Never Lie or Conceal Potential Claims From Insurer
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Post 4823
Plaintiff CMGK, LLC, doing business as Massage Envy, appealed from an order granting summary-judgment to defendant Certain Underwriters at Lloyd’s, London Subscribing to Policy Number ME10XXXX, and dismissing with prejudice plaintiff’s claims. Plaintiff sought coverage under a Sexual Acts Liability Endorsement of a claims-made-and-reported policy issued by Lloyd’s to plaintiff. The court found plaintiff was not entitled to coverage and granted the motion.
In CMGK, LLC d/b/a Massage Envy v. Certain Underwriters At Lloyd’s, London Subscribing To Policy Number ME10XXXX, No. A-1836-22, Superior Court of New Jersey, Appellate Division (June 13, 2024) the appeal was considered based on the facts established by the motions.
FACTS
CMGK operated a Massage Envy Spa franchise located in Mays Landing. Emad Gus Khalifa was the sole member of plaintiff and was familiar with its operations. In 2013, plaintiff hired April Pippin as a general manager to assist Khalifa with the day-to-day management of the facility. Pippin and Khalifa performed management functions for plaintiff.
The Application for Insurance
Khalifa executed on behalf of plaintiff an application for the policy at issue. “This Claims Made policy applies only to those claims arising from covered incidents which occur on or after the stated retroactive date. In addition, the claim must first be made and reported to the company during the policy period or applicable extended reporting period.” (Emphasis in the policy).
The Policy
Defendant issued its Specified Medical Professions Professional Liability Insurance Policy to plaintiff for the policy period March 9, 2018, to March 9, 2019, and subject to a Retroactive Date of March 9, 2014. The policy included a Sexual Acts Liability Endorsement.
The Sexual Acts Liability Endorsement. Prior to the effective date of the policy, the Insured represented that it had no knowledge of a Sexual Act or any fact, circumstance, situation or incident involving a Sexual Act which may result in a Claim under this policy.
In 2016, plaintiff hired Steffon Davis as a massage therapist. According to plaintiff’s client M.N., Davis sexually assaulted her during a massage he performed on her on September 23, 2017. Two days later, M.N. reported the alleged assault to Pippin. On September 26, 2017, M.N. went to the Township of Hamilton police station and told a police officer about the incident. According to the officer, M.N. told her “[Davis had] placed his finger between her vagina lips and cupped her breast during a massage.”
M.N. eventually sued. On September 5, 2018, plaintiff tendered the suit to defendant for coverage who refused to defend or indemnify the Plaintiff who sued Lloyd’s claiming Lloyd’s had breached the policy and seeking a judgment declaring M.N.’s claims fell within the coverage provided by Lloyd’s.
Finding the language of the prior-knowledge clause to be “clear and unambiguous,” the trial court rejected plaintiff’s attempt to interpret it in a manner where an honest belief in the futility of a claim negates actual knowledge of allegations of wrongdoing. The court found the police decision not to file criminal charges does not support a reasonable belief that M.N. would not file a civil lawsuit.
Khalifa’s assumption or hope, purportedly based on the officer’s decision not to file a criminal complaint or M.N.’s decision not to file a civil complaint sooner, that M.N. wouldn’t file a claim is not enough to defeat summary judgment. Adopting plaintiff’s interpretation of the policy language would have the effect of rendering meaningless the prior-knowledge clause. To avoid the application of the clause, an insured could simply assert it did not believe – in the face of all evidence to the contrary – a claim might be filed.
The reasonableness of excluding claims based on prior conduct that the insured could reasonably have foreseen might serve as the basis for a future claim was apparent to the appellate court as it would be to anyone involved in the business of insurance. The Appellate Division, therefore, affirmed the order granting defendant’s summary-judgment motion.
ZALMA OPINION
An application for insurance is a request to an insurer to make an offer of insurance. The insurer relies on the good faith of the proposed insured to accurately respond to all the inquires including any information available to the insured at the time the application is presented, of any acts that could result in a claim. Such an act, sexual abuse of a customer by a massage therapist, known to the insured but not yet grown into an actual suit must be disclosed to allow the insurer to make a well reasoned decision to offer to insure the proposed insured.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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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 ...
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 ...
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 ...
Million Dollar Roundup Verdict Reversed by SCOTUS
FIFRA Preempts the State-Law Failure-to-Warn Claim
Post number 5381
Posted on June 26, 2026 by Barry Zalma
In Monsanto Co. v. Durnell, Certiorari To The Court Of Appeals Of Missouri, Eastern District, No. 24–1068, argued April 27, 2026, decided June 25, 2026, the Supreme Court reversed a $1 million judgment found by a Missouri state court.
Facts
John Durnell sued Monsanto in Missouri state court, alleging that his long-term use of Roundup caused his non-Hodgkin’s lymphoma and that Monsanto should have warned users of cancer risks. A jury awarded Durnell more than $1 million on a failure-to-warn theory, and the Missouri Court of Appeals affirmed. The Supreme Court granted certiorari to resolve whether FIFRA preempts the state-law failure-to-warn claim.
Monsanto manufactures and distributes Roundup, a glyphosate-based herbicide. The Environmental Protection Agency has repeatedly evaluated glyphosate and has concluded that it is not likely to cause cancer; ...
The Right to Self-Defense is not Given Up by Employment
Colorado Employer Cannot Punish Employee for Exercising Right of Self Defense
Read the full article at https://lnkd.in/gmbSG-Nq and at https://zalma.com/blog, #insurancebooks, #insurance books, #amazon.
Post number 5380
In Mary Ann Moreno v. Circle K Stores, Inc., 2026 CO 46, No. 25SA134, Supreme Court of Colorado, En Banc (June 15, 2026) Moreno, a seventy-two-year-old Circle K employee, was working when an armed robber approached the register with hunting knives, demanded cigarettes for free, and moved behind the counter toward her.
Moreno told him not to come behind the counter and extended her arms, which she characterized as an instinctive act of self-defense. The robber left with cigarettes and was later arrested for armed robbery. Circle K terminated Moreno for violating its “Don’t Chase or Confront” policy, and Moreno sued for wrongful discharge in violation of Colorado public policy.
The District court certified a question that only asked the Supreme ...
The Right to Self-Defense is not Given Up by Employment
Colorado Employer Cannot Punish Employee for Exercising Right of Self Defense
Read the full article at https://lnkd.in/gmbSG-Nq and at https://zalma.com/blog, #insurancebooks, #insurance books, #amazon.
Post number 5380
In Mary Ann Moreno v. Circle K Stores, Inc., 2026 CO 46, No. 25SA134, Supreme Court of Colorado, En Banc (June 15, 2026) Moreno, a seventy-two-year-old Circle K employee, was working when an armed robber approached the register with hunting knives, demanded cigarettes for free, and moved behind the counter toward her.
Moreno told him not to come behind the counter and extended her arms, which she characterized as an instinctive act of self-defense. The robber left with cigarettes and was later arrested for armed robbery. Circle K terminated Moreno for violating its “Don’t Chase or Confront” policy, and Moreno sued for wrongful discharge in violation of Colorado public policy.
The District court certified a question that only asked the Supreme ...
