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?
October 17, 2022
Sanctions Against Lawyer Suing Broker Affirmed

It is Frivolous to File Same Suit Against Another Defendant After First is Dismissed

Barry Zalma

Read the full article at https://lnkd.in/gU53XnUY and see the full video at https://lnkd.in/gcph95Zw and at https://lnkd.in/g4WAZiZU and at https://zalma.com/blog plus more than 4350 posts.

Dimitri Enterprises, Inc. (“Dimitri”) and its attorney, Richard J. Flanagan, appealed from the district court’s June 24, 2021 order imposing $24,675.00 in sanctions pursuant to Federal Rule of Civil Procedure 11. Dimitri, a roofing contractor, filed this lawsuit in connection with a dispute regarding insurance coverage for an employee’s injuries on a construction project.

In Dimitri Enterprises, Inc. v. Spar Insurance Agency LLC, NIF Services of New Jersey, Inc., and Scottsdale Insurance Company, No. 21-1722-cv, United States Court of Appeals, Second Circuit (October 6, 2022) the complaint asserted claims against defendant Scottsdale Insurance Company (“Scottsdale”), which was Dimitri’s commercial general liability insurance carrier, and defendant NIF Services of New Jersey, Inc. (“NIF”), which was originally alleged to be Dimitri’s broker.

The district court granted NIF’s motion to dismiss both claims against it, reasoning that the negligence claim was time-barred, and the breach of contract claim was inadequately pled because Dimitri did not allege any contractual terms that NIF breached. Dimitri then filed a second amended complaint (the “SAC”) against an additional defendant, Spar Insurance Agency, LLC (“Spar”), which was the retail insurance broker for Dimitri’s policy.

In its SAC, Dimitri brought claims against Spar for negligence and breach of contract that were identical to the negligence and breach of contract claims that the district court already dismissed against NIF. The district court granted Spar’s Motion to dismiss.

In addition, the district court granted Spar’s subsequent motion for sanctions, explaining that “plaintiff’s counsel knew or should have known that the claims against Spar were likewise subject to dismissal” because “identical claims against NIF were previously dismissed as either time-barred or inadequately pled.”

DISCUSSION

The Second Circuit reviewed the district court’s imposition of sanctions pursuant to Rule 11 of the Federal Rules of Civil Procedure for an abuse of discretion. This deferential standard is applicable to the review of Rule 11 sanctions because the district court is familiar with the issues and litigants and is thus better situated than the court of appeals to marshal the pertinent facts and apply a fact-dependent legal standard. An abuse of discretion only occurs if the district court based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence or rendered a decision that cannot be located within the range of permissible decisions.

RULE 11 SANCTIONS

Rule 11 explicitly and unambiguously imposes an affirmative duty on each attorney to conduct a reasonable inquiry into the viability of a pleading before it is signed. The standard for triggering the award of fees under Rule 11 is objective unreasonableness and is not based on the subjective beliefs of the person making the statement.

In particular, with respect to the statute of limitations on the negligence claim, Dimitri asserts that “the suggestion of a later date for the accrual of a negligence claim was not frivolous, rather it was responsible and zealous.” Regardless, the Second Circuit, concluded it could discern no abuse of discretion in the district court’s decision to impose sanctions.

Under Rule 11, a litigant’s obligations with respect to the contents of filings are not measured solely as of the time they are filed with or submitted to the court but include reaffirming to the court and advocating positions contained in those pleadings and motions after learning that they cease to have any merit. The Second Circuit has upheld sanctions where an attorney or litigant may have initially filed a non-frivolous claim but, after the district court’s dismissal of that claim, re-filed a similar or identical claim in an amended pleading without any good-faith basis for overcoming the district court’s prior ruling.

Finding that the district court did not abuse its discretion by the Second Circuit concluded that imposing sanctions against Dimitri’s counsel because Dimitri brought the exact same negligence and breach of contract claims against Spar that had already been dismissed against NIF. Although the claims were brought against a different party, the particular grounds for dismissal of the claims against NIF (the wholesale broker) applied with equal force to the assertion of the same claims against Spar (the retail broker).

With respect to the negligence claim, the district court had ruled that the claim against NIF was time-barred because the claim accrued, at the latest, when Dimitri received notice that the coverage was denied. In the wake of that ruling, Dimitri made no argument as to how a different accrual date could possibly apply as to its identical claim subsequently brought against Spar, which related to the exact same denial of coverage. Moreover, at a hearing on the sanctions motion, Dimitri’s counsel conceded to the district court that the negligence claim against Spar was time-barred.

Plaintiff’s counsel filed the same defective claims against a new defendant. Therefore, the Second Circuit concluded that such claims were not made in good faith.

It was “patently clear” from that reasoning that amending the pleading to assert the same claims against Spar had absolutely no chance of success.

ZALMA OPINION

Some people and their lawyers believe that suing an insurance company or an insurance agent/broker is always a slam-dunk suit that cannot lose. In this case the client and his lawyer were surprised by an obvious dismissal because the suit was time barred and just filed the same suit against another defendant that they knew was also time barred. The case was dismissed and counsel was properly sanctioned under Rule 11 for submitting a frivolous suit.

(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] and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe.

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

Now available Barry Zalma’s newest book, The Tort of Bad Faith, available here. The new book is available as a Kindle book, a paperback or as a hard cover.

Write to Mr. Zalma at [email protected]; http://www.zalma.com; http://zalma.com/blog; daily articles are published at
Zalma on Insurance
Insurance, insurance claims, insurance law, and insurance fraud .

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

00:09:40
Interested? Want to learn more about the community?
What else you may like…
Videos
Posts
May 26, 2026
He Who Acts as His Own Lawyer Has an Idiot for a Client

Arsonist Tried To Represent Himself, Failed, and Sought Habeas Relief

Post number 5357

Read the full article at https://www.linkedin.com/pulse/he-who-acts-his-own-lawyer-has-idiot-client-barry-zalma-esq-cfe-d4bwc, See the full video at and at and at https://zalma.com/blog.

Karacson’s Arson for Profit Attempt Required Skill & Experience to Succeed

In Steve Ellis Karacson v. David Shaver, Warden, No. 25-1089, United States Court of Appeals, Sixth Circuit (May 20, 2026) Steve Karacson was convicted in Michigan state court of arson and insurance fraud after evidence showed he burned his own insured home. Investigators found multiple points of origin, gasoline odor, and evidence tying him to the scene, including cell-phone location data and a receipt showing he had purchased a gas can and gloves shortly before the fire.

FACTS

Karacson initially had appointed counsel, but his relationships with both appointed attorneys ...

00:08:55
placeholder
May 11, 2026
Severe Punishment for Failure to Obey Court Orders

Foolish to Repeatedly Disobey Court Orders

All That Remains For Trial Is Plaintiff’s Damages On Each Of These Claims And Establishing Proximate Causation Of Those Damages.

Post number 5348

See the full video at and at and at https://zalma.com/blog plus 5300 posts.

In Linh Wang v. Esurance Insurance Company, No. C24-0447-JCC, United States District Court, W.D. Washington, Seattle (May 1, 2026) John C. Coughenour, United States District Judge, found that throughout this case, culminating with its briefing on Plaintiff’s renewed motion and that Defendant has subjected Plaintiff to unnecessary motion practice for clearly discoverable information and made dubious representations (including to the Court).

FACTUAL BACKGROUND

This case involves an underinsured/uninsured motorist insurance bad faith claim arising from a 2017 motor vehicle collision. The plaintiff, Linh Wang, alleges that Esurance Insurance ...

00:08:27
placeholder
May 08, 2026
Ambiguous Contract to Repair not an Assignment

The Right to Negotiate with Insurer is Not an Assignment of Claims

Post number 5347

Read the full article at https://www.linkedin.com/pulse/ambiguous-contract-repair-assignment-barry-zalma-esq-cfe-2xppc, see the full video at https://rumble.com/v79is1s-ambiguous-contract-to-repair-not-an-assignment.html and at and at https://zalma.com/blog plus more than 5300 posts.

Nebraska Requires an Actual Assignment to Allow Contractor to Sue Insurer

In Millard Gutter Company, a corporation doing business as Millard Roofing and Gutter v. Farmers Mutual Insurance Company of Nebraska, also known as Farmers Mutual Insurance, also known as Farmers Mutual, No. A-24-818, Court of Appeals of Nebraska (May 5, 2026) Millard sued Farmers as an assignee of Jane Anzalone who had hired Millard Gutter to repair the roof of her home and agreed to allow Millard Gutter to coordinate with her insurer, Farmers Mutual, concerning reimbursement for repairs authorized under her insurance policy.

FACTUAL BACKGROUND

In ...

00:08:02
14 hours ago
Insurer Contended it was not Defrauded

Qui Tam Case Without Evidence to Prove Fraud Fails

Post number 5369

Read the full article at https://www.linkedin.com/pulse/qui-tam-insurer-contended-defrauded-barry-zalma-esq-cfe-pgfgc and at https://zalma.com/blog plus more than 5550 posts.

In People Of The State Of California Ex Rel. Heath & Yuen, APC v. Silver Bird Auto Leasing, LLC et al., B342847, California Court of Appeals, Second District, Eighth Division (June 5, 2026) Heath & Yuen, APC defended parties in an automobile collision case involving a McLaren and a tour van. After that case settled for $25,000, the firm filed a qui tam action under California’s Insurance Frauds Prevention Act (IFPA) against Silver Bird Auto Leasing, LLC, X-Law Group, PC, and Filippo Marchino. The firm alleged three fraudulent acts in the underlying litigation:

1. the complaint falsely stated the McLaren was making a “legal turn,”
2. respondents produced a fraudulent repair bill/estimate, and
3. respondents failed to disclose Marchino’s GEICO insurance and its payment for repairs....

post photo preview
14 hours ago
Default Judgment Must be Respected by Federal Court

Full Faith and Credit Act Controlled

Read the full article at https://lnkd.in/evHXiiFE and at https://zalma.com/blog.

Posted on June 9, 2026 by Barry Zalma

Post number 5368

Posted on June 9, 2026 by Barry Zalma

In Prime Insurance Company, Inc. v. Medicab Transportation, LLC, Jason Rhodes, and Dale Johnson v. Prime Insurance Company, Inc and Prime Property & Casualty Insurance, Inc. No. 2:24-cv-421-SPC-KRH, United States District Court, M.D. Florida, Fort Myers Division (June 3, 2026) Medicab, a paratransit company, bought two policies in 2021: a Business Auto Policy from PPCI and a Commercial Liability Policy from Prime. Both policies, as originally written, appeared to cover injuries arising from loading and unloading patients from Medicab vans.

After a patient, Margaret St. Aubin, fell while being unloaded from a van and suffered injuries, her Estate made a $1 million demand. Prime and its claims administrator concluded that the Commercial Policy’s loading/unloading language had been included by mutual mistake, because...

post photo preview
June 09, 2026
Default Judgment Must be Respected by Federal Court

Full Faith and Credit Act Controlled

Read the full article at https://lnkd.in/evHXiiFE and at https://zalma.com/blog.

Posted on June 9, 2026 by Barry Zalma

Post number 5368

Posted on June 9, 2026 by Barry Zalma

In Prime Insurance Company, Inc. v. Medicab Transportation, LLC, Jason Rhodes, and Dale Johnson v. Prime Insurance Company, Inc and Prime Property & Casualty Insurance, Inc. No. 2:24-cv-421-SPC-KRH, United States District Court, M.D. Florida, Fort Myers Division (June 3, 2026) Medicab, a paratransit company, bought two policies in 2021: a Business Auto Policy from PPCI and a Commercial Liability Policy from Prime. Both policies, as originally written, appeared to cover injuries arising from loading and unloading patients from Medicab vans.

After a patient, Margaret St. Aubin, fell while being unloaded from a van and suffered injuries, her Estate made a $1 million demand. Prime and its claims administrator concluded that the Commercial Policy’s loading/unloading language had been included by mutual mistake, because...

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