No Good Deed Goes Unpunished
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After a car accident, Zhaojin Ke filed a claim with Liberty Mutual, his insurer, for repairs to his van. Because the cost of the repairs would have reached the market value of the van itself, if not exceeded the value, Liberty Mutual offered him the van’s market value instead. Not content, Mr. Ke demanded that Liberty Mutual pay for the repairs. When it refused Mr. Ke sued, claiming that Liberty Mutual had tricked him into buying insurance, violated the insurance policy, and handled his claim in bad faith. In Zhaojin David Ke v. Liberty Mutual Insurance Company, Civil Action No. 20-1591, United States District Court, E.D. Pennsylvania (November 9, 2021) the USDC resolved the claims while giving extra concern to the claims of Mr. Ke who sued in propia persona.
Driving through Philadelphia, Mr. Ke was rear-ended on an icy road.
That day, Liberty Mutual’s claims adjuster authorized repairs on the van, but quickly backtracked. The body shop estimated that repairs would cost at least $3,389.17. Liberty Mutual’s appraiser valued the car at $3,725.00. Because the repair estimate was nearly the van’s value, Liberty Mutual labeled the van a “total loss.” So Liberty Mutual offered Mr. Ke $3,613.04, or the van’s cash value ($3,725) plus taxes and fees ($388.04), minus the policy’s $500 deductible.
DISCUSSION
Liberty Mutual offers an expert report from Kevin M. Quinley, an expert in insurance claims who opined that Liberty Mutual handled Mr. Ke’s claim in line “with … industry norms, customs, and practices.” Mr. Ke moves to exclude this report. He did not claim that Mr. Quinley was not qualified. Given that Mr. Quinley has over 40 years of experience in insurance claims and so has “specialized knowledge” he was eminently qualified.
Expert testimony that Liberty Mutual followed industry standards can be Evidence That An Insurer Acted In Good Faith, And Vice Versa.
Because Mr. Ke has not carried his burden. Neither the insurance policy nor good faith required Liberty Mutual to arrange for the repair of Mr. Ke’s van, rather than pay him the van’s value.
ZALMA OPINION
This case is evidence of the old saying that “no good deed goes unpunished.” Here, Liberty Mutual agreed to pay the value of the van, an amount in excess of the estimated cost of repair and waive its right to reduce its loss by selling the salvage. For that good deed, on a dispute of less than $2,000, Liberty needed to defend the pro-per lawsuit, hire counsel and an excellent expert witness. In that way Mr. Ke managed to punish Liberty for adjusting his claim fairly and in good faith and in accordance with the clear and unambiguous language of the policy. If a lawyer brought the action there is a high probability that counsel would have been sanctioned by the court.
© 2021 – Barry Zalma
Jury’s Findings Interpreting Insurance Contract Affirmed
Post 5105
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Madelaine Chocolate Novelties, Inc. (“Madelaine Chocolate”) appealed the district court’s judgment following a jury verdict in favor of Great Northern Insurance Company (“Great Northern”) concerning storm-surge damage caused by “Superstorm Sandy” to Madelaine Chocolate’s production facilities.
In Madelaine Chocolate Novelties, Inc., d.b.a. The Madelaine Chocolate Company v. Great Northern Insurance Company, No. 23-212, United States Court of Appeals, Second Circuit (June 20, 2025) affirmed the trial court ruling in favor of the insurer.
BACKGROUND
Great Northern refused to pay the full claim amount and paid Madelaine Chocolate only about $4 million. In disclaiming coverage, Great Northern invoked the Policy’s flood-exclusion provision, which excludes, in relevant part, “loss or damage caused by ....
Failure to Name a Party as an Additional Insured Defeats Claim
Post 5104
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Contract Interpretation is Based on the Clear and Unambiguous Language of the Policy
In Associated Industries Insurance Company, Inc. v. Sentinel Insurance Company, Ltd., No. 23-CV-10400 (MMG), United States District Court, S.D. New York (June 16, 2025) an insurance coverage dispute arising from a personal injury action in New York State Supreme Court.
The underlying action, Eduardo Molina v. Venchi 2, LLC, et al., concerned injuries allegedly resulting from a construction accident at premises owned by Central Area Equities Associates LLC (CAEA) and leased by Venchi 2 LLC with the USDC required to determine who was entitled to a defense from which insurer.
KEY POINTS
Parties Involved:
CAEA is insured by Associated Industries Insurance Company, Inc. ...
Exclusion Establishes that There is No Duty to Defend Off Site Injuries
Post 5103
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Attack by Vicious Dog Excluded
In Foremost Insurance Company, Grand Rapids, Michigan v. Michael B. Steele and Sarah Brown and Kevin Lee Price, Civil Action No. 3:24-CV-00684, United States District Court, M.D. Pennsylvania (June 16, 2025)
Foremost Insurance Company (“Foremost”) sued Michael B. Steele (“Steele”), Sarah Brown (“Brown”), and Kevin Lee Price (“Price”) (collectively, “Defendants”). Foremost sought declaratory relief in the form of a declaration that
1. it owes no insurance coverage to Steele and has no duty to defend or indemnify Steele in an underlying tort action and
2. defense counsel that Foremost has assigned to Steele in the underlying action may withdraw his appearance.
Presently before the Court are two ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
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Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
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This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
A Heads I Win, Tails You Lose Story
Post 5062
Posted on April 30, 2025 by Barry Zalma
"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime."
Immigrant Criminals Attempt to Profit From Insurance Fraud
People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.
The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...
