Articles Posted in Property Rights

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Insurance can be a tricky subject for the average consumer. There is a lot of paperwork, confusing terms, and many people do not understand what their insurance actually covers. However, the easiest way to combat the confusion is to take the time to read through your insurance policy. Oftentimes, the answers to all of your questions can be found buried deep within your policy. You just have to know where to look.

It is important to note that insurance companies will strictly follow and enforce the written policy, so it is vital that you are familiar with your plan. You should get a complete copy of the plan and keep it in your records in case you need it in the future. Pay particular attention to the four major sections. The four sections include declarations, conditions, insuring agreements, and exclusions.

The declarations section states who is being insured, what is covered, policy limits, and the effective dates of coverage. The correct name of the insurance company will also be found in this section. The timing of the coverage is very important. If the policy says that it is in effect January 1, then it does not apply if you have an accident a few hours sooner. For example, one man was rushed the hospital with a medical emergency, but was denied coverage by his insurance company because his hospital visit was merely five hours before his plan activated.

The next piece of the policy is the conditions section. This part includes all of the things that you must do in order to be insured. There may also be a conditions section for each coverage part (such as liability, collision, etc.). These conditions are important because they may also limit what the insurance company will cover and your ability to file a claim. A common condition, for example, is if you are going to file suit then you must file within a certain amount of time. Definitions for some of the terms of the policy may also be found in this section if they do not have their own section within the policy.

The third part of the policy is the insuring agreements section. This section states specifically what the policy will actually cover. Insuring agreements is also the most important section of your policy, so read this part carefully!

Lastly, the final section is the exclusions section. The exclusion section takes away or limits some of the insuring agreements coverage. It is vital that you read both of these sections together because you may think something should be covered based on the insuring agreements section, but actually, it is not covered because of the exclusions section.

A case in the Eastern District of Louisiana gives a good example of the importance of reading through your policy and knowing your plan well. An individual was in a car accident with a company vehicle. At the time of the accident, the individual who ran the company was insured under his own name in the amount of $300,000. Four months after the accident, the insurance was extended to $1 million and the policy changed to the company name. The victim of the accident then sued claiming that the insurance company had fraudulently led the victim to believe that the insurance coverage was only $300,000, not $1 million.

Unfortunately, the victim did not read the policy very well. The court ruled that the policy clearly stated the amount that it covered and who it covered. There was actually no fraud involved. It was just a matter of reading the policy. The timing of the accident was also important. At the time of the accident, the coverage was for $300,000, not $1 million, so the accident was only covered for up to $300,000.

Insurance coverage is very complicated and it is too important to be misunderstood. Coverage could be the determining factor in whether you have to pay a big bill on your own or with help from your insurance company.

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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.

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Construction worksite accidents are common occurrences in New Orleans and Louisiana. When a lawsuit is filed seeking compensation for these workplace injuries, issues often arise concerning the multiple companies involved in the construction project and their insurance companies. Chief amongst these concerns are the duty to defend and indemnification.

The duty to defend refers to an insurance company’s obligation to defend an insured against claims made under a liability insurance policy. Though this may sound straight forward, in the construction context this theory can become complex. For example, if a construction company or contractor takes out insurance, the project’s other general and subcontractors may or may not be covered under that same policy depending on the wording of the insurance policy. In many cases, general and subcontractors will be covered as an additional insured under the insurance contract. If thi is the case, then the facts of the underlying claim must sufficiently allege liability in order for the duty to defend to engage.

These issues were closely examined recently by the Court of Appeals for the Fifth Circuit when a man injured at a construction site filed a lawsuit against the general contractor, but not his employer that was the subcontractor. The general contractor sought to have the subcontractor’s insurance company defend them as an additional insured under the subcontractor’s policy. After analyzing the policy, the court found that the general contractor was an additional insured under the subcontractor’s policy, but nevertheless held that the insurance company had no duty to defend the general contractor. The reasoning behind this finding was that neither the injured employee nor his employer, the subcontractor, where alleged in the complaint to have been responsible for the injury. Since the contractor could only seek the insurance company’s duty to defend through negligence on behalf of those directly insured, namely the subcontractor or the general employee, then that duty to d efend was not induced.

The second issue in these complex insurance cases is indemnification. If a company is covered under an insurance policy, then if that company is forced to pay liability damages in a lawsuit, the insurance company will essentially reimburse the company for those damages. However, legal costs associated with defending the claim fall under the duty to defend, not indemnification.

Since the duty to defend and the duty to indemnify are separate, it is possible that an insurance company will not have to defend an additional insured but must still indemnify that company. This is what happened in the construction injury case mentioned above. The district court found that the employee was at least one percent responsible for his injury, causing the insurance to be invoked. The Court of Appeals upheld this finding as the insurance company did not challenge that ruling, but rather challenged the finding that the contractor was an additional insured.

Anytime a business or individual takes on construction work, it is important to know whether insurance coverage is provided and, if so, by whom. This will ensure that any injuries, physical, emotional or financial, will be compensated. A failure in determining insurance coverage can lead to a long, drawn out claims process that can leave an individual or business emotionally and financially drained.

Insurance claims are a necessity in order to protect businesses’ and workers’ interests. Yet, disputes over insurance coverage can be lengthy and convoluted. These complexities require the expertise of an experienced, competent attorney.

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A summary judgment is rendered when a trial court decides that there are no genuine issues of material fact that need to be determined. “Manifestly erroneous” is the high standard under which summary judgments are reversed on appeal. Summary judgments are cheaper and less time consuming than full blown trials; they are a means toward the end of judicial expediency, a goal that becomes increasingly important to our judicial system over time. Despite the importance of this procedural device, many cases do not call for summary judgment. Sometimes trial courts grant full or partial summary judgments in error and are reversed. That is what occurred in the case of Jagneux v. Frohn, which you can read here.

The defendants in this case convinced the trial court that no issues of fact existed that required litigating. Their legal journey was not over though due to the plaintiff’s appeal. The court of appeals applied the standard promulgated by the Louisiana Supreme Court. This Louisiana Supreme Court’s standard initially places the burden of proof on the party that is moving for a summary judgment. The moving party must prove that one or more elements of the adverse party’s claim or defense lacks any factual support on the record so far. The opposing party is then granted an opportunity to prove that there have been facts alleged that support that party’s position. At the time of summary judgment the record is sparse so a granting of summary judgment represents a finding by the court that no facts supporting a particular party’s, in this case the plaintiff’s, position.

The appellate court reversed the trial court’s decision in this case because it found that the issue of whether Mrs. Kling, a defendant in this case, was the driver of the white SUV at the time that it, at least partially, caused the accident at issue in this case. Because there was conflicting evidence about where Mrs. Kling was and whether or not she was actually in control of the car at the time of the accident, summary judgment was not the right choice in this case. The trial court is not to weigh the merits of the case when addressing summary judgment. Summary judgment is only appropriate in cases where no potentially meritorious case is presented by one of the parties.

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The Class Action Fairness Act of 2005 was passed in an effort to prevent class action lawsuit abuse. CAFA changed the practice of class action litigation in state and federal courts. This change was accomplished by CAFA’s jurisdictional alterations in both the diversity and removal components of the traditional framework of class action practice, i.e. Rule 23 of the Federal Rules of Civil Procedure.

In Williams v Homeland Insurance, the Fifth Circuit applied the “local controversy” exception of CAFA to the facts of the case, determining that a class arbitration is not, nor does it preclude a class action. Williams provides a lesson in the application of the elements of CAFA and an understanding of CAFA’s features. The decision also demonstrates yet another unique feature of Louisiana law that distinguishes it from the law of all of the other jurisdictions in the United States: the Louisiana Direct Action Statute.

CAFA changed the rules for federal diversity jurisdiction and removal. The Act enables large class action law suits to be filed in and/or removed to federal court. CAFA changed the numerosity requirement of Rule 23 from by raising the requirement from 40 class members to more than 100 class members; the citizenship requirement of Rule 23 by relaxing the diversity criteria, i.e. any class member must be diverse from any defendant; and the amount-in-controversy (from one named plaintiff having a claim of more than $75,000) to the total of $5 million. In addition, CAFA incorporated looser removal rules: in diversity cases any defendant can remove the case (including in-state defendants); any defendant can remove without the unanimous consent of the other defendants; there is no 1 year limit on the timing for removal of the case to another court’s jurisdiction; and the decision to grant or deny a remand is subject to appellate review.

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On behalf of the Berniard Law Firm, we hope that all of our friends and followers have had a relaxing and restful holiday. Posting will resume on Tuesday

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On June 27, 2008, Betty Jean Russell went to see her eye doctor at Eye Associates of Northeast Louisiana. Russell, 78, who required a wheelchair to get around, was driven to the apppointment by her granddaughter, Ashley Dixon. While Dixon remained in the waiting room, an Eye Associates employee wheeled Russell back to an examination room. There, Russell was required to move to one of the facility’s wheelchairs in order to access one of the examination machines. Then, in order for her to look into a different machine, Russell was required to return to her own wheelchair. In the process of moving back to her own wheelchair unassisted, Russell fell, injuring her shoulder and breaking her thighbone. The Eye Associates employees did not call an ambulance, but rather helped Russell off the floor and back into her wheelchair. Dixon immediately drove her grandmother to the ER where Russell underwent surgery to set her broken leg. Although Russell was able to walk from time to time prior to her injuries, she was no longer able to walk at all. Russell filed suit against Eye Associates and Hanover Insurance Co., its general liability insurer. She also filed a petition for a medical review panel under the Louisiana Medical Malpractice Act. The Louisiana Medical Mutual Insurance Company (LAMMICO), the professional liability insurer for Eye Associates, intervened in the action. Hanover filed a motion for summary judgment arguing that Russell was injured while Eye Associates employees were delivering professional services, and therefore Russell’s claim was one of medical malpractice. LAMMICO, on the other hand, argued in its own motion for summary judgment that Russell’s fall was “not treatment-related” or “caused by a dereliction of professional skill,” which meant that LAMMICO was not liable for coverage for her injuries.

The trial court held a hearing on the motions for summary judgment, during which it determined that this was not a medical malpractice case. The court granted summary judgment in favor of LAMMICO and denied Hanover’s motion. Hanover appealed on the basis that “the undisputed facts
and evidence establish that the plaintiff’s injuries occurred as a result of a ‘medical incident,’ as defined by the LAMMICO policy.” On appeal, the Second Circuit reviewed that “[w]hen determining whether a policy affords coverage for an incident, the insured bears the burden of proving that the incident falls within the policy’s terms.” Furthermore, “summary judgment declaring a lack of coverage under an insurance policy may not be rendered unless there is no reasonable interpretation of the policy, when applied to the undisputed material facts shown by the evidence supporting the motion, under which coverage could be afforded.” The court noted that the definition of malpractice under Louisiana law includes “unintentional torts by healthcare providers and their employees based on health care or professional services rendered.” The LAMMICO policy maintained by Eye Associates provided professional liability coverage for “incidents arising out of the rendering or failure to render professional services.” The policy defined professional services to include treatment, diagnosis, rendering medical opinions or advice, or performing management or administrative duties by Eye Associates employees. LAMMICO argued that no doctor (or other health care provider) was involved in the accident, as “no assessment of [Russell’s] condition had taken place” at the time of her fall. However, the court noted that Russell testified that the Eye Associates employee involved in her accident had already used one type of machine to examine her eyes and was attempting to
position her in order to use another machine; this move from one wheelchari to another was necessary in order to continue Russell’s eye examination. This point, in the court’s view, created “a genuine issue of material fact as to whether the accident constitutes a medical incident which occurred in connection with the rendering of professional services, satisfying the statutory definition of malpractice and meeting the terms of the LAMMICO policy for coverage.” Accordingly, the court found that the trial judge erred in granting summary judgment in favor of LAMMICO. It reversed the trial court’s judgment an remanded the case for further proceedings.

This case shows how seemingly simple claims can turn complex in litigation. Much of the Second Circuit’s decision rested on a review of the insurance policies themselves, as contracts, to determine the potential for coverage for Russell’s claims. As with any personal injury case, it was essential for the plaintiff to retain experienced counsel to ensure that all potential defendants were brought into the litigation.

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Whether someone is working at the time of an accident can be difficult to tell, and it affects which insurance coverage applies. Harry T. Kemp was an independent contractor driving a Peterbilt tractor pulling a 50-foot flatbed trailer when the truck collided with an automobile driven by Lewis Jurey in East Baton Rouge Parish. Kemp had picked up his trailer from Baker Metal Works, which had completed repairs on the trailer. The Louisiana Court of Appeal decided 2-1 in Jurey v. Kemp (La. Ct. App. 1 Cir. 9/20/11) that Kemp was not working when the accident occurred. That affected which insurance policy covered the injuries received by Jurey and his two passengers.

Independent contractors with trucking companies may be covered by the company’s insurance when the driver is performing transportation services. When the independent contractor is not, non-trucking liability, or “bobtail,” insurance is needed to fill a gap in coverage. Liberty Mutual Fire Insurance Co. insured Dallas & Mavis Specialized Carrier Co., LLC (D&M), which had hired Kemp as an independent contractor. The Nineteenth Judicial District Court agreed with Liberty Mutual that the policy did not cover Kemp because he was “on his own time.” Instead, Kemp’s bobtail coverage from Great American Insurance Co. should cover the accident.

D&M’s policy would insure the accident only if the semi-tractor, leased to D&M, was being used for business purposes when the accident occurred. The reason for Kemp’s trip was decisive to determine coverage. Kemp’s lease with D&M required Kemp to “maintain the Equipment in proper operating condition and in full compliance with applicable government regulations.” On January 17, 2008, Kemp was picking up the trailer to make room at the Baker Metal Works. Kemp had requested the metal works replace some of the trailer’s decking boards and weld a door to make it easier to reach the wiring for lights and air lines for brakes. D&M did not request this work and did not know about it. Kemp did not ask for reimbursement, and D&M did not pay him for the trip. Nor was Kemp performing any transportation services for D&M or on standby.

Previous cases have established the outlines for when an independent truck driver is working. Driving home after a delivery is personal because it is after work has ended. When the company asks its independent contractor to remain in an area to pick up a load, the driver is working. Similarly, driving to a distant motel at night for rest to be ready to haul a load is work related.

Whether Kemp was on business depended on whether the lease with D&M required these repairs. Neither D&M nor Department of Transportation regulations required the repairs on the decking boards or creation of a door accessing the trailer’s wiring and air hoses. It would be different if regulations explicitly required these repairs. Instead, the repairs were for Kemp’s convenience. Because D&M did not require the repairs, it was not work related and D&M’s insurance policy did not cover him. Kemp’s bobtail policy was the appropriate insurer for the accident.

Judge Jewel E. “Duke” Welch disagreed. By his reasoning, the lease gave D&M “exclusive possession, control, and use of the leased motor vehicle for the duration of the lease agreement.” He interpreted “use ‘for’ D&M whenever that use furthered D&M’s business interests and was not a purely personal use of the covered vehicle by Kemp.” This may be a broader standard than previous cases allowed. The repairs may have made work easier for Kemp, but they also may have served D&M’s business interests. Kemp was maintaining the leased equipment for trucking-related purposes. Under the lease, he was obligated to maintain the trailer and make sure it passed periodic safety inspections. Kemp did not get reimbursed by D&M for any maintenance work because maintenance was his responsibility. Judge Welch would have reversed the district court.

Independent contractors are common in today’s flexible business world. In these business relationships, the line between work and free time is hazier than with traditional employment. More factors need to be taken into account. A lawyer skilled in determining potential liability will be able to distinguish the boundary between the individual’s and the company’s liability and which insurance policy should pay.

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The Berniard Law Firm would like to wish everyone a Happy Holiday.

Regular posting will resume in 2012! Have a happy, and SAFE, holiday season!

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Uninsured/Underinsured Motorist (UM) coverage is designed to protect a policyholder against injury or loss inflicted by another driver who has inadequate insurance or no insurance coverage at all. Louisiana statute provides that “an insurer owes to his insured a duty of good faith and fair dealing,” which includes fairly and promptly settling claims with the insured. La. R.S. 22:1220. An insurer who breaches this duty is liable for damages that result from the breach. In order to establish a cause of action for penalties and or attorney fees, a plaintiff must show that (1) the insurer received sufficient proof the of loss; (2) the insurer failed to tender payment within 30 days; and (3) the insurer’s failure to pay is “arbitrary, capricious, or without probable cause.” La. R.S. 22:658. Louisiana courts have held that “arbitrary, capricious, or without probable cause” is “synonymous with ‘vexatious,’” and that a “vexatious refusal to pay” means it is “unjustified, without reasonable or probable cause or excuse.” The courts impose penalties on an insurer when the facts of the situation “negate probable cause for nonpayment,” but tend to avoid them when an insurer can point to “a reasonable basis to defend the claim and acts in good-faith reliance on that defense.” Pointedly, it is well settled that “bad faith should not be inferred from an insurer’s failure to pay within the statutory time limits when … reasonable doubt exists.” Instead, penalties are appropriate when the insurer refuses to tender a reasonable payment in an amount over which “reasonable minds could not differ.”

Louisiana’s Third Circuit Court of Appeal recently applied this jurisprudence in the case of Mitte v. Progressive Security Insurance Co.. On April 20, 2004, Dyna Mitte was severely injured when her vehicle was hit by an underinsured driver in Lafayette Parish. Mitte had UM coverage through Progressive and filed a claim after receiving only $32,000 from the other driver’s insurance company. Progressive made pre-trial tenders to Mitte that amounted to $393,624. Mitte then filed suit seeking penalties and attorney fees on the basis of those tenders that she alleged were “inadequate and untimely.” A jury found that the tenders made by Progressive were not adequate and awarded Mitte $1.6 million. However, the jury declined to award her penalties and attorney fees. Mitte appealed, arguing that the jury erred in failing to find that Progressive was arbitrary or capricious.

Mitte’s assignment of error was based in part on her argument that because the jury awarded a large sum compared to the tenders made by Progressive, Progressive was necessarily arbitrary or capricious. The court rejected this argument, stating that Progressive was not required to “meet some percentage of the total claim awarded [Mitte] to avoid penalties and attorney fees.” Rather, Progressive “needed to tender only a figure over which reasonable minds could not differ.” Further, the record included several factual disputes described by Progressive’s adjuster at trial. For instance, there was uncertainty over whether Mitte made a claim for lost earning capacity and also as to whether a gastric bypass surgery was related to the auto accident. Thus, although the jury ultimately concluded that Progressive undervalued Mitte’s general damages “by a fairly large extent,” there was a reasonable factual basis for the jury’s finding that Progressive was neither arbitrary nor capricious. Because the court could not find that the jury’s determination was manifestly erroneous, it affirmed the trial court’s judgment.

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