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Post number 5323

Posted on April 21, 2026 by Barry Zalma

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Law Student Taking Depositions and Argued Motions in Court Resulted in Discipline

In Frederick Mitchell v. Dawn Wigeri Van Edema et al., C102026, California Court of Appeals, Third District, Yolo (April 13, 2026) Thomas Rutaganira initiated an unlawful detainer action against Krista Mitchell. Frederick Mitchell, Krista’s father, served as a legal assistant and claimed participation in the State Bar of California law office study program, which allows individuals to qualify for the bar exam without formal law school attendance.

FACTUAL BACKGROUND

Frederick took depositions and argued motions in a related bankruptcy action, which led Keith and Dawn to file State Bar complaints, alleging Frederick’s unauthorized practice of law and Ernest’s alleged aiding of Frederick. The State Bar issued a cease and desist notice to Frederick, clarifying he was not a participant in the law office study program.

DISCUSSION AND ANALYSIS

Frederick subsequently sued Dawn, Keith, Brian, and Pakpour Banks, alleging Dawn had engaged in the unauthorized practice of law during her investigation of Ernest and Frederick and in filing complaints against them. Defendants responded with an anti-SLAPP motion under Code of Civil Procedure section 425.16 to strike Frederick’s complaint. Frederick failed to oppose the motion, and the trial court granted it.

On appeal, Frederick argued that the trial court erred by granting the anti-SLAPP motion, that the pending appeal should not have deprived the trial court of jurisdiction to grant relief from his failure to oppose, and that various procedural errors denied him due process.

Section 425.16, subdivision (b)(1) states: “A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.”

CONCLUSION

The appellate court found Frederick’s contentions without merit and affirmed the trial court’s order granting the anti-SLAPP motion.

The facts show that Frederick’s actions were interpreted as unauthorized practice of law, and the procedural history demonstrates that defendants’ anti-SLAPP motion was properly granted due to Frederick’s lack of opposition and insufficient legal grounds to reverse the trial court’s decision.

ZALMA OPINION

California, as usual, has legal rules and procedures that are different. A person need not go to a law school to be allowed to take the California Bar and become a California lawyer, he or she need only study for 4 years with a licensed lawyer. However, it is improper for such a student to act as a lawyer until he or she takes the Bar, passes and is licensed. Frederick was impatient and acted as if he was a licensed lawyer and was reported for the unauthorized practice of law and was disciplined for his fraudulent conduct acting as a licensed attorney. He sued those who reported him and his suit was properly dismissed with an Anti-SLAPP motion.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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Post number 5327

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In Susan Ochs, Commissioner, New Jersey Department Of Banking And Insurance v. Robert W. Mania, and Heidi Ann Mania, and RHM Benefits, Inc., No. A-3346-23, Superior Court of New Jersey, Appellate Division (April 15, 2026) Robert W. Mania, along with Heidi Ann Mania and RHM Benefits, Inc., were subject to a final agency decision issued on May 22, 2024, by the Commissioner of the New Jersey Department of Banking and Insurance (DOBI). The Commissioner revoked Mania’s insurance license and imposed a $16,012.50 penalty for violations of the Insurance Producer Licensing Act (IPLA), specifically N.J.S.A. 17:22A-40(a).

FACTUAL BACKGROUND

Mania appealed the decision, challenging the validity and severity of the sanctions.

Robert was a licensed insurance producer in New Jersey operating through RHM Benefits, Inc. (“RHM”), an entity which he co-owned with his wife, Heidi Ann Mania.

Between 2007 and 2009, Robert and his former employer, Frank Cotroneo, participated in a scheme to increase the brokerage commission rate on the health insurance policy, specifically by surreptitiously diverting a portion of the commission rate to Robert to reimburse him for a debt Cotroneo owed Robert. The scheme involved diverting 1% in commissions through RHM’s bank account. Pursuant to this scheme, Robert received approximately twenty-one checks totaling $141,527 through RHM, which he concealed from the insurer by using his official position to avoid disclosure by directing the funds to his personal post office box.

The scheme eventually came to the attention of the United States Attorney (“U.S. Attorney”) for the District of New Jersey. On July 2, 2012, Robert entered into a plea and cooperation agreement with the U.S. Attorney, under which he agreed to plead guilty to one count of mail fraud in violation of 18 U.S.C. §§ 1341 and 1342.

An administrative law judge (“ALJ”) issued an initial decision granting summary decision in DOBI’s favor on all four counts of the Order To Show Cause why his license should be revoked.

The ALJ concluded that Robert’s reporting obligation was triggered upon his awareness of the impending charges, requiring notice within thirty days of executing the plea agreement, not the filing of formal charges, and determined that DOBI proved the violation by a preponderance of the credible evidence.

The ALJ also found that Robert’s undisputed mail fraud conviction established a crime involving dishonesty, supporting discipline under N.J.S.A. and determined that his failure to obtain a waiver and continued licensure warranted a finding that DOBI proved the violation by a preponderance of the credible evidence.

LAW

Mania contended that several counts in the administrative order to show cause should be dismissed due to the expiration of the statute of limitations, the doctrine of laches, and the entire controversy doctrine.

DISCUSSION AND ANALYSIS

Mania believed the Commissioner should have imposed lesser sanctions. The Commissioner, however, maintained that the violations were significant enough to warrant both license revocation and a substantial financial penalty, and that the doctrines cited did not preclude enforcement.

CONCLUSION

The Appellate Division reviewed the arguments regarding procedural bars and the appropriateness of the penalties. While Mania sought a reduction in sanctions and dismissal of some counts, the Commissioner’s decision to revoke the license and impose the penalty was upheld, reflecting a strict interpretation of the IPLA and the penalty framework. The court emphasized the importance of regulatory compliance and found no error in the application of legal doctrines or penalty factors.

ZALMA OPINION

When a licensed insurance broker pleaded guilty to wire fraud based on a scheme to defraud an insurer and its insureds lost his license by order of the New Jersey Department Of Banking And Insurance. Unhappy, Mania appealed the order only to have an appellate court refuse his appeal and keep a criminal from serving insurance buyers in the state.

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Post number 5326

See the video at https://rumble.com/v78l8tq-abuse-of-process-and-use-of-ai-upsets-usdc-for-washington-dc.html.

International Litigation Unfounded

In Zavadovsky v. Republic of Austria, et al., Civil Action No. 25‑1008 (RC)
United States District Court, District of Columbia, Judge Rudolph Contreras
Decided March 31, 2026 concerning allegations that in 2021, Austrian authorities investigated Plaintiffs based on testimony concerning Plaintiffs’ alleged tax and insurance fraud. searched their Austrian property, and seized assets.

Plaintiffs claimed the investigation was false and abusive. After unsuccessfully litigating related claims in multiple state and federal courts, Plaintiffs filed the present action alleging a sweeping transnational conspiracy among Austrian officials, U.S. government employees, and private attorneys.

Plaintiffs asserted claims for conversion, defamation, intentional infliction of emotional distress (IIED), and civil RICO/RICO conspiracy, and sought over $10 million in damages, return of seized property, and broad injunctive relief. Numerous motions to dismiss, motions to strike, sanctions motions, and default motions were pending.

The Parties

Plaintiffs: Boris Zavadovsky and Elena Dvoinik, pro se U.S. citizens residing in Florida.

Defendants:

Austrian Defendants – Republic of Austria, Austrian ministries, and the Austrian Embassy.

Attorney Defendants – U.S. attorneys Elke Rolff and Dale Webner (former counsel to Austrian parties).

Federal Defendants – DOJ attorneys, a DOJ employee, and a Secret Service official.

Issues

• Whether Plaintiffs’ claims against Attorney Defendants are barred by res judicata or fail to state a claim.

• Whether the Court has subject‑matter jurisdiction, personal jurisdiction, or standing over claims against Federal Defendants.

• Whether Plaintiffs properly effected service of process on Austrian Defendants under the FSIA.

• Whether defaults entered against Austrian Defendants should be set aside.

Holding

All claims against Attorney Defendants and Federal Defendants were dismissed with prejudice.

Service on Austrian Defendants was quashed and entries of default were vacated; Plaintiffs were granted limited leave to re‑serve Austria through diplomatic channels.
Nearly all Plaintiffs’ pending motions were denied.

Reasoning

Attorney Defendants: Plaintiffs’ claims arose from the same nucleus of facts as prior Florida state and federal cases that were dismissed on the merits; thus, res judicata barred relitigation. Independently, Plaintiffs failed to plead plausible claims for conversion, defamation (barred by judicial proceedings privilege and time‑barred), IIED (no extreme and outrageous conduct), or RICO (conclusory conspiracy theories based on litigation conduct).

Federal Defendants: The United States properly substituted itself under the Westfall Act. Plaintiffs failed to exhaust administrative remedies under the FTCA, depriving the Court of jurisdiction over the conversion claim. Plaintiffs’ RICO claims were deemed patently insubstantial and “essentially fictitious,” defeating subject‑matter jurisdiction. Plaintiffs also lacked standing, failed to establish personal jurisdiction over one defendant, and did not rebut Westfall certification.

Austrian Defendants: Plaintiffs attempted service by mail under FSIA §1608(a)(3), but Austria has objected to mail service under the Hague Service Convention. Strict compliance with FSIA was required; proper service must proceed through diplomatic channels under §1608(a)(4). Because service was defective, defaults could not stand and were set aside for good cause.

DISPOSITION

1. Motions to dismiss by Attorney and Federal Defendants GRANTED.

2. Austrian Defendants’ motion to quash service and set aside defaults GRANTED.
   Plaintiffs’ remaining motions DENIED.

3. Plaintiffs may re‑serve Austrian Defendants via diplomatic channels by June 30, 2026.

NOTES

The Court admonished Plaintiffs for citing nonexistent cases and misleading authorities, warned of potential Rule 11 sanctions, and cautioned against repetitive or frivolous litigation, including possible pre‑filing restrictions.

ZALMA OPINION

The Plaintiffs, upset that the Republic of Austria investigated the plaintiffs for criminal conduct including insurance fraud they sued the Republic seeking various kinds of damages including RICO damages in the USDC for Washington DC only to have their case dismissed because it was decided previously in a different jurisdiction, failed to properly serve the Republic and used Artificial Intelligence which created false and imaginary authorities. Although no one likes to be accused of fraud if they think the charges are false they need to file a clear and unambiguous law suit understandable by the court and properly serve the defendants. The plaintiff failed on all of those issues and found their case dismissed. The Court gave the plaintiffs the right to properly serve the Austrian defendant.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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Post number 5325

Read the full article at https://www.linkedin.com/pulse/case-dismissed-failure-comply-courts-order-barry-zalma-esq-cfe-pj9ec, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.

Judge Explains Consequences Of Failing To Comply With Discovery Obligations And Court Orders

In St Charles Housing LP v. Elite Contractors LLC et al, No. 2:21-CV-03416, United States District Court, W.D. Louisiana (April 10, 2026) St. Charles Housing LP owns a residential apartment complex that was damaged by Hurricane Laura in August 2020 and Hurricane Delta in October 2020. Following the hurricanes, St. Charles engaged Elite Contractors LLC to perform restoration and construction work on the property. In January 2021, Elite and Sharpco entered into a joint venture agreement for the project. St. Charles alleges Elite is responsible for construction defects, breach of contract, and false statements, while Elite denies these claims.

Elite counterclaimed, alleging St. Charles unjustly refused to pay for services, materials, and related costs provided by Elite.

BACKGROUND

St. Charles filed this lawsuit in September 2021. Discovery disputes arose when Elite propounded interrogatories and requests for production in January 2024. St. Charles failed to respond, prompting Elite to schedule a Rule 37 conference and grant an extension. After St. Charles again failed to respond, Elite filed a Motion to Compel, resulting in a Consent Judgment in April 2025. The Consent Judgment ordered St. Charles to respond to discovery by May 6, 2025, and awarded attorney fees to Elite. The Order also permitted Elite to seek relief under Federal Rule of Civil Procedure 37(b)(2) if St. Charles failed to comply.

LAW

The legal dispute centers on alleged breach of contract, construction defects, and false statements by Elite, as claimed by St. Charles. Elite’s counterclaim invokes unjust enrichment and seeks compensation for unpaid services and expenses.

The Court’s Orders enforced discovery obligations, using Federal Rule of Civil Procedure 37(b)(2) to address non-compliance, which allows for sanctions including dismissal of claims.

ANALYSIS AND DISCUSSION

Elite’s motion sought dismissal of St. Charles’s case for failing to comply with Court Orders regarding discovery. Despite multiple opportunities and extensions, St. Charles did not respond to written discovery requests, justifying Elite’s pursuit of sanctions.

The Consent Judgment and subsequent Orders provided clear warnings and avenues for Elite to seek relief, emphasizing the importance of compliance in litigation. The Court’s analysis likely considers the repeated failures and whether dismissal is an appropriate sanction under Rule 37(b)(2).

Federal Rule 37(b) provides sanctions for failure to participate in discovery.

Specifically, if a party fails to obey an order to provide or permit discovery, such as the Orders by the USDC, the Court may issue further orders, as follows: Sanctions Sought in the District Where the Action Is Pending. “(A) For Not Obeying a Discovery Order. If a party or a party’s officer, director, or managing agent-or a witness designated under Rule 30(b)(6) or 31(a)(4)-fails to obey an order to provide or permit discovery, including an order under Rule 26(f), 35, or 37(a), the court where the action is pending may issue further just orders. They may include the following: * (v) dismissing the action or proceeding in whole or in part…”

CONCLUSION

The case illustrates the consequences of failing to comply with discovery obligations and Court Orders. Elite’s motion for contempt and dismissal was based on St. Charles’s persistent non-compliance, supported by procedural history and applicable law. The Court’s decision hinged on whether St. Charles’s conduct warrants the ultimate sanction of dismissal and potential contempt.

ZALMA OPINION

Every law student learns within a week of entering the study of law that nothing is gained by failing or refusing to obey a court order. St. Charles did not learn this basic lesson. It was ordered to comply with discovery orders persistently and its conduct warranted the ultimate sanction of dismissal.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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Post number 5322

Read the full article at https://lnkd.in/gfnYSb8a, see the video at https://lnkd.in/gEu8EzYq and at https://lnkd.in/gzrJdPfC and at https://zalma.com/blog plus more than 5300 posts.

Jail is Necessary When Probation is Violated

In United States of America v. Sabine Oltmann, No. 25-60578, United States Court of Appeals, Fifth Circuit (April 9, 2026), Sabine Oltmann pleaded guilty to unauthorized opening of mail by a postal employee and was sentenced to two years’ probation.

Just two months into that term, however, she violated the conditions of her probation by submitting a false insurance claim and falsely reporting a crime. The district court revoked her probation and sentenced her to twelve months’ imprisonment followed by twelve months of supervised release.

Oltmann contended that this above-Guidelines revocation sentence is substantively unreasonable.

The USCA reviewes probation-revocation sentences under the plainly unreasonable standard. In applying that standard, the USCA asked first whether the district court committed any significant procedural error and then whether the sentence was substantively unreasonable under an abuse-of-discretion standard.

A revocation sentence is only substantively unreasonable if it:

does not account for a factor that should have received significant weight,
gives significant weight to an irrelevant or improper factor, or
represents a clear error of judgment in balancing the sentencing factors.

All the mitigating considerations Oltmann presses on appeal were considered by the district court at sentencing. Nothing in the record suggests that the court failed to account for a factor deserving significant weight, gave significant weight to an irrelevant or improper factor, or clearly erred in balancing the pertinent factors.

Nor is the sentence suspect merely because it exceeded the advisory policy range; the USCA has repeatedly upheld revocation sentences above that range so long as they remain within the statutory maximum.

ZALMA OPINION

When a postal employee reads private mail a crime is committed. Sabine Oltmann luckily was only sentenced to probation after admitting to that crime. However, rather than accept her good luck Oltmann committed insurance fraud and her probation was revoked and she was sentenced to a year in prison for violating probation. The lesson she learned is don’t violate the terms of your probation with a serious crime like insurance fraud.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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A Claim Against an Insurer for Wrongful Conduct Cannot Be Maintained Against Its Adjuster

Post number 5321

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In Lambert v. SafePort Insurance Company, et al., Civil Action No. 25-1446 (E.D. La. Apr. 2, 2026) (Morgan, J.) Plaintiff Lisa Lambert held a homeowner’s insurance policy issued by SafePort Insurance Company covering her property against windstorms and wind damage. After two separate windstorms damaged her home (the “First Wind Claim” and “Second Wind Claim”), she promptly reported both losses and attempted to mitigate damages.

FACTUAL BACKGROUND

SageSure Insurance Managers LLC acted as the claims adjuster/manager for SafePort. In both instances:

A field adjuster inspected the property and denied coverage, attributing the damage to “foundation settling as a result of earth movement” (an excluded peril that allegedly caused water pooling on the roof).

After the second denial, an engineer retained by SageSure allegedly inspected the property, initially identified a different roof type and damage cause, but the final engineering report was altered (at the direction of SageSure and/or SafePort) to match the field adjuster’s earth-movement denial rationale.

Plaintiff alleged the alterations and misrepresentations were intentional and part of a scheme to wrongfully deny valid wind-damage claims.

PROCEDURAL BACKGROUND

Plaintiff sued both SafePort and SageSure asserting seven causes of action including Breach of contract, Breach of the duty of good faith and fair dealing. Fraud / intentional misrepresentation, Conspiracy to commit fraud, Unfair trade practices in the business of insurance, Insurance fraud, and Negligent misrepresentation

SageSure moved under Fed. R. Civ. P. 12(b)(6) to dismiss all claims against it with prejudice. Plaintiff expressly conceded in briefing that she was “not suing SageSure for breach of contract.”

LAW

General Pleading Standard (Rule 12(b)(6))

A complaint must contain sufficient factual matter, accepted as true, to state a claim that is “plausible on its face.” Legal conclusions, threadbare recitals, and naked assertions are disregarded. Dismissal is proper if the face of the complaint shows a bar to relief.

Fraud / Conspiracy Pleading Standard (Rule 9(b))

Fraud and conspiracy-to-defraud claims must be pled with particularity: the “who, what, when, where, and how” of the alleged fraud. Collective/group pleading that fails to distinguish each defendant’s role is insufficient. Malice and intent may be pled generally, but the circumstances of fraud must be specific.

DISCUSSION / ANALYSIS

The Court addressed each claim in turn and found all deficient as to SageSure:

Breach of Contract

SageSure is not the insurer; the policy declarations name SafePort. Claim dismissed (and plaintiff conceded it).

Breach of Duty of Good Faith & Fair Dealing

Statutes apply only to insurers. SageSure is an adjuster/manager, not the insurer and there was no privity.

Insurance Fraud (La. R.S. § 22:1924)

Criminal statute; no private right of action.

Unfair Trade Practices in Insurance

No private right of action.

Fraud / Intentional Misrepresentation

Negligent Misrepresentation

Louisiana law generally imposes no tort duty on an independent adjuster for claims handling. Plaintiff pled no facts fitting any narrow exception.

Failed Rule 9(b) particularity: allegations lumped SageSure, SafePort, adjusters, and the engineer together without identifying specific fraudulent statements, speakers, dates, or locations.

Independently fatal: no allegation of justifiable reliance. Plaintiff never pled she took or refrained from any action because of the alleged misrepresentation

All deficiencies were incurable on the current pleading, so dismissal was with prejudice.

CONCLUSION

SageSure’s Motion to Dismiss was granted. All seven claims against Sagesure were dismissed with prejudice. The case proceeds solely against the actual insurer, SafePort Insurance Company.

ZALMA OPINION

Insurance adjusters act as agents of insurers but are not insurers. The insured who claims the contract was breached and the insurer acted wrongfully against the insured does not allow the insured to sue the adjuster because there is no privity between the insured and the adjuster. The plaintiff could maintain her action against the insurer but not the adjuster.

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Post number 5320

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In Hassan Fayad v. Liberty Mutual Insurance Company, et al., No. 2:25-cv-10930, United States District Court, E.D. Michigan, Southern Division (March 24, 2026) Plaintiff Hassan Fayad, the owner of several businesses providing transportation, diagnostics, testing, and therapy services, regularly billed insurance companies for these services, was arrested and tried for fraud, convicted, had the conviction overruled and sued the insurers and prosecutors he found responsible.

FACTUAL BACKGROUND

By January 2020, Liberty Mutual, Progressive, Allstate, and Esurance suspected fraudulent activity and filed a complaint with the Michigan Department of Attorney General (MDAG). The insurers alleged that Fayad and others billed Michigan auto insurance policies for profit without actually providing medically necessary services, or any services at all.

Fayad was subsequently charged in state court for conspiracy to commit false pretenses and insurance fraud. He sued the insurers and two prosecuting attorneys, asserting violations under 42 U.S.C § 1983 and state law, including claims for false arrest, malicious prosecution, due process violations, civil conspiracy, and gross negligence.

In April 2022, a federal grand jury indicted Fayad for aggravated identity theft and indicted Fayad for wire fraud, conspiracy to defraud the United States, and tax evasion. After a superseding indictment and a judgment of partial acquittal a jury tried and found Fayad guilty of one count of aggravated identity theft in January 2024 but in December 2024, by stipulation of the parties, the Court vacated the jury’s verdict and dismissed that count, along with “all other outstanding counts in the underlying matter” against Fayad.

Fayad sued Fairley and Glenn, as well as Insurer Defendants, claiming that they conspired together to wrongfully charge him, obtain a warrant to arrest him, and freeze and encumber his assets. Defendants Allstate, Liberty Mutual and Progressive also moved to dismiss,

LEGAL ISSUES

Fayad’s complaint alleged federal constitutional violations under 42 U.S.C § 1983 and various state law claims. Section 1983 requires that the defendants be state actors or that their conduct be fairly attributable to the state. Prosecuting attorneys are generally afforded absolute immunity from damages for actions taken within their prosecutorial role. Civil conspiracy claims require specific factual allegations demonstrating an agreement between parties to commit an unlawful act.

DISCUSSION AND ANALYSIS

The court found that the prosecuting attorneys were entitled to immunity from Fayad’s claims, as their actions fell within their official prosecutorial duties. Fayad’s pleadings regarding civil conspiracy were insufficient, lacking factual details necessary to support such a claim. Furthermore, the insurance companies (Insurer Defendants) were not state actors and thus could not be held liable under § 1983 for constitutional violations.

At bottom, Fayad’s complaint plainly reads as “a formulaic recitation of the elements of” civil conspiracy, which “will not do” for a complaint to survive a motion to dismiss under Civil Rule 12(b)(6).

With no viable federal claims remaining, only state law claims were left for adjudication.

Glenn was entitled to absolute prosecutorial immunity because there was no conduct identified as outside of Glenn’s role as an advocate — including her conduct that was allegedly purely investigative. A plaintiff cannot sustain a false arrest claim where a case that was ultimately dismissed for lack of probable cause began with an apparently valid, lawfully obtained, and properly executed warrant

CONCLUSION

In sum, Fayad’s claims against all Defendants will be dismissed under Civil Rule 12(b)(6)

Because the federal claims were dismissed and only state law claims remained, the court declined to exercise jurisdiction over the state claims. Accordingly, the defendants’ motions to dismiss were granted, and the case was dismissed in its entirety.

ZALMA OPINION

Mr. Fayad was a very lucky man with regard to the charges brought against him by the US Department of Justice, found guilty and then had the conviction dropped voluntarily. Adding insult to the failure to convict him convincingly he sued the prosecutors and the insurers who caused his arrest. The case was properly dismissed and he can try his state based claims but might lose those as well. Vengeance is not appropriate in court.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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When all Parties Refuse Removal There is No Jurisdiction

Post number 5319

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In Beth Mayhew and Matthew Mayhew v. Vladimir Sadovyh, et al., No. 2:26-CV-04029-WJE, United States District Court, W.D. Missouri (April 6, 2026) Mayhew was involved in a trailer-truck accident with Vladimir Sadovyh, who was employed by Nova First, LLC and Globex Transport, Inc. Both companies owned the tractor-trailer involved.

FACTUAL BACKGROUND

Chubb and Mohave Transportation Insurance Company jointly issued an insurance policy covering Nova First, Globex, and Sadovyh, with EMA Risk Services acting as a third-party administrator.

Beth Mayhew sued Nova First, Globex, and Sadovyh for negligence in Missouri state court, and following a jury trial, a nuclear judgment was awarded to the Mayhews totaling $92,117,375.34, plus costs.

LEGAL ISSUES

The Mayhews filed a Petition for equitable garnishment and alleged a violation of Missouri Revised Statute § 379.200 in the Circuit Court of Cole County. Removal to federal court was sought pursuant to 28 U.S.C. §§ 1332, 1441, and 1446.

DISCUSSION

In a civil action removed under section 1441(a), all defendants must join in or consent to removal. 28 U.S.C. § 1446(b)(2)(a).

CONCLUSION

Nova First, Globex, and Mr. Sadovyh are judgment debtors and are therefore statutorily necessary parties to this equitable garnishment action. The Court granted the Joint Motion to Remand to State Court.

ZALMA OPINION

Federal courts are often favored by insurer and when they are faced with a gigantic judgment for personal injuries will try to remove the case to federal court. They failed in this case because the actual judgment creditors refused to join.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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Post number 5319

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Sexual Conduct Exclusion Doesn’t Apply When Doctor Negligently Uses His Own Sperm

In Integris Insurance Company v. Narendra B. Tohan, No. AC 47222, Court of Appeals of Connecticut (April 7, 2026) Integris Insurance Company, a medical professional liability insurer, initiated a declaratory action to determine its duty to defend and indemnify Narendra B. Tohan, a physician licensed in Connecticut, in a separate negligence action alleging medical misconduct.

FACTUAL BACKGROUND

In 2019, Kayla Suprynowicz and Reilly Flaherty (civil action plaintiffs), who were strangers for most of their lives, discovered through a genetic testing company that they are half siblings.

INSURANCE POLICY

The policy defines “Professional Services” in relevant part as “any professional medical services within the customary scope of the insured’s practice specialty or classification ….” The policy further obligates the plaintiff, among other things, to “defend the insured against any claim or suit which includes . . . allegations of professional negligence for which coverage is provided under this policy.” It excluded sexual conduct.

The plaintiff claimed that the sexual conduct exclusion applies because “procreation is quintessentially sexual.” That contention overlooked the fact that procreation was the purpose of the professional services rendered in this case. As the underlying complaint makes clear, the civil action concerns the defendant’s provision of fertility services to the civil action plaintiffs’ parents through IVF procedures, which undoubtedly are medical procedures.

The professional service at issue is not the defendant’s production of sperm. It is, instead, the fraudulent use of his sperm to inseminate his patients. Although that suit alleged that the defendant negligently mixed his own sperm with that of Gary Suprynowicz to impregnate Kayla’s mother, it also alleges that he negligently failed to offer her parents “the choice of sperm donor” and negligently utilized sperm that contained a genetic disease. The Court of Appeal was unable to see how either of the latter two negligence allegations implicate the sexual conduct exclusion in any way.

The trial court granted summary judgment in favor of Integris Insurance Company, finding that the policy exclusions applied and that there was no coverage for the alleged misconduct. Tohan appealed this decision to the Connecticut Court of Appeals.

LEGAL ISSUES

The dispute centers on the interpretation of the medical professional liability insurance policy and whether the underlying complaint alleged facts potentially within the scope of coverage.

The trial court examined two principal issues: (1) whether the underlying complaint contained allegations that could trigger coverage, and (2) whether exclusions in the policy clearly and unambiguously barred coverage for all allegations and concluded there was no coverage for defense or indemnity.

DISCUSSION AND ANALYSIS

Providing IVF services to Kayla’s parents plainly is within the customary scope of the defendant’s practice specialty and thus constitutes “professional services” as that term is defined in the policy. The fact that the defendant may have negligently used his own sperm while providing those professional services, as the civil action plaintiffs allege in their complaint, does not alter that conclusion.

CONCLUSION

The Court of Appeals found that the trial court erred by concluding that the policy exclusions applied to every allegation without ambiguity.

The Court of Appeals concluded that the defendant’s fraudulent artificial insemination of his patients with his own sperm involved the provision of professional, medical services requiring special skill and knowledge. In this case, it is the operation itself, i.e., the insemination (and, ironically, its success), that is the proximate cause of the harms alleged in the underlying civil actions. As a result, the plaintiff’s policy extends coverage to claims arising from the defendant’s misconduct.

The civil action plaintiffs did not allege in count one that the defendant was aware that his sperm contained a genetic disease or that he knowingly used sperm that contained a genetic disease when providing IVF services to Kayla’s parents and that specific allegation constitutes an ordinary claim of negligence on the part of the defendant, and one that is not sexual in nature.

ZALMA OPINION

Since the good doctor never had any contact with the plaintiff’s mother but merely performed his specialty, inseminating her eggs with sperm from the father mixed with the doctor’s sperm. There was no excluded sexual conduct, just professional in vitro fertilization of the mother’s egg – a medical procedure not excluded.

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Posted on April 7, 2026 by Barry Zalma

Post number 5318

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In Allstate Insurance Company, Allstate Indemnity Company, Allstate Property & Casualty Insurance Company, and Allstate Fire & Casualty Insurance Company v. Jonathan S. Landow, M.D., Viviane Etienne, M.D., Atlantic Medical & Diagnostic, P.C., Birch Medical & Diagnostic, P.C., Eastern Medical Practice, P.C., Empire Medical Services, P.C., Macintosh Medical, P.C. Paramount Medical Services, P.C., Preferred Medical, P.C., Sovereign Medical Services, P.C., Spruce Medical & Diagnostic, P.C., Summit Medical Services, P.C., Urban Medical, P.C., Roman Matatov, Uriyel Mirzakandov, and Ruben Levy a/k/a Ruben Leviyev, No. 24-CV-2010 (DLI) (JRC), United States District Court, E.D. New York (March 30, 2026) Plaintiffs filed a 187-page complaint, including dozens of pages of exhibits, detailing a scheme of kickbacks for patient referrals, operation of clinics by laypersons, lack of medical care provided by the M.D. Defendants, and predetermined and trumped up medical treatments.

FACTS

Allstate Insurance Company and related entities (“Plaintiffs”) sued multiple defendants, including physicians, medical professional corporations, and managerial individuals (“Defendants”). The Plaintiffs alleged that Defendants collectively participated in a scheme to defraud them by exploiting New York’s No Fault insurance system, submitting illegal or inflated medical costs through various medical professional corporations. The action involves claims of violations of the Federal RICO Act, common law fraud, and unjust enrichment.

Allstate sued Jonathan S. Landow and multiple (“M.D. Defendants”), Urban Medical, P.C. (collectively, “PC Defendants”), Roman Israilov a/k/a Roman Matatov, (collectively, “Managerial Defendants”)The suit alleged violations of the Federal Racketeer Influenced and Corrupt Organizations (“RICO”) Act, common law fraud, and unjust enrichment. Plaintiffs alleged that all Defendants collectively engaged in a scheme to defraud Plaintiffs via New York’s No Fault insurance statutory framework (“No Fault”).

LAW

The case centers on New York’s No Fault statutory framework, which is designed to provide prompt compensation for necessary medical expenses resulting from motor vehicle accidents, up to $50,000 per person. The laws allow claimants to assign benefits to licensed healthcare providers, who then submit claims to insurers for payment. Providers must be operated by licensed professionals, and any fraudulent activity — including submitting materially false claims or receiving kickbacks — is prohibited under relevant New York statutes. Failure to comply with licensing requirements renders providers ineligible for reimbursement.

DISCUSSION

Plaintiffs sought a preliminary injunction to stay all current No Fault arbitrations and prevent Defendants from filing new arbitrations or state court collection suits during the litigation. The court reviewed the statutory requirements and allegations, focusing on whether Defendants’ conduct violated the No Fault laws and related regulations.

ANALYSIS

A party seeking a preliminary injunction must show:

1. irreparable harm;
2. either a likelihood of success on the merits or both serious questions on the merits and a balance of hardships decidedly favoring the moving party; and
3. that a preliminary injunction is in the public interest.

The court examined the statutory prerequisites for medical providers to claim No Fault benefits, emphasizing the necessity of licensure and prohibition of fraudulent practices. Plaintiffs’ allegations that Defendants operated unlicensed or fraudulently managed medical corporations and submitted improper claims were found to raise serious questions under both federal and state law. The procedural history and unopposed motion supported granting the requested relief.

CONCLUSION

The court granted Plaintiffs’ motion for a preliminary injunction in its entirety, staying pending No Fault arbitrations and state court litigation against Plaintiffs and enjoining Defendants from initiating new proceedings during the pendency of the action. The decision underscores the importance of compliance with New York’s No Fault laws and the legal consequences for fraudulent or unlicensed conduct in the insurance and medical services context.

Plaintiffs’ motion for a preliminary injunction was granted.

ZALMA OPINION

The “No Fault Law” was created to avoid litigation, make benefits available promptly and avoid fraud. Unfortunately, it created a cottage industry for fraud perpetrators who created fake medical bills to obtain the maximum recovery for people who were uninjured and for health care providers who had no morals nor a willingness to follow the law. Allstate, and other insurers are using injunctions to take the profit out of the fraud since the authorities have failed to prosecute the scofflaws.

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Post number 5317

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When Contradictory Sworn Testimony are Presented Summary Judgment Fails

In Jules Francois Parisien MD, as Assignee of Manuel Plasencia v. Erie Insurance Company of New York, Index No. CV-759232-24/RI, 2026 NY Slip Op 50400(U), Civil Court of the City of New York, Richmond County (March 25, 2026) dealt with the insurer’s motion for summary judgment.

FACTUAL BACKGROUND

On April 24, 2024, an accident occurred involving two vehicles: one driven by Miguel Angel Palaciosromero and the other by Mohamed Mohamed. Manuel Plasencia, a passenger in Palaciosromero’s vehicle, sought No-Fault benefits totaling $1,449.69. Erie Insurance Company, the insurer of Plasencia, denied the claim, asserting the accident was staged. The plaintiff initiated this action seeking payment, and Erie Insurance moved for summary judgment to dismiss the case, arguing there were no material factual disputes and that the accident was staged.

LEGAL ISSUES

New York law recognizes that intentional and staged collisions, regardless of motive, are not covered accidents under an insurance policy. Insurers may seek summary judgment if required verification information is not provided by the plaintiff. However, to prevail on summary judgment, the insurer must provide sufficient proof showing the absence of any material fact. Mere suspicion is insufficient; credible evidence is required.

It is well settled that an intentional and staged collision caused in furtherance of an insurance fraud scheme is not a covered accident under a policy of insurance. In truth, the intentional nature of the event does not have to be rooted in efforts to defraud an insurance company, rather, any reason the event is intentional will foreclose the availability of No-Fault benefits

DISCUSSION AND ANALYSIS

Erie Insurance’s motion relied on testimony from Mohamed Mohamed, who stated only two individuals were in the Palaciosromero vehicle at the time of the accident. Contrarily, Palaciosromero, Plasencia, and Francisco Monseratte each testified under oath that all three were present in the vehicle. This conflicting testimony raised questions about the credibility and accuracy of the witness accounts.

It is not a court’s function on a summary judgment motion to make credibility determinations or resolve factual disputes. Instead, it must identify whether material issues of fact exist. Because the number of vehicle occupants at the time of the accident was in dispute, and with credible testimony supporting both positions, summary judgment was not appropriate. The presence of triable issues of fact precludes dismissal at this stage, consistent with New York precedent.

In this case, clearly, there are credibility determinations that must be made concerning whether Monseratte was a passenger in the vehicle. That determination cannot be made at this juncture because of contradictory sworn statements.

Regarding that sole issue, upon which the entire allegation of fraud is based, there is no inconsistency. There are, however, credibility issues with Mohamed and the occupants of the vehicle. Precisely for these reasons summary judgement must be denied.

ZALMA OPINION

There is no question if a claimant was not in the car at the time of the accident that fraud has been attempted. However, the three occupants all testified that Manuel Plasencia was in the vehicle and Mohammed testified he was not. The facts are in dispute and summary judgment cannot lie because there are material facts in dispute. This case teaches that when an insurer seeks to prove an accident was staged it needs admissible evidence that is not disputed by other admissible evidence. If someone was lying it is up to the trier of fact to determine which witness was credible.

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Post number 5316

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Pay Careful Consideration to Limitation Period in NFPA policy

In Luis Medina et al v. Wright National Flood Insurance Company, No. 8:25-cv-02628-SDM-AEP, United States District Court, M.D. Florida, Tampa Division (March 23, 2026) the USDC resolved a Flood insurance claims suit.

FACTS

Luis Medina and Luz Segura filed suit against Wright National Flood Insurance Company, alleging breach of contract stemming from flood damage to their home sustained on August 5, 2024. The property was covered under a Standard Flood Insurance Policy issued by Wright, which participates in the National Flood Insurance Program (NFIP).

Wright sent the plaintiffs a partial denial of coverage via email on September 24, 2024, after an initial attempt to notify them failed. The plaintiffs initiated their lawsuit on September 26, 2025.

LAW

Claims under an NFIP policy are governed by a strict limitations period: suit must be filed within one year of the date the notice of disallowance or partial disallowance is mailed to the insured. This requirement is set forth in 42 U.S.C. § 4072 and 44 C.F.R. pt. 61, app. A(1), art. VII(O) (2022).

LEGAL ISSUES

The central legal issue WAs whether the plaintiffs’ claim was timely filed in accordance with the statutory one-year limitations period for NFIP policies. The defendant, Wright National Flood Insurance Company, moved to dismiss the action on the grounds that it was time-barred.

DISCUSSION AND ANALYSIS

The court noted that the plaintiffs received notice of partial disallowance on September 24, 2024. Their lawsuit was filed on September 26, 2025, more than one year after the notice was sent.

Because the limitations period is calculated from the date of mailing the notice, the claim was untimely.

The plaintiffs did not respond to Wright’s motion to dismiss. Accordingly, the court granted the motion to dismiss and ordered the case closed pursuant to 42 U.S.C. § 4072; 44 C.F.R. pt. 61, app. A(1), art. VII(O) (2022).

Accordingly, the motion to dismiss was GRANTED, and the action was
DISMISSED.

ZALMA OPINION

The National Flood Insurance Program is not treated like insurance issued by private insurers. It is a creature of statute that can only be resolved in a federal court and whose conditions must be interpreted with a requirement for strict compliance with the terms of the flood insurance contract. The suit was filed a few days later than one year from the partial denial and that was sufficient to dismiss the suit.

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Post number 5315

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He Who Fails to Read Policy Must Still Fulfill its Conditions

It is Best for Insured to Read Policy Before Filing Suit

Posted on April 2, 2026 by Barry Zalma

RCV Available Only Repair is Completed Within Two Years of Loss

Post number 5315

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He Who Fails to Read Policy Must Still Fulfill its Conditions

In Schoening Investment LP v. Cincinnati Casualty Company, No. 25-3273, United States Court of Appeals, Sixth Circuit (March 25, 2026) Schoening Investment LP, a Florida-based limited partnership focused on commercial real estate, insured its Kentucky properties with Cincinnati Casualty Company. In March 2022, one of Schoening’s Kentucky properties suffered damage. Schoening filed a timely claim, seeking recovery under its commercial property insurance policy.

FACTUAL BACKGROUND

Cincinnati Casualty’s adjuster found the property was repairable but not replaced and offered to pay the cost of repairs minus a $45,000 deduction for depreciation. The adjuster noted that once repairs were completed, Schoening could recover the depreciation amount.

INSURANCE POLICY

Schoening had purchased additional coverage that would pay for repairs without deduction for depreciation, but only if repairs commenced within two years of the loss. Since Schoening had not repaired the property, Cincinnati Casualty applied the depreciation deduction. Unhappy with this determination, Schoening sued Cincinnati Casualty in March 2024, alleging breach of contract and improper deduction of depreciation.

The contract contains one other relevant feature. Schoening paid for “Optional Coverage” that modified the Valuation provision. The Optional Coverage provision “replaces” the term “Actual Cash Value” with “Replacement Cost without deduction for depreciation.”

This full replacement-cost payment anticipates the “shortfall in coverage” that might result from compensation for “actual cash value alone.” For instance, if hail destroyed a ten-year-old roof, a policyholder entitled to “Actual Cash Value” would recover the value of a ten-year-old roof, only to find that ten-year-old shingles are not readily on the market and that new shingles cost much more than ten-year-old shingles are worth. Schoening’s additional coverage avoids this problem by paying for the purchase of new shingles as long as he does so within two years of the damage causing event.

LEGAL ISSUES

The dispute centers on the interpretation of the commercial insurance policy, specifically the provision allowing for repair cost payment “without deduction for depreciation” if repairs are commenced within two years.

Cincinnati Casualty’s actions were challenged under the Federal Rules of Civil Procedure, Rule 12(b)(6), regarding failure to state a claim. The district court examined whether Schoening met the policy requirements to qualify for a depreciation-free payout to determine whether Cincinnati Casualty breached the terms of the insurance policy by deducting depreciation from repair cost payouts, and whether Schoening qualified for payment without deduction for depreciation under the policy.

DISCUSSION AND ANALYSES

The district court found that Schoening had not repaired the property within the required timeframe, making it ineligible for a depreciation-free payment. It also found that Cincinnati Casualty’s adjuster correctly applied the policy’s terms by deducting depreciation and informing Schoening that the deducted amount could be recovered upon completion of repairs.

Schoening’s argument that the insurer improperly deducted depreciation was rejected, as the policy explicitly authorized such deductions unless repairs were made as stipulated.

The court concluded that the insurer’s actions were consistent with both the policy language and established procedures for loss adjustment.

The Sixth Circuit affirmed the district court’s dismissal, agreeing that Cincinnati Casualty acted within the bounds of the insurance contract.

Before Schoening can claim the full payment, the Optional Coverage provision requires Schoening to “actually repair” the property. In the event Schoening does not repair the property, Schoening’s recovery reverts to the property’s “Actual Cash Value.”

ZALMA OPINION

After a loss those who are insured should actually read the policy contract. Apparently Schoening failed to read the policy or ignored what was read. Clearly, if Schoening wanted full replacement cost and had read the policy would have performed the repairs within the two years after the loss. Failing to do so and finding only ACV payments were available Schoening sued seeking coverage for which it did not pay and the Sixth Circuit affirmed the trial court because the language was clear and unambiguous.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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Post number 5314

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In Peleus Insurance Company, on its own behalf and on behalf of Bais Yaakov Dkal Adas Yereim and BT General Builders, Inc. v. United Specialty Insurance Company, No. 24 Civ. 1398 (KPF), United States District Court, S.D. New York (March 23, 2026) Peleus Insurance Company (“Peleus”), on behalf of itself and insureds Bais Yaakov Dkal Adas Yereim (“Bais”) and BT General Builders, Inc. (“BT”), initiated an action against United Specialty Insurance Company (“USIC”) in the United States District Court for the Southern District of New York. Peleus sought declaratory judgment regarding USIC’s obligations to defend and indemnify its insureds in connection with an underlying personal injury lawsuit pending in the Supreme Court of the State of New York, Kings County. Both parties cross-moved for summary judgment concerning USIC’s duty to defend.

FACTUAL BACKGROUND

The underlying action arose from an accident at a construction site located at 184-198 Nostrand Avenue, Brooklyn, New York, where Jonathan Caceres, employed by Charles Contractors Corp., sustained injuries while carrying a stone slab up a staircase. Caceres sued BT and Bais in state court, alleging negligence and violations of New York Labor Law Sections 200, 240, and 241(6). At the time of the accident, Charles Contractors was engaged in stonework at the site. Caceres’s injuries occurred when he slipped on water, lost control of the slab, and the slab fell on his left foot.

LEGAL STANDARDS

The motions for summary judgment required the court to determine whether USIC owed a duty to defend and indemnify BT and Bais as “additional insureds” under USIC-issued policies. The duty to defend is typically broader than the duty to indemnify and hinges on the terms of the insurance policy and the allegations in the underlying complaint.

COURT’S ANALYSIS AND DISCUSSION

The court’s analysis centered on the timing and validity of the agreement purportedly extending additional insured coverage to BT and Bais under USIC’s policies. Both parties argued for summary judgment on USIC’s duty to defend, but the court found a material dispute regarding whether the relevant agreement was executed before the accident occurred. This factual uncertainty precluded a definitive ruling on coverage and defense obligations. The court concluded that, due to unresolved factual questions concerning the execution date of the agreement, neither party was entitled to summary judgment.

CONCLUSION

The court denied both Peleus’s and USIC’s motions for summary judgment. The outcome preserves the need for further proceedings to resolve the disputed facts, particularly regarding the timing of the agreement that could trigger USIC’s duty to defend and indemnify.

Insurance policies are, in essence, creatures of contract, and, accordingly, subject to principles of contract interpretation. The initial interpretation of a contract is a matter of law for the court to decide.
Genuine Disputes of Material Fact Exist Concerning the Execution Date of the Sandstone Agreement

The parties do not seriously dispute that, if the Court finds that BT and Bais qualify as additional insureds under the USIC Policy, USIC would have a duty to defend them in the Underlying Action. Instead, the parties dispute the antecedent question of whether BT and Bais qualify as additional insureds under the USIC Policy.

In point of fact, these recitals do not mean that the Sandstone Agreement was executed on April 20, 2022, prior to Mr. Caceres’s alleged Accident. The evidence concerning the execution date of the Sandstone Agreement raises genuine disputes of material fact. In short, Peleus has not proved, nor has USIC disproved, that BT and Bais qualify as additional insureds under the USIC Policy for two separate reasons, one temporal and one intent-based. In the absence of a more developed factual record, resolution of that issue will have to wait until trial.

The decision underscores the importance of clear documentation and timing in additional insured coverage disputes and serves as a reminder that summary judgment is inappropriate when material facts remain contested.

ZALMA OPINION

Additional insured endorsements are important to every insured doing business where the contract requires them to make others insureds on the named insured’s policy. They are prevalent in construction contracts where the general contractor and owner try to shift the risk of loss to the subcontractors policies. In this case, the contract promising to make another an additional insured was not signed until after the accident and summary judgment was not proper.

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Insurance Fraud, a Way to Reduce Violent Crime

Post number 5313

She Taught Her Customers The Swoop And Squat:

Recently the California Insurance Department’s Fraud Division arrested a young woman in Los Angeles County for operating an insurance fraud school. She advertised her classes in the “Penny Saver” an advertising sheet distributed free to the public and a print version of Facebook, X Craig’s list. She had operated for several years teaching methods of committing automobile insurance fraud. Only after a police officer enrolled in one of her classes was she arrested.

Her defense counsel suggested that she admit the school existed but that she had no criminal intent. It was her intent only to reduce violent crime in her neighborhood.

The teacher lived in a Latino barrio in East Los Angeles. An area racked with violent crime and gangs. The teacher would testify that robbers shot a close relative in the armed robbery of a convenience store. She felt helpless to change this situation.

She learned, as a result of an automobile accident, the ease with which her claim was paid. She recovered more money than she expected from the insurer with ease. They never verified any of her claims.

She became a student of insurance. She visited the local library and read everything she could. She applied for, and obtained a job as trainee adjuster. She learned to investigate claims. She learned that claims investigations required little effort.

With the knowledge she gained from her reading and employment with an insurer she started her school. The school would teach gang-bangers that robbing convenience stores was dangerous. Store owners shot back. Police tracked down and arrested armed robbers. The police showed no interest in insurance fraud. The money is easy and the work is safe.

She believed, correctly, that if a gang-banger learned how easy it was to steal from an insurance company he would never take the risk of robbing a convenience store or mugging innocent individuals. Every Tuesday and Thursday, she would gather thirty people in her living room and impart her insurance knowledge. She never, personally, participated in insurance fraud. She merely taught people how to do it.

She gathered names of physicians and chiropractors working in the barrio. These health care professionals had no qualms about producing false and fraudulent medical reports. They only wanted the face amount of the billing. She got from her fellow adjusters the names of attorneys who would not ask questions when claimants would appear in their office five times a year. For one third of the recovery they filed suit against anyone.

She taught her customers the swoop and squat:

a car with four passengers pulls in front of a Mercedes or Lincoln, stops short and is rear-ended. All four occupants of the vehicle make claim against the owner of the Mercedes for soft tissue injuries. She explained the uninsured motorist fraud where the claimant’ dents his vehicle by backing into a building or tree. The claimant then reports a hit and run automobile accident to his insurer.

She taught her students how to work together. One plays the insured and the other plays the claimant. She preached it was safer to switch roles regularly. She taught her classes how to pursue a slip and fall claim against a grocery or restaurant.

She taught it was important that before they fall there must be a spilled liquid to slip on.

She did role playing with each of her students. She helped them become familiar with the methods by which adjusters take recorded statements. She explained to each of her students that they should never lie to an adjuster. She explained that absolute truth was required. Only the facts of the accident and the injuries can be fabricated.

She taught each of the appropriate symptoms for a cervical sprain and a lumbosacral sprain or strain.

She explained to each of them the physical therapy that they must describe receiving [even though they would never receive any physical therapy] to convince the adjuster that they had treated with the doctor.

She taught how to negotiate with the adjuster and make the adjuster feel confident. She explained that if they could settle with the adjuster they would keep more of the fruits of the crime.

Her lessons were effective. She trained hundreds of gang bangers to be insurance claimants. All of them made a good living from insurance fraud. They found no reason to commit violent crimes. From the time her class started until her arrest the violent crime rate in the barrio went down twenty percent. Automobile insurance fraud, unknown to the defrauded insurers, in the barrio went up forty percent. The teacher was doing a service for her community. She charged her students for this service, but only enough to pay her rent and survive. She did not become wealthy from the school for insurance fraud. She believes she saved the lives of many convenience store clerks and gang bangers.

At her trial she explained to the judge and jury that she believed the court should honor her for her efforts to reduce violent crime. Punishment for preventing violent crimes, she argued, is inappropriate.

The argument was a good one but the judge applied the law and the teacher was sentenced to spend the next five years in state prison. Her students continue to make a good living making false insurance claims.

Adapted from my book “Insurance Fraud Costs Everyone” Available as a Kindle Book and Available as a Paperback

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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Complaints Filed By The Defendants With The Department Of Motor Vehicles Were Entitled To Absolute Immunity

Post number 5312

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In Modzelewski’s Towing & Storage, Inc., et al. v. Government Employees Insurance Company et al., No. AC 47933, Court of Appeals of Connecticut (March 24, 2026) Modzelewski’s Towing & Storage, Inc., Chris’ Auto Clinic, LLC, MyHoopty.com, LLC, and Farmington Auto Park, LLC, initiated an action seeking damages for tortious interference with business expectancies and other relief. The dispute arose after complaints were filed against them by Government Employees Insurance Company (GEICO) and individual defendants John P. Vaz and Patrick Capri with the Connecticut Department of Motor Vehicles. The plaintiffs alleged that these complaints interfered with their business relationships.

LEGAL ISSUES

The central legal issue concerned the application of § 14-63-45b of the Regulations of Connecticut State Agencies, which governs complaints to the Department of Motor Vehicles. The trial court examined whether the defendants’ conduct — filing complaints with the department — was protected by absolute immunity under the litigation privilege, a doctrine that shields certain communications made in the course of judicial or quasi-judicial proceedings from liability.

1. Whether the complaints filed by the defendants with the Department of Motor Vehicles were entitled to absolute immunity under the litigation privilege.

2. Whether the trial court properly dismissed the plaintiffs’ claims for lack of subject matter jurisdiction based on the litigation privilege.

DISCUSSION AND ANALYSIS

The trial court granted the defendants’ motions to dismiss, finding that the complaints submitted to the Department of Motor Vehicles fell within the scope of the litigation privilege and were thus immune from suit.

On appeal, the plaintiffs argued that the privilege should not apply, contending the complaints were not sufficiently related to a judicial or quasi-judicial proceeding. The appellate court disagreed, concluding that the process involving the Department of Motor Vehicles constituted a quasi-judicial proceeding, and the privilege applied. As a result, the dismissal for lack of subject matter jurisdiction was affirmed.

CONCLUSION

To determine where there is an effective litigation privilege is whether the body has the power to:

1. exercise judgment and discretion;
2. hear and determine or to ascertain facts and decide;
3. make binding orders and judgments;
4. affect the personal or property rights of private persons;
5. examine witnesses and hear the litigation of the issues on a hearing; and
6. enforce decisions or impose penalties.

The court determined that the department’s complaint and hearing proceeding is quasi-judicial in nature because the Commissioner of Motor Vehicles or the designated hearing officer is vested with the discretion and judgment to consider motions, subpoena witnesses, require the production of records, receive, consider, and evaluate the evidence, limit the number of witnesses, permit additional pleadings and evidence pre- and post-hearing, and issue a final decision based on their consideration of the entire record.

The Court of Appeals of Connecticut affirmed the trial court’s judgment, holding that the defendants’ complaints to the Department of Motor Vehicles were protected by absolute immunity under the litigation privilege, thereby precluding the plaintiffs’ claims for tortious interference and other relief.

The policy underlying the litigation privilege is that in certain situations the public interest in having people speak freely outweighs the risk that individuals will occasionally abuse the privilege by making false and malicious statements.

The litigation privilege is a long-standing common law rule that communications uttered or published in the course of judicial proceedings are absolutely privileged so long as they are in some way pertinent to the subject of the controversy.

In the present case, a consumer complaint filed with the department is necessary to initiate the department proceeding that the plaintiffs concede is quasi-judicial in nature. The trial court explained that the defendants’ alleged filing of complaints with the department were part of the initial steps in the distinct possibility that the department would commence proceedings against the plaintiffs.

Accordingly, the Court of Appeals agreed with the court that public policy supports the application of the litigation privilege to complaints filed with the department of the regulations and, therefore, conclude that the court properly granted the defendants’ motions to dismiss. The judgment was affirmed.

ZALMA OPINION

The state set up a department to control and deal with disputes about the actions of people and entities involved in judicial or quasi judicial entities. GEICO, on its own behalf and on behalf of its insureds reported to the agency improper conduct only to find itself sued for defamation. The trial court and Court of Appeals applied the litigation privilege and threw out the defamation actions.

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Implied In Fact Contract Can Only Exist However Where There Is No Express One

Post number 5311

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In Ronald Daigneault v. Danielle Kolashuk et al., No. AC 47259, Court of Appeals of Connecticut (March 24, 2026) Daigneault, owned and operated an auto repair business for approximately twenty-eight years. During this period, he and his daughter, the defendant D (Danielle Kolashuk), jointly operated the business. D’s husband owned Auto Magic, LLC (“A Co.”), which periodically stored towed vehicles on the business property. Disputes arose regarding the nature of the business relationship between the plaintiff and D, the use of business accounts, and payment for vehicle storage.

FACTUAL BACKGROUND

Ronald The plaintiff initiated an action seeking damages for, among other things, statutory theft and breach of fiduciary duty. Danielle, according to the trial court, “used the Superior Auto accounts as her own piggy bank . . . .”

The trial court, however, found that she, “as a joint holder of those accounts and her father’s de facto partner, and knowing that her father did so . . . reasonably believed that she, too, had the right to do so . . . .”

LEGAL ISSUES

The case involved claims of statutory theft under Connecticut law and breach of fiduciary duty. The trial court was required to determine whether a de facto partnership existed between the plaintiff and D, and to resolve issues relating to joint account ownership and alleged oral agreements for vehicle storage.

1. Whether the trial court properly found the existence of a de facto partnership between the plaintiff and D.
2. Whether the trial court erred in concluding that joint account holders are joint owners of the account.
3. Whether there was an enforceable oral agreement requiring A Co. to pay for storage of vehicles on the business property.
Whether the trial court’s findings justified judgment for the defendants on the plaintiff’s claims for statutory theft and breach of fiduciary duty.

DISCUSSION

On appeal, the plaintiff challenged the trial court’s finding of a de facto partnership, arguing that the evidence did not support such a conclusion. The appellate court reviewed the record and found ample support for the trial court’s determination that a partnership existed, noting the lengthy joint operation of the business and the conduct of the parties. The court emphasized that the finding was not clearly erroneous.

With respect to implied in fact contracts, the courts have recognized that whether a contract is styled express or implied involves no difference in legal effect but lies merely in the mode of manifesting assent. A true implied in fact contract can only exist however where there is no express one. It is one which is inferred from the conduct of the parties though not expressed in words.

The judgment was affirmed. Ultimately, the appellate court affirmed the trial court’s judgment for the defendants on the plaintiff’s claims, as well as the judgment for the named defendant on the counterclaim. The court’s analysis rested on the sufficiency of the evidence supporting the existence of a de facto partnership and the procedural inadequacy of the plaintiff’s briefing on other issues.

ZALMA OPINION

When I was young my father tried to teach me that it was important to support the family. He tried, and failed with regard to one family member who insulted him, but otherwise always supported family. The litigation and relationships in this case teaches what happens when families don’t support each other only to have a court find an implied partnership that resolved the dispute without either party being happy.

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Court Give Plaintiffs Acting as their Own Lawyer a Second Chance

Post number 5310

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In Arin Sutton et al v. Lori Pozuelos et al., No. 5:25-cv-03544-MRA-MAR, United States District Court, C.D. California (March 20, 2026), No. 5:25-cv-03544-MRA-MAR, United States District Court, C.D. California (March 20, 2026) Plaintiffs Darin Sutton and Youtha Baker, proceeding pro se and in forma pauperis, initiated a civil rights action under 42 U.S.C. § 1983 against multiple defendants, including Lori Pozuelos, in the United States District Court for the Central District of California.

FACTUAL BACKGROUND

Plaintiffs allege violations of their constitutional rights, though the complaint’s factual allegations are stated in general terms and lack specific detail as to the actions of each defendant.

Plaintiffs are independent contractors who completed work in Missouri. Plaintiffs filed multiple claims with insurance companies. They allege one of the insurance companies filed a “suspected fraud claim” (SFC) regarding Missouri LLC’s G Mentality and Deverric and Dillon Remodeling. Defendant Pozuelos, an investigator employed by CD and assigned to the California Department of Insurance (“CDI”) Fraud Division was assigned to investigate Plaintiffs’ independent contractor work in Missouri.

LEGAL ISSUES

The Court screened the complaint under 28 U.S.C. § 1915(e)(2), which requires dismissal of any action filed in forma pauperis that is frivolous, malicious, fails to state a claim, or seeks monetary relief against immune defendants. The complaint was brought pursuant to section 1983, which provides a remedy for deprivation of federal rights by persons acting under color of state law.

The central question was whether the complaint stated a plausible claim for relief under section 1983 and satisfied federal pleading standards.

ANALYSIS

The Court found the complaint deficient for lack of specificity regarding the alleged constitutional violations and the actions of each defendant. The Court concluded that, as pleaded, the complaint did not meet the standards required by law and thus warranted dismissal.

DISCUSSION

The complaint was dismissed with leave to amend, providing Plaintiffs an opportunity to cure identified deficiencies.

Plaintiffs named Lori Pozuelos, in her Individual and Official Capacity as an Investigator with the California Department of Insurance as a defendant. Plaintiffs alleged that they are independent contractors who completed work in Missouri. Plaintiffs alleged that Defendant presented “contradictory and misleading testimony” to a grand jury, which led to their April 2023 arrests without probable cause.

SUIT AGAINST IMMUNE DEFENDANTS

A plaintiff may seek monetary damages under section 1983 from state employees in their individual capacity. However, because a suit against a state official in his or her official capacity is no different from a suit against the State itself, state officials sued in their official capacity, like the State itself, are generally entitled to immunity in a section 1983 action.

The Supreme Court has recognized one vital exception to this general rule: When sued for prospective injunctive relief, a state official in his official capacity is considered a ‘person’ for § 1983 purposes, and the Eleventh Amendment will not bar such relief. As the Supreme Court explains, a state official in his or her official capacity, when sued for injunctive relief, would be a person under § 1983 because official-capacity actions for prospective relief are not treated as actions against the State.

Therefore, a suit for prospective injunctive relief against a state employee in his official capacity may be cognizable when properly pled.

Prosecutors have absolute immunity to suits under section 1983 when the prosecutor acts within the scope of his or her authority and in a quasi-judicial capacity. Since the plaintiffs sued Doe Defendant Prosecutors there was no case against the Doe Defendants pled.

PLAINTIFF’S CLAIMS APPEAR TIME-BARRED

The statute of limitations for section 1983 claims is the applicable state statute of limitations for personal injury actions. In any amended complaint, Plaintiffs should clearly identify the dates for the relevant incidents and explain any basis for tolling of the statute of limitations.

ZALMA OPINION

People who sue in federal court acting as their own lawyer and alleging they are paupers and unable to pay the filing fees sued a California state Insurance Fraud Investigator and unknown prosecutors to stop prosecution. They failed to allege sufficient facts, the suit was dismissed, and the court gave the plaintiffs the right file an amended complaint although the plaintiffs were not worthy of the court’s kindness. The state of California should pursue the arrest and prosecution of the plaintiffs in accordance with the California Insurance Fraud Prevention Act.

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Post number 5309

Conclusory Allegations, Unwarranted Deductions Of Facts Or Legal Conclusions Masquerading As Facts Will Not Prevent Dismissal.

In Hunter Seaborn Mackenzie Black v. Robert J. Perrault, Jr. and The Florida Department Of Financial Services, No. 8:25-cv-01466-WFJ-CPT, United States District Court, M.D. Florida, Tampa Division (March 19, 2026) Defendant Florida Department of Financial Services’ (“DFS”) moved to Dismiss Count II of the Amended Complaint.. Plaintiff Hunter Seaborn Mackenzie Black (“Black”) has responded in opposition.

BACKGROUND

Plaintiff Hunter Seaborn Mackenzie Black was an independent salesman for a licensed roofing contractor, conducting door-to-door roofing sales in Florida. Defendant Florida Department of Financial Services (“DFS”) is a state agency, which includes the Division of Criminal Investigations and the Bureau of Insurance Fraud.

Defendant Robert J. Perrault, Jr., a law enforcement officer assigned to the Bureau, investigated Black in August 2022, alleging that Black impersonated a public adjuster, initiated a fraudulent insurance claim, and acted as a contractor without a license. Based on Perrault’s affidavit, the State Attorney’s Office filed criminal charges against Black. However, after further investigation, the State dismissed all charges by filing a Notice of Nolle Prosequi.

LEGAL ISSUES

Black filed suit on June 5, 2025, alleging malicious prosecution against Perrault under 42 U.S.C. § 1983 and a “negligent investigation” claim against DFS. Black asserts DFS failed to conduct a diligent investigation into the facts supporting the criminal prosecution and did not ensure probable cause before referral. DFS moved to dismiss Count II, the negligent investigation claim. The legal standard for dismissal is governed by Federal Rule of Civil Procedure 8(a)(2) and Rule 12(b)(6). To survive dismissal, the complaint must state a plausible claim for relief with sufficient factual matter, not merely conclusory allegations.

DISCUSSION AND ANALYSIS

The complaint alleged Perrault acted with “evil intent” and conducted a dishonest investigation to benefit his professional standing with the insurance industry. Black further claims DFS failed to properly investigate prior to referral for prosecution, resulting in criminal charges that were ultimately dismissed.

The court’s analysis is guided by the requirement that pleadings must provide fair notice and state a plausible claim, relying on facts rather than mere labels or conclusions. The motion to dismiss by DFS challenges whether Black’s allegations regarding negligent investigation satisfy these pleading standards.

LEGAL STANDARD

Federal Rule of Civil Procedure 8(a)(2) requires a short and plain statement of the claim showing that the plaintiff is entitled to relief to give the defendant fair notice of the claims and grounds. Plaintiff is required to allege more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.

In considering a Rule 12(b)(6) motion to dismiss, the court must construe the facts in the light most favorable to the plaintiff. A complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face to survive a motion to dismiss.

An examination of the Amended Complaint shows that none of DFS’s actions gave rise to a special tort duty. DFS never took Plaintiff into custody, detained him, or otherwise subjected him to danger. Plaintiff has failed to allege that DFS owed any special tort duty to Plaintiff.

The Court granted DFS’s motion to dismiss the negligent investigation claim in Count II without prejudice.

Accordingly, it was ORDERED and ADJUDGED that:

Defendant DFS’s Motion to Dismiss Count II, is GRANTED.

Plaintiff Black’s negligent investigation claim in Count II is DISMISSED without prejudice.

While the Court is doubtful any amended complaint will cure the deficiencies identified in this Order, the Court grants Plaintiff Black’s request for leave to amend his complaint under Federal Rule of Civil Procedure Rule 15(a). See Dkt. 33 at 17. Defendant DFS will be terminated from this case, and the remaining count will proceed against Defendant Perrault.

ZALMA OPINION

No one likes to be arrested. Mr. Black, after having the charges against him dismissed by the prosecutors, sued the arresting officer and his agency. The agency defeated the claim since Mr. Black failed to allege sufficient facts to avoid the motion to dismiss but can still proceed against the officer who failed to produce enough evidence to allow the prosecution to proceed for the charges against Black for impersonating a public adjuster and initiated a fraudulent insurance claim causing it to be more difficult for the insurance industry to defeat or deter insurance fraud in Florida.

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Post number 5308

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Convicted Fraudsters Try to Cheat Each Other

After failing to defraud insurers about the loss of a diamond ring the two admitted fraudsters sought possession of the seized ring which was neither lost nor stolen but was seized by the state.

In State Of North Carolina v. Kevin Ray Reece and Debra Lee Goldman, No. COA25-569, Court of Appeals of North Carolina (March 18, 2026) two fraudsters disputed the ownership of a platinum-banded diamond ring seized during a criminal investigation as the subject of Insurance Fraud.

FACTUAL BACKGROUND

Kevin Ray Reece pleaded guilty to two counts of felony obstruction of justice related to the ring and requested its return under N.C. G.S. § 15-11.1(a).

The trial court held an evidentiary hearing, considering witness testimony and various documents, including accountant notes, affidavits, and law enforcement reports. Ultimately, the trial court found Goldman to be the rightful owner and denied Reece’s subsequent Motion for Appropriate Relief, prompting appeal.

LEGAL ISSUES

The case involves a statute, N.C. G.S. § 15-11.1(a), which governs the return of seized personal property. Both Reece and Goldman sought release of the diamond ring.

ANALYSIS

The trial court focused on the absence of documentary evidence supporting Reece’s alleged purchase.

DISCUSSION

The trial court found the evidence insufficient to support Reece’s claim of ownership, concluding Goldman retained title to the ring.

The court’s findings were affirmed on appeal, emphasizing the importance of objective evidence in resolving property disputes arising from criminal proceedings.

ZALMA OPINION

Two criminals admitted that they used the seized diamond ring as part of an insurance fraud scheme and pleaded guilty to various crimes related to the scheme. The state seized the ring as part of its investigation of the insurance fraud scheme and after pleading guilty both criminals claimed ownership of the ring. The court took time, heard testimony, and resolved the dispute giving one of the fraudsters the right to ownership of the ring. Neither should have received the ring, it should have been sold to provide restitution to the insurer that investigated the fraudulent claim.

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