An Assignment of Rights to Sue an Insurer Was a Poor Decision
Internet Failure Causes Loss to On Line Auction
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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.
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The Right to Negotiate with Insurer is Not an Assignment of Claims
Post number 5347
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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 ...
Attempt to Withdraw Plea After Sentencing Fails
Post number 5346
Read the full article at https://www.linkedin.com/pulse/admit-crime-ready-do-time-barry-zalma-esq-cfe-hgyce, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Stealing from Insurers and Employer Gets Defendant Five Years in Prison
In State of Wisconsin v. Jacquelyn R. Harris, No. 2025AP489-CR, Court of Appeals of Wisconsin (April 22, 2026) Harris pled no contest and was found guilty. She was sentenced to five years of initial confinement and three years of extended supervision, with restitution ordered in the amounts of $31,086 to Kaliber and $25,000 to Erie Insurance Company.
FACTUAL BACKGROUND
In late 2022, Jacquelyn R. Harris was charged with theft in a business setting under WIS. STAT. § 943.20(1)(b) (2023-24). Harris, while employed as the office manager for Kaliber Collision Repair in Port ...
Attempt to Withdraw Plea After Sentencing Fails
Post number 5346
Read the full article at https://www.linkedin.com/pulse/admit-crime-ready-do-time-barry-zalma-esq-cfe-hgyce, see the video at https://rumble.com/v79hhg6-admit-to-crime-and-be-ready-to-do-the-time.html and at and at https://zalma.com/blog plus more than 5300 posts.
Stealing from Insurers and Employer Gets Defendant Five Years in Prison
In State of Wisconsin v. Jacquelyn R. Harris, No. 2025AP489-CR, Court of Appeals of Wisconsin (April 22, 2026) Harris pled no contest and was found guilty. She was sentenced to five years of initial confinement and three years of extended supervision, with restitution ordered in the amounts of $31,086 to Kaliber and $25,000 to Erie Insurance Company.
FACTUAL BACKGROUND
In late 2022, Jacquelyn R. Harris was charged with theft in a business setting under WIS. STAT. § 943.20(1)(b) (2023-24). Harris, while employed as the office manager for Kaliber Collision Repair in Port ...
It is Fraud to Make the Same Claim Twice
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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 ...
