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.
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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 ...
Employee Report of Fraud Results in Damages Suit After Qui Tam Suit Settled
No Statutory Hearing Right Arose Because No Dental Commission Complaint License Suspension, Revocation, Or Sanction Occurred.
Post 4855
Posted on October 2, 2026 by Barry Zalma
In Abbas Mohammadi et al. v. William M. Tong et al., No. AC 47598, Court of Appeals of Connecticut (September 29, 2026) Abbas Mohammadi owned and operated Columbia Dental, P.C., which provided dental services through multiple Connecticut offices; Columbia Oral Maxillofacial Imaging, LLC served as the billing entity.
From April 2012 to February 27, 2013, Columbia Dental employed Brittany Ames Mahoney as a dental assistant. During her employment, Mahoney claimed to have discovered certain billing irregularities, including, but not limited to, false and fraudulent reimbursement claims submitted to the Department of Social Services for services rendered to Medicaid beneficiaries. Mahoney filed a complaint and an affidavit in the United States District Court for the District of...
Another Anniversary for Barry Zalma, Inc
Posted on October 1, 2026 by Barry Zalma
From October 1, 1979 – 2026
Post 4854
Read the full issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/09/ZIFL-10-01-2026.pdf Forty seven years ago today I left the world of the employed and became an entrepreneur by opening my own law firm. The law practice was incorporated shortly thereafter as Barry Zalma, Inc.
When I opened for business on October 1, 1979, I had no clients and no certainty that I would have any in the future. I had borrowed money from the bank to carry me through the first six months and was concerned about my ability to pay the loan with my third child about to be born.
Much to my surprise and pleasure, on October 1, 1979, at 8:10 a.m., the best claims handler in the London market, Alan Warboys, called from London and provided me with my first case as an independent lawyer to represent Certain Underwriters at Lloyd’s, London. He, and the Lloyd’s Underwriters he represented, showed faith in me as a lawyer and insurance expert. Alan is now, although ...
Defendants Successfully Moved for Summary Judgment
Post 4854
Posted on September 30, 2026 by Barry Zalma
In Jeffrey Wayne Phillips v. Creative Website Studios, et al., No. 5:23-CV-568-BO-BM, United States District Court, E.D. North Carolina, Western Division (September 28, 2026) the Court needed to rule on the order and memorandum and recommendation (“M&R”) of the Magistrate.
Jeffrey Wayne Phillips had contracted with Creative Website Studios and SR Telecommunications for website and hosting services. He alleged that defendants repeatedly billed him for hosting periods he had already paid for and later took down his website. Phillips claimed the outage prevented him from bidding on U.S. government security contracts and sought roughly $300 million in consequential damages.
LAW
Under North Carolina law, fraud requires a false material representation or concealment, intent and effect of deception, resulting damage, and reasonable reliance. Obtaining property by false pretenses similarly requires an ...
