Articles Posted in Insurance Dispute

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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.

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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.

burn-baby-burn-1229975-1-1024x768A 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.

building-on-fire-1214366-706x1024The 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.

truck-on-hwy-1615510-1-1024x682Renting 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.

old-truck-lublin-1449942-1024x658Has 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.

build-4-1213636-1-768x1024Insurance 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.

mailbox-1-1481771-1024x683In  order to file an insurance claim you first must have insurance coverage.  It’s important that you stay aware of the renewal dates for the continuation of coverage so that you do not end up losing out on critical insurance payments in times of crisis.  In certain situations it’s your insurance company or agent’s duty to notify you that your coverage has lapsed.  A recent case involving a homeowners insurance policy for a property located on Lafourche Street in New Orleans discusses the burden of proof necessary to justify a homeowner’s claims of improper notification of nonrenewal by his insurance agent.

In early 2000, after the roof of his property in New Orleans was damaged, Edward Collins filed a claim under his homeowner’s policy with State Farm Insurance Company. State Farm paid Mr. Collins for the damage per his homeowner’s policy for that claim. In 2004, Mr. Collins submitted a subsequent claim under his homeowner’s policy. State Farm performed an investigation and uncovered that Mr. Collins failed to repair his roof after his funds were disbursed for his 2000 claim. Upon this discovery, State Farm did not renew the homeowner’s policy when it expired in May of 2005.

Mr. Collins was sent a letter of nonrenewal on April 27, 2005. However, Mr. Collins asserts that he never received a notice of nonrenewal. In August of 2005, Mr. Collins filed a claim under the homeowner’s policy for damage to his property as a result of Hurricane Katrina. State Farm denied the claim, setting forth that there no longer was an existing policy for Mr. Collin’s property.

another-mobile-home-victim-of-katrina-1560379-1024x683Hurricane Katrina wreaked havoc on Louisiana in 2005.  As a result of the storm insurance claim litigation continued on for years thereafter.  In Louisiana there are short deadlines for filing a lawsuit if you believe you were treated unfairly by your insurance company.  If you do not file your lawsuit on time you might be met with a Motion to Dismiss, as was Lionel Williams who sued Louisiana Citizens Property Insurance Company for claims of mishandling of his Hurricane Katrina insurance claims.

Lionel Williams, of Reserve, Louisiana, sued Louisiana Citizens Property Insurance Corporation (“Citizens”) in state court for claims relating to Citizens’ handling of his insurance claims for property damaged by Hurricane Katrina.  Mr. Williams did not file his lawsuit until September 20, 2011.  After receiving the lawsuit Citizens filed an exception of prescription. Prescription is the set of procedural rules in Louisiana that dictate how long a person has to file a lawsuit after being harmed.  So, in filing an “exception of prescription” what the Citizens was seeking to do was to get Mr. Williams case thrown out of court before any trial of the facts occurred.  To defend against the prescription exception Mr. Williams alleged that he was a putative member of several class actions, that he had not opted out of the class actions, and that because he was a member of those various class actions prescription was suspended in his case. Because Mr. Williams alleged he was a class member of several class actions the trial court was forced to look at the claims made and procedural posture of all of those cases and then make a decision as to what claims could survive in Mr. Williams case.  Some claims were dismissed and some were allowed to continue on.

In hoping that the appellate court would overrule the dismissal of his certain claims of his lawsuit, Mr. Williams first argued that he was a member of various class actions filed after Hurricane Katrina.  La. C.C.P. art. 596(A)  provides that a class action lawsuit suspends prescription as to all members of the class. That statute further provides that this suspension continues until 30 days after one of three events occurs: “1) a person elects to be excluded from the class by submitting an election form; 2) a person is excluded from the class by the redefinition or restriction of the class (and notice is issued); or 3) the action is dismissed, the demand for class relief is stricken, or class certification is revoked or refused (and notice is issued).” These three “statutory triggers” are exclusive. Unless one of these “statutory triggers” are present, the prescription period continues to be suspended.

car-crash-1451085-1024x686Insurance policies can be difficult to understand. Litigating disputes arising from insurance policies can be even more difficult because the court must look not only at the policy itself to decide the case but must also consider which state’s law to apply to the case. The complexity of insurance cases makes it important to seek the services of an attorney familiar with the nuances of insurance litigation.

Monica Rios was a passenger in a car, driven and owned by Mr. Eddy Reyes, that was involved in an accident in New Orleans, Louisiana. The other car involved in the accident was being driven at the time by an excluded driver for that car’s insurance policy. The insurance provider for that car, Gramercy Insurance Company, pointed out that not only was the driver of the vehicle a named excluded driver that also the policy had lapsed due to non-payment prior to the accident. As a result, Gramercy was released from any liability.

Ms. Rios had also filed a claim for uninsured/underinsured motorist (UM) coverage under Mr. Reyes’ insurance policy issued by United Automobile Insurance Company. UM is intended to compensate the insured customer when the driver who caused the accident is either uninsured or their insurance does not cover the damages. In this case, since Gramercy had been released from liability by the court, Ms. Rios looked to United, Mr. Reyes’ insurer, for relief.

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