General Insurance Dispute Information

Baton Rouge Car Accident Leads to Conflict of Interest and Defense Waiver by Insurance Company

Published on: October 8, 2010 | By Berniard Law Firm

Automobile insurance policies commonly include a clause that requires the insurer to provide a legal defense for claims made against the insured driver. Insurers have a right to contest coverage for any claim, though, and when this happens the insurer is faced with the dilemma between its contractual duty to defend the insured and its interest in avoiding coverage. This is because the insurer has a duty to defend its insured even though it may ultimately be determined that it does not have any liability for coverage. This duty is avoided only in cases where it is absolutely clear from the facts that coverage does not apply; where the existence of coverage could turn on the resolution of the plaintiff’s allegations, however, the insurer is obligated to provide a defense.

The Louisiana State Bar Association’s Committee on Professional Ethics and Grievances has stated in a formal opinion that “[w]here the insurer either denies coverage to the insured or reserves its rights to do so subsequently, … the Committee is of the opinion that it would be improper … for the same attorney to represent both the insurer and the insured” See Opinion No. 342 (May 30, 1974). Accordingly, under Louisiana law, if the insurer chooses to represent the insured but deny liability coverage, it must employ separate counsel. See, e.g., Belanger v. Gabriel Chemicals, Inc., 787 So.2d 559 (La. App. 1st Cir. 2001).

This issue was central to the resolution of Wrights v. Progressive Casualty Insurance Co., No. 2010-CA-0327 (La. App. 1st. Cir. 2010). On April 25, 2006, the vehicle in which Nedra Wrights was traveling was rear-ended by a car driven by Joshua Tourere. The impact sent Wrights’s vehicle off the road where it struck a sign and two parked cars. When the crash occurred, Tourere was running an errand for his employer, T&T Seafood. Progressive Insurance had issued an automobile libility policy to T&T which listed coverage for several specific vehicles. The car Tourere was driving was not among those listed on the policy. Thus, after being informed of the accident and investigating, Progressive sent T&T a letter concluding that there was “no coverage available for this loss.” This letter did not inform T&T that it should consult its own attorney if it wished to dispute Progressive’s decision about coverage. Despite having sent this correspondence to T&T, Progressive subsequently appointed a single attorney to defend both Progressive and T&T when Wrights filed her lawsuit on February 21, 2007. In fact, this attorney represented both T&T and Progressive through the answering of the complaint and part of discovery. Not until some 17 months later did Progressive provide a second attorney for T&T’s separate defense. Shortly after doing so, the attorney then solely representing Progressive obtained critical information about the case through an affidavit from the owner of T&T without informing the owner that he, the attorney, no longer represented T&T. After obtaining the affidavit, Progressive filed a motion for summary judgment asserting that there was no coverage under the policy. T&T responded by arguing that Progressive had waived any defense it may have had over coverage by initially appointing the single attorney to represent both itself and T&T in the matter. After a hearing, the trial court denied Progressive’s motion and granted T&T’s.

On appeal, the First Circuit noted that the “actions on the part of Progressive not only constituted a conflict of interest, but they constituted conduct so inconsistent with an intent to enforce its right to assert its coverage defense as to induce a reasonable belief that the right had been relinquished.” Additionally, the court observed that “T&T was represented by an attorney who actively took steps detrimental and prejudicial to its position in the lawsuit.” Accordingly, the court found that “Progressive waived its coverage defenses by assigning only one attorney to represent itself and its insured for seventeen months despite having knowledge of facts indicating noncoverage under the policy,” and affirmed the trial court’s decision.

This case offers a reminder that when a car wreck occurs, insurance coverage may not be clear and straightforward. While clearly a crucial question for the defendant, it is also important for the plaintiff, as the defendant himself may not have sufficient assets with which to satisfy a judgment for damages. Either way, bringing an attorney into the situation is crucial because they can spot such conflicts of interest and make sure that your legal interests are maintained and protected.

Court to Katrina Flood Victim: Follow the Rules When Making an Insurance Claim

Published on: October 4, 2010 | By Berniard Law Firm

As many Gulf Coast residents unfortunately know, standard homeowner’s insurance policies do not include coverage for flooding. In order to assist property owners in Louisiana and other states in protecting themselves against floods from hurricanes, tropical storms, and other severe weather, Congress created the National Flood Insurance Program (NFIP) in 1968. NFIP offers flood insurance to homeowners, renters, and commercial property owners in communities that participate in the NFIP. In order for a community to be eligible to participate, it must agree to adopt and enforce certain building standards that are designed to reduce the risk of flood damage. According to the NFIP, flood damage is reduced by nearly $1 billion each year as a result of the floodplain management standards implemented by these communities. Also, structures that are built to NFIP standards experience approximately 80 percent less damage annually than those not built to the standards. The Federal Emergency Management Agency (FEMA) manages the administrative functions of the NFIP, including the claims process. As one Katrina victim recently learned, homeowners who file claims under the NFIP must closely follow the rules contained in their policies.

Violet Collins, a resident of New Orleans, maintained a flood insurance policy through the NFIP to cover her house and its contents. The structure was insured for $225,000 and the contents for $12,500. When the home sustained flood damage during Hurricane Katrina, Collins contacted FEMA to provide notification of the damage. FEMA sent an adjuster to her house to inspect the damage and arrange for payment from FEMA. Collins later submitted additional documentation for damage that the adjuster had overlooked, and FEMA issued her two more checks. Some time later, Collins filed a suit against the NFIP which alleged that the payments on her flood claims were insufficient. The NFIP filed a motion for summary judgment on the basis that Collins failed to file a proof of loss as required by the insurance policy and was therefore barred from seeking additional money. The district court granted NFIP’s motion, and Collins appealed.

After reaffirming that it must “strictly construe and enforce” the flood policy’s requirements, the Fifth Circuit Court of Appeals asserted that “an insured’s failure to provide a complete, sworn proof of loss statement, as required by the flood insurance policy, relieves the federal insurer’s obligation to pay what otherwise might be a valid claim.” Gowland v. Aetna, 143 F.3d 951, 954 (5th Cir. 1998). The court noted that, ordinarily, the proof must be submitted within 60 days of the loss, but that FEMA extended the window for Hurricane Katrina claims to one year. Nevertheless, Collins never submitted any proof of loss; the court examined Collins’s arguments for why she was not required to file one. Her first argument was that FEMA had waived the requirement altogether, a contention that the court quickly dispensed with by citing well-settled case law on the same question. Second, Collins asserted that the NFIP waived the filing requirement in a letter she received from an insurance adjuster. However, the court concluded this was not possible because “federal regulations provide that no provision of the policy may be altered, varied, or waived without the express written consent of the Federal Insurance Administrator,” which was not given. Finally, Collins argued that because she suffers from a debilitating eye disease, she was excused from observing the filing requirement. In response, the unsympathetic court stated that “Collins, however, fails to explain why Louisiana tort law would apply to her claim for flood insurance proceeds or why, if applicable, this would exempt her from our precedent requiring strict compliance with the … proof-of-loss requirements.” Accordingly, the court affirmed the district court’s dismissal of Collins’s suit.

This case serves as a reminder that, even in the aftermath of such massive natural disasters as Hurricane Katrina, flood victims are still expected to follow the specific requirements of their NFIP insurance policies when seeking payment for flood-related losses. Although it may seem cruel to reject a flood victim’s appeal for a fair pay-out, the courts have put policyholders on notice that they will not entertain requests to alter the terms of the policies. For this reason, victims of any flood should seek the help of a qualified attorney who can help them navigate the steps required to fully collect on their flood insurance policies.

Boating Safety Rules for Personal Watercraft: If Broken, Liability Can Result

Published on: August 4, 2010 | By Berniard Law Firm

Boating and Personal Watercraft provide thrills and excitement for Louisiana residents and visitors every summer. As much fun as it can be, there is danger involved as well. For that reason, the Louisiana Department of Wildlife and Fisheries has provided rules for personal watercraft (PWC) operators that can help people stay safe.

PWC Rules

1. Each person riding a PWC must wear a U.S. Coast Guard approved Tyep I, II, III, or V life jacket (this includes anyone towed behind a PWC).

Louisiana Residents With Personal Injury Questions

Published on: April 18, 2010 | By Berniard Law Firm

For those Louisiana residents, whether you live in Lake Charles, Shreveport, Baton Rouge, New Orleans, Kentwood or any other of the great cities across this state, looking for more information on their possible personal injury claim, check out our blog dedicated to these legal matters:

Louisiana Personal Injury Blog

This blog discusses the legal issues relating to Admiralty/Maritime law, Animal/Dog Bites, Car Accidents, Chemical/Industrial Spills, the intricacies of Expert Testimony, Insurance Disputes, employee rights under the Jones Act, Legal Duty, Civil Lawsuits, Criminal prosecution, Medical Malpractice, Mesothelioma/Asbestos, Motorcycle Injury, Negligence, Offshore Accidents, Product Defects, Chinese Drywall, Strict Liability, Workers’ Compensation and Wrongful Death. All of these issues are crucial to citizens rights and residents of Louisiana.

Chinese drywall illustrates problems in federal laws

Published on: October 7, 2009 | By Berniard Law Firm

In a very well written and important Times-Picayune article, writer Rebecca Mowbray reports that the recent problems being caused by Chinese drywall in courtrooms goes beyond simple construction or building code and law and into the depths of federal laws regarding international products. Because of this faulty imported wallboard, Mowbray points out, huge problems in the law and remedy for faulty products have been exposed. While many have followed this matter for its importance to builders and homeowners, business and legal experts now see it as a crucial, highly important matter that demonstrates work needs to be done on the United States’ federal legal system.

The article explains

International trade agreements treat health and safety standards as barriers to commerce, and make it possible for manufacturers to hawk products that fall short of the importing country’s standards. Meanwhile, foreign companies that sell products in U.S. markets aren’t required to participate in litigation in American courts, and even if they did, there’s no means of enforcing U.S. legal judgments against them.

Understanding hurricane terms

Published on: September 17, 2009 | By Berniard Law Firm

In order to be best prepared for hurricanes or to better understand your hurricane insurance provisions, having a glossary of key terms used in hurricane reports is a good idea. Courtesy of the Texas Department of Insurance and the National Oceanic and Atmospheric Administration, here is a list of helpful terms used commonly and their definitions:

Tropical disturbance: A moving area of thunder storms in the Tropics that maintains its identity for 24-hours or more. A common phenomenon in the tropics.

Tropical depression: Rotary circulation at surface highest constant wind speed 38 miles per hour (33 knots).

Berniard Law Firm continues involvement in Chinese drywall class action

Published on: September 10, 2009 | By Berniard Law Firm

The Berniard Law Firm, having already been involved with various clients with Chinese drywall in the Gulf Coast region, recently filed in federal court two claims against manufacturers and builders who were involved in the repair and manufacturing of their homes. Further, head attorney Jeffrey Berniard has been involved in the class action proceedings with the MDL established in New Orleans. That pre-trial matter has been proceeding at a very rapid pace as Judge Eldon Fallon, quite experienced with class actions and was selected because of his work in a previous matter involving the prescription drug Vioxx. For more information on Judge Fallon’s work in the Vioxx matter and how he was chosen for his experience and expertise in the rapid development of class action pre-trial matters, read more here.

All of this involvement has led to a wealth of information that has been integral in establishing the advanced experience and approach the Berniard Law Firm has towards Chinese drywall. Mr. Berniard has been in attendance of each of the pre-trial hearings relating to the MDL Panel and has been active in helping advance the Plaintiff case in any way possible. To understand better the decisions made and the developments that come with these pre-trial hearings, refer back to our blog entry on this month’s MDL hearing located here.

While this blog is intended to be a resource for individuals living in the Gulf Coast and beyond to understand the legal matters and situations going on day-to-day, the fact that builders as far away as Nevada have been accused of using Chinese drywall demonstrates that everyone need to be aware of the news and options going on with Chinese drywall.

State Farm prices to rise by almost 30 percent in Florida

Published on: August 11, 2009 | By Berniard Law Firm

Reported late last week, State Farm Florida is looking to shore up its finances and reduce discounts for customers… at the expense of those very customers. The Daytona Beach News-Journal reports

Trying to shore up its finances, State Farm Florida will eliminate or reduce some insurance discounts it offers to homeowners — leading to an average premium increase of 28.4 percent.

The move, which comes as State Farm prepares to pull out of Florida’s property-insurance market, will have widely varying effects on policyholders because they qualify for different levels of discounts.

State Farm looking to raise prices in Texas

Published on: July 18, 2009 | By Berniard Law Firm

State Farm is looking to raise the rates of homeowners insurance in the state of Texas, appealing to the Department of Insurance for an increase up to 8.5%. The Lufkin Daily News reports

Insurance giant State Farm Lloyds filed with the Texas Department of Insurance on July 15 to increase its homeowners’ insurance rates in Texas by an average of 8.5 percent starting on Oct. 1 for existing customers upon renewal and Sept. 1 for new customers. Angelina County’s increase is below the state average at 5.7 percent. State Farm noted that 350,000 of its 1.2 million customers will see no change or a decrease in their rates as a result of the filing.

“We’ve seen major insurance carriers Allstate and Farmers raise their rates and now State Farm is completing the rate hike trifecta,” said N. Alex Winslow, executive director of Texas Watch, a consumer rights group based in Austin.

Making yourself familiar with your insurance policy and coverage

Published on: June 26, 2009 | By Berniard Law Firm

With hurricane season in full swing, it is important for home and property owners to be fully aware and clear about their insurance and coverage, or lack thereof, that it provides. Whether living in a flood plain or tucked safely in a non-flooding area, residents of the Gulf Coast can be affected all the same by a hurricane by the list of dangers such as wind or rain damage. Going through your policy and making sure the proper cover necessary to properly rebuild in the event of storm damage is there will help prevent nasty surprises should the unthinkable happen and serious destruction befalls you.

Tim Engstrom from Southwest Florida’s News-Press has more

Most homeowners – especially those outside high-hazard coastal zones – can find coverage, but it is likely to be with a newer, less-familiar company, said Randy Duncan, an agent with the Insurance Depot of Lee County in Cape Coral.