ACTUAL DAMAGES REQUIRED TO BREACH INSURANCE CONTRACT
Post 4972
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Ira and Patricia Potovsky bought an insurance policy for long term care from Lincoln Benefit Life Company in 2002. They sued Lincoln after it denied them coverage. The district court dismissed the case because the complaint failed to allege damages.
Ira Potovsky; Patricia Potovsky v. Lincoln Benefit Life Company, No. 23-4130, United States Court of Appeals, Ninth Circuit (January 7, 2025) the Ninth Circuit applied the law.
BACKGROUND
The Potovskys’ policy covered “actual expenses incurred” for qualified long term care should one of them become “chronically ill”- which the policy defined as requiring “[s]ubstantial [s]upervision to protect [themselves] from threats to health and safety due to severe [c]ognitive [i]mpairment.” The policy only covered those who had been receiving qualifying care for ninety days or more and then submitted a claim for reimbursement.
Mrs. Potovsky began to experience mental decline in her eighties. Mr. Potovsky contacted Lincoln to begin filing a claim under the policy in September 2022, because he intended to hire a caregiver for Mrs. Potovsky. Out of caution, Mr. Potovsky first asked Lincoln for a determination of Mrs. Potovsky’s eligibility.
Lincoln denied the claim. In its denial letter, after summarizing the medical record, Lincoln determined: “The supervision does not rise to the level of Substantial Supervision secondary to severe Cognitive Impairment as per the policy definitions…. There is no clear indication that Ms. Potovsky requires supervision on a continuous basis ….
“While the medical documentation on file does support Ms. Potovsky has a Cognitive Impairment, there is nothing in the file to support the Cognitive Impairment is severe and requires Substantial Supervision. The claim will now be closed.”
Although the Potovskys internally appealed this denial, Lincoln’s decision was unchanged.
The Potovskys filed suit. The district court predicted “[t]he breach of contract claim ultimately may be better suited as an anticipatory breach claim, which the plaintiff’s opposition seems to suggest.” The Potovskys added a claim for anticipatory breach to their original suit. They claimed that Lincoln’s denial confirmed it would not perform under the contract, and that this repudiation excused any lack of additional performance. Lincoln moved to dismiss again because the anticipatory breach lacked the element of damages. The district court granted dismissal with prejudice.
ANALYSIS
The elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff. In short, the Potovskys failed to allege any recoverable damages, an essential element of a breach of contract claim. Damages are an element that must be proved to prevail on the merits of a contract claim.
Damages excluded from coverage by an insurance policy are typically not within the contemplation of the parties. The Potovskys’ only alleged damages are in the form of home health care services that Mrs. Potovsky would have received had Lincoln acknowledged her entitlement to be reimbursed for supervised care or in the form of the care provided by Mr. Potovsky.
Care given by family members is expressly exempted from the policy’s coverage.
Lincoln’s denial letter and its course of conduct were not inconsistent with an intent to enforce the right to wait until expenses were actually incurred.
The Potovskys’ two other claims-bad faith and elder abuse-cannot prevail without a predicate breach of contract.
ZALMA OPINION
People, and some lawyers, forget that an insurance policy is a contract. In this case the breach of contract claim failed because the Potovskys’ incurred no damage because Mr. Potovsky wanted assurance (or didn’t have the funds) before spending money to care for Mrs. Potovsky. The Potovskys’ incurred no damages and could not, therefore, prove a breach of contract and claims of bad faith.
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Amended Complaint Provides Escape from Anti-Assignment Condition
Post number 5345
Read the full article at https://www.linkedin.com/pulse/proper-inconsistent-pleading-defeats-policy-condition-barry-mrugc, shttps://www.linkedin.com/pulse/proper-inconsistent-pleading-defeats-policy-condition-barry-mrugc and at https://zalma.com/blog plus more than 5300 posts.
State Farm’s Responsive Pleading Defeated Motion on Anti Assignment Condition
In Tyra Caire Treadway v. State Farm Fire And Casualty Company, Civil Action No. 23-6834, United States District Court, E.D. Louisiana (April 28, 2026) Plaintiff Tyra Caire Treadway owned property at 7000-02 Jeannette Street, New Orleans, Louisiana, which was insured under a State Farm homeowners’ policy.
Hurricane Ida struck Louisiana on August 29, 2021, causing damage to the property. Nearly two years later, on August 9, 2023, Treadway sold the property to M1SRJT Jeanette, LLC and assigned her State Farm insurance claim, including the right to pursue additional damages and penalties for ...
Amended Complaint Provides Escape from Anti-Assignment Condition
Post number 5345
Read the full article at https://www.linkedin.com/pulse/proper-inconsistent-pleading-defeats-policy-condition-barry-mrugc, shttps://www.linkedin.com/pulse/proper-inconsistent-pleading-defeats-policy-condition-barry-mrugc and at https://zalma.com/blog plus more than 5300 posts.
State Farm’s Responsive Pleading Defeated Motion on Anti Assignment Condition
In Tyra Caire Treadway v. State Farm Fire And Casualty Company, Civil Action No. 23-6834, United States District Court, E.D. Louisiana (April 28, 2026) Plaintiff Tyra Caire Treadway owned property at 7000-02 Jeannette Street, New Orleans, Louisiana, which was insured under a State Farm homeowners’ policy.
Hurricane Ida struck Louisiana on August 29, 2021, causing damage to the property. Nearly two years later, on August 9, 2023, Treadway sold the property to M1SRJT Jeanette, LLC and assigned her State Farm insurance claim, including the right to pursue additional damages and penalties for ...
BACKGROUND
See the video at https://rumble.com/v79dts2-crime-doesnt-pay.html and at https://youtu.be/dw0f4goCbxA, and at https://zalma.com/blog plus more than 5300 posts.
Plaintiff:
Andrew J. Mitchell, an incarcerated individual proceeding pro se sued Pandit Law Firm, LLC, on behalf of a corporation that was controlled by Mitchell who had operated Mitchell Adjusting International LLC (MAI), a Texas limited liability company.
According to the US Attorney:
A Texas man (Mitchell) acting as an insurance adjuster who cheated an Albany church out of millions of dollars paid out by its insurance company to repair its facilities heavily damaged by Hurricane Michael in 2018 was sentenced to serve more than 19 years in prison and ordered to pay nearly $4 million in restitution to victims in several states.
Andrew Mitchell, formerly Andrew Aga, 46, of Houston, Texas, was sentenced to serve 235 months in prison to be followed by three years of supervised release and was ordered to pay $2,895,903.01 in restitution to the Brotherhood ...
It is Fraud to Make the Same Claim Twice
Read the full article at https://www.linkedin.com/pulse/fraud-make-same-claim-twice-barry-zalma-esq-cfe-c4g8c and at https://zalma.com/blog.
Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages
Post number 5347
No One is Entitled to be Paid for the Same Loss Twice
In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.
BACKGROUND
In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.
PROCEDURAL HISTORY
State Farm filed motion for summary...
It is Fraud to Make the Same Claim Twice
Read the full article at https://www.linkedin.com/pulse/fraud-make-same-claim-twice-barry-zalma-esq-cfe-c4g8c and at https://zalma.com/blog.
Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages
Post number 5347
No One is Entitled to be Paid for the Same Loss Twice
In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.
BACKGROUND
In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.
PROCEDURAL HISTORY
State Farm filed motion for summary...
What Must be Done after Notice of a Claim is Received by the Insurer
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A first party property policy does not insure property: it insures a person, partnership, corporation or other entity against the risk of loss of the property. Before an insured can make a claim for indemnity under a policy of first party property insurance the insured must prove that there was damage to property the risk of loss of which was insured by the policy. The obligation imposed on the insured ...
