It is Inappropriate to Argue a Win Was Wrong and a New Result is Required
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Post 4829
Defendant, Bankers Insurance Company (“Bankers Insurance”), moved to vacate the Panel Appraisal Award Amendment & Clarification (“Amended Award”) based on three alleged “significant errors” or “clear mistakes of fact” only to see an unfavorable response in St. Joseph Medical Clinic AMC v. Bankers Insurance Company, Civil Action No. 22-4521, United States District Court, E.D. Louisiana (June 17, 2024)
BACKGROUND
This case concerns an insurance coverage dispute arising from damages sustained during Hurricane Ida. At the parties’ request, an appraisal panel provided an award in September 2022 (the “Initial Award”). The Initial Award provided for $1,066,798.39 (RCV) under the policy’s Building coverage and $12,729.86 under the policy’s Business Property coverage. Bankers Insurance disagreed with the Initial Award’s inclusion of a $61,485.00 expense for “Rose Office Systems, Inc.” (“Rose Systems”) within the Building coverage. Bankers Insurance took the position in its correspondence that the Rose Systems expense should be categorized within the Extra Expense coverage, yet Bankers Insurance chose not to pursue this objection and filed an unconditional motion to confirm in May 2023.
The Honorable Donna Currault presiding, denied the motion. The Court identified the possibility of double counting as a potential significant error that required clarification by the panel. The matter was remanded for that clarification. The Court identified no other errors in the award.
The panel issued an Amended Award in January 2024. The Amended Award explained that the panel had included the Rose Systems expense within the Building coverage and provided its reasoning for doing so. The Amended Award further provided a complete calculation of damages for all the other coverages, including Extra Expense coverage ($0.00 awarded) and Business Income Loss ($270,409.96 awarded). The Amended Award confirms there was no double-counting.
Bankers Insurance waited until May 2024 to move to vacate based on the same alleged Rose Systems error of which it was aware when it filed its prior motion to confirm in October 2022.
ANALYSIS
Appraisal clauses are enforceable under Louisiana law. The burden of demonstrating that the award should not be confirmed must fall upon the party challenging it. Contractually specified appraisal awards are presumed accurate. Although appraisal awards are presumed correct, a court is not bound to confirm an award that contains clear mistakes of fact. When an award reflects accidental double-counting that duplicates certain items or categories, that is the type of clear error that cannot stand.
Bankers Insurance’s Belated Objection To The Panel’s Treatment Of The Rose Systems Expense Is Subject To Judicial Estoppel And Lacks Merit.
If Bankers Insurance were to prevail on its first argument and its second argument, the Rose Systems expense would be subject to a lower policy limit. Bankers Insurance’s first two arguments collapse under the weight of its prior litigation strategy.
Bankers Insurance moved to confirm the Initial Award, which concluded that the Rose Office Systems expense fell within the Building coverage. Bankers Insurance made a strategy decision to abandon this objection when moving to confirm the Initial Award.
The USDC concluded that Bankers Insurance’s prior litigation conduct subjected it to judicial estoppel. Courts can invoke judicial estoppel to prevent a party from asserting a position in a legal proceeding that is inconsistent with a position taken in a previous proceeding.
Bankers Insurance asked the Court to rule that the Initial Award set the total amount of damages in this matter, including relative to an award of $1,046,255.76 under building coverage. In this motion Bankers Insurance asks the Court to vacate the Initial Award because, it contends, the Initial Award’s Building coverage determination was error. The two positions were irreconcilable.
Bankers Insurance’s Argument Relative To Lost Business Income Misstates The Panel’s Position And Lacks Merit.
Bankers Insurance’s argument does not refer to any actual calculation error-merely an alleged error in terminology-and the mischaracterization of the panel’s reasoning renders this argument confusing, at best.
CONCLUSION
Now, Bankers Insurance seeks to prevail by arguing that the Initial Appraisal suffered from a separate significant error, which has carried over into the Amended Appraisal and requires its vacatur. This attempt to “prevail, twice, on opposite theories,” renders Bankers Insurance the “quintessential ‘chameleonic litigant’ against whom judicial estoppel is usually appropriate.”
ZALMA OPINION
Appraisals often raise disputes over the finding of the appraisers. Bankers, although it disagreed with some findings of the appraisers, moved the court to affirm the award. The court sent the dispute back to the appraisers who submitted an amended award only for Bankers, to try to have the court apply the argument it originally abandoned. Judicial estoppel disposed of Bankers’ argument and the amended award was affirmed. Parties to appraisal awards should stick to their position and never change their position first accepted by the court only to ask it to do something different.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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Jury’s Findings Interpreting Insurance Contract Affirmed
Post 5105
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Madelaine Chocolate Novelties, Inc. (“Madelaine Chocolate”) appealed the district court’s judgment following a jury verdict in favor of Great Northern Insurance Company (“Great Northern”) concerning storm-surge damage caused by “Superstorm Sandy” to Madelaine Chocolate’s production facilities.
In Madelaine Chocolate Novelties, Inc., d.b.a. The Madelaine Chocolate Company v. Great Northern Insurance Company, No. 23-212, United States Court of Appeals, Second Circuit (June 20, 2025) affirmed the trial court ruling in favor of the insurer.
BACKGROUND
Great Northern refused to pay the full claim amount and paid Madelaine Chocolate only about $4 million. In disclaiming coverage, Great Northern invoked the Policy’s flood-exclusion provision, which excludes, in relevant part, “loss or damage caused by ....
Failure to Name a Party as an Additional Insured Defeats Claim
Post 5104
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Contract Interpretation is Based on the Clear and Unambiguous Language of the Policy
In Associated Industries Insurance Company, Inc. v. Sentinel Insurance Company, Ltd., No. 23-CV-10400 (MMG), United States District Court, S.D. New York (June 16, 2025) an insurance coverage dispute arising from a personal injury action in New York State Supreme Court.
The underlying action, Eduardo Molina v. Venchi 2, LLC, et al., concerned injuries allegedly resulting from a construction accident at premises owned by Central Area Equities Associates LLC (CAEA) and leased by Venchi 2 LLC with the USDC required to determine who was entitled to a defense from which insurer.
KEY POINTS
Parties Involved:
CAEA is insured by Associated Industries Insurance Company, Inc. ...
Exclusion Establishes that There is No Duty to Defend Off Site Injuries
Post 5103
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Attack by Vicious Dog Excluded
In Foremost Insurance Company, Grand Rapids, Michigan v. Michael B. Steele and Sarah Brown and Kevin Lee Price, Civil Action No. 3:24-CV-00684, United States District Court, M.D. Pennsylvania (June 16, 2025)
Foremost Insurance Company (“Foremost”) sued Michael B. Steele (“Steele”), Sarah Brown (“Brown”), and Kevin Lee Price (“Price”) (collectively, “Defendants”). Foremost sought declaratory relief in the form of a declaration that
1. it owes no insurance coverage to Steele and has no duty to defend or indemnify Steele in an underlying tort action and
2. defense counsel that Foremost has assigned to Steele in the underlying action may withdraw his appearance.
Presently before the Court are two ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
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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 ...
Professional Health Care Services Exclusion Effective
Post 5073
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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 ...
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...