Mere Negligence, Poor Judgment, Delay, Inadequate Investigation, Valuation Disagreement, or an Honest Mistake May Not Establish Bad Faith.
Post 5433
Posted on August 25, 2026 by Barry Zalma
In Joseph Russell Falasco v. USAA Casualty Insurance Company, No. 25-2632, United States Court of Appeals, Eighth Circuit (August 18, 2026) Joseph Russell Falasco insured a restored 1974 Porsche 911S through USAA. After the Porsche caught fire in August 2023, Falasco reported the loss and initially believed the vehicle was a total loss. USAA investigated the origin and cause of the fire, sent a reservation-of-rights letter, retained an appraiser, and referred the claim to its special investigations unit after questions arose about whether the fire was accidental.
The investigation ultimately indicated the fire likely resulted from deteriorated fuel lines rather than intentional conduct.
USAA offered $46,106.75 based on a CCC valuation using two comparable Porsche vehicles. Falasco disputed the valuation, argued the comparables were inappropriate, and proposed higher-value comparables from Bring a Trailer.
USAA declined to use those comparables, later obtained a Sotheby’s appraisal valuing the Porsche at about $65,000, and paid the difference between that appraisal and its prior payment.
A jury later awarded Falasco damages on his breach-of-contract claim, but the district court granted summary judgment to USAA on Falasco’s bad-faith and unfair-settlement-practices claims.
LAW
Under Arkansas law, an insurer commits the tort of bad faith only when it engages in affirmative misconduct that is dishonest, malicious, or oppressive. The required state of mind must reflect hatred, ill will, or a spirit of revenge. Mere negligence, poor judgment, delay, inadequate investigation, valuation disagreement, or an honest mistake does not establish bad faith.
DISCUSSION
Falasco argued that USAA acted in bad faith by undervaluing the Porsche, conducting a fraud or arson investigation to pressure him, misrepresenting policy terms and claims procedures, and repeatedly seeking title to the vehicle before settlement. The Eighth Circuit rejected each theory. It reasoned that valuation is inherently subjective, USAA could rely on CCC’s third-party appraisal, USAA responded to Falasco’s proposed comparables, and USAA later obtained and paid based on a higher Sotheby’s appraisal. The Eighth Circuit also held that USAA was entitled to investigate a fire of unknown origin, especially because no report identified the cause of the fire when Falasco submitted the claim.
The Eighth Circuit further concluded that USAA’s inaccurate statements about an appraisal clause, “arbitration law,” fire-report requirements, policy access, and automated settlement emails were mistakes or miscommunications rather than evidence of malicious or oppressive conduct. It also found no conversion or bad-faith title procurement because Falasco initially consented to USAA’s possession of the Porsche, USAA had contractual inspection rights, and the repeated title requests appeared to result from communications problems involving USAA and Copart.
ANALYSIS
The majority treated Falasco’s evidence as showing, at most, disputed valuation, delay, investigation, and negligent or mistaken claim handling. Because Arkansas bad-faith law sets a demanding threshold, the court separated each alleged act and found none showed affirmative misconduct carried out with the required culpable state of mind. The fact that USAA substantially paid the claim after further appraisal and that only a relatively small additional amount remained after trial supported the majority’s view that USAA reasonably attempted to discharge its contractual obligations.
CONCLUSION
The Eighth Circuit affirmed the district court’s grant of partial summary judgment for USAA on Falasco’s bad-faith claim. The undisputed facts did not show dishonest, malicious, or oppressive conduct under Arkansas law.
Judge Grasz dissented, concluding that a reasonable jury could infer bad faith from the totality of the circumstances and that the claim should have proceeded further.
ZALMA OPINION
Many people, and lawyers, believe that the refusal to pay an insured what he wants to resolve a claim is sufficient to prove the tort of Bad Faith. Although a 1974 Porsche might be considered antique or highly valuable it is just a car that, like any other product, can be valued. USAA used CCC, a valuation organization to value the car and later, when Sotheby’s showed it was worth more than the CCC evaluation it paid it. The investigation and adjustment was less than perfect but there was none of the dishonest, malicious or oppressive conduct required to prove the tort. Just being wrong is not bad faith.
(c) 2026 Barry Zalma & ClaimSchool, Inc.
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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 ...
Policy Limits Demand Accepted Settles Claim
Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute
In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange, The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.
FACTUAL BACKGROUND
Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...
Policy Limits Demand Accepted Settles Claim
Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute
In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange, The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.
FACTUAL BACKGROUND
Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
Posted on September 1, 2026 by Barry Zalma
Zalma’s Insurance Fraud Letter (ZIFL) continues its 30th year of publication dedicated to those involved in educing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/
This issue contains the following articles about insurance fraud:
Long Island Rep. Laura Gillen Is Taking Aim At Criminals Who Have Been Caught Staging Car Accidents.
Time for a Federal Crime of Insurance Fraud
The accidents may be shams, but the felonies would be real. On Thursday, Gillen (D-NY) introduced the Stop Auto Fraud Act of 2026, which would make the “crash for cash” practice a federal offense punishable by up to 10 years behind bars, with sentence enhancements for smash-ups causing injury or death.
Rep. Laura Gillen is hoping her bipartisan bill will become law to give prosecutors a federal crime to prosecute cash for crash ...
Communications with Arson Investigation is Privileged
Post 5488
Posted on September 11, 2026 by Barry Zalma
ACE Was Not Required To Produce Any Disputed Document Because Each Was Protected By The Attorney-Client Privilege, or The Work-Product Doctrine.
See the full video at and at https://rumble.com/v7fbzvo-arson-for-profit-is-ground-to-deny-claim.html
In Rubesne Resources LLC, a Colorado Limited Liability Company v. ACE Property And Casualty Insurance Company, a Foreign Corporation, Civil Action No. 1:24-cv-02300-DDD-SBP, United States District Court, D. Colorado (August 30, 2026) Rubesne Resources LLC sought insurance coverage from ACE Property and Casualty Company after a January 5, 2024 fire destroyed its business.
South Metro Fire Rescue classified the ignition as intentional, and ACE’s retained expert concluded that gasoline had been poured in multiple areas and ignited. ACE retained coverage and subrogation counsel, National Subrogation Services, and a cause-and-origin expert ...
Arson for Profit is Ground to Deny Claim
Posted on September 11, 2026 by Barry Zalma
Communications with Arson Investigation is Privileged
Post 5488
ACE Was Not Required To Produce Any Disputed Document Because Each Was Protected By The Attorney-Client Privilege, or The Work-Product Doctrine.
See the full video at and at https://rumble.com/v7fbzvo-arson-for-profit-is-ground-to-deny-claim.html
In Rubesne Resources LLC, a Colorado Limited Liability Company v. ACE Property And Casualty Insurance Company, a Foreign Corporation, Civil Action No. 1:24-cv-02300-DDD-SBP, United States District Court, D. Colorado (August 30, 2026) Rubesne Resources LLC sought insurance coverage from ACE Property and Casualty Company after a January 5, 2024 fire destroyed its business.
South Metro Fire Rescue classified the ignition as intentional.
After reviewing the disputed documents in camera, the court found that each was protected.
LAW
Colorado Revised Statutes § 10-4-1003 requires ...