Under Louisiana law, an issuer of a property insurance policy is required to follow certain procedures when renewing the policy. Essentially, an insurance company must give a property owner 30 days’ notice of either 1) its decision not to renew a policy, or 2) the homeowner’s option to renew when it expires. La. R.S. 22:887(G). Case law adds the stipulation that, in most cases, an insurer’s failure to provide this notice will result in an automatic renewal of the policy. If there is a dispute, the insurer faces an initial burden to prove that it mailed the required notice, which creates a presumption the insured received the notice. The property owner may rebut this presumption by offering evidence that the notice was never delivered. The ultimate factual determination must be made by the trial court.
The Louisiana Supreme Court recently reaffirmed this approach in the case of Nolan v. Mabray. On June 18, 2005, Wilson Mabray and Marsh Nolan were shooting off fireworks at Mabray’s family farm in Union Parish. Wilson shot a bottle rocket which struck and severely injured Marsh. Wilson’s father (“Mabray”) maintained a farm-owner’s policy issued by Shelter Insurance Company. When March sued for his injuries, Shelter disputed that the policy was in effect at the time of the accident, arguing that the policy had lapsed: Shelter asserted that it mailed Mabray a renewal notice on April 28, 2005 which stated the premium was due on June 2, 2005. However, the company did not receive payment until nearly a month late, on June 29, 2005. At trial, a Shelter employee offered testimony about the company’s computer-generated renewal notices and automated mailing process. The employee produced records of the company’s April 28 letter and also a separate “lapse letter” mailed on June 20 that warned Mabray his policy had been cancelled. Mabray’s local agent, who was copied on the lapse letter, personally contacted Mabray on June 29 and collected payment the same day. On the issue of whether he ever received the renewal notice, Mabray testified by way of deposition that he did not remember receiving it, and that if he had, he would have paid the premium right away. However, Mabray testified it was possible he overlooked the notice as April through June were especially busy months on the farm during which he “might have stuff sit on [his] desk for a couple of weeks before it gets opened.” Mabray further stated that “[he] could certainly not swear that it did not come to [his] mailbox and actually get on [his] desk.” He also admitted that several other insurance policies with Shelter had lapsed in the past because he did not pay the premium on time. Based on this evidence, the trial court found that Shelter did mail the renewal notice to Mabray on April 28, 2005 and, therefore, the policy was not in effect at the time of the bottle rocket incident because it had lapsed.
The Second Circuit reversed, finding that there was insufficient evidence to support the trial court’s conclusion that the renewal notice had been mailed. This decision was based primarily on the fact that Shelter did not introduce evidence of any person’s actual knowledge that the notice was mailed. The Louisiana Supreme court disagreed. Applying the manifest error standard of review, the Court held that
“the issue of mailing is a factual issue to be decided by the trial court, and testimony from the person who actually mailed the notice is not required. Our Code of Evidence expressly permits the use of records of regularly conducted business activities as exceptions to the hearsay rule.”
The Court continued, “while a factual determination on the notice issue may not be appropriate for summary judgment, it is prime for trial on the merits, where the factfinder’s determination is entitled to great weight.” With obvious frustration, the Court admonished the Second Circuit for failing to defer to the trial court’s finding:
“The evidence cited by the court of appeal to reverse this factual finding was merely evidence in support of its own evaluation of
the facts, and, as we have instructed courts of appeal numerous times, that is not a
permissible basis to overturn a trial court’s factual finding. Merely because there is
some factual support in the record for a contrary view does not permit an appellate
court to overturn a trial court’s factual finding under the manifest error rule.”
. Accordingly, the Court reversed the Second Circuit’s decision and reinstated the trial court’s judgment.
The Nolan case reminds litigants that the time to settle factual disputes is in the trial court, particularly where the case largely turns on circumstantial evidence. An appellate court must find serious error on the part of a judge or jury in making determinations of fact to substitute its own judgment, even if it feels after reviewing the record that its version of the events in question is more likely.