Negligence Claims

Driver Exclusion in Auto Insurance Policy Leads to Litigation After Monroe Accident

Published on: August 24, 2011 | By Berniard Law Firm

It is widely accepted in Louisiana that insurance companies may limit coverage in any manner they desire, so long as the limitations do not conflict with the law or with public policy. Coverage limitations must be written into the policy and the burden to prove that a claim is excluded generally falls on the insurer. One common limitation for auto insurance policies is a driver exclusion. Louisiana law specifically authorizes insurance carriers and their customers to agree to exclude a resident of an insured’s household from coverage under a policy. LSA-R.S. 32:900(L). This arrangement allows the insured to pay a lower premium since excluding one or more drivers in the household from the policy would reduce the insurance company’s potential liability. A dispute over the effectiveness of an excluded driver provision was at the center of the recent case of Young v. McGraw.

In December of 2007, Vernon Washington took out an insurance policy for his two cars with the USAgencies Casualty Insurance Company. During the application process, Washington signed an excluded driver endorsement. The provision expressly excluded as insured drivers Aretha McGraw and her two children, Christopher McGraw and Tiffany McGraw. During the policy’s period of coverage, Aretha McGraw was involved in a car accident while driving one of Washington’s cars. The owner of the other vehicle, Jacqueline Young, filed a suit which named McGraw, Washington, and USAgencies as defendants. USAgencies filed a motion for summary judgment, arguing that McGraw was an excluded driver under its policy and therefore was not covered. The trial court denied the motion and, after a trial, the court concluded that the evidence presented failed to establish that Washington and McGraw lived in the same household when the policy was issued. Therefore, McGraw could not be considered an excluded driver under the policy because the requirements of LSA-R.S. 32:900(L) were not met. The trial court awarded Young personal injury and property damages totaling $5,800. USAgencies appealed.

The Second Circuit Court of Appeal reviewed the evidence presented at the trial concerning whether McGraw was actually a member of Washington’s household at the time he took out the auto policy. McGraw testified that she and her children had lived with Washington continuously since 1998 and at the address of 1996 Joe G. Drive in Monroe since 2003. She admitted to giving the address of her parents’ house to the police officer at the accident scene, but said she “didn’t think it was a big deal” since she visits there every day and receives her mail there. Washington testified that he and McGraw had lived together at 1996 Joe G. Drive for seven years. He also explained that at the time he bought the auto policy, he informed USAgencies that McGraw was a member of his household but wanted to exclude her from coverage due to “financial constraints.” The court noted: “Our review of the record convinces us that the lower court’s finding that McGraw and Washington were not residents of the same household at the time the automobile liability policy was issued is clearly wrong.” “Consequently,” the court reasoned, “the trial court was manifestly erroneous in concluding that the policy endorsement excluding Aretha McGraw … under the policy was inapplicable and that … [she] was a covered operator of the vehicle at the time of the automobile accident.” The trial court’s judgment was, accordingly, reversed.

This case demonstrates the requirement that insurance companies carefully follow all statutory requirements, if they exist, when writing coverage limitations into policies. Post-contract reviews of the insurer’s processes may, like in this case, require a fact-intensive analysis and a clear understanding of the law’s requirements. Thus, a skilled attorney is essential for any party facing a dispute over a coverage limitation.

Hurricane Damage at New Orleans Apartment Leads to Dispute Over Insurance Coverage Calculation

Published on: August 22, 2011 | By Berniard Law Firm

Insurance policies routinely include provisions that are intended to limit the scope of the insurer’s coverage in the event of a claim by the policyholder. For instance, most homeowner’s insurance policies exclude coverage for fire damage that results from the policyholder’s deliberate arson. Commercial premises insurance policies, which commonly also include coverage for loss of business income, can carry similar limitations. The recent case of Berk-Cohen Associates, L.L.C. v. Landmark American Insurance Company in the U.S. Court of Appeals for the Fifth Circuit provides an instructive example of how insurance policies are “construed using the general rules of interpretation of contracts” by the courts.

Berk-Cohen Associates, L.L.C., as the owner of the Forest Isle Apartments in New Orleans, maintained an insurance policy to cover the complex with the Landmark American Insurance Company. The policy covered property damage but specifically did not cover losses at Forest Isle “caused directly or indirectly by Flood.” In the case of a covered cause of loss, such as wind damage or fire, the policy insured Berk-Cohen against both the property damage and the resulting lost business income. However, the scope of the income protection excluded any income that would have been earned directly as a consequence of any “favorable business conditions caused by the impact of the Covered Cause of Loss on customers or on other businesses.” In other words, Berk-Cohen could not profit by a widespread calamity that was also the source of a property damage claims. Forest Isle suffered a series of misfortunes, including a tornado, a vehicle strike, and–most significant–damage from Hurricane Katrina. Following the hurricane, Landmark compensated Berk-Cohen for damages caused by wind but not flood. Concerning Berk-Cohen’s claim for lost business income, Landmark argued that it was not responsible for the increased rents that resulted from the extensive flooding around the city because flood damage was excluded from the policy. Accordingly, Landmark “declined to increase its calculation of lost business income to the extent that any foregone income arose from flooding.” Berk-Cohen initiated litigation and, following a bench trial, the district court held that, notwithstanding the flood damage exclusion in the policy, Landmark should have considered the business conditions attributable to flooding in other buildings when computing the business income that Berk-Cohen lost as a result of the wind damage to Forest Isle. On appeal, the Fifth Circuit upheld the district court’s opinion. It noted that the “Covered Cause of Loss” that gave rise to Berk-Choen’s property damage claim was wind. Consequently, the policy language prohibited Berk-Cohen from recovering for lost business income as a result of wind damage suffered by customers or other competing businesses. But, “any increase in customers’ demand or reduction in competitors’ supply due to flooding at other properties is a permissible factor in calculating lost business income.” (Emphasis supplied.) The court refused to permit Landmark to exclude coverage for flood damage by the policy language while at the same time invoking the same source of damage to reduce Berk-Cohen’s business income recovery. To do so would “extend[] the flood exclusion beyond its function,” since the policy specifically permits the income calculation to consider “favorable business conditions.” Accordingly, the court “decline[d] to use a limitation on coverage”–that is, flooding–“to alter the calculation of damages for a covered loss”–the lost income. The Fifth Circuit concluded that the “policy … excludes coverage for flood damages at the Forest Isle property. The flood exclusion does not, however, prevent Berk-Cohen from recovering lost business income due to the favorable business conditions arising from flood damage to other buildings.”

This case demonstrates that applying the “normal cannons of contract interpretation” can work to the benefit of the insured. As with any contract, the insurance company is bound by the plain meaning of the policy language, even if it means that excluding coverage for one claim will open the door to liability for another. The lesson here is that a knowledgeable and experienced attorney is invaluable to anyone who is involved in a dispute over insurance coverage.

Keeping Up with Your Louisiana Home’s Construction Defects (Part II) – Understanding Statutes

Published on: August 18, 2011 | By Berniard Law Firm

As previously discussed in Part I, the case of Charles Ebinger, et ux. v. Venus Construction Corporation, et al. focuses on the time period in which a claim for damages can be brought against a contractor and the time period in which a contractor may bring an indemnifying action against a subcontractor. This Part, however, focuses on the Louisiana Supreme Court’s reasoning as to how it interpreted the applicable statute of limitations.

The Ebingers moved into their newly built home in April of 1997. On October 9, 2003, the Ebingers filed suit against Venus Construction alleging defects in the home’s foundation had caused cracks in the drywall, tile, brick walls, and floor. Venus Construction filed its indemnity claim on September 22, 2006 against the engineer and subcontractor that supplied the foundation.

First the Court determined when the cause of action arose. The Court determined that “regardless of the length of the peremptive period, it [the peremptive period] began when the owners took possession of the house or filed an acceptance of the work.” In this case, a certificate of occupancy issued on April 22, 1997, and therefore, that is when the peremptive period began. At the time the Ebingers moved into their home, the original statute was in place and thus the Ebingers would have ten (10) years to file a claim.

Second, the Louisiana Supreme Court looked at the language of the statutes to determine whether the superseding statutes were written to act retroactively or have prospective application. Though the peremptive period was ten years at the time the statute of limitations began to run, the legislature amended the governing statute in 1999, substituting ‘seven’ for ‘ten’ years as the peremptive period. Further, this Act stated “the provisions of this Act shall have prospective application only and shall apply to contracts entered into on or after the effective date of this Act.” Thus, at this time, the Ebingers would still have a valid claim through the original ten year peremptive period because the amended statute had only prospective applicability, not retroactive applicability, as specifically written in the Act by the legislature. Next, the Court looked at the second revision of the Act in 2003 which substitute ‘five’ for ‘seven’ years and did not maintain the ‘prospective application’ language. The Court states that the legislature’s actions in drafting a law are knowing and intentional, and thus, if the legislature meant for the ‘prospective application’ language to continue, then the legislature would have included it in the Act. However, because the legislature did not, the Court’s interpretation is that the 2003 Amendment supersedes the original statute and makes the peremptive period five years, even for those causes of action that arose back when the ten and seven year periods were applicable.

Third, the Court examines Constitutional rights to Due Process and determines that the statute of limitations is a procedural law and as long as it does not disturb a vested legal right, a right that at the moment may be expressed, then the statute of limitations (peremptive period) may be applied retroactively. In the end, the Ebingers’ claim is not perempted even though it was filed two months after the 2003 Amendment because the Ebingers’ right to sue had vested the moment they attained the certificate of occupancy. However, as for Venus Construction, “the mere expectancy of a future benefit,” for Venus Construction in this case the right to file a claim for indemnification, “does not constitute a vested right.” Therefore, Venus Construction’s right to file a claim for indemnification did not vest until a judgment was entered against Venus Construction, and thus the peremptive period has run for Venus Construction to file a claim for indemnification against the subcontractor.

Handling Faulty Home Construction Defects in Louisiana

Published on: August 16, 2011 | By Berniard Law Firm

Being able to be involved in the design and building of a new home can be an exciting experience. But there is nothing more special than seeing the home’s construction completed and fully furnished. After all of this, there can be nothing more upsetting than the discovery that the new home has building defects. Imagine settling in and noticing some part of the home’s structure misshapen or cracking at the seams of walls or floors, or perhaps even a foundation or structural supports that have improperly settled or misplaced. The focus of Charles Ebinger, et ux. v. Venus Construction Corporation, et al. focuses on the time period in which a claim for these damages can be brought against a contractor and the time period in which a contractor may bring an indemnifying action against a subcontractor.

The crux of this follows what happens from the time that the building has completed through when litigation is brought against the contractor, and in the event the contractor is found liable, then the indemnification proceeding the contractor would most likely bring against any subcontractor who may be at fault for the imperfect work. However, this is complicated by taking into account the statute of limitations that exists to bring about such a suit. And this is further complicated when taking into account the revisions of the statute of limitations by the legislature.

In short, and to be clear, ‘to indemnify’ means to compensate for damages or losses sustained and to pay for expenses incurred through the litigation. Thus, in the event that a contractor, one who oversees and employs the various subcontractors for a specific job, is found to be liable for damage that exists in a specific construction unit, then, if it is through no fault of the contractor, but is the fault of one of the subcontractors and his or her oversight of his or her unit and specific job, then the contractor may seek to have his or her losses, in this case through litigation and a damages award against the contractor, paid by, or reimbursed by, the subcontractor.

Court Finds No Insurance Coverage for Negligent Doctor After Medical Injury

Published on: August 1, 2011 | By Berniard Law Firm

As we have discussed previously on our blogs, Louisiana courts apply “ordinary contract principles” when interpreting insurance policies. “Words and phrases used in an insurance policy are to be construed using their plain, ordinary and generally prevailing meaning.” Cadwallader v. Allstate Ins. Co. The U.S. Court of Appeals for the Fifth Circuit, applying Louisiana law, recently utilized this approach when reviewing an appeal in a case involving a tragic medical injury.

Dr. Robert Lee Berry, an anesthesiologist, was employed by Louisiana Anesthesia Associates (“LAA”), a practice that provided anesthesia services to hospitals throughout the state. In March, 2001, Berry’s employment was terminated by Dr. William Preau, a shareholder of LAA, when it was discovered that Berry had been abusing narcotics while on duty. Yet, less than four months later, Preau wrote an unqualified letter of recommendation on Berry’s behalf when Berry applied for a job at the Kadlec Medical Center in Richland, Washington. Preau did not disclose Berry’s known drug use at work or his employment termination from LAA. On November 12, 2002, Berry improperly anesthetized a patient, Kimberly Jones, at Kadlec while under the influence of drugs. As a result of Berry’s mistake, Jones suffered an anoxic brain injury and emerged from the surgery in a permanent vegetative state. Jones’s family sued Kadlec Medical Center and Berry in Washington, ultimately arriving at a settlment with Kadlec for $7.5 million. Kadlec then brought suit against LAA and Preau in the district court for the Eastern District of Louisiana. At that trial, the jury found that Preau had committed “intentional and negligent misrepresentation” by failing to disclose Berry’s drug abuse and employment termination in his recommendation letter. The jury awarded Kadlec damages of over $8 million. This amount reflected Kadlec’s settlement with the Jones family plus approximately $750,000 in attorney’s fees Kadlec incurred defending the suit.

In 2001 when Preau wrote the recommendation letter on Berry’s behalf, LAA was insured under a commercial general liability policy issued by the St. Paul Fire & Marine Insurance Co. The policy covered covered LAA’s shareholders, including Preau. When St. Paul declined coverage of the judgment against Preau in the Kadlec suit, Preau filed an action against St. Paul. Following cross-motions for summary judgment, and the district court entered judgment for Preau. The main issue on appeal was whether the damages that Preau was obligated to pay Kadlec were covered under the policy’s “bodily injury” provision, which defined the term as “any physical harm, including sickness or disease, to the physical health of other persons.” The Fifth Circuit held that characterizing the judgment against Preau as requiring him to pay Kadlec damages for “bodily injury” was inaccurate. Instead, the judgment required Preau to pay economic damages to Kadlec for the losses it suffered due to Preau’s misrepresentation. “The economic damages Kadlec sought for Preau’s tortious misrepresentation are distinct from the damages Jones or any other party might seek for her bodily injuries.” In the court’s view, even though the amount of the damages that Kadlec sought from Preau was directly related to the amount it had paid to defend and settle the Jones family’s claim, the damages were still of the economic variety, and therefore not of the type covered by the St. Paul policy. The court further explained the distinction by noting that Preau’s liability to Kadlec arose from his breach of an independent duty he owed to Kadlec–Preau did not become legally responsible to Kadlec Suit for Jones’s bodily injuries, but rather the losses Kadlec faced due to Preau’s breach. Accordingly, the court reversed the district court’s judgment and remanded with instructions to enter judgment in favor of St. Paul.

Although the courts claim reliance on “ordinary” contract principles when interpreting insurance policies, this case shows how a court’s analysis of a policy–which to most consumers is already a particularly dense and forbidding document–can be anything but straightforward and obvious. If you are in a dispute with an insurance company over coverage, seek counsel from an experienced attorney who can help you navigate the complexities of the policy language and Louisiana case law to determine the strength of your claim.

Court Details Steps Required to Decline Uninsured Motorist Coverage in Rapides Parish Car Accident Case

Published on: July 18, 2011 | By Berniard Law Firm

Previously on our network of blogs, we have discussed uninsured/underinsured motorist (“UM”) coverage in auto policies. The statutory requirement for UM insurance “embodies a strong public policy to give full recovery for automobile accident victims.” Duncan v. U.S.A.A. Insurance Co. So strong is this public policy preference, in fact, that “the requirement of UM coverage is an implied amendment to any automobile liability policy, even when not expressly addressed, as UM coverage will be read into the policy unless validly rejected.” If a policyholder wishes to reject UM coverage, he must do so by filling out a form that is issued by the state commissioner of insurance. The Louisiana Supreme Court has explained that completing the form is no simple, routine matter; the insurance company must see that the insured: (1) initials the line in the form that sets out the rejection of UM coverage; (2) prints his name; (3) signs his name; (4) fills in the policy number; and (5) fills in the date. (The same requirements for declining UM coverage would apply to an official representative of a corporate entity that owns a vehicle.) Moreover,

“in order for the form to be valid, [the information] must be completed before the UM selection form is signed by the insured, such that the signature of the insured … signifies an acceptance of and agreement with all of the information contained on the form. An insurer who is unable to prove that the UM selection form was completed before it was signed by the insured simply cannot meet its burden of proving … that the UM selection form is valid.” Gray v. American National Property & Casualty Co.

Indeed, even when an insurance company uses the official form and confirms that it is properly completed, it will only “receive[] a presumption that the insured’s waiver of coverage was knowing” (emphasis supplied), which can be rebutted.

The effectiveness of a UM waiver was at the center of a recent decision by the Third Circuit Court of Appeal in Melder v. State Farm. On March 1, 2007, Naddia Melder was driving a 2006 Nissan pickup truck that belonged to her employer, Grimes Industrial Supply, LLC (“GIS”), in Alexandria. She was involved in a collision with another vehicle in which she sustained serious injuries. After the accident, Melder filed a suit against State Farm seeking to recover under the UM coverage provision of the policy which GIS maintained on the vehicle. State Farm filed a motion for summary judgment asserting that when Floyd Grimes, the owner of GIS, obtained the insurance policy on the Nissan, he rejected UM coverage. After a hearing, the trial court granted the motion and dismissed the action against State Farm. Melder appealed, alleging that genuine issues of material fact about the validity of the UM waiver existed. The Third Circuit agreed with Melder. It cited the inconsistent evidence in the record about Mr. Grimes’s authority to execute the UM waiver. The policy indicated that the Nissan was owned by Floyd Grimes and his brother, Frank Grimes. But other evidence pointed to the corporate entity, GIS, as the owner of the truck. The court concluded, “the record contains no evidence of the authority by which Mr. Grimes executed the UM rejection, either on behalf of the … company or the apparently non-existent partnership between himself and Frank Grimes.” Thus, the court held that a genuine, material issue existed about whether the waiver, though properly completed, was valid. It reversed the trial court’s granting of summary judgment for State Farm and remanded the case for trial.

The Melder case shows Louisiana’s strong policy toward including UM coverage in all auto policies. The significant steps required to waive UM coverage are intended to prevent unintentional or mistaken waivers by policyholders. Even though State Farm followed the requirements diligently, it failed to verify something even more fundamental–whether the person signing the form possessed the legal authority to make a decision about waiving coverage.

Dispute Over Hurricane Katrina Home Repair Shows Role of Appraisal Process in Insurance Settlements.

Published on: June 18, 2011 | By Berniard Law Firm

If a homeowner insures his home and then suffers damage to the structure, the process of making a claim and being paid for the loss can be long and frustrating. Frequently, the insurance company will arrive at its value of the loss and attempt to persuade the homeowner to accept that value, even if it doesn’t reflect the homeowner’s actual costs of repair. In such a case, the homeowner should check his policy for an “appraisal clause.” This provision provides for an alternative method for setting the value of the property damage. An appraisal procedure requires the homeowner to obtain an independent appraiser to survey the damage and assign a value to the loss. Similarly, the insurance company must hire an independent appraiser to perform the same analysis. The two appraisers must petition the court for the appointment of an umpire who will then oversee the negotiation of the settlement based on the two appraisals. Once any two of the parties–the appraisers and/or the umpire–agree as to the value of the loss, the matter is settled.

In Louisiana, like other states, flood insurance policies are underwritten through the National Flood Insurance Program (NFIP) and administered by the Federal Emergency Management Agency (FEMA). The NFIP authorizes private insurance companies to issue policies and handle the claim settlement process. Claims are actually paid by the federal government. FEMA requires that all NFIP flood insurance policies include an appraisal clause.

After their was heavily damaged by flood in Hurricane Katrina, William and Cynthia Dwyer filed a claim with their flood insurer, Fidelity National Property and Casualty Insurance Company. The Fidelity policy was issued through the NFIP. The Dwyers disagreed with Fidelity’s offer of settlement and took the dispute to the District Court for the Eastern District of Louisiana. The court entered judgment for the Dwyers, and on appeal by Fidelity, the Fifth Circuit Court of Appeals vacated the judgment and ordered the parties to submit to the appraisal process as outlined in the policy. The Dwyers and Fidelity sought appointment of an umpire, who then submitted to the district court an appraisal that included the amount of actual damage to the Dwyer home as well as a “mark-up for overhead and profit” intended to cover the cost of a general contractor to make the repairs. Fidelity accepted the umpire’s figure on damages but objected to the addition of the mark-up because the Dwyers had already sold the house and would not have any role in the repair itself. The Fifth Circuit agreed with Fidelity that “the award of overhead and profit was erroneous” and noted that “Fidelity told the district court that absent the improper award of overhead and profit, it agreed with the umpire’s appraisal.” Thus, determining that Fidelity and the umpire were in agreement on the amount of the loss, the court entered judgment ordering Fidelity to pay the Dwyers $1,552.51. This amount represented the umpire’s appraisal amount less the erroneous overhead and profit, the policy deductible, and the amount Fidelity had already paid out to the Dwyers.

The appraisal process seeks to take the potentially emotional settlement of an insurance claim out of the hands of the homeowner and the insurance company and leave the decision to disinterested, expert third parties who have no connection to the outcome. Although the process is generally more cost-effective and expedient than litigation, a homeowner should consult with an experienced attorney to ensure the procedure is properly followed and his rights are protected.

Understanding Class Action Lawsuits in Louisiana

Published on: June 16, 2011 | By Berniard Law Firm

Class actions are a common and popular legal tool for cases involving a large group of people who share the same grievance against a defendant. Specifically, the plaintiffs have to have a real and actual interest in order to join a class action. An issue may arise however, if a plaintiff’s interest is called into question. In particular, whether the plaintiff belongs to the class of persons to whom the law grants the cause of action asserted against a defendant. Essentially, the plaintiff’s have to share the same type of complaint and injury in order to form a proper class action. Many times, defendants will allege that the class action was improperly certified (allowed) in order to invalidate any complaints against them.

In a recent Second Circuit Court of Appeal Case in Louisiana, the court explored the certification of a class action in order to determine whether or not it was proper. The facts of the case include the plaintiff, representing a class of individuals, who all share a grievance against a funeral home, owners of the funeral home, and numerous banks. The gist of their complaint is that the funeral home sold prepaid funeral expenses to the plaintiffs and other putative class members. The owner of the funeral home then deposited their payments into certificates of deposit (COD) with one or more of the banks named as defendants. The bulk of COD’s were under names which included the Funeral Home, followed by either “payable on death,” or “for the benefit of” followed by the name of the individual whose prepaid funeral funds were being held on deposit. The issue became that without presentation of a death certificate as required by Louisiana statute, the law governing prepaid funeral services, and in breach of the banks’ contracts, namely, the certificates of deposit, the funeral home was allowed by the banks to withdraw the funds which they converted and appropriated for their own use. The plaintiffs argue that by accepting the deposits, the defendant banks became commonly liable with the funeral home. Yet, the appellate court is charged with the responsibility to determine whether the class action should be certified, despite the fact the trial court denied the class’s certification.

A class action must have certain definite characteristics. First, the class must be so large as to make individual suits impractical. Second, there must be a legal or factual claim in common between all the plaintiffs involved. Third, the claims or defenses must be typical of the plaintiffs or defendants. Fourth, the representative parties must adequately protect the interest of the class. Further, in many cases, the party seeking certification of a class must also show that common issues between the class and the defendants will predominate the proceedings, as opposed to individual fact-specific conflicts between class members and the defendants and that the class action, instead of individual litigation, is a superior vehicle for resolution of the disputes at hand. Here, the class certification, the plaintiffs sought to certify a class defined as “all individuals from whom the funeral home appropriated and converted funds collected by them for prepayment of funeral expenses.” Additionally, the motion asserted common questions of law and fact including:

Fire Rages After New Iberia Chemical Plant Explosion

Published on: June 14, 2011 | By Berniard Law Firm

With little details available, the residents of New Iberia sit and wait to find out more about an explosion that took place at the Multi-Chem plant. Conflicting reports exist regarding harm caused by the incident, though the most recent release states all plant employees are accounted for and there were no reported injuries.

A 1-5 mile evacuation has taken place with residents encouraged to leave or, at worst, remain inside.

More information will be available on our Personal Injury blog as it becomes available.

The Fifth Circuit Explores a Maritime Dilemma in Barge Wreck

Published on: June 5, 2011 | By Berniard Law Firm

General maritime law holds that there can be no recovery for economic loss absent physical damage to or an invasion of a proprietary interest. The issue in many cases is whether or not any actual damage has occurred. In a recent Fifth Circuit Court of Appeals decision, the court explores this very issue in order to determine whether the plaintiffs damages warranted recovery. Throughout the Mississippi River, refineries and various businesses operate, utilizing the river’s shipping channels to transport their goods and perform many of their business operations. However, if the river is blocked in any way, it hinders their production and hence, their ability to maintain scheduling and perform necessary tasks. The mere absence of access does not constitute physical damage, yet, it does constitute an injury to one’s proprietary interests. Thus, the court has to make the determination of whether or not the injured party was injured and in what way to make a ruling on any potential recovery.

The facts of the recent maritime case involve a plaintiff business who owns and operates a hydroelectric station on a privately owned channel from the Mississippi River. Near the plaintiffs property is the Mississippi River Flood Control Structures at Old River in Concordia Parish, Louisiana. The River Flood Control Station is made up of the intake channel which diverts water from the Mississippi River, a dam structure which contains the turbines, generators, and other machinery of the station, and the outflow channel which directs water from the dam to the Old River/red River/Atchafalaya River. The plaintiff’s owned the station and the surrounding property necessary for their business operations. On December 24, 2007 two tows operated by the defendant and a barge company collided on the Mississippi River approximately 2.5 miles upriver from the plaintiff’s intake channel. As a result of the collision, several barges broke free from the tow then drifted downriver into the intake channel of the plaintiff’s facility and became grounded on the east bank of the intake channel, lodging against the station. The physical damage may have resulted from one of the barges that had become lodged on the station, this physical presence obstructed the intake channel, which provided water to the turbine and generators of the plaintiff’s electric power generation facility. The presence of the barge forced the plaintiff to reduce flow of water in the intake channel into the turbine and thus, its output of electricity to prevent the barge from sinking and to allow safe access to the barge for its removal. After six hours without any progress, the plaintiff’s had to shut down six turbines and reduce the remaining two to minimum power because of the decreased flow of water directed to the turbines from the intake channel. In order to remedy the situation, a barge crane and a vessel were sent to enter the intake channel, offload the grounded barge’s cargo, tow the damaged barge away from the station where a larger barge crane could unload the barge’s cargo, so it could safely re-enter the Mississippi River. The entire process took almost ten hours to complete.

The plaintiff facility filed suit in a Louisiana state court seeking damages for the value of the electrical power it was unable to generate due to the physical presence and intrusion of the grounded barge. However, the trial court granted the defendant’s motion for summary judgment, holding that no physical damage was evidenced and thus, under general maritime law, no recovery was available. Upon appeal, the fifth circuit explored the general maritime law in order to determine whether or not the summary judgment holding was correct. The appropriate legal rule to analyze the initial claim was to apply the Robins rule. The rule of Robins carries numerous legal meanings, including: refusing recovery for negligent interference with “contractual rights,” as denying recovery for economic loss if that loss resulted from physical damage to the property of another. The rule’s goal was to exclude indirect economic repercussions, which can be widespread and open ended. Here, the defendants argued that the plaintiff suffered no physical harm. However, the appellate court agreed with the plaintiff’s, the mere presence of the barge in the intake channel, which was a functional part of the plaintiff’s facility, interfered with the unobstructed flow of water in the channel, impairing the ability of the facility to operate as designed. Thus, the harm qualifies as damage to its proprietary interests as general maritime law indicates warrants recovery. After all, the plaintiff’s had to actually turn off half of their business facilities machinery and reduce the power to the remaining two in order to allow the defendants the safe and speedy removal of their grounded barge. Without the plaintiff’s mitigating acts (turning off the majority of their machinery) they would have ru the risk of incurring physical damage their entire hydroelectric station.

The Fifth Circuit held that based on the fact that the defendants barge entered the plaintiff’s privately owned hydroelectric facility, causing the plaintiff’s physical damage to their property and invasion of their proprietary interest, they reversed the judgment of the district court dismissing its claims on summary judgment and remanded. this case illustrates that maritime law is a difficult and often complicated legal journey. In order to effectively protect your legal rights one should hire a competent and effective attorney.