Bad Faith in Arkansas Requires Proof of Dishonest, Malicious, or Oppressive Conduct Including Hatred, Ill Will, a Spirit of Revenge
Barry Zalma
Jul 14, 2023
Read the full article at https://lnkd.in/gS8SNfDt and see the full video at https://lnkd.in/gPg2zJRJ and at https://lnkd.in/gg-ifq_w, and at https://zalma.com/blog plus more than 4550 posts.
Owners Insurance Company moved for summary judgment as to a claim of bad faith. Separately, Owners argued the Court should make a finding that there no evidence to support a punitive damages instruction.
In RMS Warehouse 1315, LLC v. Owners Insurance Company, No. 5:22-CV-5114, United States District Court, W.D. Arkansas, Fayetteville Division (July 7, 2023) the USDC resolved the bad faith issue.
BAD FAITH
The tort of bad faith is established in Arkansas when an insurance company affirmatively engages in dishonest, malicious, or oppressive conduct in order to avoid a just obligation to its insured. The tort requires evidence of a state of mind characterized by hatred, ill will, or a spirit of revenge. Importantly, bad faith does not arise from a mere denial of a claim; there must be affirmative misconduct.
Plaintiff RMS contends its two claims of loss should have been covered under the policy of insurance it had with Owners. The first loss occurred on May 4, 2020, following a hailstorm that caused damage to RMS’s warehouse. The second loss was in February 2021, after a winter storm event. RMS narrows its bad-faith claim to Owners’s treatment of the winter-storm claim and explicitly states that Owners did not act in bad faith with respect to the hailstorm claim.
The only evidence RMS cited in support of its bad-faith claim is the denial letter sent by insurance adjuster Brian Doherty. RMS believes Mr. Doherty “misrepresented” in the letter what the insurance policy actually provided and omitted reference to crucial portions of the policy that provided coverage.
The standard for establishing a claim for bad faith is, and always should be, rigorous and difficult to satisfy. RMS betrayed a fundamental misunderstanding about the tort when, at one point in its briefing, it characterizes Owners’ actions as “[a]t best… a mistake,” Neither a mistake nor a “refusal to pay a disputed claim” is tortious behavior according to Arkansas law.
Summary judgment on Count II, the tort of bad faith, was therefore granted. As a consequence, RMS is not entitled to a punitive damages instruction.
The Motion was granted as to Count II, and the claim of bad faith was dismissed with prejudice; as a result, RMS will not be entitled to an instruction on punitive damages.
ZALMA OPINION
Acting as its own worst enemy the insured’s brief admitted that the insurer erred. A mistake may be sufficient to establish a breach of contract but is insufficient to prove the tort of bad faith and the right to seek punitive damages.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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Policy Limits Demand Accepted Settles Claim
Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute
In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange, The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.
FACTUAL BACKGROUND
Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...
Policy Limits Demand Accepted Settles Claim
Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute
In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange, The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.
FACTUAL BACKGROUND
Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...
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Fraud & the Fear of Bad Faith Suits
Posted on July 22, 2026 by Barry Zalma
See the full video at https://lnkd.in/gWQQEySW and at https://lnkd.in/gyhdK6wv
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection 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.
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection 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.
After ...
Crime Requires 121-151 Months of Imprisonment
Post 5486
Posted on September 9, 2026 by Barry Zalma
Mr. Baiyewu Is Liable For The Loss Resulting From Acts Directly Attributable To Him And For The Loss Resulting From The Reasonably Foreseeable Acts Of Others Taken In Furtherance of the Criminal Activity
In United States Of America v. Oluwasegun Baiyewu, CRIMINAL No. 21-395 (RAM), United States District Court, D. Puerto Rico (August 26, 2026) the court dealt with a case after on October 20, 2021, a grand jury in the District of Puerto Rico returned a single-count Indictment charging Mr. Baiyewu with conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h). About a year and a half later, on March 31, 2023, a grand jury returned a single-count Superseding Indictment charging Mr. Baiyewu and four co-defendants with conspiracy to commit money laundering, in violation of 18 U.S.C.
CONVICTION
Baiyewu was convicted by a jury of conspiracy to commit money laundering under 18 U.S.C. § 1956(h). The charged conspiracy, ...
Insurance Requires Fortuity to be an Insured Risk
Post 5485
Posted on September 8, 2026 by Barry Zalma
In Industrial Park Center, LLC, doing business as Mainspring Capital Group v. Great Northern Insurance Company, a foreign insurer, No. CV-25-0330-CQ, Supreme Court of Arizona (September 1, 2026).
The United States Court of Appeals for the Ninth Circuit certified the following question to this Court:
"Is damage to property a “fortuitous” loss when, based on the insured’s knowledge at the time the insurance policy issued, it was reasonably foreseeable that such damage was almost certain to occur if certain preventative measures were not taken?"
FACTUAL BACKGROUND
Mainspring owned commercial property leased to Star Fisheries for decades. Star Fisheries’ use of water and salt allegedly caused structural damage over time. In 2010, Mainspring learned of damage and made some repairs but did not implement all recommended preventive measures. In 2021–2022, additional similar structural damage was discovered, and ...
Insurance Requires Fortuity to be an Insured Risk
Post 5485
Posted on September 8, 2026 by Barry Zalma
In Industrial Park Center, LLC, doing business as Mainspring Capital Group v. Great Northern Insurance Company, a foreign insurer, No. CV-25-0330-CQ, Supreme Court of Arizona (September 1, 2026).
The United States Court of Appeals for the Ninth Circuit certified the following question to this Court:
"Is damage to property a “fortuitous” loss when, based on the insured’s knowledge at the time the insurance policy issued, it was reasonably foreseeable that such damage was almost certain to occur if certain preventative measures were not taken?"
FACTUAL BACKGROUND
Mainspring owned commercial property leased to Star Fisheries for decades. Star Fisheries’ use of water and salt allegedly caused structural damage over time. In 2010, Mainspring learned of damage and made some repairs but did not implement all recommended preventive measures. In 2021–2022, additional similar structural damage was discovered, and ...
