Failure to Plead Sufficient Facts to State a Facially Plausible Claim Defeats Suit
Post number 5378
Read the full article at https://www.linkedin.com/pulse/court-applies-law-written-barry-zalma-esq-cfe-itwrc and at https://zalma.com/blog plus more than 5350 posts.
Screwed by Insurance Brokers Judge Allows Plaintiff to Continue some of His Suit
In Wilfredo Cruz, et al. v. Bay Point Insurance LLC, et al., Civil Action No. GLR-25-44, United States District Court, D. Maryland on June 10, 2026 dealt with a suit brought by Wilfredo Cruz who alleged that Bay Point Insurance LLC, Karl Smith, and David Small committed insurance fraud in connection with insurance policies brokered for Cruz’s trucking business, W&DC General Contractor, LLC.
Cruz claimed Defendants represented that they could procure workers’ compensation, commercial general liability, motor cargo, and physical damage coverage even though Bay Point Insurance and Small allegedly were not licensed to transact insurance in Virginia at the relevant time. After two tractors were involved in a January 26, 2024 incident in Baltimore, Cruz reported the matter and sought claim handling and policy documents, but alleged that Defendants failed to provide the policies or benefits.
Cruz further alleged that the lack of coverage caused business losses, the shutdown of W&DC General Contractor, and other damages.
LAW:
The Court applied Rule 12(b)(6), under which a complaint must plead sufficient facts to state a facially plausible claim, and Rule 9(b), which requires fraud-based allegations to be pleaded with particularity.
For the RICO claim, Cruz had to allege conduct of an enterprise through a pattern of racketeering activity and, for conspiracy, knowledge of an agreement to facilitate RICO violations. The Court also applied Virginia law governing the Virginia Consumer Protection Act, common law civil conspiracy, fraud, tortious interference, breach of fiduciary duty, breach of contract, and indemnification, as well as Federal Rule of Civil Procedure 55 governing default.
DISCUSSION/ANALYSIS:
The Court first denied Cruz’s Motion for Entry of Partial Default because Defendants had filed a Motion to Dismiss, which constituted defending the action and postponed the time to answer even if the motion did not address every count.
CONCLUSIONS
On the Motion to Dismiss:
The Court dismissed the RICO conspiracy claim because Cruz alleged only conclusory assertions of agreement and did not plead specific facts showing how, when, or where Defendants agreed to form or participate in a RICO enterprise.
The Court dismissed the Virginia Consumer Protection Act claim because the insurance transactions involved Cruz’s business and tractors, not goods or services primarily for personal, family, or household purposes.
The Court dismissed the common law civil conspiracy claim because Bay Point Insurance, its owner Smith, and employee Small were not legally separate entities capable of conspiring with one another under the intracorporate-conspiracy principle.
However, the Court allowed the fraud claims to proceed because Cruz pleaded alleged misrepresentations about insurance coverage, reliance, damages, requests for policy documents, and licensing dates with enough detail at the pleading stage.
The Court also allowed the tortious interference claim to proceed, finding sufficient allegations that Defendants knew of and interfered with Cruz’s business relationships by allegedly selling insurance without proper licensing.
The breach of fiduciary duty claim survived because an insurance broker may owe fiduciary duties to an insured once an agency relationship is established.
The breach of contract and contractual indemnification claims also survived because W&DC General Contractor had been joined as a party and Defendants raised no other basis for dismissal.
ZALMA OPINION
When an insurance broker or agent fails to deal fairly and in good faith to sue for the damages caused by the action of the insurance agents or brokers caused. That is not necessarily east and usually requires the work of an experienced attorney. A court must, as did the USDC, apply the law when the allegations in the suit are challenged. The court removed the causes of actions that a complaint must plead sufficient facts to state a facially plausible claim, and Rule 9(b), which requires fraud-based allegations to be pleaded with particularity.
(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.
To Prove Fraud Material False Statements Must be Proved
Post number 5389
Posted on July 8, 2026 by Barry Zalma
See the video at and at
Materiality Must Be Judged Objectively.
In People Of The State Of California Ex Rel. Heath & Yuen, APC v. Silver Bird Auto Leasing, LLC et al., B342847, California Court of Appeals, Second District, Eighth Division (June 5, 2026) Heath & Yuen, APC defended a tour van driver and related defendants in an underlying auto-collision action brought by Silver Bird Auto Leasing, LLC after a low-speed collision involving Silver Bird’s McLaren and a tour van.
Silver Bird alleged the McLaren was making a legal turn and sought damages including repair costs, loss of use, and diminution in value. The defendants’ insurer later became insolvent, and CIGA took over the defense and ultimately paid $25,000 to settle the underlying action.
After settlement, Heath & Yuen filed a ...
To Prove Fraud Material False Statements Must be Proved
Post number 5389
Posted on July 8, 2026 by Barry Zalma
See the video at and at
Materiality Must Be Judged Objectively.
In People Of The State Of California Ex Rel. Heath & Yuen, APC v. Silver Bird Auto Leasing, LLC et al., B342847, California Court of Appeals, Second District, Eighth Division (June 5, 2026) Heath & Yuen, APC defended a tour van driver and related defendants in an underlying auto-collision action brought by Silver Bird Auto Leasing, LLC after a low-speed collision involving Silver Bird’s McLaren and a tour van.
Silver Bird alleged the McLaren was making a legal turn and sought damages including repair costs, loss of use, and diminution in value. The defendants’ insurer later became insolvent, and CIGA took over the defense and ultimately paid $25,000 to settle the underlying action.
After settlement, Heath & Yuen filed a ...
Arsonist Tried To Represent Himself, Failed, and Sought Habeas Relief
Post number 5357
Read the full article at https://www.linkedin.com/pulse/he-who-acts-his-own-lawyer-has-idiot-client-barry-zalma-esq-cfe-d4bwc, See the full video at and at and at https://zalma.com/blog.
Karacson’s Arson for Profit Attempt Required Skill & Experience to Succeed
In Steve Ellis Karacson v. David Shaver, Warden, No. 25-1089, United States Court of Appeals, Sixth Circuit (May 20, 2026) Steve Karacson was convicted in Michigan state court of arson and insurance fraud after evidence showed he burned his own insured home. Investigators found multiple points of origin, gasoline odor, and evidence tying him to the scene, including cell-phone location data and a receipt showing he had purchased a gas can and gloves shortly before the fire.
FACTS
Karacson initially had appointed counsel, but his relationships with both appointed attorneys ...
Data Breach Requires Plaintiff’s Own Information was Missued
Post number 5394
The Dismissal Based on Lips’s Failure to Plead Injury in Fact,
Posted on July 14, 2026 by Barry Zalma
Read the full article at https://lnkd.in/gDQZc5vP and at https://zalma.com/blog plus more than 5350 posts.
In Danielle Lips, on behaf of hersef and all others similarly situated v. ACCU Reference Medical Lab, LLC, Civil Action No. 25-13642 (SDW) (CF), United States District Court, D. New Jersey (June 24, 2026) a data-breach class action, the District of New Jersey granted Accu Reference Medical Lab, LLC’s motion to dismiss because Plaintiff Danielle Lips failed to plead Article III standing.
FACTS:
Lips alleged that ACCU, a medical testing laboratory, obtained her personally identifiable information and protected health information through diagnostic testing ordered by her former physician. She claimed the Qilin ransomware group stole ACCU’s data and posted screenshots containing some patients’ unredacted information on the...
Prisoner’s Failure to Exhaust Administrative Remedies Fatal to Suit
Post number 5393
It Does not Pay to Violate the Conditions of Post-Release Supervision
Posted on July 13, 2026 by Barry Zalma
In Monnie Villarreal v. VitalCore; Nancy Unknown, Nurse Practitioner, VitalCore/Jackson County; John Ledbetter, Sheriff; Geneva Drummond, No. 25-60415, United States Court of Appeals, Fifth Circuit (July 9, 2026) Monnie Villarreal, convicted of conspiracy to commit insurance fraud and later placed on post-release supervision, was arrested for violating the terms of that supervision and detained at the Jackson County Adult Detention Center.
While incarcerated he alleged inadequate diabetes care and later an assault by another inmate, asserting claims under 42 U.S.C. § 1983 against medical providers and correctional officials.
LAW:
The Prison Litigation Reform Act bars a prisoner from bringing a § 1983 action concerning prison conditions until all available administrative remedies are exhausted. ...
Plaintiff Representing Herself Failed to Allege Jurisdiction
Adverse Rulings Alone Almost Never Establish Bias
Post number 5392
Posted on July 10, 2026 by Barry Zalma
In Decheri Hafer v. Farmers Insurance Agency, No. 1:22-cv-0808 KES SKO, United States District Court, E.D. California (June 30, 2026) DeCheri Hafer, proceeding pro se, sued Farmers Insurance Agency alleging perjury, fraud, insurance fraud, and breach of contract.
After screening, the magistrate judge found the complaint deficient and allowed amendment. Plaintiff filed a first amended complaint objecting to all magistrate judges, while defendant moved to dismiss.
The magistrate judge recommended dismissal for lack of subject-matter jurisdiction because the amount in controversy was wholly unsubstantiated. Plaintiff did not object and instead sought default. The district court adopted the recommendation, dismissed the action without prejudice, denied default, entered judgment, and closed the case.
More than three years later, Plaintiff moved under Rule 60(b)(4) ...
