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June 24, 2022
Intentional Act Exclusion Defeats Claim for Defense & Indemnity

Customer Complaint Coverage Doesn’t Apply to Claim of Consumer Fraud

Read the full article at https://www.linkedin.com/pulse/intentional-act-exclusion-defeats-claim-defense-zalma-esq-cfe and at https://zalma.com/blog plus more than 4250 posts.

Posted on June 24, 2022 by Barry Zalma

Plaintiff, Owners Insurance Co. (insurer), appealed from the judgment of the circuit court of Du Page County ruling that an intentional-acts exclusion in an insurance policy did not exclude coverage for the expenses incurred by defendant, Don McCue Chevrolet, Inc. (insured) in defending an underlying consumer-fraud complaint brought by a former customer, Julio Salas. In Owners Insurance Company v. DonMcCue Chevrolet, Inc., 2022 IL App (2d) 210634-U, No. 2-21-0634, Court of Appeals of Illinois, Second District (June 17, 2022) the Court of Appeals resolved the dispute.
BACKGROUND

Salas’s one-count complaint against the insured in the underlying lawsuit alleged a violation of the Consumer Fraud and Deceptive Business Practices Act (Act) (815 ILCS 505/1 et seq. (West 2020)). Salas alleged as follows:

The parties entered into a written retail installment contract for Salas to purchase a new 2020 Chevrolet truck from the insured. Per the sales contract, Salas provided $5000 cash and his 2018 Chevrolet vehicle as a down payment. The parties agreed that the sales contract would be assigned to a finance company or bank. If the insured was unable to assign the contract, the transaction would not be completed, Salas would return the new truck, and the insured would return to Salas the $5000 and the 2018 vehicle. The insured was unable to obtain financing for the purchase. Per the insured’s demand, Salas returned the new truck. However, the insured “refused and continues to refuse” to return either the $5000 or the 2018 vehicle.

The insured submitted a claim under the policy for expenses incurred in the defense of the underlying lawsuit. The insured based its claim on a policy provision entitled “Customer Complaint Defense Reimbursement Coverage” (defense-reimbursement provision). That provision stated in relevant part that the insurer would reimburse the insured for reasonable costs and expenses incurred in defending a “customer complaint suit.” Coverage was excluded for any suit resulting from “[a]ctual or alleged criminal, malicious or intentional acts” committed by the insured (intentional-acts exclusion).

The insurer declined the insured’s claim for coverage of defense expenses relying on the intentional-acts exclusion.

The insurer alleged that it was not responsible for reimbursing the insured for any expenses related to the insured’s defense of Salas’s lawsuit. The insurer alleged that there was no coverage because “[t]he decisions by [the insured] to not refund Salas the $5000 down payment or to return the 2018 Chevrolet Traverse [were] intentional acts” that fell within the intentional-acts exclusion.

The trial court denied the insurer’s motion and granted the insured’s motion, ruling that the insurer had a duty under the defense-reimbursement provision to provide coverage for the insured’s expenses in defending the underlying suit.
ANALYSIS

Where cross-motions for summary judgment are filed in an insurance coverage case, the parties acknowledge that there exist no questions of material fact but only questions of law regarding the construction of the policy.

The insurer may refuse to defend only if it is clear from the face of the complaint that the allegations fail to state facts that bring the cause within, or potentially within, coverage. If an insurer relies on an exclusionary clause to deny coverage, it must be free and clear from doubt that the clause applies. An exclusion for intentional acts is construed to exclude coverage when the insured has:

intended to act and

specifically intended to harm a third party.

The burden is on the insurer to prove that an exclusionary clause applies. An exclusionary clause for intentional conduct will not apply when a claim arises, or could potentially arise, from a merely negligent act or omission. Phrases in the underlying complaint such as “mislead,” “conceal,” “scheme,” “deceive,” “intentionally,” or “willfully” are the “paradigm of intentional conduct and the antithesis of negligent actions.” [Leighton Legal Group, LLC, 2018 IL App (4th) 170548, ¶ 38.]

Since a “customer complaint” is defined as a customer’s claim that he sustained loss or damage resulting from the insured’s “[a]cts” or “[failures to act” relative to the sale of a vehicle. However, the parties disagree as to whether the intentional-acts exclusion applies to any intentional acts or strictly to intentional misconduct.
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The word “intent” for purposes of an exclusionary clause in an insurance policy denotes that the actor desires to cause the consequences of his action or believes that the consequences are substantially certain to result. The allegations of the underlying complaint fell within the policy exclusion. The underlying complaint alleged exclusively intentional misconduct, not negligence. When read as a whole, the underlying complaint exclusively alleged an intentional violation of the Act, as opposed to a negligent one.
CONCLUSION

The trial court erred in granting summary judgment for the car dealership on the question of whether its conduct as alleged in a former customer’s consumer-fraud suit fell within the scope of insurance coverage for expenses incurred in defending lawsuits based on customer complaints. Because the underlying suit alleged strictly intentional misconduct by the dealership, the policy’s exclusion for intentional acts applied.

The appellate court, therefore, remanded the case to the trial court with directions to enter summary judgment in the insurer’s favor on the complaint.
ZALMA OPINION

The facts alleging an intentional breach of the consumer protection act, breaching the agreement between the customer and the dealership, were obviously intentional – they kept the down payment and refused to return it and the trade-in vehicle. How the trial court found the action was not intentional is amazing and the Court of Appeal brought reason to the dispute.
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(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 and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe.

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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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Videos
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September 18, 2026
Expert May Only Testify to What Experience Supports

Insurance Expert May Not Testify to Speculative and Contains Unsupported Conclusions.

Posted on September 18, 2026 by Barry Zalma

See the full video at and at https://rumble.com/v7fmifw-expert-may-only-testify-to-what-experience-supports.html

In Michele A. Over, and The Estate Of Paul R. Over v. State Farm Mutual Automobile Insurance Company, and State Farm Fire And Casualty Company, Civil Action No. 23-cv-02243-PAB-STV, United States District Court, D. Colorado (September 14, 2026) Michele and Paul Over sued State Farm Fire and State Farm Auto over hail-damage and stolen-vehicle claims.

The operative dispute concerned State Farm Auto’s motion to exclude or limit opinions from plaintiffs’ insurance-industry expert, Aaron Castillo. Castillo.

Law

The proponent of expert testimony must establish by a preponderance of the evidence that an expert is qualified and that the opinions are helpful, sufficiently grounded, and reliably derived and applied. Experience-based opinions must explain how the...

00:03:10
September 17, 2026
Convicted on 29 Tax-Refund-Fraud Counts

150 Months in Prison for Tax Fraud
Post 4846

Posted on September 17, 2026 by Barry Zalma

See the full video at https://lnkd.in/g8rh3JBX and https://lnkd.in/gmkdy-9C, In United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.

FACTS

In United States Of America v. Thomas Addaquay, United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS

Thomas Addaquay controlled United Consolidated Accounting and Business Services (UC), nominally a check-cashing business.

The government proved a three-stage tax-refund scheme that converted the resulting refund checks into usable funds through ...

00:05:23
September 14, 2026
Court Enforces Fifth Amendment & Refuses to Compel Answers

Major Fraud Perpetrator Asserts Fifth Amendment Privilege to Avoid Prosecution

Post 5489

Posted on September 14, 2026 by Barry Zalma

Fraudster Refuses to Answer Questions About His Alleged Fraud

See the full video at https://lnkd.in/gvicAMDr and at https://lnkd.in/gvicAMDr

In Great American Insurance Co. v. Gemstone Property Management, LLC, et al., No. 23-cv-9100 (LJL), United States District Court, S.D. New York (September 8, 2026) Great American Insurance Company alleged that it was defrauded through a scheme in which Subin Associates, LLP recruited individuals to stage construction-site injuries, arranged unnecessary medical treatment and litigation funding, and pursued fraudulent personal-injury claims.

Luis Manuel Garcia Salcedo, resulted in a $6 million settlement. Non-party Jose Hernandez allegedly worked as an assistant manager at Subin, operated Hernandez Associates, and owned litigation-funding companies that shared office space with Subin and provided services to its clients.

After Great American ...

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13 hours ago
After Dismissal Fraud Victim May Amend Complaint After Dismissal

A Proposed Amended Complaint That Includes New Factual Allegations to Remedy Pleading Deficiencies

Posted on November 11, 2026 by Barry Zalma
After Dismissal Fraud Victim May Amend Complaint After Dismissal
Post 4580

If A Proposed Amendment Is Not Clearly Futile, Then Denial Of Leave To Amend Is Improper

In John Hancock Life & Health Insurance Company v. Caring Connections LLC, Arthur Feldheim, and Blime a/k/a Vera Feldheim, Civ. No. 25-7574 (MAS)(JBD), United States District Court, D. New Jersey (November 6, 2026) John Hancock sued Caring Connections LLC, Arthur Feldheim, and Blime a/k/a Vera Feldheim on June 5, 2025, asserting thirteen claims, including fraud, breach of contract, and aiding and abetting fraud.

On March 26, 2026, this Court entered an order granting Caring Connections’ motion to dismiss and granting in part and denying in part the Feldheims’ motion to dismiss. The dismissed claims were dismissed without prejudice, and John Hancock timely sought leave to amend.

They also argued that the New ...

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November 09, 2026
Excess Insurers May Face Declaratory Relief and Bad Faith Claims Before Coverage Attaches

Is Exhaustion Required to Seek Declaratory Relief From an Excess Insurer?

Post 4578

Posted on November 9, 2026 by Barry Zalma

In Fox Paine & Company, LLC, et al. v. Twin City Fire Insurance Company et al., S287404, 593 P.3d 832, 593 P.3d 838, 346 Cal.Rptr.3d 541, Supreme Court of California, (July 27, 2026) the Supreme Court noted that Insurance is sometimes procured in a series of layers, with an insured acquiring a primary insurance policy that provides an initial layer of coverage for loss or liability and an excess insurance policy or policies that provide additional coverage in the event the underlying coverage is exhausted. Usually, the first layer of coverage must be exhausted before the excess layers are available to the insured.
Exhaustion

Fox and Paine’s investment-firm dispute generated extensive litigation and competing insurance claims. Their insurance tower consisted of a $10 million primary policy and four $10 million excess layers.

The Fox Parties alleged that insurers paid their rivals, withheld information,...

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November 05, 2026
Convicted of Felony Fraud You Lose the Right to Vote

Payment of Fines & Completion of Probation Reinstates Right to Vote

Post 4576

Posted on November 5, 2026 by Barry Zalma

To Restore Voting Rights The Felon Must Pay Fines of $546.00

In Florida Supreme Court Mediator Ethics Advisory Committee, ETH F-26-377, No. F-26-377 (October 29, 2026) citizen unnamed and to Ron Desantis Governor, Cord Byrd the Secretary of State Florida Division of Elections provided an advisory opinion to a convicted felon about his right to vote:

To: [redacted] We received your request for an advisory opinion. You indicate that you have one or more felony convictions and request whether you are eligible to vote, including whether you have any outstanding legal financial obligations under section 98.0751, Florida Statutes, and, if so, a statement of the amount that must be paid to make you eligible to vote, and an explanation of how the amount was calculated.

The Division hereby responds to your request pursuant to its legal authority under section 106.23(2), Florida Statutes, and Florida ...

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