Three recent holdings by Louisiana's Fourth Circuit Court of Appeal are of great interest to parties and attorneys involved in Insurance Coverage and Bad Faith Litigation. The first two holdings are posted here. The third is posted on Insurance Claims and Issues Web Log. All of the holdings came in the case of Download Patrick and Elizabeth Jouve v. State Farm Fire and Casualty Co. (La. Ct. App. 4th Cir. Case No. 2010CA1522, Opinion Filed August 17, 2011) PUBLIC ACCESS, also published as 2011 WL 3611800 (La. Ct. App. 4th Cir. August 17, 2011)(authorized password required to access Westlaw).
1. "SUBSTANTIAL, REAONSABLE AND LEGITIMATE QUESTIONS" OF
a. COVERAGE ("AN INSURER'S LIABILITY") OR b. THE INSURED'S DAMAGES ("THE EXTENT OF ... AN INSURED'S LOSS") ARE DEFENSES TO VEXATIOUS DELAYED PAYMENT CLAIMS IN A FIRST-PARTY BAD FAITH CASE IN LOUISIANA.
This holding may take only a little longer to state, than the heading I have written, above, to describe it. In the Jouve case, Mr. and Mrs. Jouve sued their Homeowner's Insurance Company, State Farm, for Property Damage allegedly caused by Hurricane Katrina. Among other causes of action presented by the Jouves, they alleged that State Farm violated Louisiana Statutes which provide for the recovery of penalties and attorney fees where, among other things, the Insurance Company failed to make a timely payment of the Insured's Claim after the Insurance Company received a satisfactory Proof of Loss, and "the insurer's failure to pay was arbitrary, capricious and without probable cause." Jouve v. State Farm Fire & Casualty Co., 2011 WL 3611800 at *4.
Under the Louisiana "First-Party Bad Faith" Statutes invoked by Mr. and Mrs. Jouve, "arbitrary, capricious, or without probable cause" means "vexatious," and a refusal to pay is "vexatious" when it is "unjustified, without reasonable or probable cause or excuse." Id. "When 'there are substantial, reasonable and legitimate questions as to the extent of an insurer's liability or an insured's loss, [the insurer's] failure to pay within the statutory time period is not arbitrary, capricious or without probable cause.'" Id. [Emphasis added.] This Louisiana defense to Insurer First-Party Bad Faith may go farther than the defense recognized in most other jurisdictions, that when Coverage is fairly and reasonably debatable, an Insurance Company is held "entitled to debate it." See generally Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 11:17, "Fairly or Reasonably Debatable Claims" Defense to First-Party Bad Faith (West Publishing Co. 3d edition 2011).
Whether an Insurance Company in Louisiana complies with this standard is a question of fact, id., a holding which is consistent with the holdings in every other jurisdiction concerning the issue of compliance with the prevailing Bad Faith standard of liability. The evidence in the record of the Jouve case established, in the eyes of the Appellate Court, that the Trial Court correctly entered a Summary Judgment in favor of the Insurance Company on the Jouves' Statutory vexatious refusal to pay causes of action:
The evidence submitted indicates State Farm timely initiated the loss adjustment of plaintiffs' property and made an unconditional tender based on the first inspection within the statutory time period. When plaintiffs' counsel submitted Mr. Caracci's estimate [requested by Mr. and Mrs. Joure] to State Farm, State Farm arranged for a re-inspection of the property with Mr. Caracci. Based on the re-inspection, State Farm made a second timely unconditional tender.
Plaintiffs offered no evidence in opposition to State Farm's motion for partial summary judgment that shows State Farm acted arbitrarily, capriciously or without cause in adjusting their homeowners claim. Given that plaintiffs will have the burden of proof at trial, and thus far have offered no evidence of bad faith on the part of State Farm to create a genuine issue of material fact, we find no error in the trial court's granting a partial summary judgment dismissing the bad faith claims against State Farm.
Id. at *5.
2. EXPERT TESTIMONY AND REPORT EXCLUDED IN INSURANCE COVERAGE CASE OVER PROPERTY DAMAGES CAUSED BY HURRICANE KATRINA.
The Trial Court in the Jouve case also excluded the testimony and Report of Plaintiffs' Loss and Damages Expert. The Report was actually prepared by the Expert's grandson, using a widely found computer program, Xactimate, to estimate the Plaintiffs' "actual wind and flood damage estimates on the Jouve property". Id. at *2.
The Trial Court excluded the Expert's Testimony, in addition. It appears that the Trial Court followed the requirements of Louisiana Law for Expert Testimony, id. at *2-*3, which are the same requirements generally followed in State Courts across the country in Property Insurance Cases. See generally Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 12:18, "Experts in First-Party Insurance Bad Faith Cases: Specific Cases and General Rules" (West Publishing Co. Third Edition 2011). "Thus, the admission of expert testimony is proper only if all three of the following guidelines are met: (1) the expert is qualified to testify competently regarding the matters [she or] he intends to address, (2) the methodology by which the expert reaches [her or] his conclusions is sufficiently reliable as determined by the sort of inquiry mandated in Daubert [Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786 (1993)], and (3) the testimony assists the trier of fact through the application of scientific, technical or specialized expertise, to understand the evidence or to determine a fact in issue." Jouve v. State Farm Fire & Casualty Co., 2011 WL 3611800 at *2. Whether these guidelines are satisfied in a given Louisiana case is within the discretion of the Trial Court. Id. at *3.
In this case, the Trial Court's determination to exclude both the subject Expert's Testimony and the Report prepared by his grandson, was affirmed. "[W]e cannot say the trial court abused its discretion by granting State Farm's motion in limine to exclude the testimony and damage estimate of [Plaintiffs' Expert] from the trial." Id.
The third holding of interest in the Jouve case will be posted on Insurance Claims and Issues Web Log. It concerns the Partial Summary Judgment entered by the Trial Court on Plaintiffs' Dwelling Claims, including whether recovery should be limited to actual cash value at the time of Loss. See also for a Focused, Particular Policyholder perspective on these and many related issues, Property Insurance Coverage Law Blog, and in particular this interesting post there on August 18, 2011, "The Real Tropical Hurricane Season Begins".
The 22nd Annual Bad Faith Litigation Conference of the American Conference Institute is being held in 2011 in Orlando, Florida. The author will be speaking. As a result, the ACI will offer you a large discount if you choose to register for the Conference. In order to register and receive this discount from the ACI, contact Amanda Waltmon, Esquire, Legal Analyst and Program Director at the ACI and the deadline most recently announced by the ACI for requesting this discount is August 31, 2011. Ms. Waltmon's direct dial is 212.352.3220, ext. 5231 or send Ms. Waltmon an EMail at [email protected]. Here is a link to the American Conference Institute Website Page which features this Conference including registration, if you or anyone you know would like to attend.
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