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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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 ...
If Grounds For Dismissal Are Apparent From The Face Of The Complaint, A Court May Also Dismiss The Case on The Court’s Own Motion
Posted on October 5, 2026 by Barry Zalma
Pro Se Plaintiff Failed to Make a Short and Plain Statement
Post 4856
In Tak Lun Ng v. United Financial Casualty Company, No. 26-cv-03136-LJC, United States District Court, N.D. California (September 28, 2026) Tak Lun Ng, proceeding pro se, sued United Financial Casualty Company over a March 2, 2021 automobile accident and the insurer’s March 24, 2021 refusal to pay him.
He appeared to assert breach of contract, fraud, negligence, premises liability, product liability, and related theories. United removed the action from state court and moved to dismiss.
Ng missed that deadline but later filed several documents, including a motion for leave to amend, all of which the court reviewed.
LAW
Under Federal Rules of Civil Procedure, a complaint must provide a short and plain statement containing enough factual matter to state a facially plausible...
If Grounds For Dismissal Are Apparent From The Face Of The Complaint, A Court May Also Dismiss The Case on The Court’s Own Motion
Posted on October 5, 2026 by Barry Zalma
Pro Se Plaintiff Failed to Make a Short and Plain Statement
Post 4856
In Tak Lun Ng v. United Financial Casualty Company, No. 26-cv-03136-LJC, United States District Court, N.D. California (September 28, 2026) Tak Lun Ng, proceeding pro se, sued United Financial Casualty Company over a March 2, 2021 automobile accident and the insurer’s March 24, 2021 refusal to pay him.
He appeared to assert breach of contract, fraud, negligence, premises liability, product liability, and related theories. United removed the action from state court and moved to dismiss.
Ng missed that deadline but later filed several documents, including a motion for leave to amend, all of which the court reviewed.
LAW
Under Federal Rules of Civil Procedure, a complaint must provide a short and plain statement containing enough factual matter to state a facially plausible...
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...
