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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.
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May 23, 2022
Judgment Debtor Can Sue Indigent Defendant’s Insurer

New Jersey Statute Allows Suit Against Insurer Who Advised its Insured No Coverage Years After Denial

Read the full article at https://lnkd.in/gyWjUVKg and https://zalma.com/blog plus more than 4200 posts.
But, is this a Waste of Time & Money?

Steven D’Agostino appealed from trial court orders dismissing his complaint in Steven D’agostino v. Colony Insurance Company, Lake Poulton, Poulton & Associates, LLC, and The Lawyers’ Fund For Client Protection, No. A-5331-18, Superior Court of New Jersey, Appellate Division (May 17, 2022) dealt with the effect of a New Jersey Statute on a suit by a judgment debtor of an insured whose claim was rejected.
FACTS

Plaintiff’s complaint alleges the following facts, which, like the trial court, the appellate court accepted as true for purposes of the motion. In February 2002, plaintiff retained Laurence Hecker, a solo practitioner licensed in New Jersey, to represent him in connection with an employment matter. Despite harboring some initial skepticism as to Hecker’s ability to handle the case, plaintiff claims he decided to retain Hecker once the lawyer represented “he was ‘a PC’ with ‘half a million dollars’ worth of malpractice insurance.”

Plaintiff’s employment matter went against him and, in September 2006, proceeding pro se, he filed a legal malpractice action against Hecker. In 2009, a jury determined Hecker had been negligent in his representation of plaintiff and awarded plaintiff $330,000 in damages, along with pre-judgment interest. Plaintiff claims Hecker reportedly told two different pretrial judges he had no insurance carrier.

Defendant Colony Insurance Company issued a $1,000,000 claims made professional liability policy to Hecker for a one year period beginning March 16, 2006 – six months before plaintiff filed suit. The retroactive date for that policy, however, was March 16, 2006, the first day of the policy period. Colony declined Hecker’s request for defense and indemnification under the policy.

Plaintiff was unable to recover the $330,000 judgment from Hecker. In 2011, plaintiff filed a claim with the Lawyers’ Fund for Client Protection, that denied plaintiff’s claim.

Hecker died in May 2017, and, over the course of the next year, plaintiff obtained access to several boxes of Hecker’s personal and business records. After reviewing the records, plaintiff claims he learned Hecker had malpractice insurance in place during the pendency of the malpractice suit. Plaintiff subsequently called Poulton, which informed him that Colony had denied Hecker’s claim for coverage “because the retroactive date of Hecker’s policy did not go back far enough to cover” the conduct underlying the malpractice suit. Colony refused to provide any information and claimed it only kept records for ten years.

Colony and Poulton successfully moved to dismiss for failure to state a claim, arguing plaintiff lacked standing as a third-party beneficiary and any derivative claims were time-barred. Poulton also argued plaintiff had not stated a viable claim against the company because, as an independent insurance broker, it was not liable for an insurance carrier’s coverage decision.

The court found plaintiff’s status was more akin to a judgment creditor. The trial court found plaintiff’s claim was “essentially a bad faith claim against the insurance carrier and the broker,” which is not cognizable by an individual or entity that is not the insured or an assignee of the insured’s contract rights.
ANALYSIS

As a general rule an individual or entity that is a stranger to an insurance policy has no right to recover the policy proceeds. But, the appellate court concluded, that the general rule does not apply here. N.J.S.A. 17:28-2 provides an injured person may maintain an action against an insurer when his judgment against the insured tortfeasor remains unsatisfied due to insolvency, which plaintiff’s complaint alleges here.

The trial court was correct plaintiff is not an intended third-party beneficiary in the traditional sense. Nor is he an assignee of Hecker’s contract rights entitling him to sue on the policy. But, the court concluded, he has plainly stated a claim as a third-party beneficiary by virtue of the direct action statute with standing to sue Colony on the policy

Accordingly, the appellate court concluded that the judgment dismissing plaintiff’s complaint for lack of standing against Colony must be reversed. While Colony has raised potential defenses it may have to plaintiff’s claim, assuming plaintiff can establish Hecker’s insolvency – asserting plaintiff can look to the limit of the policy proceeds to satisfy his judgment under N.J.S.A. 17:28-2, only if coverage is available, [and] only if plaintiff does so within the statutory limitations period – the viability of those defenses will have to await discovery.

Colony’s assertion that plaintiff’s claim is time-barred was not clear to the court on this record when plaintiff’s claim accrued under N.J.S.A. 17:28-2.

The New Jersey Supreme Court has noted that “[w]hile the injured person has no greater right under the policy than has the assured, he has ‘a cause of action the moment he is injured’ which ripens into a right of action when he recovers a judgment against the assured whose insolvency is proved by the return of an execution unsatisfied.” Dransfield, 5 N.J. at 194 (quoting Century Indemnity Co. v. Norbut, 117 N.J. Eq. 584, 587 (Ch. 1935); aff’d, 120 N.J. Eq. 337 (E. & A. 1936)).

Plaintiff has only stated a claim against Colony under N.J.S.A. 17:28-2, he has come nowhere near proving one. Finally, we likewise find plaintiff has stated a claim against Poulton and Poulton & Associates for the broker’s negligent failure to procure the appropriate professional liability coverage. A broker has a duty of care to foreseeable third parties injured by the broker’s negligence in failing to secure appropriate insurance coverage.

Although it is certainly possible plaintiff will not be able to prove Poulton failed to secure the coverage Hecker asked for or expected, or that any such cause of action is timely, plaintiff has stated the claim and should thus be permitted the opportunity to try to prove it.
ZALMA OPINION

Trial and appellate courts tend to give a great deal of consideration to actions brought by pro se plaintiffs. Although Mr. D’Agostino successfully sued his lawyer for malpractice he was unable to collect on his judgment. Only when the lawyer defendant died did he obtain information that indicated the lawyer was insured at the time of his trial although the insurer disclaimed coverage he sued the insurer and insurance broker to attempt to collect his old judgment. He lost on a motion to dismiss only to have the appellate court send the case back down for gathering evidence which, very probably, will result in a judgment in favor of the insurer and broker defendants because the case is old and Hecker, now dead, has no assets. A waste of court, lawyer, and defendant time.

(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/

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Allegations That Establish Breach of a Condition Defeats Suit

Notice of Claim Later than 60 Days After Expiration is Too Late

Post 5089

Injury at Massage Causes Suit Against Therapist

Read the full article at https://lnkd.in/gziRzFV8, see the full video at https://lnkd.in/gF4aYrQ2 and at https://lnkd.in/gqShuGs9, and at https://zalma.com/blog plus more than 5050 posts.

Hiscox Insurance Company (“Hiscox”) moved the USDC to Dismiss a suit for failure to state a claim because the insured reported its claim more than 60 days after expiration of the policy.

In Mluxe Williamsburg, LLC v. Hiscox Insurance Company, Inc., et al., No. 4:25-cv-00002, United States District Court, E.D. Missouri, Eastern Division (May 22, 2025) the trial court’s judgment was affirmed.

FACTUAL BACKGROUND

Plaintiff, the operator of a massage spa franchise, entered into a commercial insurance agreement with Hiscox that provided liability insurance coverage from July 25, 2019, to July 25, 2020. On or about June 03, 2019, a customer alleged that one of Plaintiff’s employees engaged in tortious ...

00:08:31
June 02, 2025
Zalma’s Insurance Fraud Letter – June 1, 2025

ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Posted on June 2, 2025 by Barry Zalma

Post 5087

See the full video at and at

Read the full article and the full issue of ZIFL June 1, 2025 at https://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-06-01-2025.pdf

Zalma’s Insurance Fraud Letter – June 1, 2025

See the full video at https://lnkd.in/gw-Hgww9 and at https://lnkd.in/gF8QAq4d, and at https://zalma.com/blog plus more than 5050 posts.

ZIFL – Volume 29, Issue 11

The Source for the Insurance Fraud Professional

Read the full article and the full issue of ZIFL June 1, 2025 at https://lnkd.in/gTWZUnnF

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 ...

00:08:42
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May 30, 2025
Plain Language of Policy Enforced

No Coverage if Home Vacant for More Than 60 Days

Failure to Respond To Counterclaim is an Admission of All Allegations

Post 5085

See the full video at https://lnkd.in/gbWPjHub and at https://lnkd.in/gZ9ztA-P, and at https://zalma.com/blog plus more than 5050 posts.

In Nationwide Mutual Insurance Company v. Rebecca Massey, Civil Action No. 2:25-cv-00124, United States District Court, S.D. West Virginia, Charleston Division (May 22, 2025) Defendant Nationwide Mutual Insurance Company's (“Nationwide”) motion for Default Judgment against Plaintiff Rebecca Massey (“Plaintiff”) for failure to respond to a counterclaim and because the claim was excluded by the policy.

BACKGROUND

On February 26, 2022, Plaintiff's home was destroyed by a fire. At the time of this accident, Plaintiff had a home insurance policy with Nationwide. Plaintiff reported the fire loss to Nationwide, which refused to pay for the damages under the policy because the home had been vacant for more than 60 days.

Plaintiff filed suit ...

00:06:50
May 15, 2025
Zalma's Insurance Fraud Letter - May 15, 2025

ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional

See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.

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 ...

May 15, 2025
CGL Is Not a Medical Malpractice Policy

Professional Health Care Services Exclusion Effective

Post 5073

See the full video at https://lnkd.in/g-f6Tjm5 and at https://lnkd.in/gx3agRzi, and at https://zalma.com/blog plus more than 5050 posts.

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 ...

April 30, 2025
The Devil’s in The Details

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...

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