Arson and Misrepresentation Sufficient Ground to Deny Claim
Post number 5377
Bad Faith Requires A Showing Of More Than Bad Judgment Or Negligence
Read the full article at https://www.linkedin.com/pulse/bad-faith-requires-conscious-doing-wrong-because-zalma-esq-cfe-xxkdc and at https://zalma.com/blog.
Posted on June 22, 2026 by Barry Zalma
Bad Faith Requires the Conscious Doing of a Wrong Because of Dishonest Purpose or Moral Obliquity
Posted on June 22, 2026 by Barry Zalma
Arson and Misrepresentation Sufficient Ground to Deny Claim
Post number 5377
Bad Faith Requires A Showing Of More Than Bad Judgment Or Negligence
In Jonika K. Nelson v. Allstate Vehicle & Property Insurance Co., et al, No. 4:26-CV-17-RPC-DAS, United States District Court, N.D. Mississippi, Greenville Division (June 15, 2026) under Mississippi law, bad faith requires facts showing that the insurer lacked an arguable or legitimate basis for denying the claim or acted willfully, maliciously, or with gross and reckless disregard for the insured’s rights.
FACTS:
A fire destroyed Jonika K. Nelson’s Greenville, Mississippi home and its contents on November 17, 2024. Nelson had a homeowner’s policy with Allstate and submitted a claim, which Allstate denied based on alleged arson, intentional destruction, and/or misrepresentations.
Nelson contended that she fully cooperated with Allstate’s subsequent investigation and provided all requested information and documentation. Nevertheless, Allstate denied the claim, based on allegations of arson and/or intentional destruction of the property, as well as alleged misrepresentations. After coverage was denied, Trustmark Bank (“Trustmark”), which holds a valid lien on the property as the mortgagee, filed suit in the Circuit Court of Washington County against Nelson to quiet title and to judicially foreclose on the property.
Allstate filed a Motion to Dismiss Certain Counts in Nelson’s Amended Complaint, seeking dismissal of all of Nelson’s extracontractual claims. Specifically, Allstate seeks dismissal of Nelson’s claims for bad faith, negligence, and gross negligence as well as her request for emotional distress and punitive damages. Allstate contends the claims should be dismissed for failure to state a claim pursuant to Rule 12(b)(6).
Nelson sued Allstate, asserting breach of contract, bad faith refusal to pay, negligence, gross negligence, emotional distress damages, and punitive damages. Allstate moved to dismiss all claims except breach of contract.
LAW:
Under Rule 12(b)(6), a complaint must plead enough factual matter to state a plausible claim. Conclusory allegations and legal conclusions are insufficient.
Under Mississippi law, bad faith requires facts showing that the insurer lacked an arguable or legitimate basis for denying the claim or acted willfully, maliciously, or with gross and reckless disregard for the insured’s rights. Negligence requires a duty independent of the contract, while gross negligence requires facts showing reckless indifference or willful, wanton conduct. Emotional distress damages may be available in a breach of contract action if mental anguish was foreseeable and actually suffered. Punitive damages require a viable bad faith showing.
Bad faith requires a showing of more than bad judgment or negligence; indeed, bad faith implies the conscious doing of a wrong because of dishonest purpose or moral obliquity.
DISCUSSION AND ANALYSIS:
The Court found Nelson’s bad faith allegations too conclusory because she did not plead facts explaining why Allstate’s arson, intentional-destruction, or misrepresentation grounds were incorrect or why Allstate’s investigation was unreasonable.
The negligence claim failed because the alleged duty to investigate and evaluate the claim arose from the insurance contract and was not independent of it. The gross negligence claim also failed because Nelson did not plead facts showing willful, wanton, or reckless conduct. The Court allowed the emotional distress damages request to proceed because the breach of contract claim remained unresolved, making dismissal premature.
Because the bad faith claim was inadequately pleaded, the punitive damages request also failed.
CONCLUSION:
Allstate’s motion to dismiss was granted in part and denied in part. The bad faith, gross negligence, and punitive damages claims were dismissed without prejudice; the negligence claim was dismissed with prejudice; and the emotional distress damages request survived. Because Allstate did not challenge the breach of contract claim at this stage and because Nelson has failed to plead sufficient facts, Nelson’s bad faith claim is dismissed without prejudice. Nelson’s breach of contract claim remains pending because Allstate did not seek dismissal of it.
ZALMA OPINION
It doesn’t take a genius lawyer to plead sufficient facts to allege bad faith if there are any facts to support the claim. Ms. Nelson apparently hired an honest and honorable lawyer who alleged the facts he thought he could prove but did not allege facts he or she couldn’t prove. Allstate recognized the facts, moved to dismiss, and left Ms. Nelson with a breach of contract claim she would have a difficult time proving the breach since Allstate probably had evidence sufficient to prove the arson and/or the misrepresentations.
(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://gbarryzalma.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://Cwww.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the InsuranceClaims Library – https://lnkd.in/gwEYk.
The negligence claim failed because the alleged duty to investigate and evaluate the claim arose from the insurance contract and was not independent of it.
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 ...
Is Exhaustion Required to Seek Declaratory Relief From an Excess Insurer?
Post 4578
Posted on November 9, 2026 by Barry Zalma
In Fox Paine & Company, LLC, et al. v. Twin City Fire Insurance Company et al., S287404, 593 P.3d 832, 593 P.3d 838, 346 Cal.Rptr.3d 541, Supreme Court of California, (July 27, 2026) the Supreme Court noted that Insurance is sometimes procured in a series of layers, with an insured acquiring a primary insurance policy that provides an initial layer of coverage for loss or liability and an excess insurance policy or policies that provide additional coverage in the event the underlying coverage is exhausted. Usually, the first layer of coverage must be exhausted before the excess layers are available to the insured.
Exhaustion
Fox and Paine’s investment-firm dispute generated extensive litigation and competing insurance claims. Their insurance tower consisted of a $10 million primary policy and four $10 million excess layers.
The Fox Parties alleged that insurers paid their rivals, withheld information,...
Payment of Fines & Completion of Probation Reinstates Right to Vote
Post 4576
Posted on November 5, 2026 by Barry Zalma
To Restore Voting Rights The Felon Must Pay Fines of $546.00
In Florida Supreme Court Mediator Ethics Advisory Committee, ETH F-26-377, No. F-26-377 (October 29, 2026) citizen unnamed and to Ron Desantis Governor, Cord Byrd the Secretary of State Florida Division of Elections provided an advisory opinion to a convicted felon about his right to vote:
To: [redacted] We received your request for an advisory opinion. You indicate that you have one or more felony convictions and request whether you are eligible to vote, including whether you have any outstanding legal financial obligations under section 98.0751, Florida Statutes, and, if so, a statement of the amount that must be paid to make you eligible to vote, and an explanation of how the amount was calculated.
The Division hereby responds to your request pursuant to its legal authority under section 106.23(2), Florida Statutes, and Florida ...
Administrative Review Permits the Agency to Apply its Expertise
Post 4574
In Erwin Jordan Castro Valdez v. Warden, Otay Mesa Detention Center, No. 26-cv-06147-BAS-JLB, United States District Court, S.D. California (October 30, 2026) Castro Valdez, a Cuban national paroled into the United States, was arrested on June 23, 2026, for alleged insurance fraud, grand theft, and making a false report to law enforcement. In his first habeas action, the district court ordered a bond hearing within fourteen days to determine whether the changed circumstances justified revoking his parole.
An Immigration Judge subsequently denied bond because of his pending state criminal case. Castro Valdez filed a second petition under 28 U.S.C. § 2241, challenging that determination and requesting immediate release without first appealing to the Board of Immigration Appeals (BIA).
LAW
According to the supplied text, § 2241 does not expressly require administrative exhaustion, but courts impose exhaustion as a prudential requirement. ...
