Caleb Crabtree, et al. v. Allstate Property and Casualty Insurance Company, et al.

Jackson, Mississippi insurance law lawyers represented the Plaintiff who sued on a bad faith breach of contract theory.



We explained in Crabtree I that "Court Properties did not have a 'real and legitimate interest' in the bad-faith claim because it was a 'disinterested stranger[]' that had no stake in Cotton's bad-faith claim or the bankruptcy proceeding.” Id. at *4 (alteration in original) (quoting Sneed, 735 So. 2d at 311, 313). In answer to our certified question, the Supreme Court of Mississippi held that state law "prohibits a disinterested third party engaged by a bankruptcy creditor from purchasing a cause of action from a debtor's estate.” Crabtree II, --- So. 3d ----, 2025 WL 1409047, at *1. That means that the assignment of Cotton's claim by the bankruptcy trustee to Court Properties was champertous and void under Mississippi law. See Sneed, 735 So. 2d at 315 (explaining that a champertous agreement is "a void contract under the laws of the State of Mississippi”). Because Court Properties never acquired Cotton's claim, it could not have assigned it to the Crabtrees.

The Crabtrees do not possess Cotton’s bad-faith claim against Allstate, so they lacked standing to sue in federal court.