Insurance Dispute

December 29, 2016

Can an Insurance Policy still be in Effect in Louisiana if the Insured Does not Pay the Premium?

thrown-rubbish-1561470 Insurance policies can still be intact even if the insured fails to pay if the insurance company fails to follow the proper protocol in informing the insured that he or she no longer has coverage. State Farm found themselves liable for coverage in just a situation.

Thomas Sapp was insured under a Florida State Farm policy. The policy ran from December 3 until June 3, 2008, and the policy was renewed thereafter for consecutive six-month terms. Sometime during Sapp’s insurance coverage, Sapp moved from Florida to New Orleans, Louisiana. State Farm was aware of his move. On August 15, 2009, Sapp was involved in an automobile accident with Roderick Lee. Subsequently, Lee sued Sapp and State Farm seeking damages for his personal injuries incurred in the accident as the result of Sapp’s alleged negligence. State Farm denied coverage, arguing that the policy was not renewed.

In support of State Farm’s claim that they were not responsible for Lee’s damages because the policy was not renewed, State Farm presented evidence that Sapp was no longer covered by State Farm because Lee stopped making payments in February of 2009. In response, both Lee and Sapp argued that the State Farm policy was still in effect because State Farm did not send the legally required notice of cancellation for renewal. The trial court agreed with Lee and Sapp, and granted their motions for partial summary judgment, while denying State Farm’s motion for summary judgment. The Louisiana Fourth Circuit Court of Appeals agreed with the trial court and affirmed. In determining the claim, the Fourth Circuit recognized that although the incident occurred in Louisiana, the Court had to apply Florida law because the contract arose out of Florida. However, the Court also noted that even if the Court were to have applied Louisiana law the outcome would have been the same.

December 27, 2016

Pineville, Louisiana, Car Accident Leaves Insurance Company Battle in its Wake

by Berniard Law Firm

Anytime you get in a car can be a life and death situation. While no one ever wants to think about the worst, what will your insurance cover if the worst does happen. Your policy may not only need to cover you and those injured, it could need to cover your employer if you were driving in the scope of your employment.

On February 9^th, 2009, a fatal automobile accident occurred between Croom and Rhonda, Edward, and Barbara Hickey. Croom, died after he crossed the centerline of a street in Pineville, Louisiana, and colliding with the Hickey’s vehicle. Croom was insured by Allstate insurance company, who provided his estate with a defense.

The Hickeys claimed in there suit against Croom’s estate, (represented by Allstate) that he was operating a vehicle in the “Course and Scope” of his employment with the Express Company. Express was insured by two separate policies, one from Federal Insurance Group, and an excess policy by Scottsdale Insurance Company.

November 28, 2016

Appellate Court Ruling in Louisiana Serves as a Reminder to Put Settlements in Writing

by Berniard Law Firm

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Most people have heard the saying “A Deal’s a Deal.” That’s what the plaintiffs thought in a case that arose from Rapides Parish that involved eight people in one vehicle and one person in the other. The plaintiffs were the driver and passengers in the eight-person vehicle, and they were suing for damages that were caused by the defendant in the car accident. However, the only applicable insurance coverage to the plaintiffs was the uninsured motorist coverage issued by Safeway Insurance Company of Louisiana. The plaintiffs eventually reached a settlement agreement with Safeway, in which Safeway agreed to pay the agreed amount of the insurance policy.

However, the plaintiffs alleged that Safeway failed to remit the settlement fund within thirty days of the date that the settlement agreement was put into writing, as mandated by state law. Pursuant to state law under La. R.S. 22:1973, the trial court found the agreement was put into writing on March 18, 2013, while the settlement was paid off by Safeway on the thirty-fourth day after the agreement. Safeways appealed when the trial court ruled in favor of the plaintiffs. The Court of Appeals disagreed with trial court’s finding and determined the day the agreement was put into writing was March 28, 2013. The payment made by Safeway on April 22, 2013, was within the thirty-day period.

The appellate court emphasized that the thirty-day requirement is penal in nature and, therefore, the court should construe its application strictly and narrowly. The Court consequently concluded that when a party seeks penalties for an insurer’s failure to pay a settlement in time, the party is not required to prove that the insurer was “arbitrary, capricious, or without probable cause” in failing to pay. Rather, the party is required to show that the insurer “knowingly” failed to pay. See Sultana Corp. v. Jewelers Mut. Ins. Co, 03-360, p. 9 (La. 12/3/03), 860 So.2d 1112, 1119.

November 17, 2016

Actual Notice Exempts Condominium Association From Providing Insurance Coverage for Interior of Individual Condos

by Berniard Law Firm

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You hear it all the time and a good lawyer will tell you: don’t sign anything before reading it. Most people know this, but few people actually practice it. However, following this old adage can save you from many headaches and in the case of Mrs. Theodora Lourie it could have saved her time and money.

Mrs. Lourie purchased a Chardonnay Village Condominium unit in Kenner, Louisiana in 1997. In late 2010 a kitchen fire damaged the interior of the unit and much of Mrs. Lourie’s personal belongings. Fortunately, Mrs. Lourie had homeowner’s insurance through State Farm, which paid her $79,175.95 for damages and living expenses. About one year after the fire, Mrs. Lourie filed a petition for damages against the Chardonnay Village Condominium Association (“Association”). She wanted the Association to reimburse the payments State Farm made to her and sought additional damages that were not covered under her State Farm policy. In total, Mrs. Lourie wanted a judgment in her favor of $113,000.

The Trial Court granted summary judgment in favor of the Association, i.e., there was no genuine issue of material fact and the Association was entitled to judgment as a matter of law. The Louisiana Fifth Circuit Court of Appeal agreed with the Trial Court’s determination. The issue here is whether Mrs. Lourie had actual notice that the Association would not provide insurance coverage for individual condo units. If she had actual notice, then the Association was off the hook, so to speak.

November 12, 2016

Insurers Owe No Duty to Defend Against Exempted Claims in Bollinger Shipbuilder Lawsuit

by Berniard Law Firm

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It seems rare in insurance coverage litigation for a court to wholeheartedly agree with an insurer that the coverage requested is not in fact provided for in the contract for insurance. Yet, the U.S. Court of Appeals for the Fifth Circuit did just that, upholding a decision out of the U.S. District Court for the Eastern District of Louisiana finding without question that Bollinger Shipyards, Inc. was not entitled to defense by its insurers in a lawsuit brought against it by the United States.

Bollinger, a shipbuilder headquartered in New Orleans, won a multi-million dollar “Deepwater” modernization contract to upgrade eight (8) 110-foot U.S. Coast Guard cutters to make them 123-foot vessels. Despite the Coast Guard’s concerns that the boat hulls were not able to accommodate the 13-foot extensions, Bollinger pushed forward on the project. On several occasions, Bollinger submitted analyses to the Coast Guard purporting to show that the hull strength was sufficient. In reality, the hull strength was not sufficient which became apparent when one of the ships “suffered a structural casualty that included buckling of the hull.” The Coast Guard determined that the seven remaining ships were equally faulty and unusable.

Eventually, the United States filed a lawsuit against Bollinger over the faulty work. The Court allowed the United States to move forward with two claims under the False Claims Act. Days prior to the government’s filing, Bollinger notified its general maritime insurer, XL Speciality Insurance Company, and its excess insurer, Continental Insurance Company, of the impending claims in an effort to shift the burden of the expense of the defense to the insurers. In response, XL issued a “reservation of rights” letter stating that it was unsure if Bollinger’s policy included this coverage.

October 20, 2016

New Orleans Lawsuit Answers the Question of Who is Liable in Fire that Spreads Case

by Berniard Law Firm

burn-baby-burn-1229975-1-1024x768 A fire at a building you own cannot only damage your property but others as well. So what happens when a fire starts at your property and then quickly spreads to others, are you liable for their losses as well? The following case demonstrates what happens in court when a piece of real estate catches fire, causing damage to a neighboring property.

The New Orleans Fire Department was called on January 7, 2011, to suppress a fire at property owned by the Fellowship Missionary Baptist Church (“the Church”). The property encompassed the church building located at 2101 Prytania Street and a residential house located at 2113 Prytania Street. The Church had not conducted worship services on the property since the church was damaged in 2005 by Hurricane Katrina. The fire was investigated by the New Orleans Fire Department, the State Fire Marshall’s Office, and the Bureau of Alcohol, Tobacco, and Firearms. All of the agencies agreed that the cause or the origin of the fire could not be determined conclusively.

Show and Tell of New Orleans, L.L.C. sustained water and fire damages to their nearby properties, along with the owners of the Magnolia Mansion. Those parties filed lawsuits essentially claiming that the Church was negligent for its alleged inattentiveness in maintaining its property in a safe and secure manner. Further, the Plaintiffs alleged negligence in the Church’s failure to adequately secure the church to prevent vagrants, who the Plaintiffs claimed caused the fire, from habitually entering and inhabiting the church. The Plaintiffs also contended that the building was in a state of disrepair, that the property was a public nuisance, and that it had been cited as blighted property by the City of New Orleans in September and November of 2009. All of these problems in the Plaintiffs eyes lead to the Church being liable for the damages they sustained from the fire.

October 16, 2016

Fire in Scott, Louisiana, Leads Appellate Court to Decide Commercial Insurance Contract Dispute

by Berniard Law Firm

building-on-fire-1214366-706x1024 The case may have seemed simple enough to the courts at first: interpret a contract. The main question in the case before the U.S. Court of Appeals for the Fifth Circuit was whether to apply the business’ projected income versus the actual income when calculating the coinsurance reward. The Court had to determine whether the language in the insurance policy and contract was clear as to which income it referred to. The Court applied Louisiana law, and indicated that courts must apply the contract as a whole, rather than in separate parts. The Court also applied the same law, which prior Louisiana Supreme Court decisions established, in determining that a court must enforce a contract as it is written when the contract’s meaning is clear and unambiguous.

Advance Products & Systems, Inc., (APS) of Scott, Louisiana, purchased an insurance policy in from Mt. Hawley Insurance Company in November of 2009 for its commercial property. Mt. Hawley Insurance Company is an Illinois company with a Baton Rouge agent. A fire damaged APS’s facility in September of 2010, about ten months after Mt. Hawley issued the policy. A dispute subsequently arose between Mt. Hawley and APS during the claims-adjustment process, and Mt. Hawley then sued APS in a Louisiana federal court – the United States District Court for the Western District of Louisiana. Mt. Hawley had the option to sue in federal court since the two parties were incorporated in different states.

The dispute stemmed from two provisions in the insurance policy. The first provision involved coverage for income lost – business income coverage; the second, a coinsurance clause, required APS to be responsible for a percentage of certain losses because APS chose to purchase a limited level of coverage, as opposed to the full value of its income. The policy applied the coinsurance clause as a penalty when the policy limit amounted to less than 90 percent of the sum of the net income and operating expenses ‘that would have been earned or incurred’ over a 12-month period. APS’s coverage limit was $500,000; whereas it claimed to have lost $723,109 of income as a result of the fire.

October 12, 2016

U-Haul and Fedex Trucks Collide, Claims Adjuster Repwest Makes a Quick Exit from Lawsuit

by Berniard Law Firm

truck-on-hwy-1615510-1-1024x682 Renting a U-Haul truck can be a necessary burden when you are tasked with moving a lot of stuff from place to place. During the rental process you might be asked whether or not you want supplemental insurance policies. But who do you sue when an accident happens? In the following case out of New Orleans, Louisiana one plaintiff finds out who definitely cannot be sued when a U-Haul and Fedex truck collide.

JR was driving a rented commercial truck (U-Haul), when his truck crashed into a delivery truck (Fedex) in New Orleans. JR filed a lawsuit against the delivery truck and also named the insurer of the company he rented the truck from as a Defendant as well. JR named the company from whom he rented a truck as a Defendant because he claimed to have purchased “risk protection” from that company in the course of his rental agreement with the company. JR believed that the risk protection insurance would provide him with uninsured motorist coverage. The plaintiffs went on to add RW Insurance Company as another defendant, apparently believing that RW was the commercial company’s insurer.

However, RW insurance apparently is only a claims administrator for the commercial company and not an insurance company. Upon receipt of the lawsuit RW wanted out as soon as possible. To do so they filed a motion for summary judgment (MSJ). If RW could prove that there was no genuine issue as to the material fact that they were not an insurer for the commercial company and thus owed no coverage to JR they could be dismissed from the case. See Louisiana Code of Civil Procedure article 966. They did just that and the trial court granted their motion.

October 1, 2016

Does an Insurer’s “Duty to Defend” Extend to Pre-Lawsuit Settlements in Louisiana?

by Berniard Law Firm

old-truck-lublin-1449942-1024x658 Has your business sought to avoid litigation over its insured business activities by negotiating an out of court settlement? Louisiana business Meyers Warehouse, Inc. (“Meyers) pursued this route assuming its insurer, Canal Indemnity Company (“Canal”), would join Meyers in settlement negotiations. However, to its surprise, Canal refused to participate in Meyers’s defense. Unfortunately for Meyers, it misinterpreted key terms within its insurance policy specifying when Canal’s duty to defend it against claims and lawsuits arises.

Meyers is the owner and operator of several trucks, trailers, and trucking operations in Louisiana. Like many businesses, it purchased insurance coverage to protect against liabilities stemming from core business activities. In November 2011, Meyers received notification that one of its shipments contained contaminated liquid sugar. The contamination caused significant damage to the client’s production line.

Meyers and the client reached a settlement agreement in lieu of pursuing litigation. The agreement transferred the liability for damages to the third party contractor responsible for cleaning Meyers’s tankers. Canal was not involved in the negotiation process. Meyers filed its lawsuit against Canal because Canal refused to participate in Meyers’s defense during the settlement negotiations arising out of the November 2011 notification. The primary dispute between the parties was whether or not Canal had a duty to defend Meyers during the settlement negotiations even though no lawsuit against Meyers was ever filed.

September 17, 2016

New Orleans Business Insurance Claim Dispute Leads to Clarification of Requirements to Receive Payment

by Berniard Law Firm

build-4-1213636-1-768x1024 Insurance companies are coming under increasing pressure due to the recent proliferation of natural disasters in the United States. For an insurance company, navigating the boundary between legitimate and bad faith denial of claims can be a very risky business. However, courts are providing more and more guidance for insurers of companies who find themselves targeted by disaster. Recently, in Citadel Broadcasting Corp. v. Axis U.S. Insurance Co., 2014-CA-0326, the Fourth Circuit Court of Appeal in Louisiana clarified the requirements a claimant must meet in order to receive payment through an insurance plan.

Citadel Broadcasting (“Citadel”) was based in New Orleans at the time it sustained crippling damage from Hurricane Katrina. Prior to the incident, Citadel was insured by Axis U.S. Insurance (“Axis”) for physical damage and business interruption (“BI”) losses, including contingent business interruption income. This means that in addition to physical damage, Axis covered the loss of profits suffered by Citadel while it was restoring its locations and broadcasting capabilities. This BI coverage was to extend for 365 days from the date of the incident. Axis denied coverage to Citadel relying on “exclusion k”, a loss of market exclusion. Loss of market means that the coverage would be denied because Citadel had lost the opportunity to market their broadcasting to their listeners. A jury returned a verdict against Axis in the amount of $11,813,976, and this amount was mostly affirmed by the Court of Appeal.

Louisiana law imposes a relaxed burden of proof showing that a particular catastrophic event actually caused the damage. Damages must be proven to a reasonable certainty, and the proof of loss must only be as precise as circumstances allow. See La Louisiane Bakery Co. v. Lafayette Ins. Co, 09-825, p. 28 (La.App. 5 Cir. 2/8/11) The court is given broad discretion over these questions due to the imprecise nature of the calculation of lost profits. The formula examines a company’s actual loss by comparing expected performance prior to the incident with actual performance after the incident, and does not require direct proof of loss of customers. For example, Citadel satisfied this requirement by demonstrating a loss of market share at the expense of an increased market share of its competitors, and by calculating actual loss according to Axis’ insurance coverage provisions.