Breach of Contract Required to Sue for Bad Faith
Post 4975
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Foremost Insurance Company Grand Rapids, Michigan (“Foremost”) moved the court to dismiss in C & S Properties – I, LLC v. Foremost Insurance Company Grand Rapids, Michigan, Civil Action No. 24-462, United States District Court, E.D. Louisiana (January 10, 2025)
FACTUAL BACKGROUND
Damages from Hurricane Ida caused insurance claims concerning three properties owned by Plaintiff. The properties were each covered by separate insurance policies issued by Foremost when they were damaged by Hurricane Ida in August 2021.
Plaintiff alleged that, while Foremost has been in possession of sufficient evidence of the losses or had the opportunity to fully apprise itself of the actual losses and damages, it has failed to pay the amount due under the policies required by Louisiana law.
Plaintiff sued Foremost in Louisiana state court asserting claims under Louisiana law for breach of contract and bad faith damages. Foremost removed the matter to the USDC on the basis of diversity jurisdiction.
Foremost moved to Dismiss Plaintiff’s claims based upon the improper cumulation of claims and because the suit did not state a claim for which relief can be granted.
LEGAL STANDARD
Joining Claims
Federal Rule of Civil Procedure 18 provides that, “[a] party asserting a claim . . . may join, as independent or alternative claims, as many claims as it has against an opposing party.”
Under Federal Rule of Civil Procedure 12(b)(6), a defendant can seek dismissal of a complaint, or any part of it, for failure to state a claim upon which relief may be granted. To survive a Rule 12(b)(6) motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Dismissal is appropriate when the complaint on its face shows a bar to relief.
ANALYSIS
Regarding the insurance policies attached by Foremost, the Court found that those are referenced in Plaintiff’s state court Petition and are central to Plaintiff’s claims and thus may be rightfully considered by the Court.
Cumulation of Claims
The Court found that Plaintiff properly included its claims concerning each of the three properties in one lawsuit pursuant to Fed.R.Civ.P. 18(a).
Failure to State a Claim
The allegations in the Petition are insufficient to support a breach of contract claim. The Petition contains only vague and conclusory allegations and does not refer to specific actions or omissions by Foremost.
Plaintiff alleged that Hurricane Ida caused substantial amounts of damage to the exterior, interior, roof, and other structures of the Insured Properties, that Plaintiff provided timely notice of the loss event to Defendant. The Court found that Plaintiff’s Petition failed to state a breach of contract claim against Foremost.
The Court reached the same conclusion with respect to Plaintiff’s bad faith claim. The Petition merely sets forth the legal standard applicable to Louisiana bad faith claims, without providing factual support for Plaintiff’s allegations that Foremost acted in bad faith.
Leave to Amend
In its Opposition brief, Plaintiff requested leave to amend its Petition if the Court agrees with Foremost that the Petition is deficient.
While Plaintiff has failed to explain how it would amend its Petition Plaintiff shall have fourteen (14) days to file an amended petition addressing the deficiencies raised as to the sufficiency of its breach of contract and bad faith claims.
The Motion to Dismiss Pursuant to Federal Rule 12 was granted.
Plaintiff was granted fourteen (14) days from the date of this Order to file an amended pleading that addresses the deficiencies raised in the Motion to Dismiss regarding the sufficiency of its breach of contract and bad faith claims. Failure to amend will result in dismissal.
ZALMA OPINION
The USDC requires proper, detailed and effective pleading when suing for breach of contract or the tort of bad faith, not just a parade of horribles alleged against the defendant with the statutory requirements without supportive facts. The USDC spend much of its opinion explaining to the Plaintiff what is required to plead a viable complaint against Foremost if the facts exist.
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ZIFL – Volume 30, Issue 9 – May 1, 2026
Read the full article at https://www.linkedin.com/pulse/zalmas-insurance-fraud-letter-may-1-2026-barry-zalma-esq-cfe-2tywc, see the video at at and at https://zalma.com/blog plus more than 5300 posts.
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
ZIFL – Volume 30, Issue 9 – May 1, 2026
Zalma’s Insurance Fraud Letter (ZIFL) continues its 30th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year and is written by Barry Zalma.
DOJ Creates National Fraud Enforcement Division
Will the Feds Take on Insurance Fraud? Possibly as Part of a National Anti-Fraud Effort
On April 7, 2026, the Acting Attorney General, Todd Blanche, issued a memorandum establishing the Department of Justice National Fraud Enforcement Division (NFED). The memo describes an ambitious, but perhaps redundant, vision for this ...
When Abalone Died As a Result of Multiple Causes The Efficient Proximate Cause Requires Payment
Post number 5345
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In American Abalone Farms, LLC v. Star Insurance Company et al., H052643, California Court of Appeals, Sixth District (April 27, 2026) the Court of Appeals dealt with an insurance coverage issue that required application of the efficient proximate cause doctrine.
FACTS
American Abalone Farms, LLC ("American Abalone" ) operates an aquaculture farm in Santa Cruz County, California, raising abalone in tanks. In August 2020, the CZU Lightning Complex Fires led to a prolonged power outage and road closures near the farm. As a result, the farm’s water pumps failed, causing the death of most of the ...
Breach of a Specific Condition Precedent Is a Complete Defense
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In United Services Automobile Association and State Farm Mutual Automobile Insurance Company v. Anthony Wenzell, 2026 CO 25 (Colo. Apr. 27, 2026) Anthony Wenzell was rear-ended in a car accident. He had a significant prior 2014 accident that required back surgery.
Wenzell claimed underinsured-motorist (UIM) benefits under three policies: (1) the tortfeasor’s liability policy, (2) his own primary UIM policy with State Farm, and (3) an excess UIM policy issued by USAA (under his brother’s policy, which contained an “other insurance” clause making USAA’s coverage excess over any collectible insurance).
After receiving the claims, both USAA and State Farm repeatedly requested that Wenzell execute comprehensive medical-release authorizations so they could obtain his full medical records and ...
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 ...
