Zalma on Insurance
Education • Business
Insurance Claims professional presents articles and videos on insurance, insurance Claims and insurance law for insurance Claims adjusters, insurance professionals and insurance lawyers who wish to improve their skills and knowledge. Presented by an internationally recognized expert and author.
Interested? Want to learn more about the community?
April 08, 2022
Subrogating Insurer Has No More Rights than the Insured

Insured & Insurer Had no Right Against Tenant for Failure to Provide Notice

Read the full article at https://www.linkedin.com/pulse/subrogating-insurer-has-more-rights-than-insured-zalma-esq-cfe and https://zalma.com/blog plus more than 4150 posts.

Posted on April 8, 2022 by Barry Zalma

After a hailstorm that impacted a shopping plaza in Colorado Springs where Defendant Dillon Companies, LLC (“King Soopers”) operates a store, the owner of that shopping area, H. Plaza, LLC (“Plaza”) had the roofs of its property examined and ultimately contracted to have the roof replaced. Plaza then sought coverage for the roof from its insurance provider, Plaintiff Zurich American Insurance Co. (“Zurich”). Zurich, acting as the Zurich American Insurance Co., as subrogee of H. Plaza, LLC v. Dillon Companies, LLC, dba King Soopers, Civil Action No. 20-cv-2183-RM-MEH, United States District Court, D. Colorado (March 30, 2022) sued the tenant to recover the amounts paid by Zurich to replace a roof based on King Soopers’ obligations under the lease with H. Plaza, LLC.

BACKGROUND

King Soopers is a tenant in the Plaza property where it has operated a store for almost 20 years. King Soopers and Plaza entered into a detailed, 20-year lease in 2002 that delineated both landlord’s and tenant’s responsibilities for maintenance and insurance coverage, among other things.

In June of 2018 a hailstorm hit Colorado Springs. King Soopers had the roof on its building inspected and concluded that there was no significant damage that would require its replacement. Plaza, however, unbeknownst to King Soopers, decided that the roof needed to be replaced. King Soopers first discovered that Plaza was replacing the roof in November of 2019, when employees noticed workers on the roof. At that time, King Soopers reached out to Plaza to get additional information and learned that the job was already 75% complete. King Soopers expressly inquired into its financial responsibility for the new roof and Plaza informed them that “Tenants will not be billed for this, it’s covered with insurance money from the hail damage claim.” King Soopers was never given notice that the lease required it to pay for the replacement of the roof.

Ultimately Zurich paid for the roof replacements for the Plaza property. The portion of that payment attributable to the King Soopers roof was $902,613.

Zurich sued King Soopers alleging a breach of contract.

SUBROGATION

By paying a debt that rightfully belongs to another, the subrogee has created a windfall for the debtor. Subrogation allows the subrogee to pursue that amount against the rightful debtor, thus eliminating any unjust transfer of responsibility for the debt. A subrogated insurer has no greater rights than the insured, for one cannot acquire by subrogation what another, whose rights he or she claims, did not have.
BREACH OF CONTRACT

As the plaintiff, Zurich must carry the burden of proving a prima facie case. The performance element in a breach of contract action means substantial’ performance.

Substantial performance occurs when, although the conditions of the contract have been deviated from in trifling particulars not materially detracting from the benefit the other party would derive from a literal performance, the defendant has received substantially the benefit he expected.

APPLICATION

Zurich must prove that:

1. a contract existed between King Soopers and Plaza,

2. King Soopers failed to perform its obligation under the contract,

3. Zurich and/or Plaza did perform or had a justification for failing to perform, and

4. Zurich suffered damages as a result.

The first and fourth elements are undisputed here-the parties agree that the lease constitutes a contract between King Soopers and Plaza, and they do not dispute that Zurich paid for the roof which, if there was a breach, constitutes damages. The parties vigorously dispute, however, whether Zurich can demonstrate that the second and third elements are met in this case. Both of those elements turn on the interpretation of the contract, a question of law that this Court is well positioned to address without the presentation of additional evidence.

When the Court interprets a contract, it strives to give effect to the intent of the parties. In this case, the parties strongly disagree about whether the lease required King Soopers to pay for the new roof-it is undisputed that King Soopers did not do so.

King Soopers asserts that it was entitled to notice of any breach under the “Default” provisions of the lease, and it argues that it never received any such notice.

The lease provided that the Landlord “will not exercise any right or remedy provided for in this Lease or allowed by law (including delivery of a Demand for Payment or Possession or Notice to Quit under the forcible entry and detainer laws) because of any default of Tenant, unless Landlord shall first have given written notice thereof to Tenant, and Tenant, within a period of twenty (20) days thereafter shall have failed to pay the sum or sums due, if the default consists of the failure to pay money, or, if the default consists of something other than the failure to pay money, Tenant shall have failed within thirty (30) days thereafter to begin the correction of the default or thereafter fails to actively and diligently and in good faith proceed with and continue the correction of the default until it shall be fully corrected.” (emphasis added)

While notice need not take any particular form, such provisions are intended to provide the allegedly breaching party with an opportunity to investigate the claim and potentially cure the breach.

ZURICH’S ARGUMENT IS CIRCULAR AND ABSURD

he Court was unpersuaded by Zurich’s argument that if this reading of the lease is correct then it, too, would have been entitled to notice of its breach-i.e., it did not receive notice of its failure to provide notice. This argument is clearly circular and absurd, but it is also unsuccessful for a simple reason.

King Soopers did not seek to exercise any remedy under the contract or at law to enforce Zurich/Plaza’s obligation to provide it with notice and time to cure. It did not allege that Plaza somehow defaulted on the lease by failing to notify it. Instead, it simply argues that the failure to provide it with notice precludes Zurich from exercising a remedy against King Soopers.

The Court concluded that Zurich has provided no facts that would permit a reasonable jury to conclude that it complied with the obligation under the lease to notify King Soopers of its default. Because Zurich has failed to do so, King Soopers is entitled to summary judgment in its favor.

ZALMA OPINION

Every insurance claim requires a thorough investigation by the insurer to provide the indemnity promised by the policy and to protect the rights of the insurer to pursue a subrogation claim. In this case, had Zurich’s claims personnel read the lease before replacing the roof it would have required the owner to give notice to King Soopers of its obligation. It did not do so and, in fact, the landlord gave notice to King Soopers that it would not bill King Soopers for the roof (a waiver of subrogation that was not discussed by the court). Zurich’s failure to protect its rights under the insurance contract, the pursuit of King Soopers in court, asserting a theory of notice that the court concluded was circular and absurd, was a waste of time and money.

(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 at http://www.zalma.com and [email protected].

Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe.

Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.

Write to Mr. Zalma at [email protected]; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com.

Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://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/

Interested? Want to learn more about the community?
What else you may like…
Videos
Posts
September 26, 2025
No Way Out After Murder Conviction

Intentionally Shooting a Woman With A Rifle is Murder

Post 5196

See the full video at and at and at https://zalma.com/blog and more than 5150 posts.

You Plead Guilty You Must Accept the Sentence

In Commonwealth Of Pennsylvania v. Mark D. Redfield, No. 20 WDA 2025, No. J-S24010-25, Superior Court of Pennsylvania (September 19, 2025) the appellate court reviewed the case of Mark D. Redfield, who pleaded guilty to third-degree murder for killing April Dunkle with malice using a rifle.

Affirmation of Sentence:

The sentencing court’s judgment was affirmed, and jurisdiction was relinquished, concluding no abuse of discretion occurred.

Reasonable Inference on Trigger Pulling:

The sentencing court reasonably inferred from the guilty plea facts that the appellant pulled the trigger causing the victim’s death, an inference supported by the record and consistent with the plea.

Guilty Plea Facts:

The appellant admitted during the plea hearing...

00:07:16
placeholder
September 25, 2025
Prelitigation Communications Privileged

The Judicial Proceedings Privilege
Post 5196

Posted on September 25, 2025 by Barry Zalma

See the full video at and at

Judicial Proceeding Privilege Limits Litigation

In David Camp, and Laura Beth Waller v. Professional Employee Services, d/b/a Insurance Branch, and Brendan Cassity, CIVIL No. 24-3568 (RJL), United States District Court, District of Columbia (September 22, 2025) a defamation lawsuit filed by David Camp and Laura Beth Waller against Insurance Branch and Brendon Cassity alleging libel based on statements made in a letter accusing them of mishandling funds and demanding refunds and investigations.

The court examined whether the judicial proceedings privilege applieD to bar the defamation claims.

Case background:

Plaintiffs Camp and Waller, executives of NOSSCR and its Foundation, sued defendants Insurance Branch and Cassity over a letter alleging financial misconduct and demanding refunds and audits. The letter ...

00:07:56
placeholder
September 24, 2025
Untrue Application for Insurance Voids Policy

Misrepresentation or Concealment of a Material Fact Supports Rescission

Post 5195

Don’t Lie to Your Insurance Company

See the full video at and at https://rumble.com/v6zefq8-untrue-application-for-insurance-voids-policy.html and at https://zalma.com/blog plus more than 5150 posts.

In Imani Page v. Progressive Marathon Insurance Company, No. 370765, Court of Appeals of Michigan (September 22, 2025) because defendant successfully established fraud in the procurement, and requested rescission, the Court of Appeals concluded that the Defendant was entitled to rescind the policy and declare it void ab initio.

FACTS

Plaintiff's Application:

Plaintiff applied for an insurance policy with the defendant, indicating that the primary use of her SUV would be for "Pleasure/Personal" purposes.

Misrepresentation:

Plaintiff misrepresented that she would not use the SUV for food delivery, but records show she was compensated for delivering food.

Accident:

Plaintiff's SUV was involved in an accident on August ...

00:07:48
September 09, 2025
The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma

See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.

The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime

See the full video at and at

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help 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.

How Elderly Doctors Fund their ...

placeholder
September 08, 2025
The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma

See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.

The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime

See the full video at and at

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help 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.

How Elderly Doctors Fund their ...

placeholder
September 03, 2025

Barry Zalma: Insurance Claims Expert Witness
Posted on September 3, 2025 by Barry Zalma
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit

© 2025 Barry Zalma, Esq., CFE

When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.

On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...

post photo preview
See More
Available on mobile and TV devices
google store google store app store app store
google store google store app tv store app tv store amazon store amazon store roku store roku store
Powered by Locals