Strict Liability

Contract Dispute Resolution in Louisiana

Published on: August 17, 2012 | By Berniard Law Firm

The state of Louisiana, like many other states, has very specific requirements that the judicial branch uses to help interpret contracts when the parties are in dispute. Generally, the court likes to stay out of contracts because the right to contract without interference from the government is something that the American society greatly cherishes. The ability to contract is a basic fundamental right that is guaranteed by the Fourteenth Amendment. The court will usually only interfere if there is a dispute or if the contract was in some way illegal. Therefore, it is very important to have a contract that is well written and that all parties understand completely.

If the court has to step in to work with a contract, then it will follow a few select guidelines. The ultimate goal of the court is to determine the common intent of the parties and enforce the contract in that way. In order to determine the intent, the court will look to the contract itself. In contracts that include terms of art or very technical requirements, the court will look to the common use of the word within that trade. For example, some trades include quantity information that is always larger than actually stated; think of a “baker’s dozen.” Even though twelve is technically considered a dozen, a contract between bakers may actually mean thirteen. This notion disregards the fact that in any other contract that is not between bakers, a dozen would equal twelve.

The court will also consider the contract in its entirety, not just a few sections or a single disputed term. It will determine what outcome is practical for both parties and technical terms will be given their technical meaning. In addition, if a word has more than one meaning, then the court will defer to the meaning that will carry out the goal of the contract. Consider a simple example. If a grocery store contracts to receive bananas and they receive plastic bananas instead of real bananas, the court will likely conclude that the other party providing the plastic bananas was at fault because the definition of a banana is commonly a consumable food, especially if it is going to be sold at a grocery store. The contract did not say that the grocery store wanted edible bananas, but the court will assume this information because the outcome becomes ridiculous without this assumption.

The court will generally try to stay within the language of the contract when attempting to resolve disputes. When the contract is clear and doesn’t lead to ridiculous consequences, then external evidence provided by the parties to show an alternative intent cannot be considered. The contract’s wording is therefore very important. However, if the contract is not clear or is ridiculous, then the court can consider some outside evidence in order to determine the common intent of the parties. In our banana example, if the grocery store has always ordered real bananas from this seller and has never requested plastic bananas from this seller, then that information could be considered in the court’s analysis.

The court has a means to determine whether the meaning of the contract is clear or not. Obviously if a term or issue is missing from the contract entirely, then the court will most likely deem the issue to be unclear or ambiguous. In addition, the court will also reason that an issue is ambiguous when “the language used in the contract is uncertain or is fairly susceptible to more than one interpretation.” If this is the case, then the outside evidence can be used to determine what the intent of both parties actually is.

A well written contract will convey the intention of both parties and will define all of its questionable terms so that there is no contention in the future. Sometimes, one party does not think a term in unclear when it actually is, so a conflict will arise. Competent attorneys are needed to create a well written contract and deal with conflict.

Careful Reading of Insurance Policies Crucial to Prevent Disaster

Published on: August 15, 2012 | By Berniard Law Firm

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.

Auto Insurance Case Illustrates Need for Following Statutory Requirements

Published on: August 10, 2012 | 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.

Texas Construction Injury Leads Court to Analyze Duty to Defend, Indemnify

Published on: July 17, 2012 | By Berniard Law Firm

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.

Summary Judgment Summarily Dismissed by Third Circuit in Vehicle Accident Case

Published on: April 23, 2012 | By Berniard Law Firm

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.

Personal Injury Case Delves into Medical Malpractice Difficulties

Published on: April 16, 2012 | By Berniard Law Firm

The following very interesting and compelling question by plaintiffs, and the contingent commentary by the court, is articulated in this appeal to the Second Circuit Court of Appeals in Louisiana: “Does a diagnosis by a doctor rendering a second and correct opinion, equate to a per se reasonable belief that the previous treating physicians committed medical malpractice?”

This question arises in the context of the Second Circuit’s consideration of the plaintiff’s appeal of the trial courts “judgment of defendants, sustaining an exception of prescription as to the malpractice claim filed by Joseph Lee Amos prior to his death and granting summary judgment which dismissed their wrongful death claim.” The purpose of this paper is to discuss the question posed by the plaintiff and the Second Circuit’s response to that question.

On April 12, 1999, Joseph Lee Amos had his first appointment with Dr. Rebecca Crouch: he was experiencing “occasional rectal bleeding.” Mr. Amos “repeatedly complained of similar symptoms in his subsequent visits to Dr. Crouch.” Mr. Amos claims that “when he was under Dr. Crouch’s care, he was continually ‘hurting a lot’ and that the blood was ‘bright red’…The physicians report states that Mr. Amos said that Rebecca Crouch checked down there ‘and (Mr. Amos) was told everything was okay.” His final appointment with Dr. Crouch was on January 3, 2000.

Class Action Rules Difficult to Understand, Important for Successful Litigation

Published on: April 10, 2012 | By Berniard Law Firm

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.

Happy Holidays from the Berniard Law Firm

Published on: April 8, 2012 | By Berniard Law Firm

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

Tort or Medical Malpractice? Insurance Companies Battle Over Coverage in Ouachita Parish Injury Case

Published on: March 23, 2012 | By Berniard Law Firm

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.

Fifth Circuit Court of Appeals Finds Missing Health Information Not a Bar to Life Insurance Recovery

Published on: March 19, 2012 | By Berniard Law Firm

When individuals apply for life insurance, several application forms must be submitted. Amongst these forms is a history of the applicant’s medical history. Based on this history, and a variety of other factors, insurance companies will either accept the application and set a premium that must be paid to obtain the insurance, or deny the application for pre-existing conditions. However, errors, omissions, and accidents occur during this application process and can cause several legal issues to arise when a life insurance policy needs to be paid out.

This situation arose in Foster v. United of Omaha. In that case, an individual sought to change her life insurer, but when the paperwork was arranged and sent to her, the medical history page was absent. The individual signed all of the paperwork and sent it back to the insurance company. Without any red flags regarding the individual’s medical history, United extended $1 million worth of life insurance to her. No physical health examination of the individual took place and the policy was extended based on the blank medical history paperwork.

The individual, after discovering that she was at high risk for cardiovascular disease, sought an addendum to the insurance policy to raise the payout to $2 million. To complete the policy change, the individual had to sign additional paperwork stating that her health condition had not changed since the issuance of the original policy. Because the individual never signed anything for the original policy claiming poor health, she signed the addendum stating that her health had not changed.

After some time, the individual passed away of lung cancer. United conducted an investigation and discovered that, prior to the issuance of the original coverage, the individual had been treated for heart disease, chest pain, and lung ailments. Based on these findings, coupled with the fact that the addendum stated that the individual’s health hadn’t changed, United refused to pay the policy out. The individual’s trustee brought suit against United, seeking payment of the policy.

Several insurance forms, including the one in Foster’s case, contain language that states “incorrect or misleading information may void this policy from its effective date.” Thus, courts have established that an insurance company, in order to rescind a policy on these grounds, must establish that statements made in the form were false, that those misrepresentations were made with an actual intent to deceive, and that the false statements materially affected the insurance company’s acceptance of risk. The most difficult of these elements to establish is the insured’s intent when making false statements. In these types of cases, courts often look to the attending circumstances to determine whether or not the insured had knowledge of the falsity.

In the Foster case, United failed to carry its burden of proof in establishing that the insured intended to deceive United. Though the individual did not claim her medical ailments in the policy application, the paperwork for the original policy was never made available to her. Thus, the insured could not be held responsible for claiming no change in her health when, in fact, it had not changed since the issuance of the original policy. The insured thought she was telling the truth, and therefore could not be held to have intended to deceive the insurer. This finding places responsibility on the insurer to ensure that all paperwork is provided and explained in a clear, reasonable manner. This avoids consumer confusion and creates an efficient market.

Many insurance companies claim that truthfulness is a condition precedent to policy coverage. This means that the policy will only extend its coverage upon the fulfillment of truthful statements required by the applicant. However, whether or not something is a condition precedent is a matter of contract interpretation. In the Foster case, for example, the court held that the language in the addendum that stated “incorrect or misleading information provided herein may void this policy from its effective date” was permissive. The use of “may” in this type of contract suggests that misleading information provided by the applicant might void the policy, but on the other hand, it might not. Such permissive language will never be held to be a condition precedent in insurance disputes.

With these rules at hand, the court in the Foster case found that United was not entitled to withhold the policy payment. Such a finding solidifies courts’ standing in placing responsibility on insurance companies to provide accurate assessment of insurance coverage and risk. Placing this burden on insurance applicants would carry market chilling potential. In addition, search costs could rise and those who were inexperienced with insurance applications would be prone to making mistakes that would stifle courts with insurance interpretation disputes.