UM coverage. Affording the words chosen by the General Assembly their plain and ordinary meanings the Supreme Court concluded that UIM coverage is a constituent part of UM coverage and does not represent a separate tranche of available coverage when UM coverage has been exhausted. The fact that the statute requires one endorsement for both UM and UIM incidents provides a sufficient basis to conclude that UIM coverage is a constituent part of the UM endorsement, and thus, is not a separate tranche of insurance. Any residual doubt is extinguished by the language regarding the limits of coverage available under the endorsement required by Code § 38.2-2206(A). The third sentence of the statute sets coverage limits for the endorsement required by the first sentence of the statute, providing that such "limits shall equal but not exceed the limits of the liability insurance provided by the policy, unless any one named insured rejects the additional uninsured motorist insurance coverage[.]" Code § 38.2-2206(A). This language reflects a policy decision by the General Assembly to afford insured drivers some measure of protection against injuries caused by the acts of others, but to limit that protection to no more in insurance coverage than the insured driver has elected to provide for the benefit of others who may be injured by the acts of the uninsured or underinsured driver. A cap on UM coverage with no corresponding cap on UIM coverage-would represent an anomaly bordering on an absurdity. Although the conclusion was compelled by the words of the statute, the Supreme Court noted that it also was consistent with its prior cases addressing the UM/UIM statute. The circuit court's interpretation of the statute not only fails to address the evil sought to be corrected by the legislature it leads to the very anomaly that the 1982 statutory amendment was designed to eliminate. Under the circuit court's interpretation, Miles would be in a better position from an insurance coverage perspective because she was hit by one underinsured motorist and one uninsured motorist as opposed to two underinsured motorists. Both the text of the Code § 38.2-2206(A) and prior cases interpreting the statute lead inexorably to the conclusion that UIM coverage is a constituent part of UM coverage. Concluding that the circuit court erred in granting Miles' motion for summary judgment and denying GEICO's cross-motion for summary judgment the Supreme Court reversed the judgment of the circuit court and final judgment was entered in favor of GEICO. ZALMA OPINION Uninsured and Underinsured Motorist insurance is designed to protect the insured from the danger of being injured by a person who cannot be held liable for the injury because of escaping the scene of the accident or having inadequate insurance to indemnify the injured. Unfortunately, insureds like Ms. Miles, buy only minimal insurance to protect themselves and more to protect others. GEICO, in good faith, paid everything they owed and Miles tried to double the coverage with an imaginative analysis of the UM/UIM coverages that simply failed to comport with the Virginia statute and the policy wording. The good claims handling, because of the severity of her injury, forced GEICO to defend to the state supreme court, it good deeds. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Chubb Must Pay for Cancellation of Tina Turner Concert Because of Order of State of New York Tina Turner Musical LLC v. Chubb Insurance Company of Europe SE, Appeal No. 16804, Index No. 651607/21, Case No. 2022-02269, Supreme Court of New York, First Department (December 6, 2022) In an appeal from an order of the Supreme Court, New York County (Andrew Borrok, J.), entered on or about December 30, 2021, that denied defendant's motion to dismiss the complaint, the New York Appellate Court unanimously affirmed the decision of the trial court. New York appellate courts are noted for the brevity of their opinions, and this one is no exception. The appellate court concluded that the trial court, the Supreme Court, New York County, correctly concluded that plaintiff's losses resulting from the cancellation of its Broadway show during the COVID-19 pandemic did not fall within the communicable disease exclusion in the insurance policy. The exclusion precluded from coverage: any loss directly or indirectly arising out of, contributed to by, or resulting from... any communicable disease or threat or fear of communicable disease... which leads to: [1] the imposition of quarantine or restriction in movement of people or animals by any national or international body or agency; [2] any travel advisory or warning being issued by a national or international body or agency. The appellate court noted that the exclusion did not clearly and unmistakably preclude from coverage losses caused by communicable diseases that were of such a systemic nature as to lead to quarantine or travel advisory orders by a national or international body or agency. Rather, giving the exclusion a strict and narrow construction, and resolving any ambiguities against defendant, the appellate court found that it precluded from coverage losses resulting from quarantine or travel advisory orders issued by a national or international body or agency in response to a communicable disease. Since plaintiff's losses stemmed from Executive Orders issued by the New York State Governor and New York City Mayor banning performances and gatherings in theaters, the exclusion did not apply. ZALMA OPINION Whenever there is an issue of whether an insurance policy must provide coverage to an insured it is necessary to read the full policy. The New York Appellate court did just that: it read the exclusion relied upon by Chubb to refuse coverage to Ms. Turner, and found that her losses resulted from Executive Orders issued by the Governor of New York state and the mayor of New York City. Since the exclusion only excluded orders of a: "national or international body or agency," and since neither the Governor nor the Mayor were national or international bodies or agencies, the exclusion did not apply. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Jay Shah appealed from a judgment entered in favor of Fidelity National Title Insurance Company after the trial court granted summary judgment. After two trials and a second appeal the Court of Appeals dealt with improper and contumacious conduct by plaintiff's counsel. In Jay C. Shah v. Fidelity National Title Insurance Company, A165816, California Court of Appeals, First District, First Division (November 30, 2022) resolved the title insurance issue based on the evidence and California Codes and precedent. BACKGROUND In 1959, non-party Mary Silva acquired a life estate in the property that is the subject of this action near Quimby Road in San Jose, California (the property). In December 1995, Shah entered a contract to purchase the property from Silva for $350,000. Silva transferred her interest in the property via a grant deed to "Jay C. Shah, Living Trust Dated June 8, 1993," (the Trust) as grantee. When he purchased the property, Shah did not know that Silva held only a life estate. Fidelity issued the title insurance policy in connection with Shah's 1995 purchase. The title policy was effective December 29, 1995. Schedule A of the title policy listed the named insured as the Trust. The title policy stated that the "estate or interest in the land described herein and which is covered by this policy is: A Fee." Suit Against Fidelity The trial court granted Fidelity's motion for summary judgment and determined Shah's motion for summary adjudication was moot. The court concluded that Fidelity met its burden to show coverage terminated under section 2(b) of the title policy before Shah's 2009 tender because Shah had voluntarily transferred the property to his parents in 2002, and the transfer became effective by operation of law in May 2007 when Shah obtained fee title through adverse possession, under the after acquired title doctrine (Civ. Code, § 1106). The Court of Appeal, concluding that it was not at liberty to rewrite the policy to achieve the result Shah sought & Fidelity met its initial burden to demonstrate coverage under the title insurance policy terminated under section 2(b) when Shah voluntarily transferred the property to his parents in the 2002 grant deed and subsequently acquired fee title by adverse possession in May 2007. Because Shah failed to present evidence raising a triable issue of material fact, Fidelity was entitled to judgment as a matter of law on Shah's causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing. CIVILITY In addition to deciding the insurance issue the California Court of Appeal concluded that they were obligated to admonish Shah's counsel, Craig J. Bassett, for making repeated, unfounded personal attacks on the trial court and opposing counsel in his appellate papers, apparently because he disagreed with the trial court's decision. To illustrate, the Court of Appeal quoted a few excerpts from the opening and reply briefs that were damning. Excerpts About the court: "Thus far, the trial court has favored Fidelity because that court does not understand, and refuses to learn, the principles of the law applicable to the facts of this case. The lower court unlawfully sides with the wrongdoer and throws Shah out the courtroom door, twice now!" "The lower court wrests [the] holding [of Marriage v. Keener, supra, 26 Cal.App.4th 186], misrepresents it, and misuses it to knowingly err to achieve a preconceived outcome harmful to Shah. It wanted to vindicate the judge of the same court who in error prejudicially sustained Fidelity's demurrer to Shah's FAC on the same erroneous grounds, despite the successful appeal and reversal of that decision." "In rendering its decision on the MSJ [(motion for summary judgment)], the lower court acted like a magical mystery trial had been held without a jury while Shah was in absentia and that it was decided based on one single document alone ...." "The duplicity of the lower court, however, exposes its pervasive error." "The lower court's short-sighted derogation of the policy of the law explained above and its total disregard for the relevant statutes in order to achieve a wrongful outcome to favor the title insurance industry and knowingly harm the innocent insured, twice now, means that something is terribly wrong and that the courts have lost their way." "The lower court knowingly erred here to protect itself rather than enforce the law as was its sworn duty." The trial court "refuses to get the facts straight, refuses to interpret the clause properly, and refuses to follow the law." About defendant, and by implication, opposing counsel: "Because it knows that it can with success, as this case proves, engage in bad faith insurance tactics to seduce gullible courts who have little experience and no training in such matters ...." "Is it not the goal here to consider and discover the truth, the whole truth, and nothing but the truth drawing inferences from and accepting evidence in the light most favorable to Shah? Why would Fidelity think itself above this law? Because it believes it is a law unto itself not subject to the law so that it can in bad faith seek exoneration on spurious grounds when its liability is clear. The sophistry of Fidelity cannot be passed off as truth in this proceeding." "This court should respect and adopt [Shah's] absolutely correct analysis, no matter what bag of tricks, lies, and misdirection Fidelity throws at the Court at this juncture, which is all that Fidelity has done judging by the content of its respondent's brief." These quotes were a sampling of the numerous inappropriate arguments scattered throughout counsel's briefs. Perhaps not surprisingly, these unhelpful remarks are unsupported by any evidence in the record. Such bombastic, ad hominem attacks have no place in an appellate brief and are potentially contemptuous and sanctionable behavior. The Court of Appeal further noted that: "[d]isparaging the trial judge is a tactic that is not taken lightly by a reviewing court. Counsel better make sure he or she has the facts right before venturing into such dangerous territory because it is contemptuous for an attorney to make the unsupported assertion that the judge was 'act[ing] out of bias toward a party.'" (In re S.C. (2006) 138 Cal.App.4th 396, 422.) The Court of Appeal noted that "ironically, the extremely argumentative nature of his two briefs on appeal makes it more time-consuming for this court to sift through the unjustified personal attacks and hyperbolic rhetoric to get to the legal issues that need to be resolved." For counsel's benefit the Court of Appeal repeated the admonition of the Board of Governors of the State Bar that: attorneys have an obligation to be professional with . . . other parties and counsel, [and] the courts .... This obligation includes civility, professional integrity, personal dignity, candor, diligence, respect, courtesy, and cooperation, all of which are essential to the fair administration of justice and conflict resolution." (Cal. Atty. Guidelines of Civility &Professionalism (July 20, 2007) Introduction., p. 3; id., § 4, p. 5 ["An attorney should not disparage the intelligence, integrity, ethics, morals or behavior of the court or other counsel, parties or participants when those characteristics are not at issue. [¶] . . . [¶] . . . An attorney should avoid hostile, demeaning or humiliating words."].) The kind of conduct displayed in counsel's appellate briefing "not only disserves the individual involved, it demeans the profession as a whole and our system of justice." Rather, counsel must "strive for the highest standards of attorney behavior to elevate and enhance our service to justice." (Ibid.) [emphasis added] The Court of Appeal strongly admonished plaintiff's counsel to conduct himself in a more professional manner when appearing before the Court of Appeal or any other court and noted that such conduct in a future case may subject him to sanctions much harsher than the warning. ZALMA OPINION The insurance issue was resolved with a detailed analysis that clearly established that Fidelity owed nothing to Shah. The reason for this article is to point out that the Court of Appeal was kind to plaintiff's counsel by only admonishing his conduct. Lawyers, should never get emotionally involved in their cases and, when they lose at trial, should never question the integrity of the court or opposing counsel. A dispute over a Title Insurance Contract is a legal issue that was resolved by the Court of Appeal by review of the facts and the applicable statutory law and precedent. For an appellate court to add the warnings it did is quite unusual. The Court, in my opinion, should have done more than admonish counsel and in my opinion, issued more than a warning. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Summary Judgment Fails for Lack of Convincing Evidence Plaintiff Craig Finch owns parcels of real property in Broome County, New York, the relevant ones for our purposes being one on Kennedy Road (hereinafter the subject premises) and another on Bishop Road. A single-family home was situated on the subject premises, while a second home was situated about 1,000 feet away on the Bishop Road property. The homeowner's insurance policy for the subject premises was procured through defendant Erie Insurance Company and named Finch as the insured. Erie contended Finch did not live at the Dwelling and denied his claim on that ground. In Craig Finch v. Erie Insurance Company, No. 534429, 2022 NY Slip Op 06851, Supreme Court of New York, Third Department (December 1, 2022) Erie appealed the denial of its Motion for Summary Judgment and a New York Appellate Court resolved the dispute. FACTS A fire seriously damaged the subject premises on the evening of November 22, 2016. Plaintiff notified defendant of the loss, stating that warm ashes in a vacuum cleaner on the back porch had caused the fire, and the ensuing investigation conducted on defendant's behalf confirmed that the fire was accidental and had begun on the back porch. The investigator did not determine the cause of the fire but could not rule out the vacuum cleaner. Defendant disclaimed coverage upon the grounds that plaintiff did not reside at the subject premises as required and that, by installing a pellet stove where the warm ashes had originated, he had substantially increased the hazards present there. Finch sued alleging that Erie had breached the insurance contract by disclaiming coverage. Both parties moved for summary judgment. The trial court denied the motion and cross motion, and Erie appealed. ANALYSIS Defendant, as the party seeking to disclaim coverage on the ground that plaintiff did not reside at the subject premises, bore the burden of establishing that the exclusions or exemptions apply and that they are subject to no other reasonable interpretation. The policy provides coverage "for loss to... [plaintiff's] dwelling at the residence premises," with the latter term defined as "the dwelling where [plaintiff] reside[s]." What constitutes a residence is not defined in the policy and is therefore construed against defendant as the insurer, but it is well settled that residency requires something more than temporary or physical presence and requires at least some degree of permanence and intention to remain. A person may have only one domicile but more than one residence for insurance purposes, and the question of whether a person resides in a given location is a fact-driven inquiry that depends on the totality of the circumstances. Erie came forward with proof suggesting that plaintiff did not reside at the subject premises, including that he had primarily lived at the Bishop Road property for almost a decade prior to the fire, that his sister resided at the subject premises in return for her making the mortgage payments and covering other expenses, and that he had expressed an intent to transfer ownership of the subject premises to her, all serious indicators that he did not reside at the dwelling. The record, the appellate court concluded, made it clear that plaintiff continued to have significant connections to the subject premises, however, and that he gave conflicting accounts of what his actual plans were for it. For example, plaintiff testified that the subject premises had been his parents' residence, that he was living there with them when he purchased it around 2001, and that it has consistently been occupied by either him or his family members. Plaintiff testified that he performed all maintenance and repairs at the subject premises while his sister was living there, as well as that he continued to both keep many personal belongings and receive mail there at the time of the fire. Plaintiff also made clear that he was at the subject premises every day for both maintenance and recreation reasons and that he could and did sleep there on occasion. Although plaintiff did testify that he aimed to transfer ownership of the subject premises to his sister once she paid off the mortgage, he also gave conflicting testimony in which he stated that he wanted to move back there after he "g[o]t [his] sister set," and he explained in an affidavit that his plan was to do so after rehabilitating the home on the Bishop Road parcel for his sister's use. The trial court established plaintiff's family connections to the subject premises, his continued use of and presence at the subject premises, and his conflicting statements as to his future plans regarding the subject premises reveal questions of fact as to whether he satisfied the residency requirement of the insurance policy that would preclude summary judgment on that point. The order was affirmed. ZALMA OPINION The residence requirement has been ignored by insurance agents, insurance brokers and people seeking homeowners insurance. As a result, many suits, like that filed by Finch keep finding their was to the trial and appellate courts. The evidence presented by Finch established that the dwelling was his domicile since he received mail there and spent much time at the dwelling. It was not, however, his residence and was the residence of his sister. The entire dispute would have been resolved if Finch had the policy name as an insured, his sister, and add himself as an additional insured. He did not. At trial the insurer will need to produce evidence that Finch did not "reside" at the premises where the fire occurred. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Representative of Five Dead Seek to Hold Owner of Vehicle's Insurer Responsible for Deaths and Injuries In Motorists Commercial Mutual Insurance Company v. Roger Hartwell; Lynnway Auto Auction, Inc., Safety Insurance Company; et. al. Nos. 21-1603, 21-1636, United States Court of Appeals, First Circuit (November 23, 2022) the plaintiff claimed it owed neither defense nor indemnity to persons not insured by it to claims that a vehicle the named insureds' owned while driven by the employee of an auctioneer killed five people and injured many. FACTUAL BACKGROUND The dispute arose from an auction at which a motor vehicle being displayed for bidding suddenly accelerated into a group of attendees, killing five and injuring many others. Motorists Commercial Mutual Insurance Company ("Motorists"), which insured the dealership that owned the vehicle, sued seeking a declaration that its policies do not cover the auctioneer or its employee who was behind the wheel of the vehicle when it struck the victims. Defendants include those who claim an interest in Motorists' coverage: the victims, the auctioneer, and its employee. Both sides moved for summary judgment. The district court granted the motion for summary judgment in favor of Motorists. Nashua Automotive, LLC is a New Hampshire car dealership that sells new and used cars. It is owned by a dealership group called AutoFair, Inc. and operates under the name "AutoFair Volkswagen of Nashua." ("Nashua.") While Nashua sells most of their vehicles "retail" (to the public), about 8% or 9% of their revenues come from vehicles sold "wholesale" (online or at an auction). For its vehicles sold wholesale, Nashua primarily engages with a company called Lynnway Auto Auction, Inc., which operates an auction facility in Billerica, Massachusetts. Neither AutoFair nor Nashua owns Lynnway, and Lynnway does not own Nashua or AutoFair. In April 2017, Nashua received a 2006 Jeep Grand Cherokee as a trade-in for a new vehicle it sold. Nashua arranged for Lynnway to auction the Jeep. On May 3, 2017, while that Jeep was being put up for auction inside Lynnway's Billerica facility, it accelerated into a crowd, causing multiple serious injuries and five deaths. At the time of the accident, Lynnway employee Roger Hartwell was seated in the driver's seat of the Jeep, though he claims that the vehicle accelerated uncontrollably despite his efforts to stop it. In due course, the victims and their estates filed a series of lawsuits in Massachusetts state court, alleging several theories of liability against Lynnway, Hartwell, Nashua and AutoFair, as well as other related individuals and entities. Of the various insurance companies whose policies may be implicated by those underlying claims, this case concerns only one: Motorists Commercial Mutual Insurance Company. Motorists provided a liability policy (the "Primary Policy") that covered AutoFair, Nashua, and other AutoFair-affiliated dealerships as named insureds, but did not name Lynnway or Hartwell among the insureds. Motorists also provided a so-called "Commercial Umbrella" policy (the "Umbrella Policy"), which provided supplemental insurance above the Primary Policy's limits to many of the same named insureds, including Nashua and AutoFair. THE MOTORISTS' POLICIES The Primary Policy includes a "Garage Coverage Form". This form was modified by a New Hampshire Changes in Policy endorsement (the "New Hampshire Endorsement"). The New Hampshire Endorsement changed the definition of "Who Is An Insured" such that it includes "[a]nyone else while using with your permission a covered 'auto' you own . . . except . . . [s]omeone using a covered 'auto' while he or she is working in a business of selling, servicing or repairing 'autos' unless that business is yours." The Umbrella Policy, in turn, provides further coverage for bodily injuries, but contains an "Automobile Liability -Following Form" endorsement, which provides: “Except as coverage is available to you in the underlying policies as set forth in the Schedule of Underlying Insurance, this policy does not apply to the ownership, maintenance, operation, [or] use . . . of any automobile while away from premises owned by, rented to, or controlled by you.” The Umbrella Policy also defines "who is an insured" for that policy, which specifically excludes "[a]ny person employed by or engaged in the duties of an auto sales agency . . . that you do not operate." Motorists sought a declaratory judgment that its policies do not provide coverage for the victims' claims against Lynnway and its employee. Defendants include Lynnway and Hartwell (the "Lynnway defendants") and the accident victims who brought the state-court suits (the "victim defendants"). All defendants moved for summary judgment, prompting a cross-motion from Motorists. Motorists pointed to the auto business exclusion which Motorists contended foreclosed coverage under the Primary Policy. It also argued that its Umbrella Policy's Following Form Endorsement provides auto coverage that is no broader than that provided for in the Primary Policy. The district court agreed with Motorists on all scores, granting summary judgment in its favor. ANALYSIS It is axiomatic that interpretation of an insurance policy is a question of law. An appellate court starts its analysis by examining the plain and ordinary meaning of the words in context to construe the policy's terms as would a reasonable person in the position of the insured based on more than a casual reading of the policy as a whole. On appeal, both the Lynnway defendants and the victim defendants contended that the coverage provided by the broad insuring clause of the Primary Policy survives that policy's auto business exclusion as well as its suspended license exclusion. They also insist that the Umbrella Policy separately provides coverage. The parties agreed that Lynnway and Hartwell are covered under the Primary Policy unless one of the two exclusions relied upon by Motorists applies. As modified by the New Hampshire Endorsement, that exclusion excepts from the definition of insureds "[s]omeone using a covered 'auto' while he or she is working in a business of selling, servicing or repairing 'autos' unless that business is yours." The "yours" in this language refers to a named insured – in this case, Nashua. Lynnway's Articles of Incorporation describe it as "a general automobile auction business" whose purpose is "to auction, sell and distribute automobiles" and "[t]o engage in the business of purchasing, . . . [and] selling . . . all types of new and used automobiles." The First Circuit opined that someone engaged in an auction business is engaged in a selling business. The language at issue plainly aims at making sure that coverage does not extend in general to persons or entities working in any business of selling autos, while at the same time carving out an exception. The issue posed here is the reach of that exception. Clearly it preserves coverage for Nashua and its employees. Construing the "business" that is "yours" to mean Nashua's business enterprise -- i.e., its dealership that sells autos – fully accomplishes this aim. No reasonable insured that procured the policy would have any interest in paying for a policy that provided coverage for another person who works for another unrelated seller of autos. Lynnway retained its own insurance policies, the providers of which have conceded the availability of coverage. The fact that Hartwell was employed by and subject to the control of Lynnway reinforces the conclusion that he was not working in Nashua's business. The First Circuit concluded, therefore, that the Primary Policy's auto business exclusion defines the policy's insureds so as to exclude Lynnway and Hartwell from coverage for the underlying claims here. Defendants next contended that the Umbrella Policy provides coverage for the underlying claims. The phrase “follow form” refers to the practice, common in excess policies, of having the second-layer coverage follow substantively the primary layer provided by the main insurer. Given that the underlying Primary Policy does not cover the claimed liabilities neither does the Umbrella Policy and the judgment of the district court was affirmed. ZALMA OPINION The five deaths and multiple injuries prompted a search for every possible insurance coverage to allow the availability to the victims of sufficient funds to indemnify the victims of the runaway Jeep. The attempt was understandable. The arguments were not. The First Circuit read the entire policy, applied the facts of the accident and the relationships of the persons involved and necessarily found that the Motorists policies provided no coverage for the auctioneer and the driver of the Jeep. The analysis was clear, logical and applied the clear and unambiguous meaning of the policy and its exclusion. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

In Maryland if Policy Limits are Offered Before Trial There Can Be No Bad Faith When a seriously injured person is injured by a person with a policy providing minimal limits the plaintiff's lawyer will invariably attempt to set up the insurer for a bad faith case by making a policy limits demand with a short period of time to respond. In David Grant Orndorff v. Erie Insurance Exchange, No. 1318-2021, Court of Special Appeals of Maryland (November 21, 2022) Mr. Orndorff had a leg amputated as a result of an accident and sought to set up Erie Insurance, the other driver's insurer. David Grant Orndorff ("Mr. Orndorff") was seriously injured when the motorcycle he was riding struck another vehicle attempting to make a left turn. The driver was insured by Erie Insurance Exchange ("Erie") under a policy with a liability coverage limit of $30,000. Five months after the accident, Mr. Orndorff rejected Erie's offer of its insured's policy limits in full settlement of his claims against the insured. Two years later, when Mr. Orndorff sued Erie for bad faith in failing to settle sooner, the Circuit Court for Prince George's County granted summary judgment to Erie. BACKGROUND Two days after the accident, on October 17, 2016, the driver of the other vehicle (Erie's insured) reported the accident to Erie. Erie then assigned a claims adjuster who began a thorough investigation of the claim the next day. One week into the investigation, on October 25, 2016, the claims adjuster received a message from Mr. Orndorff's retained counsel requesting that all correspondence go to her. On November 3, 2016, the claims adjuster reviewed the accident report. The report indicated that Erie's insured was cited for "failing to yield right of way" and that Mr. Orndorff had "exceeded the speed limit" and thereby contributed to the accident. The adjuster informed Orndorff's counsel: Erie has received the police report which indicates your client contributed to the accident by speeding. I would suggest he have his own insurance company handle if he has not done so already. I am trying to reach the witness to confirm our final liability decision but as MD is a contributory negligence state, your client may be barred from recovery against our insured. Maryland has not adopted comparative negligence. If an injured person contributes to the accident - for example by speeding - he or she cannot recover anything because of his or her contributory negligence. On November 8, 2016, thirty-four days after the accident, Mr. Orndorff demanded that Erie settle his claim" . . . for the full insurance policy, or any and all insurance policy or policies covering your insured for this accident." Mr. Orndorff (perhaps as part of a plan) did not supply any of the requested documents or description of his injuries that Erie said were necessary to determine liability and settle the claim. Mr. Orndorff indicated he would release Erie's insured from liability if Erie delivered a check no later than 5 p.m. EST on December 8, 2016. On November 21, 2016, Erie denied Mr. Orndorff's claim because its investigation showed that Mr. Orndorff was speeding and contributed to the accident. Mr. Orndorff's Motor Tort Complaint On January 9, 2017, Mr. Orndorff sued Erie's insured in the Circuit Court for Prince George's County and later served Erie's insured. On January 30, 2017, Mr. Orndorff's counsel emailed the claims adjuster that all prior settlement offers were withdrawn and that its insured had been served. On March 17, 2017, Erie, through the attorney assigned to represent its insured in the motor tort suit, offered to settle Mr. Orndorff's claim for the full limit of the insured's policy. On April 26, 2017, having not heard from Mr. Orndorff, Erie reiterated its policy limits offer to Mr. Orndorff. Mr. Orndorff's motor tort suit having been bifurcated between liability and damages, a jury found Erie's insured liable for Mr. Orndorff's injuries. Specifically, the jury found that Erie's insured was negligent, and that Mr. Orndorff was not contributorily negligent. The Liability-Only Trial Aftermath On October 27, 2017, Erie again offered its insured's policy limits to settle Mr. Orndorff's claim against Erie's insured. Mr. Orndorff did not accept this offer. Before the trial on damages Plaintiff's counsel notified the circuit court that they had settled Mr. Orndorff's claim with the entry of consent judgment against Erie's insured for $2,870,000; an assignment of the insured's claims against Erie (if any) to Mr. Orndorff; and Mr. Orndorff's promises (1) to forbear on collection efforts while the assigned claims against Erie were pending, and (2) to file an Order of Satisfaction once litigation of the assigned claims (including appeals) was over Orndorff v. Erie Insurance Exchange (This Case) On October 15, 2019, Mr. Orndorff sued Erie claiming that Erie had acted in bad faith in refusing Mr. Orndorff's November 2016 demand. On March 29, 2021, Erie filed a motion for summary judgment arguing that it had acted in good faith (not bad) in attempting to negotiate a settlement of Mr. Orndorff's claim within its insured's policy limits. What Plaintiff asked the Court to do is to allow plaintiffs to control bad faith in the sense that a plaintiff could go to the end with an insurance company. An insurance company could offer policy limits on the eve of trial and the - - in cases where they offered it at eve of trial, the plaintiff, under the circumstances, could reject it and go forward, get an excess judgment, and then come back, presumably on behalf of the insured, and say, "hey, they didn't offer the policy limits before we got this judgment." The trial Court did not find bad faith and concluded there was no breach of contract by the insurance company to its insured. Erie offered its policy limits. It offered its policy limits well before any judgment was entered against Erie's insured. It offered the limits well before any trial occurred. So, this claim could have been resolved at an earlier time by the Plaintiff. The Plaintiff elected not to accept the offer of the policy limits and chose to pursue its claim against Erie's insured. The appellate court decided that the insurance company should not be at the mercy of what the Plaintiff wants to do. DISCUSSION Genuine disputes can arise from "predicate" facts or from the inferences that may reasonably be drawn from those predicate facts. The motions court found that Mr. Orndorff made a demand on Erie to settle for its insured's policy limits in late October or November 2016, a demand that Erie denied. This denial was not in bad faith because it was based on the information Erie had at the time. By March 17, 2017, Erie had gathered more information and "had come around" to the determination that its insured was liable. Erie offered its insured's policy limits in full settlement, but Mr. Orndorff refused the offer. Once an insurer undertakes to defend its insured on a claim, the insurer's wrongful failure to settle the claim is a claim in tort, not contract. The possibility of liability in tort does not mean that an insurer must settle all claims against its insured. An insurer does not have an absolute duty to settle a claim within policy limits, although it may not refuse to do so in bad faith. An insurer's decision to reject a settlement will be in "good faith" if the decision consists of an informed judgment based on honesty and diligence. The appellate court was aware of no case, and Mr. Orndorff cited none to the court, in which a jury was permitted to determine an insurer's good (or bad) faith in settling (or not settling) a claim where, as in this case, the insurer offered its insured's policy limits in full settlement prior to its insured being at risk of an excess judgment. Even if Erie could be said to have acted in bad faith by denying Mr. Orndorff's November 2016 demand, Erie's subsequent offer of policy limits before its insured faced the risk of an excess verdict meant that Erie did not act in bad faith in attempting to settle Mr. Orndorff's claim against Erie's insured. Ultimately the circuit court did not err in granting summary judgment in favor of Erie. Erie's subsequent offer of its insured's policy limits, an offer made well before its insured faced the risk of an excess verdict, foreclosed any claim by Mr. Orndorff, the insured's assignee, that Erie had acted in bad faith. ZALMA OPINION Erie had a good reason to deny the claim because Maryland still follows contributory negligence rather than what most states have adopted comparative negligence. Regardless, when it did further investigation it offered its full policy limits multiple times only to have the plaintiff turn the offers down and insist on going to trial on the tort claim and eventually making a deal with Erie's insured to agree to a $2,870,000 judgment it promised to not collect from the tortfeasor but only from his insurer. He received the $30,000 limit and cost Erie much to defend two lawsuits that did not need to be filed or tried. The court should have considered sanctions on plaintiff's counsel. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

ZIFL Volume 26, Issue 23 The December 1, 2022 issue contains articles and reports of insurance fraud convictions for every insurance claims professional, SIU investigators and everyone interested in the efforts to defeat or deter insurance fraud. The December 1, 2022 issue includes: It Doesn't Pay to Try to Cheat Your Insurance Company Sigismondi Foreign Car Specialists, Inc. appealed the U. S. District Court's summary judgment in favor of State Auto Property and Casualty Insurance Company on State Auto's declaratory judgment action and statutory insurance fraud claim. In State Auto Property And Casualty Insurance Company v. Sigismondi Foreign Car Specialists, Inc., No. 21-2435, United States Court of Appeals, Third Circuit (November 18, 2022) the Third Circuit Court of Appeal dealt with the allegations of the insurer that Sigismondi attempted insurance fraud. Read the full article at ZIFL-12-01-2022 New California Law Means New Obligations for Insurance Agents & Brokers California Governor Gavin Newsom has signed into law Senate Bill 1242, written by the Senate Insurance Committee and aimed at protecting California consumers by imposing a variety of requirements upon producers. The omnibus bill is essentially a kitchen sink of unrelated topics covered under a single piece of legislation. It takes effect on Jan. 1, 2023, and addresses, among other things, insurance fraud reporting and education mandates, fingerprinting and licensing disclosures. Reporting Fraud At the start of the year, agents and brokers will be required to report fraud to the California Department of Insurance (CDI). More specifically, SB 1242 amends the California Insurance Code to require producers who suspect or know a fraudulent application for insurance is being made to submit to the DOI Fraud Division via the electronic Consumer Fraud Reporting Portal information regarding the factual circumstances of a dubious application and the alleged misrepresentations it contains. Read the full article at ZIFL-12-01-2022 Crime Doesn't Pay - It Leads to Bankruptcy North Carolina’s Wake County Superior Court judge ordered the liquidation of two life insurance companies in rehabilitation operated under billionaire insurance and finance executive Greg Lindberg. The judge approved the order to liquidate Colorado Bankers Life Insurance Co. and Bankers Life Insurance Co., which have been in rehabilitation since 2019. The companies were put into rehabilitation after questions arose about Lindberg’s alleged use of reserve funds to support other businesses he operated. Read the full article at ZIFL-12-01-2022 Good News From the Coalition Against Insurance Fraud A pain doc stuck patients with unneeded injections for knees and other body parts in a $240M scheme in San Antonio, Tex. Area. Dr. Jorge Zamora-Quezada falsely diagnosed patients with degenerative diseases such as rheumatoid arthritis. He gave them batteries of injections, invasive chemo and other toxic treatments they didn’t need. He earned a trip to the Coalition’s Insurance Fraud Hall of Shame in 2020 — and finally is scheduled for federal sentencing May 18. Zamora-Quezada kicked patients out of his office if they questioned his treatments and hid their records from docs the patients next saw. He also laundered the insurance money. And he bought a private jet, owned luxury properties in Aspen and other jet-set locales and bought a fleet of luxury cars. And Zamora-Quezada gave patients knee-buckling doses of chemo and other toxic treatments they didn’t need, all to keep insurance money flowing. Many patients — one aged just 13 — suffered serious physical and emotional damage from the chemo injections and sometimes hours-long intravenous infusions. Zamora-Quezada falsely diagnosed one man with rheumatoid arthritis. The patient later developed burns on his skin, lost both finger and toenails, and later began losing his skin from the toxic medications. His health problems continued until his death. Read the full article about multiple insurance fraud convictions at ZIFL-12-01-2022 The Examination Under Oath Is Not a Replacement for the Insurance Claims Professional An attorney is not an insurance adjuster. The attorney representing an insurer at an EUO is not a “super adjuster.” The attorney is a lawyer who was retained to provide legal advice and counsel after assisting the insurer in gathering facts at an EUO. Competent outside adjustment services can be obtained for a great deal less per hour than any attorney. The EUO should complement, and be part of, the thorough investigation of the Insurance Claims Professional. It should provide the information that the Insurance claims professional is unable to obtain because of the recalcitrance of the Insured, because of the lack of records, or because complex legal and factual issues have made resolution of the claim on an adjusting level impossible. Read the full article at ZIFL-12-01-2022 Health Insurance Fraud Convictions Florida Birth-Related Neurological Injury Compensation Plan and Association to Pay $51 Million to Resolve False Claims Act Allegations The Florida Birth-Related Neurological Injury Compensation Plan and its administrator, the Florida Birth-Related Neurological Injury Compensation Association (collectively, “NICA”), have agreed to pay $51 million to resolve allegations that they violated the False Claims Act by causing NICA participants to submit their healthcare claims to Medicaid rather than NICA, in violation of Medicaid’s status as the payer of last resort under federal law. The civil settlement resolves a lawsuit filed and pursued by Veronica N. Arven and the estate of Theodore Arven III against NICA under the qui tam or whistleblower provisions of the False Claims Act, which permit a private party (known as a relator) to file a lawsuit on behalf of the United States and receive a portion of any recovery. Although the United States did not intervene in this case, it continued to investigate the whistleblowers’ allegations, provided substantial assistance to the whistleblowers in defending against a motion to dismiss, and negotiated the settlement announced today. The Arvens will receive $12,750,000 as their share of the recovery in this case. Read the full article about multiple insurance fraud convictions at ZIFL-12-01-2022 Post Loss Underwriting is Rare When an insurer decides to rescind a policy of insurance it is often accused of “Post Loss Underwriting.” Although considered in some states, post loss underwriting is an oxymoron. Underwriting is the decision, based on information provided by a proposed insured, to accept the risk of certain losses needed by the proposed insured. Underwriting, by definition, must be conducted before a policy comes into existence except in the event when a policy is bound subject to a physical inspection of the property. If the inspection shows the risk to be other than that promised by the insured, the policy will be cancelled. Rescission, on the other hand, happens when an insurer learns, after a policy is written, that it was deceived by a material misrepresentation or a concealment of a material fact or by fraud. Read the full article at ZIFL-12-01-2022 Other Insurance Fraud Convictions Workers’ Compensation Fraud Convicted Frances Davis pleaded guilty to one count of attempting to commit workers’ compensation fraud, a fifth-degree felony, and agreed to pay $17,144.79 in restitution, according to the Ohio Bureau of Workers’ Compensation. The BWC Special Investigations Department discovered that Davis potentially earned wages while collecting disability benefits from the BWC. Davis, a Franklin County, Ohio woman was ordered to pay $17,000 in restitution she defrauded from the Ohio Bureau of Workers’ Compensation. It was confirmed that while Davis was collecting benefits, she worked for seven different employers over the course of two years and held positions such as manager, assistant manager, packer, and machine operator. A Franklin County judge found Davis guilty and sentenced her to five years of community control to pay the restitution as well. Read the full article about multiple insurance fraud convictions at ZIFL-12-01-2022 It’s Time to Subscribe to Locals or Substack For Subscribers Only I Have Published Special Insurance Videos I published today on Locals.com Video Number 23 of the Excellence in Claims Handling program on Specific, Blanket and reporting coverages. I also published on Substack.com Video Number 9 of the Excellence in Claims Handling Program available only to Subscribers. The subscribes have access to all the videos and a webinar on “The Examination Under Oath A Tool Available to Insurers to Thoroughly Investigate Claims and Work to Defeat Fraud.” The videos start with the history of insurance and work their way through various types of insurance and how to obtain and deal with insurance claims. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Subscribe to my publications at substack at substack.com/refer/barryzalma Go to substack at substack.com/refer/barryzalma Read the full article at ZIFL-12-01-2022 (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

No Coverage for Theft by Persons Entrusted When the plaintiff turned her restaurant over to two restaurateurs when she became ill they took out of the restaurant and converted it to their possession. The restaurateurs claimed they purchased the equipment from plaintiff and she claimed they took advantage of her illness and stole the property. She made a claim to her insurer, State Farm, who denied the claim because either cause alleged was due to a peril not insured or a peril specifically excluded. In Tomazina Johnson, d/b/a Zing Zing's Wings & More, LLC v. State Farm Fire & Casualty Company, No. 2:20-cv-02912-cgc, United States District Court, W.D. Tennessee, Western Division (November 23, 2022) the USDC resolved the dispute by reading the full policy and applying its language to the facts established by State Farm's motion. INTRODUCTION Plaintiff's Circuit Court Complaint alleged two claims: breach of contract and bad-faith refusal to pay an insurance claim pursuant to Tennessee Code Section 56-7-105. State Farm moved for Summary Judgment arguing that Plaintiff's claim for breach of contract failed as a matter of law because the Policy does not provide coverage regardless of which version of the evidence a trier of fact would choose to accredit. Specifically, the Policy does not provide coverage either if the property was sold to third parties or if the property was entrusted to third parties and removed or stolen by them. Plaintiff argued that the Policy provides coverage for accidental physical loss of business personal property and that she has met her initial burden of establishing that an accidental, direct loss during the Policy period. THE INSURANCE POLICY State Farm issued a businessowner's insurance policy that was in full force and effect insuring Plaintiff's restaurant business, Zing Zing's Wings & More, LLC (“Zing Zing's”). The Policy provides that State Farm insures for the “accidental direct physical loss to Covered Property.” However, “Section I - EXCLUSIONS” and the “Property Subject to Limitations” provisions limited the coverages available to the Plaintiff. The policy contained the following exclusion: Dishonesty (1) Dishonest or criminal acts by you, anyone else with an interest in the property, or any of your or their partners, “members,” officers, “managers,” employees, directors, trustees, or authorized representatives, whether acting alone or in collusion with each other or with any other party; or (2) Theft by any person to whom you entrust the property for any purpose, whether acting alone or in collusion with any other party. This exclusion applies whether or not an act occurs during your normal hours of operation. This exclusion does not apply to acts of destruction by your employees; but theft by your employees is not covered. With respect to accounts receivable and “valuable papers and records,” this exclusion does not apply to carriers for hire. The exclusion set forth in subsection 2(g) of the Policy (“False Pretenses Exclusion”) states as follows: False Pretense “Voluntary parting with any property by you or anyone else to whom you have entrusted the property if induced to do so by any fraudulent scheme, trick, device or false pretense.” Evidence of Events Relevant to Plaintiff's Claims Plaintiff opened her restaurant Zing Zing's. Its grand opening took place in February of 2019. However, while Plaintiff was operating the restaurant, it was operating at a loss. On the advice of counsel Plaintiff dealt with two individuals-Curtis Braden (“Braden”) and Rayford Burns (“Burns”)- who were to take over Zing Zing's while she was ill. While the Policy remained in effect, Plaintiff testified that she “entrusted” her “business property and business” to Braden and Burns, provided them keys to the business, allowed them to temporarily operate her restaurant, allowed them to use her property and equipment, allowed them to sell food that she had already purchased, and allowed them to use the services of her employees for at least some period of time. Plaintiff testified that, while Braden and Burns were doing so, she would continue to pay her employees' wages, the utilities, and all other bills related to the business, but Braden and Burns would pay the rent and keep the profits. During this arrangement, Plaintiff did not characterize Braden and Burns as her employees. Plaintiff testified that, after entrusting Zing Zing's to Braden and Burns, she was contacted by the landlord of Zing Zing's who told her that the business was shut down. After receiving this phone call, Plaintiff went to Zing Zing's and encountered two neighbors of the business who told her that the individuals she had allowed to operate the restaurant had removed everything out of the restaurant through the back door. Plaintiff reported to State Farm that Braden and Burns stole all of her property from Zing Zing's. Braden's version of events is substantially different. He testified that Plaintiff transferred Zing Zing's and its equipment and property to Burns by way of Bill of Sale. Braden testified that he observed Plaintiff initial and sign the Bill of Sale and that he notarized it. Plaintiff continued to testify that she has “no idea” why her initials and signature were on the Bill of Sale and contends that it is a fraudulent document. Ultimately, State Farm denied Plaintiff's claim under the Policy. Plaintiff provided an itemized list of property related to her claim that totals $20,052.48. ANALYSIS & CONCLUSIONS OF LAW Breach of Contract Claim Plaintiff's first claim alleges breach of contract by State Farm. There is no dispute that State Farm issued the Policy and that it was in effect at all times relevant to Plaintiff's claim. Thus, the legal question at issue here is whether State Farm failed to perform its obligations under the Policy by denying Plaintiff's claim for coverage. The evidence before the Court failed to show that any dispute exists as to who removed the property. Plaintiff informed State Farm that Braden and Burns stole the property, and she personally continues to believe that Braden and Burns are responsible. She entrusted the property to Braden and Burns if they stole the property as alleged the theft was excluded. Statutory Bad Faith Claim Plaintiff's second claim alleges a statutory claim for bad faith refusal to pay pursuant to Tennessee Code Annotated Section 56-7-105. To prevail on such a claim, the following elements must be met: the policy of insurance must, by its terms, have become due and payable; a formal demand for payment must have been made; the insured must have waited sixty days after making his demand before filing suit (unless there was a refusal to pay prior to the expiration of the 60 days); and, the refusal to pay must not have been in good faith. The Court determined that the Policy did not provide coverage for Plaintiff's claim as a matter of law since both possible causes of loss were excluded. Since Plaintiff's claim has never been “due and payable” Plaintiff's statutory claim for bad faith refusal to pay fails as a matter of law. ZALMA OPINION A sad tale of a person who - because she was ill - entrusted her property to two individuals who claimed they purchased the property and who she claimed stole the property. Unfortunately for the plaintiff either occurrence was specifically, clearly and unambiguously excluded. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

No Right to Sue Insurer for Fraud in Claims Handling Impossible to Sue Insurers who are Part of the Same Group of Insurers John R. Parrish sued alleging claims for breach of contract, breach of the duty of good faith and fair dealing, and fraud against the three defendant insurance companies. The claims arose out of defendants' handling of an insurance claim submitted by plaintiff for storm damage to his home. In John R. Parrish v. Liberty Mutual Insurance Company, et al., No. CIV-22-0802-HE, United States District Court, W.D. Oklahoma (November 18, 2022) the homeowner's policy that plaintiff relies on was issued by defendant American Economy Insurance Company. The other two defendants, Liberty Mutual Insurance Company and Safeco Insurance Company of America, are alleged to have handled various dealings with plaintiff and to have participated in the claims handling process. All three defendants moved to dismiss the purported fraud claim arguing that Oklahoma law does not recognize a fraud claim in the alleged circumstances. Defendants Liberty Mutual and Safeco also moved to dismiss the contract and bad faith claims as to them since they did not insure Parrish. A court will grant a motion to dismiss if the complaint fails to allege enough facts to state a claim to relief that is plausible on its face. The court accepts all well-pleaded factual allegations of the complaint as true and views them in the light most favorable to the nonmoving party. A claim is facially plausible when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. THE FRAUD CLAIM Claims for fraud in the inducement of the contract or as to the types and amount of coverage are examples of fraud allegations allowed with regard to insurance matters in Oklahoma. But that is not the circumstance alleged by Parrish. The petition raised no issue as to the formation of the insurance contract involved. Instead, Parrish, focused entirely on how plaintiff's claim was handled once a claim was made under the policy. In that context, where claims handling practices under an insurance contract are at issue, Oklahoma does not recognize a fraud claim. In Lewis v. Farmers Ins. Co., Inc., 681 P.2d 67 (Okla. 1983), the Oklahoma Supreme Court, stated that Oklahoma law recognized the two causes of action which may be asserted premised on the existence of an insurance contract: an action based on the contract; and an action for breach of the implied duty to deal fairly and in good faith. The result is that here, where all the claims are premised on the existence of the contract, no fraud claim is available to the plaintiff. The court concluded that Oklahoma law does not recognize a claim for fraud where the challenged conduct is the handling of a claim under an otherwise valid policy. Defendants' motions were, therefore, granted. LIABILITY OF LIBERTY MUTUAL AND SAFECO Defendants Liberty Mutual and Safeco contend no claim is stated against them at all, as they did not issue the homeowner's policy involved here and therefore cannot be liable on it or as to the duties arising out of it. Plaintiffs argued the extensive actions of Liberty Mutual and Safeco, and their employees, in handling the claims are sufficient to make them liable on the contract and bad faith claims, even though they were not a party to the contract. The petition alleges that all three defendants are part of the same insurance group, that they advertise together in various ways, and that employees of Liberty Mutual and Safeco dealt directly with plaintiff and handled most or all aspects of the claims adjustment process. Plaintiff contends that is enough to make them potentially liable. The petition does not explicitly allege that Liberty and/or Safeco are instrumentalities of American Economy nor, more importantly, does it allege facts that would support such a conclusion. The petition does, to be sure, allege substantial involvement by employees of Liberty Mutual and Safeco in handling plaintiff's claim. Without more, the suit only suggests a basis for concluding that Liberty Mutual and Safeco were agents of American Economy, not instrumentalities of it or of each other. Since neither Liberty Mutual nor Safeco are alleged to be parties to the insurance contract and since no plausible basis has been alleged here for concluding they were instrumentalities of the contracting party, the petition does not state a claim against either of them. For the foregoing reasons, American Economy's Partial Motion to Dismiss and Liberty Mutual and Safeco's Motion to Dismiss were granted. The fraud claims were dismissed as to all defendants. The contract and bad faith claims were dismissed as to Liberty Mutual and Safeco. ZALMA OPINION Because of mergers, consolidation, and specialization insurance holding companies operate multiple different insurance companies, with different names, different specialties, and management. To save expenses the holding company will employ the same staff of underwriters and claims personnel to handle claims for all of the many insurers under the control of the holding company. Each insurer is an individual entity that shares personnel with its sister insurers. In this case only American Economy insured Parrish and only American Economy could be sued for failure to fulfill the terms of the contract or for the tort of bad faith. The suit against the other insurers was simply an attempt to annoy and vex the holding company. It didn't work. The claim for fraud couldn't be proved in Oklahoma since anything done in the adjustment of a claim could fulfill the need to prove all of the elements of fraud. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

My Thanksgiving Wishes from My Family and I to You and Yours A Blog and Video Blog Explaining Why I am Thankful My family and I have much to be thankful for this year, not the least of which are the care provided by Dr. Wright, the cardiologist who cares for me and my wife, Thea. I am personally in good health, walking four to five miles a day, and in retirement from the practice of law, working only six to eight hours a day doing what I love the most, writing about insurance, insurance claims, insurance law and acting as an insurance claims consultant and expert witness. To me, I am thankful for you, my friends, clients and readers of “Zalma’s Insurance Fraud Letter,” my blog “Zalma on Insurance,” and my books and other writing including the new books: The Compact Book on Ethics for the Insurance Professional, The Tort of Bad Faith, The Equitable Remedy of Rescission of Insurance, and Insurance Fraudsters Deserve no Quarter, the newest among many other books I wrote on insurance, insurance law and insurance claims available. As a first generation American, whose parents were proud naturalized citizens, I am honored to join with all Americans the ability to celebrate Thanksgiving. The holiday started when the United States was a dream and just a colony of Great Britain to give thanks for the good things in life at least once a year. It took Abraham Lincoln, our greatest President, to make it an official holiday. The Thanksgiving holiday gives me and my family the opportunity to consider the blessings we have received as an American family and to thank all who have made it possible. When I enlisted in the U.S. Army in 1967 to avoid the draft I volunteered to serve anywhere in the world other than Viet Nam. Fortunately for me, it seemed the U.S. Army made assignments in alphabetical order, so I was sent, with the wisdom only the U.S. Army could understand, to Peoria, Illinois. I served my enlistment in Missouri and Illlinois where I became a Special Agent in Charge of an office of U.S. Army Intelligence investigating people who sought security clearances. I was trained effectively to be an investigator and enjoyed every minute of the job. Until the Army I had never seen a river without a concrete bottom only to see the mighty Mississippi as my first real river. I had never seen snow other than in the distance on mountains only to find myself shoveling the snow off the driveway in the small half-of-a-house I rented from my Peoria landlords, an old couple who could not do it themselves. My investigative assignments required me to travel throughout Central Illinois from the Iowa to the Indiana borders. I stopped at court houses along the way, all of which had signs that Abraham Lincoln had practiced law there and convinced me to return to California and study law. Those experiences with the courts, law enforcement officers, and court personnel gave me the incentive to become a lawyer. When I finished my three year enlistment I returned home, proposed marriage to the love of my life. I began the study of law at night and found my first real job where I could use the skills I learned in the Army. I was hired as a claims trainee at the Fireman’s Fund Insurance Company who spent the time to train me to be a claims adjuster. The training I received was, unlike what is done at modern insurers, thorough. I was required to read a treatise on insurance and insurance claims handling. I was sent out with experienced adjusters in all types of insurance Fireman’s Fund wrote, and eventually allowed to deal with the public under close supervision. Contrary to what was done in the insurance industry at the time, Fireman's Fund allowed me to study law at night while I worked as a full-time insurance adjuster with the Fireman’s Fund. I was fortunate enough to work for a claims manager – Coleman T. Mobley – who did not require me to go out of state to adjust major storm claims if it interfered with my law school studies. Since I was in law school 50 weeks a year the only storm duty I was required to work was a fire storm that burned from the San Fernando Valley to the ocean at Malibu. Because of Mr. Mobley and the Fireman’s Fund I was able to complete my studies and pass the California Bar late in 1971 that allowed me to be admitted to the California Bar on January 2, 1972. I took a cut in pay to get my first job as an Associate Attorney with a law firm that was willing to teach me to be a lawyer handling every kind of problem a new lawyer could face from wills, tort claims, divorce, drunk driving, trials, depositions, and dozens of orders to show cause in multiple courts around the Inland Empire of California. By doing so, the first two years after I started practicing law in 1972 I was able to become a lawyer who could deal with any issue brought to me. I was fortunate enough to move to an insurance law firm in Century City where I was assigned to a coverage lawyer who was trying to deal with over 500 active matters who, when I arrived, assigned me 250 of the matters and pointed me to the firm’s library to learn what to do. At the time new technology was an IBM Selectric typewriter that could erase errors from the keyboard without the need to use white-out paint. I did legal research in the firm’s large library which, when it was inadequate for the task, I had to drive to the County Law Library in downtown Los Angeles. Research in a large library took days to find support for an issue. In 1979 I decided it was time to be my own boss. I started a law firm called Barry Zalma, Inc. with a secretary who came from my last firm and brought an IBM Selectric typewriter with her into a small windowless office. I had obtained a line of credit from a bank that I hoped would carry us until the practice started since the only case I had was my sister’s rear-ender from which I could not take a fee. The office was furnished with a file cabinet from my father-in-law’s dental practice and a dining room table from my wife’s grandmother who had passed away. I received my first call at 8:10 a.m. on the first day, October 1, 1979, from Alan Worboys then a claims person at Lloyd's, assigning my fist case, and my practice began. I had nothing to do on October 3, 1979 so I wrote an article for publication. After that I had no peace and the firm quickly grew to 9 lawyers and a large staff to serve me and the eight other lawyers. The firm defended people who were insured and soon morphed into specialists acting as coverage counsel for insurers who needed advice and defense of bad faith suits. We did no plaintiffs' tort cases. Some of the things I, and my family, can give thanks for include: I have loved my wife for 68 years since we first met when she was nine and I was twelve. I am thankful that she still loves me and lets me make clear every day that I love her more now than I did when she ignored me when I was 12 and made me wait to marry her until 1967. My three adult children who are successes in their own right. That my three children, my almost six-year-old granddaughter live nearby, put up with my wife and I, and are healthy, successful,and mostly happy in what they do. That my grandson is about to graduate from Puget Sound University in Washington state. My clients who, for the more than 50 years have allowed me to earn a living doing what I love: practicing law until I let my license go inactive, acting as a consultant, testifying as an expert witness and writing materials to help others provide excellence in claims services as members of the insurance profession. My publishers the American Bar Association, Full Court Press, Fastcase.com, Thomson Reuters, and Amazon.com. My dearly departed parents and grandparents for having the good sense to leave the Ottoman Empire at the beginning of the 20th Century so our extended family could avoid the Holocaust and I could be born American. My country for giving me a place to live and work in peace and complain about it without fear. The state of California, where I was born, and have lived for 80 years, for allowing me to have my home and grow my family, and the ability to pay the high taxes for the privilege. Those of you who read what I write and gain something from it. Eighty years of mostly good health, but for a small heart attack and clogged arteries, that were all redone by a great surgeon, Dr. Robertson, who gave me the ability to continue to work as an octogenarian. Allowing me the health and ambition to avoid my cardiologist by walking every day and working on my garden and training my bonsai. The hundreds of friends I have never met but with whom the Internet has allowed me to communicate in parts of the world I have never visited. The wonder of the Internet that allows me to publish Kindle E-books, ZIFL, insurance related videos and my blog instantly on line. That my family can get together to express our thanks for each other and our happiness this year again without a need for anything but enjoying each other’s company. That most of you, who I know only by my publications, have the right and opportunity to gather with your families to express your thanks for all of the good things that you have experienced. I was more successful than I ever expected. I, whose life experience was limited to Los Angeles County and Central Illinois, found a need to travel to Taipei, Taiwan and London, England on behalf of my clients. I worked, as I had learned from my father who survived the Depression, 16 hours a day six or seven days a week. When I became 75 years old my firm had been reduced to a sole practice and I decided it was time to stop practicing law and become a consultant and fulfill my childhood dream to be an author. I am a very lucky and happy man. I do work that I love. I fulfilled my childhood dreams. I Live in a home I have owned for more than 46 years that my wife and I adapted and increased as children were born to meet our needs, have the love of my life with me and look forward to celebrating our 55th wedding anniversary next month. I am honored that my eldest daughter has come back to live with us and care for my wife and I who are not able to do everything we used to do. My son shares my office building and has time to visit with me as allowed by his busy schedule. My youngest daughter is a successful public relations executive and makes the time to visit us regularly to allow us to play with her soon to be six year old daughter as often as possible. I hope, on this Thanksgiving weekend, that you can join my family and me remembering that it is more important to think about our blessings and those things that we have to be thankful for than to get in line for “Black Friday” to buy an inexpensive flat screen t.v. or tablet. Enjoy the holiday and your family as I will enjoy the holiday and my family as I have for every day of my life.

IT DOESN’T PAY TO TRY TO CHEAT YOUR INSURANCE COMPANY Legitimate Claim Destroyed by Creating Fake Invoices Sigismondi Foreign Car Specialists, Inc. appealed the U. S. District Court's summary judgment in favor of State Auto Property and Casualty Insurance Company on State Auto's declaratory judgment action and statutory insurance fraud claim. In State Auto Property And Casualty Insurance Company v. Sigismondi Foreign Car Specialists, Inc., No. 21-2435, United States Court of Appeals, Third Circuit (November 18, 2022) the Third Circuit Court of Appeal dealt with the allegations of the insurer that Sigismondi attempted insurance fraud. FACTS State Auto issued a commercial insurance policy that provided coverage for Sigismondi's car repair shop. Sigismondi requested an insurance payment for water damage, but State Auto denied the claim, citing fraud. The misrepresentations asserted as a defense by State Auto occurred during the claims-adjustment process. Sigismondi and State Auto retained adjusters to value the damaged inventory. The adjusters first created a joint inventory-a list of all the damaged items for which Sigismondi sought insurance proceeds. State Auto's adjuster, Chad Foster, then researched prices of the same or similar products to determine either a "replacement value" (if Sigismondi replaced the item) or an "actual cash value" (if not). Sigismondi's adjusters, or Sigismondi itself, likewise valued the items. Sigismondi valued certain items higher than Foster estimated or could verify. Sigismondi presented what appeared to be original invoices from various vendors trying to convince State Auto to pay more than its adjuster calculated. In truth, a Sigismondi employee had scanned at least some of the invoices into the computer and then used editing software to change the items and prices listed by the vendors. After Foster alerted State Auto to this issue, State Auto sent Sigismondi a reservation of rights letter, requesting further documentation and highlighting a policy provision stating the policy would be void if any insureds "intentionally conceal or misrepresent a material fact concerning . . . [a] claim under this policy." State Auto subsequently sued after further investigation confirmed the alterations. It sought a declaratory judgment that the policy was void. It also requested damages for statutory insurance fraud. Sigismondi counterclaimed for statutory bad faith. At the summary judgment stage, Sigismondi initially claimed its misrepresentations were not material. The District Court determined the misrepresentations were material and granted summary judgment to State Auto on its declaratory judgment action and statutory insurance fraud claim. ARGUMENTS ON APPEAL Sigismondi contended that it did not knowingly or in bad faith provide false or misleading information by submitting the altered invoices, and that the invoices themselves were not in fact misleading. The company argued it submitted the invoices only to allow the adjusters to identify items and vendors-not prices. Sigismondi insists this should have been clear because the invoices were dated after the water-damage incident. It was hard to imagine how the invoices-which were doctored to include prices that did not come from the vendor-were anything but knowingly made to include false or misleading information. A fabricated receipt created by a consumer and presented as an official document from a retailer, without the retailer's knowledge, constitutes false or misleading information. Sigismondi also argued that any misrepresentations were not material because the invoices would not be the final word on value-Foster would conduct his own inquiry into prices based on the items and vendors. Sigismondi provided the altered invoices in response to a request for "invoice support" or other "documentation for the value claimed." Its argument that the invoices, to which it added prices, were relevant only for information about items and vendors is contradicted by undisputed evidence. Because this exchange of information was part of an effort to determine the value of the insured items, the falsified invoices that indicated prices charged by vendors were undoubtedly material. CONCLUSIONS Reviewing the record in the light most favorable to Sigismondi the Third Circuit concluded that the altered invoices were material. The affirmance of the declaratory relief in favor of State Auto doomed Sigismondi's counterclaim for statutory bad faith. Because the policy was void, it did not cover Sigismondi's damaged inventory. It followed, therefore, that State Auto cannot be liable for bad faith denial of the claim. The Judgment was affirmed. ZALMA OPINION Insurance fraud like that attempted by Sigismondi is fairly easy to prove. Since the invoices and receipts presented were not originals the insurer merely had to have its adjuster or SIU investigator visit the various vendors to either affirm the authenticity of the invoices or establish that they were prepared in an effort to defraud. State Auto did just that and proved to the court and the Third Circuit that fraud was attempted. Although Sigismondi had incurred a proper loss it recovered nothing because it tried to cheat and when caught argued it really didn’t intend to defraud. The Third Circuit looked through the specious arguments and ruled against Sigismondi and in favor of the insurer. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.comandzalma@zalma.com. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe. Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/subscribe? Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Minnesota Statute Does not Require Insurer to Pay to Bring Church Property up to Code From Damage Predating Loss St. Matthews Church of God and Christ (St. Matthews) is located in St. Paul, Minnesota sued State Farm Fire and Casualty Company (State Farm) who insured St. Matthews. The policy provided replacement cost coverage for damage to St. Matthews's buildings. In St. Matthews Church of God and Christ v. State Farm Fire and Casualty Company, No. A21-0240, Supreme Court of Minnesota (November 23, 2022) St. Matthews sought payment for damaged masonry wall when covered peril only damaged drywall covering the masonry that was cracked as a result of old age. FACTS In June 2017, a storm damaged the property of St. Matthews, including the building's drywall. State Farm agreed to cover repair costs for the damaged property caused by the storm, including removal and replacement of the damaged drywall. When the damaged drywall was removed, cracks in the masonry were discovered. There is no dispute that the cracks in the masonry preexisted the storm. However, because the cracks in the masonry violated the city's building code, the City of St. Paul (City) would not allow St. Matthews to replace the drywall without also repairing the masonry. St. Matthews requested that State Farm reimburse it for the cost of repairing the masonry. At issue is the interpretation and application of Minn. Stat. § 65A.10, subd. 1 (2020) (“the statute”). The statute requires replacement cost insurance to cover the cost of repairing any "damaged property in accordance with the minimum code as required by state or local authorities." In "the case of a partial loss," replacement cost insurance is required to cover only "the damaged portion of the property." St. Matthews's policy provided replacement cost coverage, meaning that, in the event of a loss, the insurer agreed to compensate for that loss without taking into account depreciation. State Farm's typical policy does not require it to cover the cost of bringing property that is lost or damaged up to code. But the policy issued to St. Matthews included a Minnesota Endorsement, which states, in relevant part: If this coverage is provided on a replacement cost basis we will pay the increased cost of replacing, rebuilding, repairing or demolishing any building in accordance with the minimum code in force at the time of loss as required by state or local authorities, when the loss or damage is caused by a Covered Cause Of Loss. In case of a partial loss to the covered property, we will pay only for the damaged portion of the property. (emphasis added) By December 2018, State Farm paid St. Matthews $107,053, an amount that included the cost of replacing and repairing the drywall. St. Matthews was required to obtain a building permit from the City to make the necessary repairs, including replacing the drywall. The City was concerned about the defects in the existing masonry wall which rendered the wall out of code. St. Matthews subsequently requested State Farm to pay the cost of bringing the masonry up to code. In response, State Farm hired a consultant to evaluate the damaged masonry and determine the cause of damage. The consultant concluded that the "cracked and out-of-plumb condition . . . was a longterm condition unrelated to the storm ...." On cross-motions for summary judgment, the district court granted summary judgment to State Farm. ANALYSIS The parties agree that the damaged property at issue is a partial loss and that, before the drywall can be repaired, St. Paul's city code requires that the masonry be repaired sufficiently to bring it in accordance with minimum code. The statutory language "[i]n the case of a partial loss . . . this coverage applies only to the damaged portion of the property" is susceptible of only one reasonable interpretation. In the event of a partial loss, the insurer's obligation is limited to bringing up to code that "portion of the property" that was damaged. The Supreme Court concluded that the statute means that, when a partial loss like St. Matthews suffered occurs, State Farm's obligation to bring the damaged portion of the property up to minimum code is limited to repairs necessary to bring up to code that part of the property that was damaged in the insured event. Since it was undisputed that only the drywall was damaged in the storm. It was also undisputed that the masonry was damaged earlier as a result of a different, unknown cause. Consequently, State Farm was not required to pay for repairs to bring the masonry up to code under the statute. Contrary to St. Matthews's assertion that the drywall and the masonry were parts of a single damaged item: the wall; which includes both the drywall and the masonry, the masonry wall was independent of the masonry to which it was attached. All parties agreed that the damage to the masonry was not caused or impacted by the storm. Accordingly, the damage to the masonry was not independently covered by State Farm's policy. Viewing the project from the perspective of a drywall installer there was nothing in the condition of the masonry that prevented the installation of new drywall. The Supreme Court concluded that under a plain reading of the statute in the case of a partial loss, replacement cost coverage applies only to the damaged portion of the property covered by a cause of loss. Only the drywall was damaged because of the storm, but the masonry was not. Therefore, only the damaged drywall is subject to the statute's code-compliance provision. Under the statute, when a partial loss occurs, an insurer's obligation to bring the damaged portion of the property up to minimum code is limited to repairs necessary to bring up to code only that part of the property that was damaged in the insured event. ZALMA OPINION Insurance requires, by definition, to respond only to a contingent or unknown event. It cannot, and should not, respond to damage that preceded the date the policy came into effect from causes that were not caused by a peril insured against. Since the only damage by the storm was to the drywall and since both parties agreed that the damage to the masonry was not caused by the storm that damaged the drywall. Unfortunately for the church it did not acquire code compliance coverage and the statute it relied on was not as broad as the church desired. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

INSURANCE POLICY TERMINATED BEFORE LOSSES Plaintiffs lost their days they planned to ski in 2020. They are members of a certified class who purchased ski-pass insurance from Defendant United Specialty Insurance Company ("USIC") for their 2019/2020 season ski passes to Vail Resorts. Vail Resorts shut down all of its resorts on March 15, 2020, because of the COVID-19 pandemic and did not reopen for the rest of the season. In re: United Specialty Insurance Company Ski Pass Insurance Litigation, Ann C. Hoak; et al. v. United Specialty Insurance Company, and American Claims Management; Beecher Carlson Insurance, LLC, No. 21-16986, United States Court of Appeals, Ninth Circuit (November 22, 2022) Plaintiffs attempted to recover for their lost ski days, relying on the "quarantine" provision of their insurance policy, but USIC denied their claims. The district court dismissed the complaint without leave to amend holding that Plaintiffs' allegations did not support that they had been "quarantined" within the meaning of the insurance policy. The Ninth Circuit, believing it found a better reason to rule in favor of USIC reviewed the "effective date of coverage" provision of the insurance policy. Plaintiffs' insurance coverage terminated on March 15, 2020, the "effective date of coverage" provision made clear that coverage terminated on "the date upon which ski operations are ceased due to an unforeseen event" if that date is earlier than the scheduled end of the season, April 15, 2020. Since ski operations ceased for the 2019-2020 season on March 15 when Vail Resorts closed all of its resorts and never reopened for that season. Operations ceased due to the spread of COVID-19, which was clearly an "unforeseen event" under the "ordinary and popular sense" of the term. The "effective date of coverage" provision thus makes plain that Plaintiffs cannot recover for any losses on or after March 15, 2020. Since the loss - the inability to ski at Vail - happened after March 15, 2020, there was no loss when the policy was in effect. Contrary to Plaintiffs' contentions, the separate "termination" provision, which automatically terminates coverage on the last day of the season, does not suggest that coverage could not end earlier under the "effective date of coverage" provision. The Plaintiffs claimed that the policy's "natural disaster" provision was rendered a nullity; it would allow for coverage in instances when all the resorts in a state closed indefinitely for a natural disaster but reopened one month later thus not ceasing ski operations altogether for the season which is not what eliminated the Plaintiffs desire to ski. The trial court’s decision was affirmed. ZALMA OPINION The Ninth Circuit, unlike the Plaintiffs, the lawyers for the Plaintiffs, and the District Court, read the full policy and found that it did not matter whether the Plaintiffs were quarantined because their loss happened after the policy, by its terms, had expired. (c) 2022 Barry Zalma & ClaimSchool, Inc. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe. Go to substack at substack.com/refer/barryzalma Consider subscribing to my publications at substack at substack.com/refer/barryzalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.com andzalma@zalma.com Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Court Refuses to Strain to Find Ambiguity That Did Not Exist Go to substack at substack.com/refer/barryzalma In ERIE INSURANCE EXCHANGE v. DRAGANA PETROVIC, No. 1-21-0628, 2022 IL App (1st) 210628-U, Court of Appeals of Illinois, First District, Second Division (November 15, 2022) the circuit court properly granted summary judgment in favor of the insurer declaring that it had no duty to indemnify or defend the insureds because the underlying accident occurred while the insured was operating his personal vehicle during the scope of employment, triggering the "auto exclusion" provision of the policy. Erie Insurance Exchange (Erie) sued the defendants, Aral Construction Company (Aral) and Arunas Alasevicius (Alasevicius) and Dragana Petrovic (Petrovic), seeking a declaration that Erie was not obligated to defend or indemnify Aral or Alasevicius in the underlying negligence claim brought by Petrovic. In that underlying negligence claim, Petrovic alleged a truck driven by Alasevicius struck her open car door as she was exiting her parked car and knocked her unconscious. Petrovic further alleged that Aral owned or operated the truck that struck her and that Alasevicius was acting in the scope of his employment with Aral at the time of the accident. Both Aral and Alasevicius were insured under a commercial general liability policy with Erie (the insurance policy) at that time. Erie claimed that: (1) Alasevicius failed to provide it with proper notice of the accident; and (2) that coverage was barred under the "auto exclusion" provision of the insurance policy. After discovery, Petrovic and Erie filed cross-motions for summary judgment seeking a declaration regarding Erie's duty to defend Aral and Alasevicius. The circuit court entered judgment in favor of Erie and against Petrovic. BACKGROUND The motor vehicle accident at the heart of the underlying negligence claim occurred on October 25, 2017 in Chicago. Alasevicius was driving a truck when he struck the open car door of Petrovic's parked car, as she was attempting to exit it, rendering Petrovic unconscious. Alasevicius stopped the truck and exited, but when Petrovic regained consciousness, he left. Petrovic sued Alasevicius for negligence. Specifically, the amended complaint alleged that Petrovic suffered a closed head injury with brain damage including numerous side effects, such as vision impairment and headaches. Petrovic incurred $300,000 in medical bills, $75,000 in lost income, and $2085.80 in damage to her car. At the time of the accident, while Aral was insured under the insurance policy with Erie, the Erie policy titled "Fivestar Contractors Policy" is a commercial general liability policy and was issued to Aral with a limit of $1 million. The policy provides liability coverage for bodily injury and property damage arising from Aral's business With respect to the scope of coverage the policy contains numerous exemptions including, relevant to this appeal, the "auto exclusion" provision, which states that the insurance does not apply to: 'Bodily injury' or 'property damage' arising out of the ownership, maintenance, use or entrustment to others of any *** 'auto' *** owned or operated by or rented or loaned to any insured. Use includes operation and 'loading and unloading.' This provision further provides: This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured, if the 'occurrence' which caused the 'bodily injury' or 'property damage' involved the ownership, maintenance, use or entrustment to others of any *** 'auto' *** that is owned or operated by or rented or loaned to any insured. The insurance policy further contains numerous conditions. Relevant to this appeal, the condition titled "Duties in the Event of Occurrence, Offense, Claim or Suit" requires the insured to notify Erie "as soon as practicable of any 'occurrence' or an offense which may result in a claim." Nearly two years after the accident, on September 10, 2019, Alasevicius notified Erie of the accident and the underlying lawsuit. A month later, on October 21, 2019, Erie sued for declaratory judgement seeking a declaration that it was not required to defend or indemnify Alasevicius or Aral under the insurance policy. Only Petrovic participated in the declaratory judgment action. ANALYSIS To ascertain the meaning of the policy, the court must construe the policy as a whole, as well as consider the risks undertaken, the subject matter that is insured, and the purpose of the entire contract. Where the words used in the policy, given their plain and ordinary meaning, are unambiguous, they must be applied as written. However, if the words in the policy are susceptible to more than one reasonable interpretation, they will be considered ambiguous and will be strictly construed in favor of the insured and against the insurer who drafted the policy. To determine whether an insurer has a duty to defend an action against the insured, a reviewing court must compare the allegations of the underlying complaint to the relevant portions of the insurance policy. An insurer may refuse to defend when the underlying complaint considered in light of the entire insurance policy, precludes the possibility of coverage. In the present case, after reviewing the "auto exclusion" provision in the insurance policy and comparing it with the allegations in Petrovic's amended complaint and the pleadings and exhibits offered by the parties the Court of Appeal found that Petrovic failed to state facts which either actually or potentially bring the case within the policy's coverage. The insurance policy to Aral is a commercial general liability policy, which contains an "auto exclusion" provision, explicitly precluding coverage for "bodily injury" or "property damage"" arising out of the ownership, maintenance, use or entrustment to others of any ***' auto' *** owned or operated by *** any insured." Petrovic's amended complaint seeks recovery for bodily injury and property damage "arising out of" "ownership" and "use" of an "auto" "owned and operated" by an insured, namely Alasevicius. Accordingly, comparing the plain language of the "auto exclusion" provision to Petrovic's amended complaint and the evidence offered by Alasevicius' deposition, there can be no dispute that the accident alleged in the underlying complaint arose from the "use" or "operation" of an "auto" "owned and operated" by an insured, namely Alasevicius, so as to bar coverage and absolve Erie from defending Aral and Alasevicius in the underlying lawsuit. Petrovic made numerous judicial admissions that under the insurance policy Alasevicius could be both an executive officer and an employee, and that at the time of the accident he was in fact performing work as an ordinary employee of Aral, so as to trigger the "auto exclusion" provision. A judicial admission is a deliberate, clear, unequivocal statement by a party concerning a concrete fact within that party's knowledge. Since by Petrovic's own admissions Alasevicius was acting as Aral's "employee" at the time of the accident, he was an "insured" under the policy and the "auto exclusion" provision applied to bar coverage of the accident. By its plain and ordinary terms, the "auto exclusion" provision applies to "any insured," and therefore to both Aral's "executive officers" and "employees." Petrovic's interpretation of the insurance policy. to the contrary, would lead to an absurd result. In the present case, Petrovic's interpretation of the policy language is neither reasonable, nor supported by legal authority. Under these circumstances, the court refused to strain to find an ambiguity where none exists. ZALMA OPINION The Illinois Court of Appeals acted as required and interpreted the CGL as written. Petrovic was seriously injured by Erie's insured and if the coverage applied would have responded as, I can only assume, the auto insurer paid the limits of its policy. Erie was the target of Petrovic because she needed some way to gain damages for her serious injury. Not everyone is insured for all risks faced by the person insured. No matter how deserving Ms. Petrovic was; no matter how serious her injury; the court could not create insurance coverage that did not exist. No insurance policy covers every risk of loss. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.comandzalma@zalma.com. Consider subscribing to my publications at substack at substack.com/refer/barryzalma Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe. Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/subscribe? Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

CAST IRON PIPES RUST & LEAK Marisol Rosa ("Rosa") appealed a final summary judgment entered in favor of Safepoint Insurance Company ("Safepoint"). In Marisol Rosa v. Safepoint Insurance Company, No. 5D21-3005, Florida Court of Appeals, Fifth District (November 14, 2022) the Court of Appeals interpreted an exclusion for damages caused by an act of nature. The Insurance Policy Safepoint insured Rosa's dwelling pursuant to a homeowners insurance policy. The dwelling was damaged by the overflow of water from the plumbing system. The parties agree that the loss resulted from the deterioration of cast iron pipes that was caused by "rust or other corrosion." After investigating the damage, Safepoint determined the loss was excluded from coverage under the policy's Water Damage Exclusion Endorsement. Rosa then sued seeking to recover the costs she incurred in repairing her dwelling due to the water damage. The Issue The issue in this appeal is whether the policy covers the subject loss, and the answer depends on the meaning of the term "act of nature" in the policy. The introductory paragraph of the policy's Exclusions section states that the policy does "not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. . . ." The definition of "Water Damage" following that introductory language was replaced by an endorsement to the policy, the Water Damage Exclusion Endorsement, which defines "Water Damage" as including: “d. Accidental or intentional discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system or from within a household appliance; . . . . Caused by or resulting from human or animal, forces or any act of nature.” (emphasis added) Thus, if the rust or other corrosion that caused this loss was an act of nature, Safepoint correctly denied coverage. But, if the rust or other corrosion was not an act of nature, the Water Damage Exclusion Endorsement did not preclude coverage. Policy Interpretation The interpretation of an insurance policy is a question of law reviewed de novo. The guiding principle for insurance policy interpretation is that the policy must be read as a whole, affording words their plain meaning as bargained for by the parties. Florida law provides that insurance contracts are construed in accordance with the plain language of the policies as bargained for by the parties. The insured argued that “act of nature” is synonymous with "act of God" and only occurs when a singular act or external force occurs. However, everyday interpretation of the phrase “act of nature” is not as narrow or technical as the insureds propose but rather is to be given its ordinary meaning as "something that naturally occurs." Read the Full Policy The Court of Appeal found that in the context of this policy the phrase "act of nature" does not require an uncontrollable or unpreventable event. Here, the loss was caused by rust or corrosion. Corrosion, the chemical reaction between iron and moist air, is an act of nature or a naturally occurring force. Thus, the rust or corrosion occurred because of a natural act. As a result, the Water Damage Exclusion endorsement applied to this loss. Such losses are excluded even if they were caused concurrently by a covered peril. In context, "any act of nature" is not limited to natural disasters, i.e., an act of God. The policy at issue references "an Act of God" more than once in its Cancellation and Nonrenewal sections. Where the document has used one term in one place, and a materially different term in another, the presumption is that the different term denotes a different idea. As a general proposition, the use of different language in different contractual provisions strongly implies that a different meaning was intended. In light of the entire policy, the use of "an Act of God" and "any act of nature" separately indicates each phrase has a different meaning for the purpose of this homeowners insurance policy. Relatedly, the choice of the drafters to capitalize "an Act of God" stands in contradiction to the uncapitalized use of "any act of nature" in the exclusion. The distinction further undermines Rosa's argument that the terms "any act of nature" and "an Act of God" are interchangeable within the policy. Because the phrase "any act of nature" is made expressly applicable to the Water Damage Exclusion Endorsement the Court of Appeal concluded, as is required by basic insurance policy rules of interpretation, that the phrase is to be given its ordinary meaning. In sum, the rust or other corrosion that occurred in the pipes in Rosa's dwelling, regardless of whether it was perhaps preventable or controllable, was a naturally occurring force and thus an act of nature. As an act of nature, the loss came within the policy exclusion for "any act of nature." Consequently, the Court of Appeal concluded that Safepoint correctly denied coverage. ZALMA OPINION Insurance policies are always interpreted by reviewing the entire policy to make sense of the intent of the parties. Since the term "act of nature" only appeared with regard to the water damage exclusion and "Act of God" appeared elsewhere it was obvious to the court that the terms had different meanings. Rust is natural when moisture and air meets iron. It exists naturally in hillsides, abandoned autos and in iron pipes. The cause of the loss was the rust that caused the insured's pipes to leak and damage her property. No insurance policy insures against every possible risk of loss and the cause of the loss was clearly and unambiguously excluded. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.comandzalma@zalma.com. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe. Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/subscribe? Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/zalma Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library

Arson is not Evidence of Love Following a fifteen-day trial, a jury agreed with the State's claims that defendant Terrence L. Strothers' year-long dispute over a woman with another man, Shane Stevens, resulted in defendant assaulting Shane by firing a flare at Shane's car; and later that same day recruiting some friends to aid in his retribution who fired two flares at Shane's family's home, causing its destruction. In STATE OF NEW JERSEY v. TERRENCE L. STROTHERS, No. A-5157-18, Superior Court of New Jersey, Appellate Division (November 15, 2022) he attempted to avoid jail and the convictions that the jury found obvious. JURY VERDICT In reaching its verdict, the jury found defendant guilty of eleven of the State's thirteen charges. Defendant was convicted of: third-degree conspiracy to commit arson as a lesser-included offense of second-degree conspiracy to commit aggravated arson; third-degree arson, as a lesser-included offense of second-degree aggravated arson; third-degree conspiracy to commit criminal mischief; third-degree criminal mischief; third-degree conspiracy to commit aggravated assault as a lesser-included offense of second-degree conspiracy to committed aggravated assault; third-degree aggravated assault as a lesser-included offense of second-degree aggravated assault; second-degree aggravated assault; two counts of third-degree possession of a weapon for unlawful purposes; and three counts of fourth-degree unlawful possession of a weapon. Defendant received an aggregate eleven-year sentence for second-degree aggravated assault subject to the No Early Release Act (NERA), N.J.S.A. 2C:43-7.2, consecutive to a four-year sentence for third-degree arson, third-degree criminal mischief, and the third- and fourth-degree weapons offenses. Defendant was also ordered to pay $50,000 in restitution to the Stevens. CHALLENGES TO CONVICTION Defendant contested the trial judge's: denial of defendant's motion for judgment of acquittal; admission of the State's fire expert testimony; decision not to substitute a deliberating juror; and jury instruction on the conspiracy to commit aggravated arson and aggravated arson charges. Judgment of Acquittal Defendant asserted the use of a flare gun was "a spur of the moment occurrence as no one expected Stevens and his friends to drive past . . . defendant's house." The only "weapons" brought were a bat and a two-by-four in case he and his friends were outnumbered in the fight. In denying defendant's motion for acquittal, the judge reasoned that all the co-conspirators had met earlier at the defendant's residence and at some point, proceeded over to the Stevens' residence, to accompany defendant in his, I guess, vendetta for and retribution for damage to his car. That, in conjunction with the phone conversation where defendant threatened Shane that even though he may be going back to school to California, his house isn't, at least creates the inference that he was going there to do something to the home. And as it turned out, he went there with others who had flare guns and it was obvious to defendant that others had flare guns. Codefendant Joshua Maldonado fired a flare gun. He recruited Barnes to accompany him. Barnes fired a flare gun. To convict defendant of conspiracy to commit a crime, the State had to satisfy N.J.S.A. 2C:5-2(a), which provides in pertinent part: A person is guilty of conspiracy with another person or persons to commit a crime if with the purpose of promoting or facilitating its commission he: Agrees with such other person or persons that they or one or more of them will engage in conduct which constitutes such crime or an attempt or solicitation to commit such crime; or Agrees to aid such other person or persons in the planning or commission of such crime or of an attempt or solicitation to commit such crime. The Appellate Court concluded that the denial of defendant's motion for judgment of acquittal of the arson, assault, and related weapon charges were appropriate. Juror Substitution The defendant invited the juror substitution and should not benefit from the substitution by claiming it was an error. He should not be able to argue that an adverse decision by the trial judge was the product of error, when he urged the judge to adopt the proposition now alleged to be error. Even if the alleged error was not invited, the plain error rule applies because defendant neither objected to the removal of juror number nine nor argued it was too late to reconstitute the jury. Once a jury begins its deliberations, the trial judge may not substitute an alternate juror unless "a juror dies or is discharged by the court because of or other inability to continue." The substitution of juror nine was consistent with Rule 1:8-2(d)(1) and did not violate defendant's due process rights by denying him a fair trial. Jury Instructions Even though "and/or" is repeatedly used in the model jury instructions, and the jury is directed to consider alternative options, defendant fails to show how the phrase was improperly used in this instance. As to defendant's guilt, the State argued he fired the flare gun at Shane's car, and his conspiracy with others directly led to them firing the flare gun at Shane's home. This did not present a reasonable possibility that a juror will find one theory proven and the other not proven but that all of the jurors will not agree on the same theory. SENTENCING AND RESTITUTION Lastly, defendant objected to the judge's order to pay restitution towards the Stevens' expenses of $138,065.27, which were uncompensated by insurance coverage. The judge assessed defendant's ability to pay restitution, considering his wage earnings at the time of sentencing and his anticipated employment after serving his sentence. ZALMA OPINION In ordering restitution the judge ignored and cut out one of the victims of the crime, Shane's insurer. It should have appeared at sentencing and demand restitution. Otherwise, this case proves that jealousy should be limited and by punishing the "other man" the lovelorn will now spend 11 years in prison and when he comes out he must pay his victim $138,065.27 or go back to jail. (c) 2022 Barry Zalma & ClaimSchool, Inc. Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available athttp://www.zalma.comandzalma@zalma.com. Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.comhttps://zalmaoninsurance.locals.com/subscribe. Subscribe to Excellence in Claims Handling athttps://barryzalma.substack.com/subscribe? Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com;http://zalma.com/blog; daily articles are published athttps://zalma.substack.com.Go to the podcast Zalma On Insurance athttps://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter athttps://twitter.com/bzalma;Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921;Go to Barry Zalma on YouTube-https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg;Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library