Articles Posted in General Insurance Dispute Information

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firefighter_cars_accident_hood-scaledNobody likes insurance policies or divorce. Both can be extremely messy and full of legal jargon. Megan Daigle experienced this firsthand as her divorced parents’ insurance did not cover everything they hoped for. 

In the fall of 2013, Megan Daigle was driving in Morgan City, Louisiana, when she did not stop at a stop sign. This failure to stop resulted in her vehicle, a car her father owns and provides to Megan for her sole use, colliding with a car driven by Monty Rivers. At the time of the accident, Megan was a minor. Megan’s mother had legal custody as her parents were divorced. Megan was insured under an Allstate policy held by her mother and stepfather.  Mr. Rivers was injured in the accident and filed lawsuits against Megan, her father, her mother, and all connected insurance companies. 

Allstate filed a motion for summary judgment and a partial summary judgment, arguing the policy did not provide coverage because a policyholder did not own Megan’s vehicle, and it was available for Megan’s regular use. The lower court granted this judgment. Rivers appealed the granting of Allstate’s motion arguing that Allstate waived their right to assert a coverage defense and that the allegations found in the pleadings were sufficient to put Allstate on notice of the potential coverage defense. Rivers’ argument was based on the understanding that upon receipt of the pleadings, Allstate had sufficient notice of the facts, which indicated the policy held by Megan’s mother did not provide coverage for Megan.

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medical_consultation_treatment_room-scaledCourts often rely on motions for summary judgments to avoid the costly and time-consuming reality of going to trial and presenting a case in front of a jury. Motions for summary judgment are when one party asks the court to decide the case based on the current facts alleged in their favor. Courts should grant these motions when there are no facts in dispute for the jury to resolve. But how much evidence does a party have to present to survive one of these motions? A case out of New Orleans shows that, in some cases, just having medical records could be enough to deny a motion for summary judgment. 

Emmanuel Bridgewater was lounging on a median at the intersection of Washington Avenue and South Dorgenois Street when a Regional Transit Authority (RTA) bus made a left-hand turn off of Toledano street and an immediate right turn onto Washington Avenue. The bus cut the corner too closely and drove onto the median, hitting Bridgewater. As a result of the accident, Bridgewater’s right arm broke, his right leg was injured, and he said that the accident left him permanently disabled. Bridgewater alleged that the bus did not stop after he was hit and instead fled the scene. A bystander who did not witness the accident heard Bridgewater calling for help and called 911 emergency services. An ambulance and New Orleans Police Officer Roger Smith arrived at the scene. Bridgewater alleged that Smith did not question him about the accident before he was taken to the hospital.

Bridgewater filed a lawsuit against the RTA and the City of New Orleans and added the Transit Management of Southeast Louisiana, Inc. (TMSL) as a defendant. Bridgewater accused the defendants of being jointly liable for his injuries and argued that the NOPD officer assigned to the RTA acted to protect the RTA from liability. Bridgewater also asserted that the City was at fault because it failed to place signs in the accident area to warn pedestrians that buses may run onto the median and hit them. The City filed for summary judgment, and the court granted the City’s motion. Next, Bridgewater filed a motion for rehearing, contesting the court’s decision. Then, RTA also filed a motion for summary judgment, and the judge denied Bridgewater’s rehearing and granted RTA’s motion. Bridgewater eventually appealed, and RTA responded, seeking attorney fees and costs against Bridgewater for filing a frivolous claim, which means that the lawsuit lacked any basis. 

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hammer_court_judge_justice-scaledCourt cases are contentious, polarizing atmospheres between the parties. Stubbornness is ripe, and the opposing parties are staunchly in, unsurprisingly, opposition. However, sometimes even opposing parties can agree. Any party can take issue with a court’s judgment, and sometimes ALL parties can take issue with a court’s decision–even if these issues are different. But when multiple parties raise various errors in a trial court judgment, how can the higher courts resolve such allegations of error?

 In 2001, a workplace incident occurred between the plaintiff, Bradley W. Smith, and the defendant, then-coworker Paul Babin. Smith alleged that while the two parties were in the parking lot at their workplace, Babin intentionally hit Smith with his vehicle. In his 2002 lawsuit, Smith claimed that Babin was liable for Smith’s damages and later amended the lawsuit to include Shelter Mutual Insurance Company (Shelter) as Babin’s liability insurer. 

In late 2014, a trial court heard Smith’s lawsuit on liability, causation, and damages and then heard Babin’s crossclaims. At the beginning of the trial, the parties entered a pretrial stipulation that determined Smith’s past medical expenses caused by Babin’s act totaled $338,556.27, for which both Shelter and Babin would get worker’s compensation credit. 

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Automobile insurance claims are complex enough, as it is unlikely that all parties involved will immediately agree on a settlement amount. These claims become even more convoluted when there are questions as to what state law should apply or when the insured isn’t fully aware of what his policy entails. Unfortunately, this is precisely what happened when a man was involved in an accident in New Orleans. 

Jones was involved in a motor vehicle accident in Orleans Parish, and the other driver, insured by Allstate, was found to be at fault. Jones settled with Allstate and then attempted to recover under his own uninsured/underinsured motorist claim from GEICO. GEICO denied his claim stating that Jones was in direct violation of his Georgia-issued policy and statutory law when he failed to obtain GEICO’s approval before settling with and releasing Allstate. 

Jones then brought a claim against GEICO, where he, in part, filed a motion for summary judgment seeking a judicial determination that Louisiana law applied, not Georgia’s. The Civil District Court of Orleans Parish granted Jones’ partial summary judgment claim and found that Louisiana law applied. GEICO then appealed the Trial Court’s ruling to the Louisiana Fourth Circuit Court of Appeal, where the issue focused on whether the Trial Court correctly granted Jones’ motion for partial summary judgment. 

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padlock_grating_insurance_security-scaledBefore purchasing motor vehicle insurance, it is vital to fully understand what the policies will cover. For instance, some policies may not cover your medical bills if you were involved in a single-vehicle accident. Understanding what is covered and what is not may help you avoid legal action in the future.

Randy and Brenda Mills, husband, and wife, purchased separate uninsured/underinsured motorist (“UM”) coverage from State Farm on three of their vehicles: a Kawasaki motorcycle, a GMC Envoy, and a Chevy pickup. The policies on each of the three vehicles also included liability coverage. However, the UM and liability insurance policies for the motorcycle were in Randy’s name only, while the UM and liability insurance policies for the other two vehicles included Randy’s and Brenda’s names. 

One morning, Randy was driving the motorcycle with Brenda as a passenger when he lost control, went off the road, and entered a ditch. Brenda alleged that she suffered severe injuries and was hospitalized for three days. She claimed that, as a result of these injuries, her medical bills exceed $42,545. She also claimed lost wages, loss of employment benefits, emotional damages, and loss of enjoyment of life. State Farm then paid Brenda the $50,000 policy limit owed under the liability policy purchased by Randy on the motorcycle. However, State Farm declined to pay her for any of the UM benefits under the three separate policies. 

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It is extremely important to review your home insurance policy to determine what types of damages the policy will actually cover, especially in areas prone to suffer from hurricane damages. Under Louisiana law, the insured individual is required to first prove that the insurance policy covers the cause of the claim. For example, if the policy only covers certain types of causes of damage, such as wind and hail, then the insured must prove that the damage was in fact caused by either wind or hail. Once the insured has done this, then the insurance company can argue that the incident is not covered by the policy. Therefore, it is extremely important that the insured take the time to determine the cause of the damage in order to prove that the policy covers their claim.

 

A case arising from Lake Charles, Louisiana illustrates this point. In this case, a homeowner suffered roof damage that they believed was caused by Hurricane Ike around September 13, 2008. Four shingles were missing and the insured claimed that this resulted in leakage in several rooms of the home. However, State Farm, the homeowner’s insurance company, determined that the leakage was not caused by Hurricane Ike and reclassified the claim as a “non-hurricane” claim.

 

State Farm, using several experts, determined that the leakage resulted from normal wear and tear on the roof, and therefore the homeowner’s insurance policy did not cover the leakage damage. Instead, State Farm concluded that only the four missing shingles were the result of wind and that they were the only damages that State Farm should reimburse to the insured; State Farm did not reimburse the insured for the damages caused by the leakage, but just the replacement value of the four damaged or missing shingles. The total damages that State Farm paid were under $500.00.

 

The insured had damages that were estimated at $9,385.00 by one expert and $204,717.78 by another expert. However, while these experts estimated what the cost of the leakage damage and repairing the roof would be, neither expert determined the actual cause of the damages. One of the insured’s experts thought that the wind had lifted the house’s flat roofing, which allowed water to enter the home. However, the expert could not explain why the nails on the flat roofing were still in place if the wind had lifted it. The State Farm expert, on the other hand, determined that the wind damage only included those four damaged or missing shingles and the leakage was actually caused by normal wear and tear. The State Farm expert concluded that there was “no evidence of roof damage that would be caused by severe weather . . . . The roofs, both asbestos shingle and built up roofs and all associated flashings are past their life cycle and are in need of replacement.”

 

The insured’s policy did not cover “poor workmanship; wear, tear, deterioration, or latent defect; settling, cracking, or expansion of walls, roofs, or ceilings; or leakage of water from air conditioning systems, household appliances, or plumbing.” Since the State Farm expert determined that the cause of the damage was from normal wear and tear, there was no way that the insured could satisfy the requirement to prove that the policy covered his claim. As such, the court granted State Farm summary judgment.

 

The court will grant summary judgment where one party cannot meet their required burden as a matter of law at trial. Summary judgment allows the court to avoid costly trials where there is one clear winner before the trial even begins. In this case, where the insured had no evidence that all of the damage he was claiming was caused by an occurrence included in the insurance policy, the court determined that summary judgment was appropriate. If the insured had employed experts that specifically testified as to the cause of the leakage damage, then the court may have allowed the case to proceed to trial. Further, the insured could have made a more diligent effort to report leakage as it occurred, which would help prevent the damage from spreading in the long run.

 

This case illustrates several very important points for the average homeowner. First, you should carefully read your policy so that you know what type of damage is covered. Second, if necessary, you may need to acquire experts that can explain what caused the damage to your home. Lastly, report damages immediately so that you can avoid costly repairs later on.  Continue reading

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In an appeal filed in the United States Court of Appeals for the Fifth Circuit, from the Western District of Louisiana, the Court affirmed a district court verdict ruling in favor for the IRS. The Plaintiff, S.P. Lewis was ordered to pay monthly installments to the government to pay for taxes withheld from employee’s wages while S.P Davis and three other people were equal owners of the Winward Institute, Winward Heath Care Center, and Mynex. These three entities provide medical services to Louisiana patients. In 1997, these owners became aware that the companies were not paying enough federal payroll taxes. The owners asked the vice president of finance, Samuel Stevens, to negotiate with the IRS but the debt was never corrected.

In 2002, The IRS caught up with the companies and issued assessments against the owners for unpaid payroll taxes. Davis paid what he felt was his portion of the debt and then filed for a refund with the IRS. His claim was denied. In District Court, the government won the argument that the owners and Stevens were responsible people who had the opportunity to cure the dabt long ago. Because the owners and Stevens all had knowledge of the debt, and the opportunity to address the situation prior to suit, the owners and Stevers were considered equally responsible.

The government typically garnishes debtor’s wages in this situation. However, if the person in debt recieves income not exempt from taxes, the district court may order the person in debt to make payments instead of garnishing wages. When the Court established monthly payments against all counter-defendants, only Davis refused to pay. Davis did not want to pay the amount per month ordered by the government. Davis argued that the government was making him pay far too much each month. He argued the government was determining the monthly amount on a period in time when Davis had a much higher income. Davis also argued that the court had not properly considered his personal circumstances including the costs associated with earning his self-employment income.

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Louisiana has a Direct Action Statute that allows injured third parties to sue an insurance company directly when the insurance company’s insured causes an injury. For example, if you are involved an automobile accident where you are not at fault, you can sue the at-fault driver’s insurance company directly instead of suing the at-fault driver themselves. The Direct Action Statute is beneficial because it gives injured third parties access to the entity that will actually pay compensation for the injuries. It can be especially helpful where the insured fails to file a claim with their insurance company themselves. However, the injured third-party’s ability to sue the insurance company directly is limited by the insurance contract between the insurance company and the insured.

Despite the fact that the insurance contract is between the insurance company and the insured, an injured third party must still comply with most of the terms of the contract. This overarching rule applies specifically to whether the policy covers the insured and whether the policy covers a particular event. The insurance company will ask: Did this person have coverage when this accident happened? and Does this policy cover this type of event? For example, in insurance contracts limited to specific times, the insurance company will not cover a claim that occurred outside the time frame of the contract, regardless of who brings the claim. In a related example, automobile coverage that is limited to only certain vehicles will cover only those vehicles, regardless of who brings the claim. That is, the injured third party can have no greater rights than the insured would have had if he or she brought the complain themselves.

In a United States Fifth Circuit Court of Appeals case, the court determined that specific requirements of the contract also extend to injured third parties. That case involved a “claims-made-and-reported” policy. That type of policy not only requires that a claim arise within the policy period, but also that the insured (or another party under the Direct Action Statute) had to have reported the claim within the policy period. This type of notice requirement helps insurance companies avoid claims that are reported years after they happen; instead, this policy requires notice within a certain amount of time.

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When you signed up for automobile insurance, you might have noticed that many states now require automobile insurance agencies to include some sort of uninsured motorist (“UM”) clause in your insurance agreement. Oftentimes, the only way to get out of including this in your coverage, and therefore having to pay a higher premium, is by explicitly rejecting this additional coverage. How exactly do you reject this additional coverage, though? While this might seem like an easy question, most states, including the state of Louisiana, require very specific requirements to be met in order for rejection of UM coverage to be proper.

In the State of Louisiana, that is exactly the case: In order to get out of paying a higher premium for this uninsured motorist coverage, the insured has to explicitly reject that coverage. And the state of Louisiana has many rules with regard to how to properly complete this task.

In order for an uninsured motorist rejection to be considered proper, Louisiana courts have found six tasks that must be completed by the insured. In Duncan v. U.S.A.A Ins. Co., 06-0363 (La. 11/29/06), 950 So. 2d 544, the court outlines these six tasks as follows:

1) initialing the selection or rejection of coverage chosen;
2) if limits lower than the policy limits are chosen (available in options 2 and 4), then filling in the amount of coverage selected for each person and each accident;
3) printing the name of the named insured or legal representative;
4) signing the name of the named insured or legal representative;
5) filling in the policy number; and
6) filling in the date.

While the Court in Duncan did not explicitly deal with the timing of these tasks, a couple years later, the Court in Gray v. American National Propery & Cas. Co., 07-1670 (La. 2/26/08), 977 So. 2d 839, discussed the requisite timing in which the above tasks need to be completed. According to the Court in Gray, all six of these tasks have to be completed before the UM selection form is signed by the insured. The Court also went on to say that the completion of these tasks has to be done in a manner showing that the insured’s signature signifies that he or she agrees with all of the information that is contained in the insurance form. While the Court said that the tasks have to be completed before the UM selection form is signed by the insured, that was not the most important part of the Court’s findings. Rather, the most important part of the Court’s holding was that the insured’s signature needs to signify agreement with all that is contained in the form.

In the recent case decided by the Louisiana Supreme Court, Edward Morrison v. U.S.A.A Casualty Ins. Co., No. 2012-CC-2334, the Court really focused on the fact that the most important part of the timing of the UM selection form is that the insured’s signature is affirming agreement to all the clauses contained therein. This case primarily deals with task #1 listed above which requires that an individual properly initial the selection or rejection of coverage chosen in order for UM rejection to be considered proper.

In this case, the insured’s representative clearly meant to reject UM coverage but accidentally did not initial the line that stated such in the agreement form. When the insurer received the form, he or she noticed that the form was incomplete and sent it back to the insured’s representative. At that time, the representative initialed the proper line rejecting UM coverage and returned the form to the insurer. This clearly showed that the insured agreed with all of the clauses and various information contained in the form. Furthermore, all of this was completed before the relevant accident, so the court held the UM rejection valid.

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In a previous blog post, we discussed how exactly uninsured/underinsured motorist (UM) benefits can be rejected in Louisiana. While that post went through some of the legal technicalities involved in rejecting UM coverage, it did not discuss in depth some of the scenarios in which coverage might be rejected and how the court might actually rule despite those legal technicalities.

This blog post will focus on specific cases and scenarios in which, despite not following every legally prescribed requirement under Louisiana law, the court has decided that coverage was actually properly rejected or limited. Some of these examples involve just a word or two out of place, others involve completely leaving off pertinent information. But all of the below examples make it clear that the parties’ intents are more important that perfectly following the letter of the law.

The first example deals with a case involving an automobile accident. In that case, the individual driving the car involved in the accident was driving one of his employer’s vehicles. So the question was whether or not the employer’s insurance company, General Insurance Company of America (GICA), had properly produced a valid and enforceable uninsured/underinsured motorist rejection form, as required by the commissioner of insurance. Whether or not this UM rejection form had been properly completed would mean the difference between $100,000.00 and $1,000,000.00 available under the policy. GICA contended that it had filled the form out properly and that coverage should be $100,000.00, and the individual driving the car claimed the opposite and that coverage should be in the amount of $1,000,000.00.

In that case, the plaintiff argued that the form did not fulfill all requirements as specified by Louisiana statute for proper uninsured/underinsured motorist rejection. Specifically, the form that was signed had an improper title. Despite the fact that the form did not have the exact proper title, the court decided that the form was still valid and enforceable, and therefore, UM rejection was properly executed. The governing factor in the case was whether or not GICA’s intent was clear from the UM rejection form. Because the intent was clear, despite the improper title, rejection was still proper.

Another example from the Louisiana court system involved a UM rejection form that not only had the title wrong, but also had several other deviations. Despite these errors, the uninsured/underinsured motorist rejection was still deemed proper because the form was clear about the limitation of the coverage. From the form, it was obvious that the party meant to limit UM motorist coverage.

Yet another case dealt with a form that was missing the insurance company name and policy number. Both of those pieces of information are technically required by law in order for the UM rejection to be valid. However, the court in that case ruled that such omissions will not invalidate an otherwise valid form when it is clear that the intent was to reject UM coverage. The technical errors had little weight on the court’s decision because the overall intent of the parties was clearly stated in the signed document.

In a Louisiana Supreme Court case, a form did not properly contain the printed name of the legal representative of the corporate insured. However, once again, despite this technical error, the Court determined that the uninsured/underinsured motorist rejection form would not be considered invalid because of that small error because the overall intent of the parties was clear from the form.

From these examples, it is clear that the courts will not always strictly apply the stated law and that sometimes the overall intent of the parties is more important and carries more weight in determining the validity of a UM rejection form.

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