Innocent Co-Insureds Have no Rights to Proceeds When Fraud Committed on Their Behalf
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Post 4808
Plaintiffs Timeless Bar, Inc. and Horseshoe Club, LLC sued their insurer Illinois Casualty Company, claiming the latter breached the parties’ insurance agreement. Specifically, the Plaintiffs allege that even though the fire that destroyed their property was intentionally set by an officer of the corporation and a member of the LLC, the insurer was obligated under the policy and Minnesota law to pay for the loss.
In Timeless Bar, Inc., doing business as The Press Bar and Parlor, and Horseshoe Club, LLC v. Illinois Casualty Company, No. 22-cv-1685 (KMM/LIB), United States District Court, D. Minnesota (May 21, 2024) the USDC, in a lengthy opinion resolved the issues of who was responsible for the fraud.
BACKGROUND
In April 2016, while still a married couple, Andrew Welsh and Jessie Welsh purchased a bar in St. Cloud, Minnesota. The couple opened the business as The Press Bar and Parlor and operated it through a corporation, Timeless Bar, Inc. (“Timeless Bar”). They also set up a real estate holding company, Horseshoe Club, LLC (“Horseshoe Club”), and arranged the building purchase through that company. On February 17, 2020 a fire that destroyed the bar. The Defendant and law enforcement later discovered that Andrew intentionally set the fire.
Illinois Casualty Company (“ICC”) insured The Horseshoe Club against the risk of loss by fire and covered as an additional named insured – “building owner” – for certain losses associated with the building itself under the Policy.
The Arson and Plaintiffs’ Insurance Claims
On February 17, 2020, Andrew Welsh burned down the bar. The following day, Andrew executed a Non-Waiver Agreement with ICC as the authorized representative of Timeless Bar as a named insured under the Policy. On February 26, 2020, Timeless Bar and the Horseshoe Club submitted the initial insurance claim to ICC via a “Proof of Loss” seeking approximately $1.4M in proceeds. The initial claim sought the policy limits for the building and other amounts. The claim states that the fire was of “unknown origin.” Further, the sworn proof of loss states: That said loss did not originate by any act, design or procurement on the part of your insured, or as affiant; nothing has been done by or with the privity or consent of your insured or this affiant, to violate the conditions of the policy, or render it void. Andrew and Jessie both signed that proof of loss on behalf of the businesses. There is no dispute that in the proof of loss, Andrew falsely stated that the fire was of unknown origin and that the loss did not originate by any act, design, or procurement of his own. Nor is there any dispute that his submission of the false claim as an affiant on behalf of the insured was an effort to defraud ICC.
DISCUSSION
The crux of the dispute in this case is whether Andrew Welsh’s conduct-burning down the bar and later lying about it in the insurance claims-allows ICC to deny coverage to Timeless Bar and Horseshoe Club. ICC argued that Andrew’s conduct is imputable to the Plaintiffs for purposes of all three exclusions at issue: his submission of fraudulent insurance claims precludes coverage for the Plaintiffs under the Misrepresentation and Dishonesty Exclusions, and his arson precludes coverage under the Intentional Acts Exclusion.
As explained below, the Court found that there is no genuine dispute that Andrew filed fraudulent claims on behalf of both Timeless Bar and Horseshoe Club. Because he did so, no reasonable jury could find that ICC breached the Policy by denying coverage under either the Misrepresentation Exclusion or the Dishonesty Exclusion.
Misrepresentation and Dishonesty Exclusions
ICC is entitled to judgment as a matter of law because the Policy provides no coverage. He filed a fraudulent claim when he signed the original Proof of Loss on February 26, 2020, and the May 15, 2020 amended Proof of Loss. No reasonable jury could conclude otherwise based on this record.
“Innocent Insureds”
Minn. Stat. § 65A.01, subd. 3, provided that the entire policy was void if, either before or after a loss, “the insured has willfully and with intent to defraud, concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof or the interests of the insured therein.” (emphasis in the original)
The Court found that, even viewed in the light most favorable to Plaintiffs, Andrew’s false statements in the proofs of loss submitted to ICC were dishonest acts and were made with intent to defraud ICC, and his actions are properly imputed to Timeless Bar and Horseshoe Club for purposes of applying the Misrepresentation and Dishonesty Exclusions.
Andrew’s actions are imputed to the Plaintiffs, the Misrepresentation Exclusion and the Dishonesty Exclusion preclude coverage as a matter of law, and ICC is entitled to summary judgment.
ZALMA OPINION
Arson-for-Profit is a serious crime. An arson fire is a specifically peril, the risk of loss of which, is insured by a fire policy. There is no “arson” exclusion in a fire insurance policy. The named insured may go to jail for the crime but that does not effect the insurance claim. Where Welsh went wrong was in signing under oath a false claim as a result of the fire. The fraud voided coverage and no one had the right to recover even his innocent wife and the innocent corporations who owned the building where the bar was located.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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Convicted Criminal Seeks to Compel Receiver to Protect his Assets
Post number 5291
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When There are Two Different Other Insurance Clauses They Eliminate Each Other and Both Insurers Owe Indemnity Equally
Post number 5289
In Great West Casualty Co. v. Nationwide Agribusiness Insurance Co., and Conserv FS, Inc., and Timothy A. Brennan, as Administrator of the Estate of Pat- rick J. Brennan, deceased, Nos. 24-1258, 24-1259, United States Court of Appeals, Seventh Circuit (February 11, 2026) the USCA was required to resolve a dispute that arose when a tractor-trailer operated by Robert D. Fisher (agent of Deerpass Farms Trucking, LLC-II) was involved in a side-impact collision with an SUV driven by Patrick J. Brennan, resulting in Brennan’s death.
Facts
Deerpass Trucking, an interstate motor carrier, leased the tractor from Deerpass Farms Services, LLC, and hauled cargo for Conserv FS, Inc. under a trailer interchange agreement. The tractor was insured by Great West Casualty Company with a $1 million policy limit, while the trailer was insured by Nationwide Agribusiness Insurance Company with a $2 million ...
Opiod Producer Seeks Indemnity from CGL Insurers
Post number 5288
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Insurers Exclude Damages Due to Insured’s Products
In Matthew Dundon, As The Trustee Of The Endo General Unsecured Creditors’ Trust v. ACE Property And Casualty Insurance Company, et al., Civil Action No. 24-4221, United States District Court, E.D. Pennsylvania (February 10, 2026) Matthew Dundon, trustee of the Endo General Unsecured Creditors’ Trust, sued multiple commercial general liability (CGL) insurers for coverage of opioid-related litigation involving Endo International PLC a pharmaceutical manufacturer.
KEY FACTS
Beginning as early as 2014, thousands of opioid suits were filed by governments, third parties, and individuals alleging harms tied to opioid manufacturing and marketing.
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Endo filed Chapter 11 in August 2022; before bankruptcy it ...
Passover for Americans
Posted on February 19, 2026 by Barry Zalma
“The Passover Seder For Americans”
For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lost the ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah. Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and wonder how did all these wonderful things come into being. Jews believe the force we call G_d created the entire universe and everything in it. Jews feel G_d is all seeing and knowing and although we can’t see Him, He is everywhere and in everyone.We understand...
Passover for Americans
Posted on February 19, 2026 by Barry Zalma
Read the full article at https://www.linkedin.com/pulse/passover-americans-barry-zalma-esq-cfe-5vgkc.
“The Passover Seder For Americans”
For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lostthe ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah.
Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and ...
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Post number 5275
Posted on January 30, 2026 by Barry Zalma
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When Experts for Both Sides Agree That Two Causes Concur to Cause a Wall to Collapse Exclusion Applies
In Lido Hospitality, Inc. v. AIX Specialty Insurance Company, No. 1-24-1465, 2026 IL App (1st) 241465-U, Court of Appeals of Illinois (January 27, 2026) resolved the effect of an anti-concurrent cause exclusion to a loss with more than one cause.
Facts and Background
Lido Hospitality, Inc. operates the Lido Motel in Franklin Park, Illinois. In November 2020, a windstorm caused one of the motel’s brick veneer walls to collapse. At the time, Lido was insured under a policy issued by AIX Specialty Insurance Company which provided coverage for windstorm damage. However, the policy contained an exclusion for any loss or damage directly or indirectly resulting from ...
