Settlement

Environmental Damage Appeal Focuses on Mineral Lease, Oil

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

In January, the Louisiana Supreme Court considered an appeal from the Vermilion Parish School Board. The appeal centered on environmental damage to land that was subject to a mineral lease. The mineral lease allowed those leasing the land to look for and remove any mineral, including oil, that they found on the land. However, once they did this, they left the land in a state that was environmentally hazardous.

Louisiana has special procedures for dealing with restoring land so that we do not harm the environment, specifically when removing oil. The remediation of the land, this restoring process, was one of the major issues in the Vermilion Parish case. The defendants included Union Oil Company of California, Union Exploration Partners, Carrollton Resources, LLC, Chevron USA, Inc., and Chevron Midcontinent, L.P.

The Court faced two major issues in this case. The first was whether the parties could receive damages in excess of the amount it would take to restore the property, thereby correcting the environmental damage. The Court determined that the language of the legislation (La. R.S. 30:29) was clear and that the parties could receive a larger amount.

Under Louisiana law, when a case arises where a party is required to correct an environmental wrong, the funds are deposited into the court’s registry. The court will then disperse the funds to repair the land. This is a relatively new development because this act was put into effect in 2006. The legislature was concerned that parties who received funds to help correct the damage done to their land would not use it for that purpose if they were not so required. Leaving property that is damaged could create serious issues for the health, safety, and welfare of the surrounding population.

The legislation focuses on the role of the fact finder in determining whether there was environmental damage, and how much that environmental damage will cost to fix. As such, the court determined that the case should continue so that the fact finder could make those determinations.

The second issue was whether Chevron should be dismissed from the case. According to the facts, Union Oil had the mineral lease first, but Chevron subsequently acquired Union Oil and all of their assets, including the lease. As such, Chevron became responsible for any environmental damage that Union Oil may have caused. Chevron admitted responsibility initially, but then denied that they should be legally responsible later.

Chevron explained that while Chevron Corp. owns both Chevron USA and Union Oil Company of California, the two sections do not overlap. That is, Union Oil had $18 billion in assets, and should they be found liable for environmental damage, the amount that they will pay will come from their assets and not Chevron’s. Chevron explained that those assets were never transferred out of Union Oil, so Union Oil remained somewhat independent even after Chevron acquired them.

Therefore, Chevron argued that Chevron USA should be removed from the case so that those assets are not adversely affected. Nonetheless, Frank Soler, the senior liaison in the subsidiary governance unit of the corporate governance department for Chevron Corp. admitted that Union Oil does not have any employees and there may be service agreements between the two sections for day-to-day activities.

The Plaintiffs in the case were only allowed to discover a very limited amount of information from Chevron regarding this case. The court restricted the information until they determined whether or not Chevron should remain in the case a defendant. As such, many facts remained unknown regarding the relationship between Chevron and Union Oil. Therefore, the court determined that Plaintiffs should be allowed to gather more information and the case should continue.

Both of these issues failed the summary judgment test. The test is whether there is an absence of material facts in the case. If there is such an absence, then the court will only determine the questions of law and one side will receive a summary judgment. In this case, however, the court determined that there may be facts in dispute because they did not have enough information; therefore, the case continued.

Uninsured / Underinsured Accident Case Explores UM Coverage Concepts

Published on: October 1, 2013 | By Berniard Law Firm

Angela Terrell was driving her employer’s van when she was injured in a vehicle collision on U.S. Highway 190 in Pointe Coupee Parish on Mach 5th of 2010. Ms. Terrell filed a lawsuit against the other driver and his insurance provider for damages and later amended her lawsuit to also include her employer’s van’s insurance provider, ACE, to force ACE to cover any of her damages that were in excess of the other driver’s insurance policy. In Terrell v. Fontenot the Louisiana Court of Appeals ruled that ACE did not need to cover any excess damages because the van’s policy holder properly rejected the uninsured/underinsured provision of the insurance agreement.

Insurance providers typically offer their customers uninsured or underinsured insurance coverage, also called UM coverage. If an insurance provider provides UM coverage to its client the insurance provider may need to pay for any damages the customer sustained in a vehicle accident if the other driver was both at fault and uninsured or underinsured. UM coverage in an individual’s insurance policy can work as a safeguard against the individual having to pay for his own damages out-of-pocket if an uninsured or underinsured driver causes an accident with the individual.

Louisiana does not require a driver to have UM coverage, but a handful of states do. Because Louisiana does have a strong public policy favoring UM coverage, UM coverage is implied in automobile insurance policies, even if UM coverage is not explicitly listed in the insurance contract. The only time in Louisiana that UM coverage will not be read into an automobile insurance policy is when the customer has clearly and unambiguously rejected the coverage. The insurance provider has the burden of proof to prove that the rejection was sufficiently clear.

The court in Duncan v. U.S.A.A. Ins. Co. established the criteria for properly rejecting UM coverage: (1) initialing the rejection of UM coverage; (2) filling in the amount of coverage selected for each person and accident if the a limit lower than the policy limit is chosen; (3) printing the name of the insured or legal representative; (4) signing the corresponding signature; (5) filling in the policy number; and (6) filling in the date.

Ms. Terrell later amended her suit to also include the van’s insurance provider, ACE, so that if the other driver was later found to be at fault and did not have sufficient cash or insurance to pay all of her damages then ACE, through its UM coverage, would become liable for any remaining damages. The crux of the case, therefore, is whether the van’s ACE insurance policy includes UM coverage.

The court sided with ACE insurance in holding that the van’s insurance policy did not include UM coverage because the owner of the van properly rejected ACE’s UM coverage option. The owner of the van that Ms. Terrell was driving was a corporation— Professional Transportation, Inc. (PTI), a company that leased the vehicle from another owner.

The owner of the van, PTI, is a corporation and is unable to act on its own behalf. Instead PTI acts on its own behalf as all corporations do: by authorizing individuals to act on behalf of the corporation. That’s exactly what happened here. The owner of PTI verbally authorized one of its employees to obtain insurance and sign insurance forms. The court agreed with ACE that because that employee clearly and unambiguously rejected the van’s UM coverage ACE is not responsible for any UM insurance.

Ms. Terrell argued that although PTI’s employee rejected the UM coverage according to the above criteria for proper rejection, the rejection was invalid because PTI never properly authorized the employee to obtain insurance on its behalf. The court sided against Ms. Terrell because Louisiana’s Revised Statute 22:1295 makes clear that the insured or his legal representative can reject UM coverage. Here PTI’s employee was PTI’s legal representative, and Ms. Terrell was unable to convince the court that PTI had to do more than verbally authorize its employee to act on its behalf.

Because the owner of the van properly rejected the UM coverage, Ms. Terrell faces an uphill challenge if the Defendant is uninsured or underinsured and unable to pay all of her damages.

Court Finds Waiver of Uninsured/Underinsured Motorist Coverage

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

Although the law requires that all motorists obtain liability coverage, when pressed with financial difficulty and confronted with rising insurance premiums, some individuals voluntarily accept the risk of large fines and choose to forego liability insurance. Despite all attempts at exercising reasonable care, a fraction of these drivers inevitably end up causing accidents. And when they do, the lack of resources that led them to risk driving without insurance becomes the problem of the other driver who cannot recover for personal injury or property damage resulting from the accident.

This scenario led many states, Louisiana among them, to enact laws designed to encourage motorists to obtain Uninsured/Underinsured Motorist Coverage. The State of Louisiana is among the most aggressive in encouraging uninsured motorist coverage. Louisiana law requires that all policies contain underinsured/uninsured motorist coverage sufficient to pay damages for bodily injuries resulting from an accident. This is known as Uninsured/Underinsured Motorist Bodily Injury Coverage (“UMBI”). In addition to the required UMBI coverage, insurers offer Uninsured/Underinsured Motorist Property Damage Coverage (“UMPD”).

Under Louisiana law, therefore, all policies implicitly contain UMBI coverage unless the insured specifically “rejects” such coverage pursuant to a state-prescribed form. Even in states permitting the insurer to draft the UMBI waiver form, courts have developed a policy of construing these documents strictly against the drafter, in order to promote the public policy of obtaining such coverage.

Boat Injury Case Highlights Watercraft and Coverage Exclusions (Pt 2)

Published on: September 7, 2013 | By Berniard Law Firm

In 2008, three men were passengers on a chartered fishing boat that collided with a utility boat. The fishing boat’s insurance company was St. Paul Fire and the utility boat’s insurance company was Steadfast. Harvest Oil owned the utility boat. Normally, the insurance companies would fight about who was at fault and may eventually make it to court. However, this case was more complicated because the men in the fishing boat did not own the boat, and the owner of the utility boat filed for bankruptcy shortly after the passengers drug them into the lawsuit as a third party. The issue of waiver of a coverage defense while the insured is in a bankruptcy proceeding is one that has not been considered in Louisiana previously.

Harvest filed for bankruptcy in 2009 and the passengers in the accident filed in its bankruptcy proceeding as a creditor for “an amount to be determined.” Where an insured filed for bankruptcy, it was very smart of the injured party to file as a creditor because that helps protect their interest if the insurance company refuses to pay Harvest’s liability coverage.

When an individual or company files for bankruptcy, federal law provides an automatic stay on any other litigation proceedings. That means that all other litigation involving the debtor must be paused until the bankruptcy proceeding is closed. Therefore, Harvest dropped out of the insurance lawsuit, and the passengers had to sue the insurance company alone.

As a result, when Steadfast asserted the watercraft exclusion, that meant that the passengers could no longer sue the insurance company and had to sue the insured himself. Since the insured was in bankruptcy proceedings, there was not only a delay in the litigation because of the stay, but there was also a very real chance that the injured parties may not get any money.

When an individual goes into a bankruptcy proceeding, they have to pay off their creditors in a certain order. First, the secured creditors will receive payment. A secured creditor has something that they use as collateral for the loan or credit that they extended to the debtor. For example, if you have an automotive loan, your car is likely your collateral or security. If you file bankruptcy and cannot pay for your car loan, then, with a few exceptions, they will likely come take your car. When a creditor is unsecured, however, they cannot take anything and must share with all of your other unsecured creditors. That likely means that they will not get paid the entire debt that they are owed, and will usually only receive a small portion of their money back.

A judgment is an unsecured debt, and because the passengers filed so late, they are likely at the back end of the line of creditors in the bankruptcy proceeding. Louisiana law allows those with liability coverage to sue the insurer directly when the insured has been removed for bankruptcy proceedings under the Louisiana Direct Action statute. So, if the insurance company would have covered the accident, then the insurance company would have paid them directly instead of going through the insured. This is because liability coverage in Louisiana is not the property of the insured; it is the property of whoever the injured party was. Other types of insurance coverage, such as collision, for example, would still be the property of the insured and would be included in the bankruptcy proceedings. Where the insurance coverage would be a property of the estate, then the stay that applies to the insured would also apply to the insurer. However, that is not the case here because the liability coverage is not property of the insured.

Once the court decided the reservation of rights and waiver issues, then it questioned how those decisions were affect the bankruptcy proceeding. The court considered claim and issue preclusion. Preclusion in civil cases is a lot like the rule against double jeopardy in criminal cases; the idea is that you cannot keep taking someone back to court for the same offenses over and over again.

Claim preclusion does not allow the same parties or parities that are in privity, or connected in some way, to try the same claim or cause of action after a court of competent jurisdiction has rendered a final verdict. If the claim was litigated to completion, then it cannot be litigated again. It is sometimes difficult to determine if parties are in privity, however. Usually these relationships are based on a connection so strong that liability of one would normally be the liability of another such as in employee and employer relationships. An insurance company sued under the Louisiana Direct Action statute could be an example, but only if the insured’s and the insurer’s interests are aligned. In this case, because the insurer is asserting a coverage defense, then their interests are not aligned and they are not in privity. Therefore, claim preclusion does not affect the bankruptcy suit.

Issue preclusion is virtually the same as claim preclusion except that it applies to only one issue in the lawsuit instead of the entire case. The issue still needs to be completely decided by a court of competent jurisdiction, however. It also requires that the parties be the same, but there is no privity exception. Since the parties will not be the same in the bankruptcy proceeding, issue preclusion has no effect on the bankruptcy proceeding either.

The law overlaps occasionally and can result in some confusing and interesting results. You need an experienced attorney to help you navigate the legal waters.

Experts a Valuable Resource in Hurricane Damage Insurance Litigation

Published on: August 19, 2013 | By Berniard Law Firm

Years after Hurricane Rita, which hit in September 2005, those who have had their homes damaged are still dealing with cleaning up the wreckage and rebuilding. Litigation involving insurance companies is still particularly prominent. One couple from Lake Charles, Louisiana knows about this type of litigation all too well.

The couple had homeowners insurance through State Farm and made a claim for damage to their home as result of the storm. State Farm paid them for the damages and they began to rebuild. However, after the claims were settled, the couple found that significant damage to the home’s rafters in the attic. An adjuster came right over and paid the couple for damage to three windows. The rafters, on the other hand, were a different question. There was a separation between the center beam and the rafters that connected to the center beam to support the roof; the center beam was essential to the strength and integrity of the home’s overall structure. State Farm explained that the couple needed to have the opinion of an engineer to support their claim for damage to the rafters.

In Louisiana, like many other states, lay people are generally not allowed to offer their opinions at trial. Instead, they are supposed to supply facts and the jury or judge is supposed to provide their opinion, resulting in the outcome of the trial. The witness should not substitute their opinion for that of the factfinder. However, if the witness is certified as an expert in a particular area, then they can give their opinion to the court.

Testimony of expert witnesses is particularly useful in highly technical trials. For example, if an individual is suing for a personal injury, it may be helpful to have a doctor come in to explain the injury and state how he or she thinks the plaintiff acquired the injury. If you can only acquire the injury a certain way, then the fact finder should know that information so they can provide an accurate final verdict.

In this case, the couple had their contractor come in to testify. Their contractor built the home and testified as to his opinion of how the damage occurred. He was a valuable witness because he could tell the judge that when he built the home, the center beam and rafters were not separated as they are now. He explained that if they were separated like that, then the house would not have been up to code and the couple could not have lived there.

The couple also employed an engineer to testify at the trial regarding the cause of the split in the rafters. The engineer looked at the house after the storm and, using his experience, explained that only extremely high winds could have created that kind of damage in the time between when the house was built and shortly after Hurricane Rita hit. He also stated that the home’s structure would have continued to get worse if the attic frame was not properly restored.

State Farm argued that the contractor was not an appropriate expert because he was not trained to be an expert regarding causation of the movement in the rafters. Because he was not an engineer, he could not compute the effect of the wind speed on the house nearly as well as an engineer could. However, State Farm did not like the engineer that the couple used either. In fact, they argued, the contractor did not even use the correct wind speed when he calculated the effect of the wind, so his testimony should be entirely discredited.

The court determined that both the contractor’s and the engineer’s testimony would remain in evidence. First, it concluded that the contractor was not retained as an expert for the trial, so he did not need to be qualified as an expert. Instead, he spoke about the before and after affects regarding the rafters. Louisiana law allows witnesses who are not experts to testify about their inferences and opinions if they are “rationally based upon the perception of the witness and helpful to a clear understanding of [the] testimony or determination of the fact at issue.” In addition, the court kept the engineer’s testimony because they determined that even though he had used the incorrect wind speed in his calculations, the correct wind speed would not have changed the outcome of his opinion.

Witnesses can make or break a case, and expert witnesses are particularly important to explain technical concepts that the average person may not understand. Those technical concepts are usually essential to the case.

Dispute With Former Attorney Provides Example of Appeal Process

Published on: August 5, 2013 | By Berniard Law Firm

Disputes involving attorneys can be inherently complicated and require a significant amount of legal wrangling to settle. The issue at hand in this post comes from a case heard in the Court of Appeal for the Fourth Circuit of Louisiana. The plaintiffs, Jill and Claud Brown, brought a case against their attorney Mr. Lehman. Mr. Lehman represented the Browns in a case to recover damages suffered from Hurricane Katrina but subsequently withdrew from the case with the court’s permission on July 23, 2009.

In the spring of the next year Mr. Lehman filed a “motion to set fees” requesting the Browns to pay him legal fees. Although the lower court granted Mr. Lehman a large percentage of the settlement received by the Browns amounting to $12,300, the Court of Appeals reversed that decision because Mr. Lehman had withdrawn from the case and failed to first file a motion to intervene (a fact the trial court was not aware was necessary) before he filed the motion to set fees. The motion to intervene in the action was deemed to be necessary by the appeals court and that was the reason for the reversal.

The above case displays the importance of detail within the law. The trial court made a judgment on an intervening rule that was then overturned on appeal, creating a situation very detrimental financially to the Browns and anyone in the same situation. Every law student takes a course in civil procedure in their first year of law school and many find it to be unexciting and drawn out. This case, however, shows its practical importance in the legal world in which we reside. The Browns situation is one that anyone can easily finds themselves especially considering the difficulty for most people to navigate the language of the law in Louisiana.

Summary Judgment Granted in Uninsured Motorist Dispute

Published on: June 26, 2013 | By Berniard Law Firm

Vehicle collisions are difficult in of themselves but when they involve an insurance dispute, they can be considerably daunting. One recent case involving an accident in dispute helps illustrate this further. In this case, Broussard and Brandy Oppenheimer live together with a child, but are unmarried. Broussard was driving Oppenheimer’s vehicle when he was rear-ended by an uninsured driver. While the pair maintained unisured motorist coverage through their insurance policies, which is suppose to cover them in these types of situations. However, the insurance company saw otherwise.

Farm Bureau denied Broussard’s request, stating that “the policy did not cover the accident in that Broussard was operating a vehicle that was not listed in the policy.” The insurer filed a motion of summary judgment on the issue of coverage, while Broussard filed a cross motion summary judgment to recover under his policy. The Appellate court cited Schroeder v. Board of Supervisors of Louisiana State University to define summary judgment, which states that a motion for summary judgment should be granted “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law.”

The trial court reasoned that by allowing Farm Bureau “to exclude coverage would allow…a policy in derogation of La.R.S. 22:1295.” The statute explains that the policy should provide coverage to “an injured party while occupying and automobile not owned by said injured party.” Farm Bureau appealed the trial court’s decision to grant Michael Broussard’s motion for summary judgment. The granted motion for summary judgment declared Broussard was entitled to coverage under his uninsured motorist clause in his insurance policy.

To counter, Farm Bureau cited policy language claiming the insuring policy does not apply:

This insuring policy does not apply: (1) to any automobile owned by or furnished for the regular use to either the named insured or a member of the same household.

And;

This policy does not apply: (g) Under division 1 of coverage to bodily injury to the insured, his spouse or members of household sustained while in or entering into or alighting from an automobile owned by the insured, his spouse, or members of the household except the one described in the declarations.

The trial court and the Appellate court both agreed and affirmed that “policy language cannot change the requirements of the statute.” The law would allow the exclusion of coverage if involving a spouse or relative’s policies, but is not the situation here as Broussard and Oppenheimer are not married or related. Farm Bureau’s attempt to push the limits of its restrictions were unsuccessful, however, resulting in the judgment in favor of Broussard.

Injuries Realized After Settlement Fail to Receive Compensation

Published on: June 12, 2013 | By Berniard Law Firm

Settlement agreements are compromises between two people or companies that face a lawsuit. Their purpose is to avoid the high costs and extensive time involved in taking a case to trial. These settlements, however, include terms that require careful consideration before signing.

In the case of Montgomery v. Montgomery, Chad was trimming a tree on his brother Richard’s land, using a frontloader to lift him high enough to reach the limbs. His father, R.L., was operating the frontloader. R.L. accidently hit the quick release, dropping Chad and injuring him. R.L. was covered by homeowners insurance and farm insurance from Farm Bureau. Richard’s land was covered by insurance from American Reliable Insurance Company. Chad sought a recovery from both Farm Bureau and American Reliable. Chad was able to receive money from both companies through settlements. In the American Reliable settlement agreement, Chad received a $100,000 settlement in turn for agreeing to release both insurance companies and his father from any further claims. The Farm Bureau only agreed to give $1,000, but also included a statement that it was released from all claims.

This release from all claims is a common feature of settlements. The insurance company agrees to pay some amount of money in return for no further liability, or obligation to pay any more. However, this is a major concession on the part of the injured person. In the words of the Farm Bureau agreement, Chad agreed to “release, acquit and forever discharge” the insurance company for any injury sustained, even if it is “not yet evident, recognized or known.” The American Reliable agreement stated that he gave up “any and all…claims” from “any and all known and unknown personal injuries.”

This agreement can only be questioned by a court if there is “substantiating evidence” of mistaken intent. This means that there is evidence showing that the person signing “was mistaken as to what he or she was signing” or that the person “did not intend to release certain aspects of his or her claim.” Otherwise, any challenge to such a settlement will be thrown out of court through summary judgment. The insurer also has a duty to “adjust claims fairly and promptly and to make a reasonable effort to settle claims with the injured [person].” If the insurer misrepresents “pertinent facts or insurance policy provisions relating to any” injury coverage that is at issue, then it violates this duty.

Some time after signing the agreements, Chad began to feel that his injuries were worse than he had originally thought. He then filed a lawsuit against Farm Bureau. He claimed that the agreement with Farm Bureau had been misrepresented to him. The court, however, granted summary judgment to Farm Bureau. It stated that Chad had presented no evidence that he had misunderstood what he was signing. In addition, the American Reliable agreement released Farm Bureau from any claims. Chad argued that there was misrepresentation regarding Farm Bureau, but not regarding the American Reliable agreement.

Settlement agreements involve signing away significant rights to future damages. Such an agreement should be made only with the advice of an experienced attorney.