General Insurance Dispute Information

Louisiana Supreme Court Finds Binding Arbitration Clause Fair and Reasonable to the Client

Published on: May 10, 2013 | By Berniard Law Firm

The Louisiana Supreme Court has recently undertaken a case deciding whether arbitration clauses in attorney-client retainer agreements are appropriate. In the past, Louisiana has favored the enforcement of arbitration clauses in written contracts. Arbitration avoids taking a case to trial and is a thrifty and efficient way to conduct the resolution of disputes outside of the courts. During arbitration, each party refers its dispute to an arbitrator, who then imposes a decision that is legally binding for both sides. However, Louisiana law also imposes a fiduciary duty requiring attorneys to act with the utmost fidelity and forthrightness in their dealings with clients and any contractual clause, which may limit the client’s rights against the attorney is subject to the upmost scrutiny.

According to the Louisiana Supreme Court in Hodges v. Reasonover, there is no per se rule against such binding arbitration clauses, provided that they are fair and reasonable to the client. In Hodges v. Reasonover, Jacqueline Hodges, the founder, sole shareholder, and CEO of Med-Data Management, Inc., hired Kirk Reasonover of the law firm of Reasonover & Olinde to sue a company known as MedAssets, Inc. in federal court in Atlanta, Georgia. In the retainer agreement between Hodges and Reasonover there was an arbitration clause, which essentially provided that any dispute shall be submitted to arbitration in New Orleans, Louisiana and that such arbitration shall be submitted to the American Arbitration Association (AAA).

Hodges was ultimately unsuccessful on her suit against MedAssets, Inc., which led her to file suit for legal malpractice against Reasonover. According to the Louisiana Supreme Court, Courts must closely scrutinize attorney-client agreements for signs of unfairness or overreaching by the attorney. Further, Louisiana Rule of Professional Conduct 1.8(h)(1) prohibits a lawyer from “prospectively limiting the lawyer’s liability to a client for malpractice unless the client is independently represented in making the agreement.”

Louisiana Couple Injured in Car Accident Seeks Recovery from Insurance Companies

Published on: May 6, 2013 | By Berniard Law Firm

You have just been involved in a car accident. Someone else was driving, and you bring suit against them and several insurance companies that are involved. But who has the burden of proof to prove how much you should be able to recover from the insurance companies? In Louisiana, that burden is on the plaintiff. The plaintiff, when seeking a declaration of coverage under an insurance policy, has to prove that his or her claims are covered under the policy coverage and also has to establish all essential facts in order to recover.

How would this play out? Well, recently, this exact situation played out in Louisiana. A couple was riding in a car driven by another man. The man driving had rented the car from Houston, Texas, but the case was tried in Louisiana. At some point while driving the couple, the man lost control of the vehicle and ended up flipping the car twice. The couple suffered severe injuries from the accident and then filed suit.

Not only did the plaintiffs (the couple) file suit against the man driving, but they also filed suit against several insurance companies involved. Before actually bringing the case to trial, the couple tried to settle the case with a couple of the insurance companies, and the couple received checks in the full amount of the coverage under those insurance companies. However, it was not clear whether or not this was a full recovery. The plaintiffs also wanted to receive payment from the insurance company from the uninsured/underinsured motorist coverage (UM coverage). During the time the parties were trying to decide if this was a complete settlement or not, the plaintiffs’ attorney went ahead and gave his clients the check. The defendants then filed a motion for summary judgment, stating that UM insurance coverage was not available. After several motions and cross motions, the trial court decided that UM coverage was not available to the plaintiffs and granted the motion of summary judgment in favor of the defendants.

When this case was brought to the appellate court, the court analyzed the case de novo (or as if the trial court had not already tried the case) and decided to affirm the trial court’s ruling. Why did they affirm the trial court’s ruling? This is primarily because the plaintiff has the burden of proving what he or she is owed under the insurance policy, and the plaintiffs in this case could not prove that they should be able to recover under UM coverage.

The reason that the plaintiffs could not prove that they should be able to recover under UM coverage is because of the plain language of the insurance coverage policy. Normally, summary judgment should only be granted if there is no reasonable interpretation of the policy, supported by evidence and the facts of the case, that would support granting coverage. This seems like a pretty lenient standard for the plaintiffs, but it still requires that the plaintiffs prove that there is a reasonable interpretation of the policy that does allow them to recover in the manner that they are seeking. And in this case there was not.

In the language of the policy, several clear definitions were given, and as long as the policy wording is clear, then the agreement has to be enforced as it is written. In this case, the policy language stated that in order to recover under UM coverage, the vehicle cannot be available for regular use. However, in this case, the rented vehicle was clearly available for regular use during the rental period, and the vehicle, therefore, could not be classified as underinsured. So the plaintiffs were not entitled to recover any more than they already had.

If you have been involved in a car accident, you want to make sure that you claim and recover the proper amount that is available to you under the various insurance policies involved in the case.

The Carefully Worded Insurance Policy: Making Sure Your Coverage Matches Your Expectations

Published on: May 2, 2013 | By Berniard Law Firm

Do you drive an automobile insured through an employer? How well do you know the policy? It’s possible that you aren’t covered as well as you think.

The petitioners of Broussard v. Progressive Sec. Ins. Co. were merely seeking coverage compensation after a seemingly simple traffic accident in Maurice, Louisiana. They ended up in court and dealt with costly appeals over whether or not the driver of the other automobile, a dump truck, was insured by the business who hired him for this particular haul. The driver, who owned the dump truck, was a contractor, and thus not an employee. As a result, he was screened out of much of the hiring company’s insurance policies, thus potentially inhibiting the petitioners’ attempt to recover.

The major questions regarding the insurance coverage were over the definition of a “hired” auto and the definition of a “nonowned auto,” in light of the specific policy at hand. While it may seem at first glance that the dump truck had to qualify under one of these categories, the court found there was a genuine issue of material fact as to whether the company had “hired” the truck or “hired” the services of the driver. This distinction is important because specifically hiring the truck would result in coverage under this insurance policy, whereas hiring the full services of a driver would not result in coverage for the truck. The court considered invoice tickets engaging the driver’s company generally, and not a specific vehicle, to be a relevant factor in deciding this issue.

The When and How of Waiving Uninsured Motorist Coverage

Published on: April 30, 2013 | By Berniard Law Firm

Uninsured motorist (UM) coverage protects drivers from individuals not carrying sufficient insurance. The importance of such coverage makes waiving it a somewhat complicated procedure, designed to make sure the driver truly does not want it. A case in Abbeville, Louisiana, illustrates the complexities of when corporations waive UM coverage on company automobiles.

Plaintiff James Bergeron sued to recover damages after being rearended in the vehicle provided by his employer, Murphy Oil. All defendants were dismissed from the suit except Liberty Mutual, which contended it didn’t include uninsured motorist coverage in the policy it issued to Murphy Oil.

In Louisiana, uninsured motorist coverage is provided by a specific statute, La.R.S. 22:1295. Court decisions have recognized the importance of UM insurance as a matter of public policy, to the extent that the coverage is implied as an amendment to any automobile liability policy (even policies not expressly providing for it).

High/Low Agreement Proves Fatal to Plaintiff’s Cause of Action

Published on: April 28, 2013 | By Berniard Law Firm

Settling with an insurance company out of court is commonplace in the legal world. However, entering into a “High/Low” agreement prior to trial can come back to hurt a plaintiff and should be carefully worded and considered before executed. The cost of this kind of failure is exemplified in Soileau v. Smith True Value and Rental.

In November 2007, plaintiff Mary Solieau sustained serious injuries when a John Deere front-end loader detached from a John Deere tractor and shattered her leg while she was supervising the cleaning out of canals for the Town of Mamou. The tractor was rented from Smith’s Hardward, insured by Defendant Hartford Insurance Company.

Before proceeding to trial, Solieau entered into a “high/low” agreement with Hartford, capping Hartford’s liability at its policy limit of $2,500,000 and further releasing the Smiths of any personal obligation. At trial, Solieau moved to dismiss the Smiths, which led to Hartford filing for a directed verdict based on the language of its policy, which obligated Hartford to pay only those sums that its insured becomes legally obligated to pay. The trial court denied the motion.

Lafayette Summary Judgment Case Highlights Insurance Company Practices

Published on: April 21, 2013 | By Berniard Law Firm

Summary judgment is a mechanism used when one party clearly deserves to win the case based on either issues of fact or law. That is, the parties agree to facts and those facts point to a clear winner of the case when the correct laws are applied. Summary judgment helps cases move quickly through the judicial process because an actual trial is not necessary. However, where there are issues of factual disputes or the evidence is unclear, summary judgment cannot be used to conclude the case.

Often, both sides will move for summary judgment because any grant of summary judgment will conclude the case and avoid a full trial. A case appealed from Lafayette, Louisiana, explains when summary judgment is appropriate. The court explains that the burden of proof is on the party moving for summary judgment. However, that burden adjusts depending on who would be the party needing to prove the burden at actual trial. As a general notion, the burden is usually on the party who is claiming the error. For example, if you are injured in a car accident, then you must prove that the other party was at fault in order to recover. If the mover would not have had the burden at trial, then the threshold to grant summary judgment is much lower. Instead of proving that there is no way the other side could win, the party without the burden could prove that the other party does not have enough facts, evidence, or there is some other fatal flaw with their argument.

In that case, the plaintiff was in a car accident that caused him serious back injuries. His back injuries resulted in surgery and completely inhibited his ability to work. In fact, the plaintiff was a lawyer who previously had his own law practice, but the law practice closed after his accident because he could not continue due to his injuries. The lawyer had two disability policies that covered him should he become disabled and unable to continue working. These polices both had partial options that would award partial benefits if the individual could continue working, but not at full capacity. Since the lawyer had to quit his law practice, he argued that he should be awarded full disability payments.

Both sides argued for summary judgment. The lawyer argued for summary judgment based on the notion that he should be paid the full amount of disability and his payments should have occurred much sooner than they did. The insurance company, on the other hand, argued that summary judgment for their side was appropriate because the lawyer did not deserve full disability and they could not have given payments any sooner because the lawyer did not furnish them with all of the information they needed to begin making payments.

The disability payments depended a great deal on past income. The payments were adjusted to portions of income depending on whether the individual was awarded full or partial disability. As such, the insurance carriers required the lawyer to submit previous tax returns as proof of income. The insurance company requested the plaintiff’s 1999 tax return, but did not receive it until 2005. Instead, the plaintiff furnished the insurance company with his tax returns from 1997 and 1998. Since the accident occurred in 1998 and the payments were to be based on the previous year’s earnings, the plaintiff assumed that the insurance company would want previous year’s tax returns.

While the insurance company was waiting on the 1999 tax return, the insurance company made two payments to the plaintiff. However, the insurance company alleges that they did not pay in full because they did not have the 1999 tax return. The court noticed this inconsistency. The court explained that the plaintiff was obviously entitled to some benefit since the insurance company paid him, but the question was whether the payments were correct and timely. Since the facts did not line up with the testimony, the court determined that neither side should be awarded summary judgment. Accordingly, the case will go to trial and the court will determine the case on the merits, instead of just as a matter of law.

Summary judgment is a valuable tool when used properly. It avoids the time and money involved in a complete trial and allows the winning party to obtain the same result that they likely would have at trial. It functions as a legal short cut. The Berniard Law firm can help determine if your case is appropriate for summary judgment. In addition, we can also take your case to trial if needed.

Understanding the Federal National Flood Insurance Program as Hurricane Season Approaches

Published on: April 17, 2013 | By Berniard Law Firm

The Federal National Flood Insurance Program (“NFIP”) is a federal program that allows homeowners to protect against flooding because most homeowners insurance does not cover flooding (You can check out their website here). It is offered to homeowners, renters and some business owners. The federal government works with private insurance companies to encourage them to offer insurance. The government sets a standard rate and then the insurance is actually through the private insurance company, but involves the federal government to a great degree. The federal government underwrites, or supports the insurance company, but the private insurance company does all of the related administrative tasks.

Because of the federal government’s involvement, when there are issues with the insurance company, you must follow unique litigation paths in order to recover for any damages in many occasions. For example, the federal government will normally cover any litigation costs for the private insurance company. As such, some procedures that would normally be acceptable at the state level may not be allowed in the federal court.

A case in Mississippi that was appealed to the Fifth Circuit Court of Appeals helps explain these differences. In that case, Grissom, the insured individual, had insurance under the NFIP through Liberty Mutual. He was eligible for a preferred risk insurance policy, but did not know he was eligible. After Hurricane Katrina, he argued that he would have purchased the preferred risk insurance policy if he had known about his eligibility.

Hurricane Damage Appraisals at Core of Insurance Dispute

Published on: April 14, 2013 | By Berniard Law Firm

Even in 2012, issues regarding Hurricane Katrina, which occurred in 2005, are still prevalent. Insurance companies are particularly affected by Katrina, and they are still attempting to sort out many claims. Some of the contract claims that are still moving through the courts are somewhat unique. For example, contracts occasionally have provisions where both parties can appoint an appraiser if the two parties cannot decide how much damage actually occurred. The insurance policies will only insure up to a certain amount, of course, but determining the amount of damage is a vital part of reimbursement of the claim.

An apartment building in Metairie, Louisiana carried insurance that had such an appraisal policy. The contract explained that both parties were to appoint their own appraiser, who is supposed to be fair and impartial. Then, a third individual, the umpire, would be appointed. The umpire takes both of the appraisers’ estimates, examines them, and then comes up with a third number that will be the final number for total damage. The two parties are supposed to appoint the umpire as well, but if the two parties cannot decide on an umpire, then the court can appoint one for them.

In this case, the court did appoint an umpire. However, the court not only appointed an umpire, but also imposed certain rules and restrictions to the appraisal process. In particular, the court restricted the documents that the umpire could receive and required that if the umpire needed to communicate with either party then the opposing party would also be included in the conversation. The communication issues required the umpire to copy both parties on e-mails, letters, and make conference calls. Communication with just one party was strictly not allowed. In addition, neither party was to give the umpire documentation of a legal nature that would attempt to convince the umpire that the award should be a certain amount. Instead, the documentation was limited to receipts, inspections, and other impartial information.

The apartment’s appraiser valued the damage at approximately $200,000, but the insurance company’s appraiser valued the damage at zero. The apartment owner argued that the insurance company’s appraiser was not being impartial because they did not award any damages. However, the insurance company noticed that the apartment owners had already fixed most of the damage using funds from other insurance companies, so the insurance company’s appraiser determined that the apartment owners were not entitled to any more damage payments.

The umpire agreed with the insurance company’s appraiser and recommended that the damage award be zero. Naturally, the apartment owner was upset by this result, so he appealed the decision to the Fifth Circuit Court of Appeals for the State of Louisiana. The apartment owner argued that the court interfered too much with the process–the apartment owner should have been able to give the umpire whatever documentation they wanted and communicated however they wanted.

The Court disagreed. It began its analysis by underscoring that although the two parties had an appraisal clause in their contract, the clause does not take away the court’s right to hear a case. In addition, insurance policies are contracts, and should be interpreted under the regular principles of contracts. Therefore, the court will interpret the contract using its regular meaning unless some of the phrases have gained technical definitions in that particular line of business.

The Court explained that the two parties deliberately involved the court when they stated in the contract that the court was to assign an umpire if the two parties could not agree to one. The appraisal portion of the contract did not set specific guidelines in the process, so the court stepped in to create them. The lower court explained that they were afraid the umpire was getting far too much irrelevant information, so they intervened. The Court deemed this a completely acceptable practice under the circumstances. The Court also decided that the insurance company’s appraiser was sufficiently impartial. Lastly, the Court concluded that since the lower court acted appropriately, the award of zero damages should still stand.

This case illustrates a unique clause that could potentially be helpful for the insured, but since the clause was not detailed enough to limit the court’s actions, it turned out to be detrimental.

Attorney Jeffrey Berniard makes New Orleans Magazine top lawyers list

Published on: April 4, 2013 | By Berniard Law Firm

Licensed attorneys in New Orleans were asked which attorney they would recommend to residents in the New Orleans area. Attorney Jeffrey Berniard, of the New Orleans-based Berniard Law Firm, LLC, was named one of the best mass litigation and class action attorneys in New Orleans in the November 2012 issue of the magazine. Propelled into success by holding insurance companies accountable in the wake of Hurricane Katrina, Berniard has built the Berniard Law Firm into one of the premiere personal injury law practices in not only New Orleans, but the entire state of Louisiana. Since Hurricane Katrina, Berniard Law Firm has focused on insurance disputes and class action litigation.

Jeffrey Berniard has been involved in several high-profile cases, solidifying his expertise in complex high risk litigation. He worked on the highly publicized Deep Water Horizon oil rig case in the Gulf Coast, representing a very large group of individuals affected by the sinking oil rig. In 2008, Berniard Law Firm secured a $35 million dollar settlement for a class of 70,000 members seeking bad faith penalties for tardy payments by a Louisiana insurance company in the wake of Hurricane Katrina and Hurricane Rita. In 2009, the Berniard Law Firm participated in five class actions against insurance companies and corporations. In the process of these major claims, the firm also helped many residents of the Gulf Coast with their personal injury concerns, insurance claims and business disputes.

– What is Mass Tort Litigation? –

Hurricane Katrina Case Faces Ambiguous Contract Language Hurdle

Published on: April 2, 2013 | By Berniard Law Firm

In the first year of law school, nearly every student takes a course in Contracts. Contract law is one of the bases of our legal system and is at the core of almost all legal agreements. Everytime you get car insurance, sign a lease, agree to pay your plumber or electrician for work, or sign up for new cellphone service, you are dealing with a contract.

In contracts, every single word and punctuation mark is important. Clear, concise and unambiguous language is vital to writing a good contract. Sometimes even big companies enter into contracts that contain ambiguous language. These ambiguities can cause legal problems down the road. The case of WH Holdings, L.L.C. et al. v. ACE American Insurance Company illustrates how ambiguous contract language can lead to legal problems for the parties involved.

Prior to Hurricane Katrina, WH Holdings, the owner of the Ritz Carlton Hotel Complex in New Orleans, hired Gootee Construction Company to renovate the existing structure of the complex. Gootee was in the process of performing the renovations when Hurricane Katrina made landfall and caused damage to the exterior of the building. WH Holdings filed suit against Gootee’s insurer, ACE American Insurance Company, for almost $3.3 million for damage to the exterior of the hotel.
The parties agreed that the contract was governed by a form document known as the General Conditions of the Contract for Construction (General Conditions). The General Conditions is a document that contains amendments that the parties negotiated themselves – the Court acknowledges that these amendments are clearly marked in the document.

Both parties also agreed that WH Holdings was only covered under the policy which ACE issued to Gootee if, and only if, WH Holdings qualified as an insured party under the policy. Thus the entire case rested on whether or not Gootee was “contractually obligated… to insure WH Holdings such that it became an insured on the ACE policy.”

To reach its decision, the District Court looked at two clauses of the contract, Subsections 11.4.1 and 11.1.5(g). The parties distinctly amended a portion of Subsection 11.4.1. to seemingly place the responsibility of purchasing property insurance on Gootee. The District Court even acknowledged that if 11.4.1 stood alone, ACE would have no basis to contest WH Holdings claim. However, the District Court held that a separate subsection, 11.1.5(g), located in a different portion of the contract, changed the meaning of 11.4.1 by “unambiguously… obligating WH Holdings to carry the insurance ‘when the construction is an addition or a renovation.'”
The district court granted ACE’s motion for summary judgment and concluded that WH Holdings was not an insured party under the contract and Gootee had no responsibility to insure WH Holdings.

The 5th Circuit disagreed with the District Court’s analysis stating that while the district court “relied entirely on subsection 11.1.5(g) in finding the contract unambiguous… subsection 11.1.5(g) is not as ‘crystal clear’ as the district court thought it to be.” The Court goes on to point out that 11.1.5(g) appeared in an entirely different portion of the contract than 11.4.1. Subsection 11.1.5(g) appeared in a section of the contract covering “Contractor’s Liability Insurance” while 11.4.1 appeared in a section entitled “Property Insurance.” The Court found that 11.1.5(g) is limited in scope by a preceding clause and therefore does not modify 11.4.1, and to read it any other way would be ignoring this express limit. The 5th Circuit finally stated that it simply cannot agree with Gootee’s assertion and the District Court’s conclusion that the contract language unambiguously obligated WH Holdings to purchase property insurance.

The 5th Circuit also disagreed with WH Holdings argument that it was in fact Gootee who was “unambiguously required… to purchase the property insurance” since WH Holdings was unable to persuasively argue their interpretation. Stating that there were “difficulties with each party’s contention that the contract unambiguously supports its position,” the 5th Circuit vacated the District Court’s judgment and remanded the case back to the District Court. Finally, due to the ambiguous nature of the contract, the 5th Circuit also ordered the District Court to examine outside evidence brought by both parties regarding the meaning of the contract and to examine how both parties had performed the contract prior to the lawsuit being brought.

Contracts can be extremely important and very complicated particularly when dealing with insurance issues. Hiring the proper attorney is very important to ensure that all documents relevant are maintained, and provided, from start to finish, as well as to navigate any complicated appeals that may arise.