Articles Posted in Term Definitions

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In Calcasieu Parish School Board vs. Mary Miller, the Louisiana Third Circuit examines a case in which Ms. Miller’s daughter was involved in a fight at school that resulted in injury to an art teacher employed by the school board. The school board paid the teacher workers’ compensation, then sued Ms. Miller’s homeowner’s insurance company, Louisiana Citizens Property. Both the School Board and the insurance company filed for summary judgment. A summary judgment is a ruling by the judge in favor of the filing party before the evidence in the case is presented. The trial court granted the School Board’s motion and denied the insurance company’s. The Third Circuit, in an opinion that elucidates the court’s manner of interpretation of insurance contracts, upheld the trial court’s decision.

In insurance law, the service agreement is the governing contract. The interpretation of this contract may be the deciding factor in the case. When determining coverage, the law requires that the court interpret the parties’ common intent, beginning with the insurance policy itself. The words and phrases used are assumed to have their everyday meaning, stated by the Louisiana Supreme Court as their “plain, ordinary, and generally prevailing meaning,” unless they have obtained a technical meaning. The entire contract must be considered, meaning that if a sentence affects the meaning of another sentence, then that difference in interpretation must be taken into account.

After the application of these rules, if the meaning is clear, the court is bound to apply the contract as written. Of course, at times there may still be different ways that the agreement can reasonably be interpreted. If this situation occurs, there is an ambiguity in the contract. When there is ambiguity regarding the meaning, the court favors the interpretation of the contract that grants coverage.

In the agreement between Ms. Miller and Louisiana Citizens Property, the contract stated that coverage would be granted for medical expenses resulting from actions of one of the individuals insured. A later provision excludes any “loss…[c]aused by a peril…which is expected or intended by one or more ‘insureds’….” Any time a fight takes place, injuries can be expected. Thus injuries such as the teacher’s that result from a fight, would be excluded.

Of course, the daughter would not expect to injure the teacher. Citizens Property argued that because of the mention of “bodily injury,” including an injury “of a different kind, quality, or degree than initially expected or intended,” the exclusion applied. Under this argument, even if the daughter did not expect to harm the teacher, she may have had the expectation that someone would be injured, and thus the resulting injuries would fall under the exclusion. The insurance company would then not be liable for the teacher’s injury.

The insurance company’s argument may seem convincing; however, the language of the exclusion creates an ambiguity, speaking of a “loss” from a “peril.” A loss is not a liability as a liability results when an individual or entity’s actions cause harm to another person and that person has a legal claim to be recompensed for the harm. A loss, in the context of this agreement, is generally damage to property. In addition, peril, as used earlier in the agreement, refers to loss to property, not liability arising from injury to others. The provision, however, also refers to bodily injury. Some of the language seems to limit it to property loss, while the reference to bodily injury indicates that it may be more extensive. Thus, it is unclear whether the exclusion should include liability for injury.

Following the rule that an ambiguity will be interpreted in favor of coverage, the court upheld the lower court’s ruling against Louisiana Citizens Property and in favor of the Calcasieu School Board. Such matters demonstrate the ambiguity in language that requires careful legal argument and calculated application of clauses to receive a quality verdict.

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Keith Brown v. State Farm Mutual Automobile Insurance Company, is a very interesting case to come out of the Parrish of Caddo, Louisiana. Plaintiff, Keith Brown, was injured in a two-car accident on June 30, 2008, while he was the passenger of Michael Darnell. The driver of the other car involved in the accident was Ronald Moseley. At the time of the accident, Plaintiff was insured by State Farm Mutual Automobile Insurance Company (State Farm).

State Farm was given notification of the accident on July 8, 2008, and a claim was set up. On July 18, 2008, State Farm was contacted by Plaintiff’s medical provider, Dr. Diane Sino at Chiropractic Health Center. Subsequently, State Farm paid the submitted bills, with the exception of those bills that were not paid due to invalid procedure codes; or due to a code’s inclusion in another procedure on the bill; or because the code was used more than normally was expected during a visit. Plaintiff and Sino were informed of the reasons for nonpayment, and they did not dispute them.

Further complicating these matters is the fact that on August 5, 2008, Plaintiff was involved in another car accident. On September 10, 2008, he informed State Farm about the accident, and he indicated that Allstate Insurance Company would be responsible for all medicals incurred for that accident. Plaintiff and adjusters for State Farm and Allstate confirmed this during a three-way conference call in which Allstate gave State Farm its claim number and told State Farm to forward its medical payments demand for reimbursement. State Farm had made its final payment to Dr. Sino on September 3, 2008 before receiving notice of the second accident. On September 30, 2008, State Farm sought a refund from Allstate for those inadvertent payments.

This case raised several complicated issues, mainly who was responsible for Plaintiff’s medical bills, since he sustained injuries in two different car accidents and within a relatively short time frame. In December 2008, Plaintiff filed suit against the drivers and their insured for the June 2008 accident. Plaintiff’s claims against Moseley and his insurance company, Shelter Mutual Insurance Company (“Shelter”), were settled on August 29, 2009 for $13,000 pursuant to a “receipt and release.” As pertains to State Farm, in May 2009, State Farm had informed Plaintiff that it would pursue a subrogation claim of $3,894.82 (the amount of the medical coverage paid by State Farm) against Plaintiff, and it requested that he do nothing to jeopardize those rights. In August 2009, Plaintiff’s attorney sent a letter to State Farm indicating that State Farm’s subrogation claim would be protected.

On August 21, 2009, Plaintiff and his attorney received a check for $10,642.31, and a check payable to State Farm for $2,357.69. On September 11, 2009, Plaintiff forwarded the check to State Farm, stating that it represented the “full and final settlement for any subrogation rights that you have against Mr. Brown for payments made in reference to the accident of June 30, 2008.” In the meantime, Plaintiff’s attorney sent a certified letter dated August 14, 2009,to State Farm, indicating that an outstanding balance of $458.18 was owed to Dr. Sino. State Farm received this letter on August 19, 2009. It is this balance which is at issue in the case.

On November 12, 2009, plaintiff filed suit against State Farm, alleging nonpayment of the $458.18, as well as damages and attorney fees due to bad faith. In May 2011, State Farm filed a motion for summary judgment, which the trial court subsequently granted.

The Court of Appeal, for the Second Circuit of Louisiana, affirmed the trial court’s decision. The Court noted that the disputed amount, the $458.18, fell into two categories. One category, totaling $252.86, consisted of items submitted to State Farm that were denied due to “invalid procedure codes, inclusion in another item on the same bill, or submission of multiple codes for the same thing for the same visit.” The other category, totaling $205.32, consisted of items for treatment that took place after the second accident. The Court also found that in regards to all other payments that were not at issue, that State Farm paid them in a timely manner.

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As a Louisiana law firm, our practice takes great pride and enjoyment from Fat Tuesday and all of the history that follows. For all of our readers in the New Orleans area, have a safe and happy holiday.

Postings will resume shortly. In the meantime, laissez les bon temps rouler!

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The Third Circuit Court of Appeal for the State of Louisiana affirmed a Pineville City Court’s decision to grant the plaintiffs’ awards for lost wages and injuries that resulted from a serious traffic accident. The decision was affirmed by the appellate court after a finding that the plaintiff was not negligent in the incident and there was no clear showing of error made by the the trial court.

In considering the defendants, Empire Fire & Marine Insurance Company and the defendant driver’s allegation that the trial court erred in the vehicular accident case, the appellate court explored the facts and reasoned that the offered evidence to support a finding of error was not valid. In order to overturn a trial court’s decision, a court of appeal must find manifest error or determine that the initial ruling was clearly wrong. If the testimony provided is not credible, or the inferences of fact were not reasonable, the appellate court may overturn a decision. However, in this case, the appellate court declared that the testimony was credible, in fact, the defendants own testimony supported the trial court’s ultimate decision. Furthermore, the trial court’s assessment of damages is a finding of fact to which appellate courts give great deference on review. It is not an easy task to simply overturn a damages award, thus, as a result, the record must clearly reveal that the jury abused their discretion in making its award.

The plaintiff in this case was a young woman who was driving her Pontiac Grand Prix with her son and an acquaintance who had his ten year old son as passengers. the plaintiff’s vehicle was in the far right lane on a four lane highway with two eastbound and two westbound lanes. The lane the plaintiff was traveling in became heavily congested, thus, she looked in her rear view mirror to determine whether or not the left hand lane was safe to enter. This is an important factor to consider, since the defendant driver testified that he saw her check her rear view mirror numerous times, supporting the idea that she did not simply enter into the lane negligently. In addition to the plaintiff driver checking her rearview mirror, the adult passenger in the vehicle also checked out the window to assure her that it was safe to change lanes. As she entered the lane, an eighteen-wheeler operated by the defendant collided with her Pontiac, making it spin to face the opposite direction. The issue raised by the incident was who was at fault for the collision.

Many times factual determinations rest on testimony provided. In this case, the officer at the scene provided the conversations he had with both parties following the accident. What the officer had to say leaned heavily in the plaintiff’s favor, since the eighteen-wheeler driver declared that he saw the plaintiff check her rear view mirror numerous times and as he was behind her, decided to change lanes at essentially the same time she did, resulting in the collision. Following the accident the plaintiff driver and her passengers and the three passengers sought medical attention, the doctor’s report indicated that two of the passengers suffered various soft-tissue injuries, including cervical, thoracic, and lumbar strains, a post-traumatic headache, and clavicle damage. In order to remedy there injuries physical therapy, medication, and cold/hot packs were prescribed. Unfortunately, none of the injured parties had medical attention, so the medical expenses began to weigh heavily on their finances. Specifically, the plaintiff’s acquaintance that was riding in her vehicle the day the collision occurred was a carpenter, his injuries grew increasingly worse, negatively impacting his ability to perform his work duties. With the loss of income, increasing medical expenses, and the need for future help, the lawsuit ensued. The trial court held that the defendant driver was solely responsible for the accident and the trial court awarded $9,500 in general damages to the adult passenger plaintiff as well as $11,000 in general damages as well as $1,500 in lost wages to the driver plaintiff. Both adult passengers were reimbursed for their medical expenses.

The trial court determined that the testimony provided by all the parties and the resulting injuries supported the finding of damages and responsibility. Yet, the defendants attempted to portray to the appellate court, that the fact at issue was the trial court’s failure to apply appropriate law to the facts of the case. The entire basis of their argument was that the plaintiff driver “it must be presumed…did not look before she turned because if she had looked she would have surely noticed the appellant’s 18-wheeler.” Further, the defendants alleged that the plaintiff did not testify at trial due to a prior felony conviction, thus her declarations in regards to the collision should be held unreliable. Neither argument succeeded. First, the defendant driver testified that he saw the plaintiff driver check her rear view mirror “numerous times,” this negates the defendants argument that she simply “should have known.” Secondly, the trial court was fully aware of her prior felony conviction, but apparently found the plaintiff’s position more credible then the defendant driver’s. Lastly, the plaintiff had no obligation to testify, no one subpoenaed her as a witness, the defendants never called her to the stand.

The defendants failed to provide any authority for their positions, they simply argued that the trial court’s ruling was not fair. In order to make a legal position, one must first build a foundation using precedent, case law, or statutory authority. Without a foundation a building will fall, as such, the defendant’s argument failed without having any support.

If you have been injured in a car accident, you need representation that will be able to build the legal foundation you need in order to have a supported legal argument.

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In Matte v. Imperial Fire & Casualty Insurance Co., the Louisiana Court of Appeal agreed with the decision of the 13th Judicial District Court, Parish of Evangeline that the City of Ville Platte (City) was not liable for a car crash. The crash in question occurred on August 20, 2008, when Michael Jenkins was driving in Ville Platte. Jenkins approached LaSalle Street when, behind a tree, he noted a flashing red light. Despite this sign, Jenkins continued into the intersection, where his vehicle struck the car containing Dana Matte and two passengers. All three suffered injuries.

Matte alleged that the City had failed to maintain its right-of-way because foliage blocked view of the stop sign. The City defended itself by showing it had two traffic control devices at the intersection: the stop sign, and a flashing red light that was more visible to drivers. The City asked the district court to decide that it was not liable while Allstate, the underinsured motorist insurer for Matte’s employer, opposed the motion. The 13th Judicial District Court, Parish of Evangeline granted the City’s motion.

Louisiana statutes limit liability of public bodies “unless the public entity had actual or constructive notice of the particular vice or defect which caused the damage prior to the occurrence, and the public entity has had a reasonable opportunity to remedy the defect and has failed to do so.” The City did not dispute that it knew a tree blocked the stop sign. Instead, it showed in a photograph that the flashing red light and stop sign were clearly visible to Jenkins from where he approached the intersection. A flashing red light means that drivers must stop.

Jenkins said that trees blocked both signals, but he estimated that he saw the flashing red light about five seconds before he reached the LaSalle Street intersection but believed that a flashing red signal meant the driver should exercise caution and slow down.

The City Street Commissioner, who is familiar with the intersection, stated he had never witnessed a time when the foliage obscured the flashing red light for a southbound driver. The district court, which said it was familiar with the intersection, agreed. Upon review, the court of appeal analyzed the evidence received by the district court. The City photographs showed that Jenkins should have seen the flashing red light in enough time to respond, but Jenkins did not believe he had to stop at the flashing red light. The reviewing court concluded that the district court was correct when it determined that Jenkins’ negligence caused the accident.

This conclusion means that even if one traffic control device at the intersection may not always be easy to see, a second, more visible device providing the same warning shields the municipal government from liability. Because the City installed the flashing light, it was not liable for an accident when at least the flashing light was visible to a driver who had time to stop.

Auto accidents and the many types of insurance policies that may cover them are complicated matters. Specialized policies and coverage practices are not common knowledge. Governments may be liable, but it may require added knowledge of the facts and the limitations to immunity from suit. An experienced lawyer knows what to look for to obtain the best possible recovery.

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In some instances, employers and individuals can waive uninsured/underinsured motorist bodily injury coverage in order to decrease their insurance rates. According to LSA-R.S. 22:1295(1)(a)(ii), rejection of the coverage must be made on a form approved by the commissioner of insurance. If the form is properly completed and signed by the insured or a legal representative who signs on behalf of the insured (like the president of a company), then it creates a presumption that the insured knowingly rejected the coverage. In other waivers, an employer could argue that they were unaware that they waived the coverage, but in the case of the uninsured/underinsured motorist bodily injury waiver, the employer cannot make this argument because of this presumption. In addition, if the form is valid, then the waiver will last for the entire life of the policy, even if the policy is renewed, reinstated, substituted, or amended.

The notion that the waiver lasts through renewal or amendment is particularly important. As a result, generally, as long as an employer or individual stays with the same company, then the waiver will continue to be valid. A case decided in January of last year provides an excellent example of this concept. An employee was involved in a two-car accident while he was acting within the scope of his employment. The employee filed suit against the other driver, the other driver’s insurance company, and the employer’s insurance company, Progressive Security Insurance Company (“Progressive”).

Progressive challenged the suit because the employer signed an uninsured/underinsured motorist bodily injury waiver six years prior to the accident. The employee argued that the waiver was invalid. However, a legal representative of the company signed the waiver and the owner of the company initialed a document that stated, “I do not want UMBI Coverage. I understand that I will not be compensated through UMBI Coverage for losses arising from an accident caused by uninsured/underinsured motorists.” The employee’s central argument rested on the notion that the name of the company changed each time the coverage was renewed. If the name changed, the employee argued, then the waiver could not apply to the new named company.

The rejection form was validly executed, but the “named insured” changed on the policy. However, the court rejected this notion because although the name changed slightly, the entity that was insured did not. The court explained that LSA-R.S. 22:1295(1)(1)(ii) specifically says, “Any changes to an existing policy, regardless of whether these changes create new coverage, except changes in the limits of liability, do not create a new policy and do not require the completion of new uninsured motorist selection forms.” Therefore, since the limits of the liability were not changed, a new waiver form was not required and the waiver form signed six years prior to the accident was still valid.

Since the waiver was valid, the company will likely have to pay for the injuries out of their own pocket. In addition, the injured employee may also get some money from the other driver involved in the accident.

In another case, Munsch v. Liberty Mutual Insurance Company, a surviving spouse did not validly waiver uninsured/underinsured motorist bodily injury coverage. In that case, the deceased actually waived the coverage and even though the coverage passed to the spouse, it changed who it covered when it passed so the waiver was not valid. Unlike the previous case, the person or entity that the insurance covered changed, so the waiver could not be valid. The surviving spouse did not have the opportunity to waive the coverage, so it could not apply to her directly. If the coverage were going to be waived, a new form signed by the insured and approved by the insurance commissioner would be required.

These situations highlight the importance of reading all of the fine print in your insurance policy. Where some waivers and rules may only last for one term of coverage, uninsured/underinsured motorist bodily injury waivers do not follow this pattern. Experienced lawyers can help walk you through your insurance policy if you have any questions or concerns.

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In a Wal-Mart parking lot in Minden, Louisiana, two mothers and two children were hit by an oncoming car rented two days previously from a local Enterprise. The families sued based upon their injuries and several insurance companies got involved. One insurance company, Safeway, was for Peaker, the individual driving the car. Safeway’s policy included a clause that stated they would cover accidents in vehicles that he did not own, “provided the non-owned vehicle is being used by the named insured with the permission of its owner.”

Normally, permission to drive someone else’s vehicle is fairly straightforward. In this case, the dispute involving coverage depended on whether the rental car company gave Peaker permission to drive the rental car. Peaker’s girlfriend actually rented the car and Peaker’s name was not on the list of authorized drivers. If Enterprise did not give its permission for Peaker to drive the car, then, Safeway alleged, the insurance company would not cover damages related to the accident.

There was conflicting testimony as to whether Peaker actually had permission. According to Peaker, he went to Enterprise with his girlfriend to pick up the car. He paid cash for it and rode with her back to their house in the vehicle. However, the Enterprise employee who rented the car to them did not remember seeing Peaker and they had no records as to where the cash payment originated. At the time of rental, the employee specifically asked Peaker’s girlfriend if anyone else would be driving the car and she answered in the negative. In addition, Peaker could not be listed regardless because he did not have a valid driver’s license at the time of rental, nor when the accident took place.

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Redhibition is defined as “the nullification of sale because of a defect in the article sold of such nature as to make it totally or virtually unusable or as to have prevented the purchase if known to the buyer.” An automobile redhibition case involves some hidden defect in the car that, if the purchaser would have known about it, would make it likely that the purchaser would not have bought it. For example, the fact that the car does not run at all, would likely be a reason that a purchaser would not want to buy the car. A defect such as this would allow the buyer to get their money back for the sale or, at least, a reduction in the purchase price.

The theories stated above apply to used vehicles as well as new ones. In 2007, a couple bought a car from Ford that, although was used, was certified to be in good condition. However, shortly after the purchase the couple noticed significant water leaks in the vehicle. At first, they thought the moon roof was just left open. Gradually, they realized that that was not the case.

In fact, the leaks got so bad that the couple was forced to put towels on the seat, put a plastic bag over the driver’s legs, and vacuum the water out of the car frequently. Finally, the mildew odor got so bad that they had to get a replacement vehicle. After several attempts at repairs, the couple was informed that the leaks could not be fixed. They hired an attorney and brought the suit for redhibition in the Pineville City Court.

In order to have a claim against Ford, the couple needed to prove that the defect existed at the time of manufacture, and did not develop later. As the car manufacturer, Ford is presumed to have knowledge of the defects of the products that it manufactures. In this case, Ford attempted to argue that the leaking problems were likely caused by poor maintenance and a failure to clean out the drainage tubes in the vehicle. However, the court scoffed at this argument and pointed out that the couple had the entire front end of the car removed, cleaned, repaired, and put back on. Nonetheless, the leaking continued.

The couple pointed out that the Technical Service Bulletin, a publication that describes defects in vehicles and how maintenance personnel can handle them, stated that water leaks in that type of vehicle could occur due to a roof-opening panel. This bulletin explained that there were serious manufacturing flaws in the moon roof drainage system in some of the Ford vehicles, the couple’s vehicle included. Ford argued that this bulletin did not assume that their particular vehicle had problems. However, the court took the bulletin into significant consideration.

Lastly, Ford argued that if there were a manufacturing problem, then the previous owners would have noticed the problem and reported it. The previous owner made no such complaint. However, since Ford had no documentation or direct proof that the previous owners were not having problems, the court disregarded this argument as well.

The court found that the couple met the qualifications for proving that the defect was caused by manufacture and not by any fault of their own. Had they known about the defects, they likely would not have purchased the vehicle. Therefore, the court awarded the purchase price of the vehicle and other fees to the couple.

Manufacturing defects are not always easy to detect. It is important that you make a thorough inspection of your vehicle and report any defects. You should not have to pay for a defective product.

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Even when a case goes to federal court, that body must still try to interpret state law if that is the governing policy in the matter. While this may seem confusing, cases involving local matters can get to federal court for a number of reasons. Of the most common are the notion that the case involves federal law, such as a social security claim, or that the case involves two parties that are not from the same state. The latter is termed “diversity jurisdiction.” In diversity jurisdiction cases, the federal court will often have to look to state law to determine how a case must be decided. For example, state law, not federal law, generally determines cases in personal injury or contract disputes.

Louisiana, like many states, holds the notion that insurance policies are contracts. Therefore, contract law covers any disputes regarding insurance policies. As such, if a case goes to federal court because the insurance company is not in the same state as the insured, then the federal court will have to use Louisiana contract law to determine the outcome of the case.

Louisiana contract law provides two overreaching concepts regarding contract interpretation. First, the contract should reflect the intent of the two parties. That intention is portrayed in the wording of the contract; therefore, the court should look only to the contract, not to outside information, to determine the intent of the parties. Second, Louisiana will only apply the first concept if the result is not absurd.

All of these concepts, diversity jurisdiction, insurance policies as contracts, and contract interpretation in Louisiana, were embodied in a recent case. In that case, property damage due to smoke from a fire created an insurance dispute. Once the parties determined that they needed their insurance to cover the damage, they started looking into their insurance policies. The complication in this case was that the parties were both individuals and they ran their own businesses; the insurance policies were unclear as to which entity was covered, the individual or the business. The names of the business also changed frequently. That is, they used a commonly referred to trade name instead of their official name. A common example of this is something like using the name “Disney” instead of “The Walt Disney Company.”

Since the names were an issue, the insurance company was trying to claim that the damaged property was not covered under their current policy. The insurance company claimed that they were covering someone or something else entirely. The lower court actually went along with the insurance company’s reasoning and determined that the property as not covered and dismissed the case in favor of the insurance company.

During the appeal, the party whose property was damaged argued that they intended for the property to be covered, so the court should take that into consideration because contract interpretation involves determining the intent between the parties. The court did so and found that if the insurance company’s reasoning were to prevail, that would mean that they insured companies that just did not exist. The court pointed out that this is an example of an absurd result. They concluded that the parties could not have possibly meant to insure companies or persons that did not exist. Therefore, the court looked beyond just the wording of the contract because of this absurd result. As a result, they remanded the contract back to the parties to reword it so it would reflect their common intentions.

It is important to note that federal law did not play a role in this case because even though it was in federal court, contract law was governed by Louisiana in this case. The federal court noted that they were guessing what the Louisiana Supreme Court would say about this case by mentioning that because of the result, “[i]t is our judgment that the Louisiana Supreme Court would not enforce the literal text of the 2004-2005 Policy.”

This case shows us the importance of the insurance policy contract. If the wording does not accurately reflect the intentions between the two parties then there can be a negative result. The Berniard Law firm can help you with insurance disputes if you need help.

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Settlements are an important part of the legal process. They save time, money, allow the parties to negotiate their own terms, and, above all, they keep the parties from having to go to court to litigate their claims. In the case of settling with insurance companies, the companies like to avoid court because it not only costs them time and money, but also may negatively affect their reputation in the community. As such, it is common practice for an injured person to sign a release form after they receive settlement money. This release form bars the person injured from any future claims against the insurance company. Both parties usually end up happy in this situation because the person who was injured gets some compensation and the insurance company avoids the negative effects of going to court.

What happens if an injured person settles and signs a release form before they realize how badly they are injured? For example, perhaps an individual thinks they only bruised their ribs, but actually suffered from more long term effects such as kidney injuries. In that case, the injuries are likely to be much more expensive than both parties originally anticipated. Then, the injured individual does not have enough money to cover medical expenses and the insurance company gets out of paying for the extra expenses.

In Louisiana, a general release will not necessarily bar recovery for aspects of the claim that the release was not intended to cover. However, most releases are very broad in that they cover any existing injuries and injuries that may occur because of the accident in the future. Louisiana law only allows settlements to be set aside if there was an error when the settlement was signed. Two major mistakes could set aside a settlement: 1) the injured party was mistaken as to what he or she was signing even if there was no fraud involved, or 2) the injured party did not fully understand the nature of the rights being released or that they did not intend to release certain rights. A settlement can also be set aside if there is fraud or misrepresentation involved.

Louisiana Civil Code Article 1953 defines fraud as “. . . misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss of inconvenience to the other. Fraud may also result from silence or inaction.” In order to determine if there is fraud involving a release, which is also a contract, the court will only look to the document itself to determine if fraud is evident. Evidence of fraud in this situation could include any intentionally incorrect statement of material fact, such as stating items that are not covered by the insurance company when those items are actually covered.

A recent case gives an excellent example of a settlement with an insurance company. In that case, an individual fell off a tractor and injured himself. Two insurance companies provided compensation for injuries relating to his fall. Once each insurance company provided compensation, they each had the injured party sign a release form to keep him from filing claims against them in the future should the injuries be worse than originally anticipated.

The injured individual did have complications with his injuries and tried to get the settlements set aside so that he could get more money based on the coverage, but because he signed the release forms and there was no evidence of fraud, the court would not set aside the settlement agreements. The court stated that the injured individual knew exactly what he was releasing and there was no mistake in the settlement. The insurance companies both provided clear statements of what they did and did not cover and provided compensation for the things they did cover. The release statements specifically said that the injured party could not sue again for the same fall even if the injuries got worse, so he could not file claims again.

One lesson to take away from this example is that it might be helpful to find out the extent of your injuries before you enter into any settlements or sign any release forms.

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