An Assignment of Rights to Sue an Insurer Was a Poor Decision
Internet Failure Causes Loss to On Line Auction
See the video at https://lnkd.in/gQ-VMf6b and at https://lnkd.in/gfmkwby7, and at https://zalma.com/blog plus more than 5250 posts.
In Auto-Owners Insurance Company v. Halo Foundation: Helping Art Liberate Orphans, No. 25-1275, United States Court of Appeals, Eighth Circuit (January 27, 2026) the Helping Art Liberate Orphans Foundation challenges Auto-Owners Mutual Insurance Company’s denial of liability under its insurance policy. HALO argued that a broken YouTube link for its virtual auction caused losses covered by the policy. The district court disagreed, granting summary judgment to AutoOwners.
FACTUAL BACKGROUND
HALO, a non-profit organization, hosts an annual art auction. In 2022, it was virtual. To livestream it, HALO contracted with Paradise Productions KC, LLC and Qtego Fundraising Services. Paradise would handle the visual feed, Qtego the bidding software. Paradise created a YouTube link for attendees to view the livestream. Qtego, using the link, synced its software with the livestream. Synced, attendees could view the auction and place bids on one screen.
Minutes before the auction, Paradise lost connection to the internet at its studio. While short lived, the outage permanently broke the YouTube link, ending the connection between the visual feed and bidding software. Attendees could neither place bids nor view the auction. Improvising, HALO diverted the stream to Facebook Live, causing asynchronous visuals and bidding. HALO raised significantly less money than projected due to the broken link.
HALO threatened to sue Paradise for breach of contract and negligence. Unable to pay, Paradise assigned to HALO its claim against its insurer, AutoOwners.
THE POLICY
Auto-Owners’ general liability insurance policy covers “property damage,” including the “[l]oss of use of tangible property that is not physically injured.” The policy, however, excludes: “Damages arising out of the loss of, loss of use of, damage to, corruption of, inability to access, or inability to manipulate electronic data.”
Electronic data was defined as “information, facts or programs stored as or on, created or used on, or transmitted to or from computer software, including systems and applications software, . . . data processing devices or any other media which are used with electronically controlled equipment.”
In the district court, Auto-Owners sued for a declaratory judgment that no coverage exists for the outage. It argued, in part, coverage was barred by policy exclusions. The district court granted summary judgment for Auto-Owners, ruling that the electronic-data exclusion bars recovery. HALO appealed.
ANALYSIS
Insurance contracts are read as a whole to determine the intent of the parties, giving effect to that intent by enforcing the contract as written.
The central issue a court faced with the requirement to interpret contract language is determining whether any ambiguity exists, which occurs where there is duplicity, indistinctness, or uncertainty in the meaning of the words used in the contract. If the policy language is clear and unambiguous, it must be construed as written.
If ambiguities exist, courts construe them in favor of the insured, but only when a reasonable person would expect coverage under the policy terms.
Under Missouri law, the insured has the burden of proving coverage, and the insurer has the burden of proving that an exclusion applies.
HALO argued that the policy’s plain language covers its lost auction revenue. It asserted that the bidders’ inability to access the YouTube livestream on their electronic devices is a loss of tangible property that is not physically injured. The Eighth Circuit agreed with the trial court and concluded that the policy’s electronic-data exclusion bars recovery.
This provision excludes coverage for: “Damages arising out of the loss of, loss of use of, damage to, corruption of, inability to access, or inability to manipulate electronic data.” (emphasis added)
The exclusion’s plain language clearly and unambiguously bars HALO from coverage. The Eighth Circuit found that a policy must be enforced as written when its language is clear and unambiguous and concluded that the district court properly granted summary judgment and the judgment was affirmed.
ZALMA OPINION
When a party, like HALO, has a good case against a potential defendant it can resolve the dispute by settlement or litigation and collect its losses from the assets of the defendant or its insurer. Since the defendants did not have the assets to pay for HALO’s losses it offered to assign its rights against its insurer so that HALO could sue the insurer for freedom from a potential judgment. HALO took a chance, took the assignment and sued the insurer only to find it bought a pig in a poke because there was no coverage. No one should settle by taking an assignment against an insurer unless sure that coverage applies. HALO wasted its legal fees to sue AUTO-OWNERS.
(c) 2026 Barry Zalma & ClaimSchool, Inc.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to my substack at https://barryzalma.substack.com/subscribe
Go to X @bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/account/content?type=all; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the InsuranceClaims Library – https://lnkd.in/gwEYk.
Insurance Expert May Not Testify to Speculative and Contains Unsupported Conclusions.
Posted on September 18, 2026 by Barry Zalma
See the full video at and at https://rumble.com/v7fmifw-expert-may-only-testify-to-what-experience-supports.html
In Michele A. Over, and The Estate Of Paul R. Over v. State Farm Mutual Automobile Insurance Company, and State Farm Fire And Casualty Company, Civil Action No. 23-cv-02243-PAB-STV, United States District Court, D. Colorado (September 14, 2026) Michele and Paul Over sued State Farm Fire and State Farm Auto over hail-damage and stolen-vehicle claims.
The operative dispute concerned State Farm Auto’s motion to exclude or limit opinions from plaintiffs’ insurance-industry expert, Aaron Castillo. Castillo.
Law
The proponent of expert testimony must establish by a preponderance of the evidence that an expert is qualified and that the opinions are helpful, sufficiently grounded, and reliably derived and applied. Experience-based opinions must explain how the...
150 Months in Prison for Tax Fraud
Post 4846
Posted on September 17, 2026 by Barry Zalma
See the full video at https://lnkd.in/g8rh3JBX and https://lnkd.in/gmkdy-9C, In United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS
In United States Of America v. Thomas Addaquay, United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS
Thomas Addaquay controlled United Consolidated Accounting and Business Services (UC), nominally a check-cashing business.
The government proved a three-stage tax-refund scheme that converted the resulting refund checks into usable funds through ...
Major Fraud Perpetrator Asserts Fifth Amendment Privilege to Avoid Prosecution
Post 5489
Posted on September 14, 2026 by Barry Zalma
Fraudster Refuses to Answer Questions About His Alleged Fraud
See the full video at https://lnkd.in/gvicAMDr and at https://lnkd.in/gvicAMDr
In Great American Insurance Co. v. Gemstone Property Management, LLC, et al., No. 23-cv-9100 (LJL), United States District Court, S.D. New York (September 8, 2026) Great American Insurance Company alleged that it was defrauded through a scheme in which Subin Associates, LLP recruited individuals to stage construction-site injuries, arranged unnecessary medical treatment and litigation funding, and pursued fraudulent personal-injury claims.
Luis Manuel Garcia Salcedo, resulted in a $6 million settlement. Non-party Jose Hernandez allegedly worked as an assistant manager at Subin, operated Hernandez Associates, and owned litigation-funding companies that shared office space with Subin and provided services to its clients.
After Great American ...
Inadequately Briefed Issues Defeats Appeal
Post 4852
Issues on Appeal Must be Adequately Briefed
Posted on September 25, 2026 by Barry Zalma
In Emy Ojekwe v. Connecticut Transit District Consortium, No. AC 47389, Court of Appeals of Connecticut (September 22, 2026) Emy Ojekwe alleged that he was injured on September 24, 2020, while leaving a bus operated by Connecticut Transit District Consortium, doing business as Greater Bridgeport Transit Authority.
According to his complaint, the wheelchair ramp began to rise before he had fully exited, causing his wheelchair to fall backward and allegedly injuring several parts of his body and damaging the wheelchair. The defendant denied negligence and alleged comparative negligence. After a two-day jury trial in November 2023, the jury returned a defense verdict.
The trial court denied Ojekwe’s motion to set aside the verdict and for a new trial, and he appealed.
LAW
A trial court’s refusal to set aside a verdict because of counsel’s improper remarks is reviewed for abuse of ...
Inadequately Briefed Issues Defeats Appeal
Post 4852
Issues on Appeal Must be Adequately Briefed
Posted on September 25, 2026 by Barry Zalma
In Emy Ojekwe v. Connecticut Transit District Consortium, No. AC 47389, Court of Appeals of Connecticut (September 22, 2026) Emy Ojekwe alleged that he was injured on September 24, 2020, while leaving a bus operated by Connecticut Transit District Consortium, doing business as Greater Bridgeport Transit Authority.
According to his complaint, the wheelchair ramp began to rise before he had fully exited, causing his wheelchair to fall backward and allegedly injuring several parts of his body and damaging the wheelchair.
LAW
Refusal to set aside a verdict because of counsel’s improper remarks is reviewed for abuse of discretion.
Appellate claims receiving only cursory treatment, without record citations, supporting authority, or legal analysis, are inadequately briefed.
DISCUSSION
Improper opening remarks.
Defense counsel referred to Ojekwe’s national origin,...
Psychiatrist Who Was Convicted of Fraud Asked the First Circuit to Reduce his Punishment
Post 4851
Posted on September 24, 2026 by Barry Zalma
Fraud to Private and Public Health Insurers Doesn’t Pay
In United States v. Gustavo Kinrys, Nos. 24-1592, 24-1716, United States Court of Appeals, First Circuit (September 21, 2026) Gustavo Kinrys, a Massachusetts psychiatrist, submitted fraudulent claims to private and public health insurers from 2015 through 2018, including bills for more than 1,000 sessions when he or the purported patient was outside the country. When insurers requested supporting records, he delayed through a fictitious office manager and created false documentation.
A jury convicted Kinrys on fourteen counts. The district court imposed a 99-month sentence, calculated intended loss at slightly more than $19 million based on billed amounts, ordered $6,537,309.59 in restitution, and ordered $6,527,391.19 in forfeiture.
At sentencing, the district court calculated Kinrys’s base offense level to be ...
