Arson by Insured’s Management Voids Coverage
Post 5156
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Corporate Owners are not Innocent Co-Insureds
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Arson by Insured’s Management Voids Coverage
Post 5156
Arson for Profit by Corporate Entity Management Voids Policy
Following a fire that destroyed The Press Bar and Parlor in St. Cloud, Minnesota the insurer denied coverage after its determination that Andrew Welsh – a controlling officer of the insured intentionally set the fire and submitted a false proof of loss.
In Timeless Bar, Inc., doing business as The Press Bar and Parlor; Horseshoe Club, LLC; Jessie Welsh v. Illinois Casualty Company, No. 24-2245, United States Court of Appeals, Eighth Circuit (July 22, 2025)
BACKGROUND
In 2016, Andrew and Jessie Welsh purchased The Press Bar and Parlor. They managed the business through two legal entities: Horseshoe Club, LLC, which owned the real estate, and Timeless Bar, Inc., which operated the bar.
Incident and Legal Proceedings
The Press Bar and Parlor in St. Cloud, Minnesota was destroyed by fire on February 17, 2020. Law enforcement found that Andrew Welsh, a controlling officer of the insured, intentionally set the fire.
ICC denied the claim based on three policy provisions: Concealment, Misrepresentation or Fraud; Dishonesty Exclusion; and Intentional Acts Exclusion.
Court’s Decision
The District Court concluded Andrew’s conduct barred recovery under the policy.
KEY LEGAL POINTS
Jessie Welsh’s claims were dismissed due to lack of standing as a non-insured. Andrew’s conduct was deemed attributable to both business entities.
CONCLUSION
The court affirmed the district court’s judgment, denying coverage for the loss or damage caused by the fire.
Coverage under the policy was subject to a number of conditions. One of the listed conditions is categorized as “concealment, misrepresentation or fraud.” The policy refused to allow an insured to recover for a fire intentionally caused by the insured.
As noted by the district court, the policy determination of whether coverage should be extended to innocent, nonnamed business owners rests with the state legislature, not the federal courts.
ZALMA OPINION
When a person in control of two corporate entities commits arson-for-profit he, and the corporations he controlled, committed fraud when a proof of loss was submitted saying the fire was accidental. The corporate entities could not be “innocent” co-insureds when they were controlled by the arsonist. In this case crime didn’t pay.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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ZIFL Volume 30, Number 2
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
Post number 5260
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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 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/ This issue contains the following articles about insurance fraud:
Read the full 19 page issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/01/ZIFL-01-15-2026.pdf.
The Contents of the January 15, 2026 Issue of ZIFL Includes:
Use of the Examination Under Oath to Defeat Fraud
The insurance Examination Under Oath (“EUO”) is a condition precedent to indemnity under a first party property insurance policy that allows an insurer ...
ERISA Life Policy Requires Active Employment to Order Increase in Benefits
Post 5259
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In Katherine Crow Albert Guidry, Individually And On Behalf Of The Estate Of Jason Paul Guidry v. Metropolitan Life Insurance Company, et al, Civil Action No. 25-18-SDD-RLB, United States District Court, M.D. Louisiana (January 7, 2026) Guidry brought suit to recover life insurance proceeds she alleges were wrongfully withheld following her husband’s death on January 9, 2024.
FACTUAL BACKGROUND
Jason Guidry was employed by Waste Management, which provided life insurance coverage through Metropolitan Life Insurance Company (“MetLife”). Plaintiff contends that after Jason’s death, the defendants (MetLife, Waste Management, and Life Insurance Company of North America (“LINA”)) engaged in conduct intended to confuse and ultimately deny her entitlement to...
Failure to Respond to Motion to Dismiss is Agreement to the Motion
Post 5259
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In Mercury Casualty Company v. Haiyan Xu, et al., No. 2:23-CV-2082 JCM (EJY), United States District Court, D. Nevada (January 6, 2026) Plaintiff Mercury Casualty Company (“plaintiff”) moved to dismiss. Defendant Haiyan Xu and Victoria Harbor Investments, LLC (collectively, “defendants”) did not respond.
This case revolves around an insurance coverage dispute when the parties could not be privately resolved, litigation was initiated in the Eighth Judicial District Court of Nevada. Plaintiff subsequently filed for a declaratory judgment in this court.
On or about April 15, 2025, the state court action was dismissed with prejudice pursuant to a stipulation following mediation. Plaintiff states that the state court dismissal renders its ...
Court Must Follow Judicial Precedent
Post 5252
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Insurance Policy Interpretation Requires Application of the Judicial Construction Doctrine
In Montrose Chemical Corporation Of California v. The Superior Court Of Los Angeles County, Canadian Universal Insurance Company, Inc., et al., B335073, Court of Appeal, 337 Cal.Rptr.3d 222 (9/30/2025) the Court of Appeal refused to allow extrinsic evidence to interpret the word “sudden” in qualified pollution exclusions (QPEs) as including gradual but unexpected pollution. The court held that, under controlling California appellate precedent, the term “sudden” in these standard-form exclusions unambiguously includes a temporal element (abruptness) and cannot reasonably be construed to mean ...
Lack of Jurisdiction Defeats Suit for Defamation
Post 5250
Posted on December 29, 2025 by Barry Zalma
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He Who Represents Himself in a Lawsuit has a Fool for a Client
In Pankaj Merchia v. United Healthcare Services, Inc., Civil Action No. 24-2700 (RC), United States District Court, District of Columbia (December 22, 2025)
FACTUAL BACKGROUND
Parties & Claims:
The plaintiff, Pankaj Merchia, is a physician, scientist, engineer, and entrepreneur, proceeding pro se. Merchia sued United Healthcare Services, Inc., a Minnesota-based medical insurance company, for defamation and related claims. The core allegation is that United Healthcare falsely accused Merchia of healthcare fraud, which led to his indictment and arrest in Massachusetts, causing reputational and business harm in the District of Columbia and nationwide.
Underlying Events:
The alleged defamation occurred when United ...
Zalma’s Insurance Fraud Letter
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ZIFL Volume 29, Issue 24
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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/
Zalma’s Insurance Fraud Letter
Merry Christmas & Happy Hannukah
Read the following Articles from the December 15, 2025 issue:
Read the full 19 page issue of ZIFL at ...
