Car accidents can be a problematic scenario for the parties involved emotionally and financially. This situation can become even more complicated when the insurance company provides coverage to both parties involved in the accident, and the injured party files a lawsuit against the insurance company, arguing that the injured party is a first-party claimant. The Fourth Circuit Court of Appeals for Louisiana recently addressed the issue.
In August 2009, Mr. Sapp drove a vehicle down Prytania Street in New Orleans, Louisiana. Unfortunately, Mr. Sapp collided with the car driven by Mr. Lee. After the accident, Mr. Lee filed a lawsuit in the Orleans Parish of Louisiana against Mr. Sapp and State Farm Insurance Company. In the case, Mr. Lee alleged that the accident resulted in personal injuries. All the parties reached a settlement agreement seven years after the accident occurred.
The settlement agreement covered all claims from the accident in 2009, except for the exception of “Reserved Claims.” The agreement between the parties provided that “Reserved Claims” meant all claims of bad faith by Mr. Lee against State Farm Mutual Automobile Insurance Company. One month after the settlement agreement was entered, State Farm filed an exception. In this exception, State Farm sought to dismiss all reserved claims except one. This one was for Mr. Lee’s misrepresentation claim, pursuant to La. R.S. 22:1973(B)(1). The Trial Court ruled in favor of State Farm, sustaining the exception and dismissing all of Mr. Lee’s bad faith claims except for misrepresentation. Mr. Lee then appealed the decision of the Trial Court.