Insurance Company Delays

Court Rules that Survival Suits Exists Against Insurance Company of a Dissolved Corporation

Published on: January 6, 2011 | By Berniard Law Firm

The death of a loved one can obviously be a hard time for a family. Families have to deal with many issues after the death of one of its members, and the financial implication of the death is a hard to handle issue. Many times financial issues may take a long time to materialize. When the death of a loved one is due to an accident or an effect from something on the job, many families have to sift through the complex legal system to see if they have any rights against the employer, or any third-party. Many people in the past have been impacted by exposure to asbestos. Many illnesses can occur due to this exposure, icluding malignant mesothelioma. Many families attempt to bring survival suits against employers when their loved one was exposed to asbestos during employment. The impact of asbestos exposure may not manifest itself for many years, or decades in the future. What if the corporation has changed hands? What if the corporation no longer exists? This last question was answered in a recent decision by the Appeals Court of Louisianna, Fourth District.

In Marcel vs. Delta Shipbulding Co.(Delta), the plaintiffs were survivors of a man who died due to malignant mesothelioma after exposure to asbestos while working for Delta. The plaintiffs were suing Delta’s insurance company, Continental Insurance Co.(Continental). The issue in the case was that the company went out of business in 1969. The employee worked there between 1948 and 1949. Continental argued that there could be no cause of action because the corporation was no longer in business. In trial court, Continental was able to successfully argue that due to today’s law, which states that all suits against a corporation are null and void three years after the dissolution of the corporation, the cause of action did not exist as a matter of law. Plaintiffs took their case to the appellate court arguing that the trial court was wrong to conclude that there was no cause of action.

The appellate court took the case as a matter of first impression. The Court had never dealt with a case where the corporation had went out of business prior to the enactment of legislation creating a cause of action in such circumstances. The new legislation was passed in 1969. The Court stated that the cause of action accrues in a long-latency occupational disease case when the tortious exposures are significant, such that they will later result in the manifestation of the disease. This meant that the cause of action accrued when the exposure occured back in 1948-49. The Court cited a Louisiana Supreme Court case for the proposition that a survival action accrues simultaneously with the tort, i.e. the exposure, and is transmitted to the heirs of the victim upon death. Based on this, the Court found that the appropriate law was the law that existed at the time of exposure, not the law that exists as it stands today. The statute in effect at that time was act 128. This act discussed the procedure of bringing an action against a dissolved corporation, but it did not discuss causes of action. Although the current law, which states that after three years a cause of action is barred against a dissolved corporation, would have barred this case, the law as it existed at the time of exposure would not bar the current suit, and that law is the law that applied to the current case. Continental brought forth case history that stated that any case against a dissolved corporation is abated at the time of dissolution. The Court was quick to state that even if that law would bar a case against Delta, it does not extend to parties other than the dissolved corporation like Continental. Therefore, the survivial action is not terminated due to Delta’s dissolved status.

In hard times, the last thing anyone wants to deal with is a difficult legal question regarding one’s rights. However, it is pertinent that potential legal issues be discussed with a lawyer as soon as possible. Each case has a time period in which it can be brought. It is essential that if you have a claim, or your think you have a claim, you should seek the advice of legal counsel as soon as possible so that time does not run out on your ability to take any kind of action on your claim.

For more information on asbestos exposure and mesothelioma, feel free to browse our blog dedicated to the topic.

Louisiana Legislature Extends Period to Bring Suit in Home Fire Damage Cases

Published on: January 2, 2011 | By Berniard Law Firm

While Louisiana law has not always been a beneficial reliance for residents to fall back on, changes in the last 5 years have helped change that and make financial recovery in the wake of a disaster possible. The previous law in Louisiana stated that, after a fire to a home, the homeowner had 12 months in which to bring a case against the insurance company. A new law passed in mid-2007 extended the period to 24 months. This is a break for many families who felt the impact of such a disastrous event. It will give these individuals and families more time to figure out whether the insurance company’s offer is sufficient. As with every time a new law is passed, there are certain questions that remained to be answered as the situations arise. One such question is how the new legislation impacts those whose claim arose prior to the enactment of the law and had not expired by the time the law was enacted.

In Eric Holt vs. State Farm Fire Casualty Co., such a situation arose for Mr. Holt (Holt). In January 2007, Holt’s home was damaged in a fire. He was insured by State Farm Casualty Co. (State Farm). State Farm refused to pay for any of the damages under the policy. In February of 2008, Holt sued State Farm due to dissatisfaction with its ultimate decision. State Farm filed for summary judgment arguing that (1) the claim was barred because state law, at the time the claim arose, allowed only 12 months in which the claim could be filed for fire damage to a home and (2) the claim was barred because the policy stated that any claim must be filed within 12 months. State Farm argued that because of these two reasons, and the fact that the claim was filed more than 12 months after the fire, the claim is barred by the prescriptive period. The trial court refused to grant summary judgment and State Farm appealed.

In terms of State Farm’s claim that the policy between it and Holt barred any claim beyond a 12 month period, the policy also states that if the policy conflicts with state law, state law will control the issue. The appellate court then had to figure what state law governed the issue at hand. Act 43 of 2007 was enacted On August 15, 2007. The act increased the time in which to bring a home damage claim, including fire damage, from 12 months to 24 months. State Farm argued that because the act was enacted after the damage to Holt’s home, the act did not apply to Holt. Under Louisiana law, the difference comes down to (1) whether the legislature clearly identified if an act will apply retrospectively and (2) if the act does not clearly so state, if the act is substantive in nature, meaning that it creates or impacts a cause of action, it will only apply proscriptively, on the other hand, if the act is procedural in nature, meaning it impacts only how a cause of action can be brought, it can apply retrospectively.

Act 43 does not clearly state whether it applied retrospectively. The Appellate Court concluded that because the act only increased the time in which to bring a claim, and not the type of claim or any elements of the claim, that the act was procedural in nature. Under Louisiana law, it is a well settled issue that procedural acts can be applied retrospectively. The only exceptions to this are that if applying an act retrosepctively (1) impacts a vested cause of action, or (2) revives an already expired cause of action, the retrospective application would violate constitutional rights and would be unjust to apply. However, neither of these exceptions apply in the application of the law in Holt’s case. Therefore, the Court decided that Holt’s claim was not time barred by the prescriptive period.

It is essential that if you have a claim, or your think you have a claim, you should seek the advice of legal counsel as soon as possible so that time does not run out on your ability to take any kind of action on your claim .

Fire Claim Difficulties Show Need for Skilled Attorney

Published on: December 23, 2010 | By Berniard Law Firm

In the legal world, one of the most important things to do is to make sure that all necessary documents are submitted to the court, and the opposing party, in a timely manner. The procedural aspect of the legal process has many deadlines that need to be met. The result of not meeting these deadlines could lead to the end of a litigation with no chance of bringing the same claim before court.

In Tapp v. Shaw Environmental Inc., we see an example of the results of waiting until the very last second to bring a claim against parties. Tapp, the plaintiff, brought a claim against a number of sellers and manufacturers of trailers. The basis of the complaint was a fire that occurred, in the trailer, on February 27, 2007. The statute of limitations, the time within which a claim could be brought for this event, was one year. Tapp waited until the very last minute to file a complaint on February 26, 2008. The complaint was literally filed on the very last day under the statute of limitations. On a later date, after the time period to bring the claim had passed, Tapp realized that there were other defendants that should have been added to the original complaint. The problem was that Tapp could not simply file a complaint against these new defendants. Tapp needed to add these defendants by a provision within the federal rules of civil procedure called “relation back.” The “relation back” procedure is like adding defendants to the original complaint as if they were actually on the original complaint. The purpose is to allow plaintiffs to add defendants even if the statute of limitation has expired. The federal rules of civil procedure explain that if the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out in the original complaint, and if there are new defendants, that these defendants are notified and added in the amendment within 120 days after the filing of the original complaint. This provision of civil procedure is a last second, last chance, opportunity to add new defendants. It is by no means the most efficient or effective way of adding defendants to a case.

The complaint filed against the first newly added defendant was filed on June 13, 2008. This defendant executed a waiver of summons on June 25, 2008, which was exactly 120 days after the filing of the original complaint. The Court ruled that, as to this defendant, the federal rules of civil procedure requirements for adding a defendant post-expiration of the statute of limitation had been met. Thus, this defendant was properly added onto the original February 26, 2007 complaint. Another amended complaint was filed adding another defendant on August 8, 2008. Using the same “relation back” procedure, the Court ruled that this newly added defendant was added outside the 120-day period allowed by federal civil procedure. Therefore, this defendant was not added to the case, and thus the plaintiff could seek no relief from this defendant for this claim. Tapp lucked out because at least one of the new defendants was added to the case. However, as this case clearly demonstrates, it is essential that claims are brought as soon as possible within the statute of limitation period, so that if anything needs to be done within the period, it can be done while time still remains to take action.

It is essential that if you have a claim, or your think you have a claim, you should seek the advice of legal counsel as soon as possible so that time does not run out on your ability to take any kind of action on your claim.

Hartzo Case Illustrates Difficulties with Insurance Policies, Disputes

Published on: December 19, 2010 | By Berniard Law Firm

The Court of Appeals of Louisiana, First Circuit, recently defined the way in which the Court would look at implied permission for the use of ones car. Depending on the terms of the auto insurance policy, the policy may provide protection for damages that even extend to the passenger in a vehicle driven by someone who has permission to drive the vehicle. This means that if the passenger died in the car accident, the passenger’s family may be able to collect by filing a petition for damages against the insurance of the actual owner of the car, not just the actual driver at the time of the accident.

In Hartzo v. American National Property and Causualty Insurance Company, the driver of a Ford Taurus crashed into a Toyota Tacoma. The driver and passenger of the Taurus were killed in the accident. The driver of the Taurus was the brother of the owner of the vehicle. The family of the passenger filed a petition for damages against American National Property and Casualty Insurance Company (ANPAC) and another insurance company. The insurance policy through ANPAC had provisions that extended such benefits if the driver of the vehicle had express or implied permission to drive the vehicle.

ANPAC thought that they had a good argument that the driver of the Taurus had no permission to drive the vehicle. The Court of Appeal looked at the facts and the policy that the owner of the vehicle had. The Court found that deciding whether there was express permission would not dispose of the case. The Court spent its time analyzing what factors they would look to in order to find implied permission. The Court stated that “the issue of implied permission involves a balancing of legal and public policy issues and must be inferred from the totality of the facts and the relationships involved.” With this statement the Court seems to be saying that both customary use and relationship can be used to find implied permission. The Court of Appeal later stated that the following factors were indicative of implied permission: (1) At the time of the accident the driver and owner of the vehicle were living in the same household, (2) On the day of the accident, the driver of the vehicle had already driven the vehicle with the knowledge of the owner, (3) In the past, the driver had driven the Taurus on many occasions. Therefore, the Court looked at both the relationship involved (i.e. the fact that driver and owner lived under the same roof) and the custom between the parties (i.e. the fact that the driver had driven the car on many occasions). Thus, ANPAC was liable under the petition of damages.

It is very important to clearly understand your insurance policy. The policy may be confusing and many different, and what may seem insignificant factors, can change the entire outcome of a litigation. It is essential that prior to settling any issues with your insurance company, that you seek the advice of competent legal counsel to help you maneuver through complex insurance policy determinations.

Progressive Insurance Slapped With Penalty for Failing to Pay in Covington Car Wreck

Published on: December 5, 2010 | By Berniard Law Firm

Previously on this blog, we have explored several cases that profiled the often contentious role that insurance companies play in auto accident litigation. In the interest of seeing that consumers get the benefits of the policies they pay for and to promote a speedy resolution for third parties who have legitimate claims, the Louisiana legislature enacted a law that requires insurers to pay claims within 30 days of being notified with a satisfactory proof of loss by the insured. La. R.S. 22:1892. An insurer’s failure to do so, if “arbitrary, capricious, or without probable cause,” can mean a penalty for the insurer of up to 50 percent of the claim amount, in addition to attorneys’ fees and costs. This requirement was at the center of the recently decided case, Krygier v. Vidrine.

On October 11, 2006, Kenneth Krygier was a passenger in a rented Chevy Cobalt being driven by his co-worker, Billy Toon. Krygier and Toon were on the way to their employer’s office in Covington when their vehicle was rear-ended by a Ford Explorer operated by Karen Vidrine and insured by Liberty Mutual. Toon also carried an insurance policy with Progressive that provided uninsured/underinsured motorist (“UM”) coverage to all occupants of an “insured” vehicle. Vidrine’s policy with Liberty Mutual had a limit of only $30,000 per incident, so when Krygier filed suit against Vidrine for the injuries he suffered in the crash, he also named Progressive and his employer as defendants. Progressive first denied responsibility for UM coverage because it alleged the rented Chevy wasn’t an “insured vehicle” under Toon’s policy, Krygier was not a “covered person” under the policy, and Vidrine was not underinsured. The parties filed cross-motions for summary judgment on these questions, and in December, 2007, the trial court determined that coverage under Progressive’s policy extended to Toon’s rental car and to Krygier as a guest passenger.

As part of the discovery process, Liberty Mutual served on all parties a copy of the policy with the $30,000 limit it had issued to Vidrine covering her Explorer. Nevertheless, Progressive took the position that it did not have sufficient documentation establishing that Vidrine was underinsured at the time of the accident. In January of 2008, Krygier gave a deposition during which he testified about his injuries, his ongoing medical treatments, and his pain and suffering. Krygier also provided documentation regarding his employment, lost earnings, and medical treatment in response to Progressive’s discovery requests. In November, 2008, Krygier filed an amended petition for damages in which he sought penalties, attorneys’ fees, and costs based on Progressive’s failure to tender its policy limits upon receipt of satisfactory proofs of loss. Krygier received only $15,000 from Vidrine’s Liberty Mutual policy (the balance of which was paid to Toon). Krygier alleged that, based on this result and the outcome of prior proceedings in the matter, Progressive was well aware that Vidrine did not have sufficient insurance to cover the damages he sustained in the accident. Progressive’s failure to pay, Krygier argued, amounted to a violation of the statute requiring a timely tender of payment. Accordingly, Krygier asked for $50,000 in penalties (half the policy’s $100,000 limit), together with reasonable costs and attorneys’ fees. The trial court granted Krygier’s motion, finding that Progressive was “arbitrary and capricious in failing to promptly tender policy limits,” and awarded penalties in the amount of $50,000 to Krygier. The judgment further awarded Krygier “the remaining interest owed on the policy limits, plus attorneys’ fees and costs.” Progressive appealed to an unsympathetic First Circuit. The court stated, “we find reasonable persons could reach only one conclusion, i.e., that Progressive acted arbitrarily, capriciously, or without probable cause in not tendering its policy limits within thirty days of” first learning of Krygier’s legitimate claim. The court affirmed the $50,000 penalty awarded by the trial court.

In this case, Krygier’s misfortune was only compounded by Progressive’s efforts to protract the litigation and delay payment. In situations like this, it is especially important for an accident victim to have an experienced attorney on his side to ensure he gets the recovery he deserves.

Court Examines Question of Insurance Policy Coverage Limitations After Tragic Car Accident

Published on: December 3, 2010 | By Berniard Law Firm

Many employees routinely use their own automobiles in the course of their employment. Whether running an occasional errand on behalf of the company, or using a car to make door-to-door sales calls, employees who drive their vehicles for the benefit of their employers may wonder how liability is affected if they are involved in an accident. Generally speaking, an employer is responsible for the negligence of its employees who operate motor vehicles on behalf of the company. For this reason, employers maintain liability insurance policies that cover them for losses that may arise from auto accidents caused by employees. Like other policies, these liability policies can be subject to specific limitations to coverage as arranged between the employer and the insurer. One example where the language of the policy exceptions proved determinative is the 2010 case of Anderson v. State Farm Fire & Casualty Insurance Co.

Donald Anderson worked for Labor Finders, a staffing agency with offices throughout the state of Louisiana. Anderson was killed when an oncoming motorist, Gordon Pugh, Jr., crossed the center line and struck his car as Anderson was driving to an appointment for work. After her father’s death, Monica Anderson filed a wrongful death action which named Pugh, Pugh’s insurer (State Farm Fire & Casualty Insurance Company), and National Union Fire Insurance Company as defendants. National Union was included because the company had issued a liability policy to Labor Finders which was in effect at the time of the accident. This policy, which applied to employees of Labor Finders, contained an endorsement for uninsured/underinsured motorist (UM) coverage. National Union answered, denying that Anderson was covered under the policy. Monica settled with Pugh and State Farm, after which National Union filed a motion for summary judgment. The trial court concluded that under the clear and unambiguous terms of the policy, Donald Anderson was not covered.

On appeal, the First Circuit conducted its own detailed analysis of the policy language. After noting that “insurers have the right to limit coverage in any manner desired, so long as the limitations are clearly and unambiguously set forth in the contract and are not in conflict with statutory provisions or public policy,” Campbell v. Markel American Insurance Co., the court found that an exclusion within the National Union policy which denied coverage to any employee who was injured in the course of operating an automobile applied to Anderson’s death. The court also concluded that Anderson was not covered under the policy’s UM endorsement because it extended coverage only to a “partner or officer” of Labor Finders, of which he was neither. Accordingly, the court concluded that the trial judge correctly found that Anderson was not eligible for liability coverage under the National Union policy, and affirmed the decision.

The Anderson case provides a warning to employees that they should not assume they will necessarily be covered by their employer’s insurance policy if they are involved in an accident–particularly, as here, one where they are not at-fault. We can presume, though it is not stated in the court’s discussion, that Monica Anderson settled with State Farm (the at-fault driver’s insurer) for a sum that was within the policy limits. The suit against National Union was, perhaps, an understandable attempt to obtain more funds beyond those she received in the State Farm settlement. While Monica’s situation is tragically sympathetic, the court made it clear that an issuer can use the language of a policy to limit coverage substantially, even to the detrmiment of an “innocent” party.

The Importance of Reading Your Insurance Policy: Louisiana Court of Appeals Denies Coverage in Logging Accident Case

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

In a recent Louisiana Court of Appeals case, an injured logger was not able to collect damages from his employer’s insurance company because the subcontractor at fault for the accident was found to be not covered.

Travis Palmer was working for A.T. Martinez (ATM), LLC, as a logging truck driver and was injured when he was struck by a log while his employer’s truck was being loaded with timber. Palmer sued his employer’s insurer, Royal Indemnity Company (Royal), alleging that they provided general liability coverage even though a subcontractor, KLM Logging (KLM) was at fault. The trial court granted a motion for summary judgment in favor of the Palmer and found that the insurance policy in question covered KLM but the court of appeals disagreed on appeal.

Royal denied coverage here on the primary grounds that KLM did not meet the definition of “an insured” or an “additional insured” under the terms of the policy issued to ATM. In addition, there was no agreement between ATM and KLM that required ATM to name KLM as an insured for the timber cutting/loading operations or for any other subcontractor work. KLM and ATM did allege, however, that had an oral agreement that ATM’s insurance would also cover KLM. The two owners of the respective corporations (who happen to be parent and child) claim that KLM paid insurance premiums to Royal for this coverage by virtue of ATM withholding part of the payments they owed to KLM. ATM believed that the policy covered their subcontractors, even though the owners admitted they never read it.

Katrina Victim Denied Benefits Under Lender-Only Flood Insurance Policy

Published on: October 31, 2010 | By Berniard Law Firm

By the terms of most mortgage agreements, homeowners are required to maintain adequate insurance on their houses. In New Orleans and other coastal areas, this requirement can include both a standard homeowner’s policy as well as flood insurance. Mortgage lenders insist on insurance coverage to help protect their financial interest in the properties for which they issue mortgages. If a borrower fails to purchase or maintain adequate coverage, the lender is permitted to “force-place” a policy–that is, to purchase an insurance policy on the property for its own benefit. A force-placed policy allows the lender to protect its exposure on a home up to the then-owed amount of mortgage on the date of issuance.

When Hurricane Katrina hit New Orleans, the home of Latisha Williams sustained significant flood damage. Williams had purchased the house with a mortgage issued by Homecomings Financial, the terms of which required her to maintain a flood insurance policy on the property. In June of 2005, Williams let the flood policy lapse, at which point Homecomings Financial force-placed a new policy on the property that was issued by Lloyd’s of London. Following the Katrina disaster, a Lloyd’s adjuster inspected the property and issued a loss estimate that Williams believed was below the true amount of loss on the property. Williams sued Lloyd’s seeking to recover for the full amount of flood damage to the house. At trial in the district court, Lloyd’s filed a motion to dismiss Williams’s claim, arguing that she lacked standing to bring the action. Standing is the right to initiate a lawsuit which arises from the plaintiff’s direct connection with or involvement in a legal dispute. The district court granted Lloyd’s motion, and Williams appealed.

The Fifth Circuit of the U.S. Court of Appeals examined the facts to determine whether Williams had standing to sue Lloyd’s. The issue centered around the question of whether the insurance policy, which was an agreement between Lloyd’s and Homecomings Financial, was intended to benefit Williams in any way. Without this intent to benefit Williams, she would have no standing to bring suit. Under Louisiana law, which the federal court applied, a contract for the benefit of a third party is called a “stipulation pour autrui.” See Paul v. Louisiana State Employees’ Group Benefit Program, 762 So.2d 136, 140 (La. App. 1st Cir. 2000). According to the court, “[t]he most basic requirement of a stipulation pour autrui is that the contract manifests a clear intention to benefit the third party; absent such a clear manifestation, a party claiming to be a third party beneficiary cannot meet his burden of proof.” The court found ample evidence that Homecomings Financial and Lloyd’s did not intend to benefit Williams in any way. The court noted that the policy specifically stated that Homecomings Financial was the “sole insured” under the policy, notwithstanding “the insurable interests of the owner,” (Williams). Furthermore, the policy specified that Homecomings was Lloyd’s “sole insured under this policy” and that benefits paid would be “made directly to [Homecomings].” Thus, the court affirmed the district court’s dismissal of Williams’s action.

The lesson from this case is that a homeowner should always maintain the appropriate level of insurance for his or her property. Because a mortgage issuer is able to force-place a policy only up to the value of the outstanding balance on the mortgage, any equity the homeowner may have in the property is left unprotected in the event of a catastrophe. It is no stretch to imagine that a mortgage issuer would be happy to accept a settlement offer that covers its exposure without regard to any equity loss the homeowner may personally sustain.

Allegations Allstate Defrauded Government, Policy Holders Emerge in Court

Published on: October 22, 2010 | By Berniard Law Firm

The Gulf Coast has seen its share of hurricanes and tropical storms, unfortunately, and nearly everyone who lives in our region knows someone who has been adversely affected by the damage these acts of nature cause. Whether a home, car, business or other form of property, many suffered devastating losses that left the future unclear. While those with insurance may have felt more relieved than those without, the fact remains that a wide variety of uphill battles exist.

If you are a Louisiana resident who suffered any type of injury relating to a storm, whether it was to your person or property, the courts have held a mixture of results that both reinforced and hindered claimants. Just a few weeks ago, a lawsuit was filed in Louisiana against Allstate Insurance in conjunction with a whistle blower alleging improper actions by the company.

The case, which is still pending in the courts, claims that Allstate cheated the federal government by creating false data that steered the majority of costs toward the National Flood Insurance Program. The lawsuit accuses Allstate, a major participant in the government’s Write Your Own Program, of fabricating damage documents. Allegedly, Allstate “substantially inflated” the flood portion of damages while “substantially deflating” the homeowners insurance claims. This means that the company may have also been shifting numbers away from the claims of homeowners, forcing them to either settle for the offer substantially less than they deserved or hire attorneys to get them proper compensation.

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.