Good Hope Baptist Church v. Ict Insurance Agency, Inc.

• Court: Louisiana Court of Appeal
• Decided: June 9, 2010
• Docket: CA-0010-0142
• Status: Unknown

Opinion

STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT

10-142

GOOD HOPE BAPTIST CHURCH

VERSUS

ICT INSURANCE AGENCY, INC. A/K/A REGIONS INSURANCE

************

APPEAL FROM THE NINTH JUDICIAL DISTRICT COURT PARISH OF RAPIDES, NO. 229,931 HONORABLE DONALD T. JOHNSON, DISTRICT JUDGE

DAVID E. CHATELAIN* JUDGE

Court composed of Ulysses Gene Thibodeaux, Chief Judge, Shannon J. Gremillion, and David E. Chatelain, Judges.

REVERSED AND REMANDED.

Mark F. Vilar Aaron L. Green Kellen J. Mathews Vilar & Elliott, LLC Post Office Box 12730 Alexandria, Louisiana 71315-2730 (318) 442-9533 Counsel for Plaintiff/Appellant: Good Hope Baptist Church

* Honorable David E. Chatelain participated in this decision by appointment of the Louisiana Supreme Court as Judge Pro Tempore. Mark R. Pharr, III Robin Sylvester Craddock Charles E. Schaub Galloway, Johnson, Tompkins, Burr & Smith 4021 Ambassador Caffery Parkway, Building A, Suite 175 Lafayette, Louisiana 70503 (337) 735-1760 Counsel for Defendant/Appellee: GuideOne Insurance Company

Mary McCrory Hamilton Voorhies & Labbe Post Office Box 3527 Lafayette, Louisiana 70502 (337) 232-9700 Counsel for Defendant/Appellee: ICT Insurance Agency, Inc. CHATELAIN, Judge.

Good Hope Baptist Church (Good Hope) appeals the trial court’s grant of a

peremptory exception of prescription GuideOne Insurance Company (GuideOne)

filed. For the following reasons, we reverse and remand.

FACTS AND PROCEDURAL HISTORY

The facts are not in dispute. Good Hope is located in Pineville, Louisiana. It

insured the church’s sanctuary and Sunday school classrooms through a policy of

insurance procured through ICT Insurance Agency, Inc. (ICT) and issued by

GuideOne. In May of 2003, Good Hope received a donation of a building located

adjacent to the church. Thereafter, Good Hope contacted ICT to request coverage for

the building, which it referred to as a Fellowship Hall. GuideOne added the

Fellowship Hall to Good Hope’s existing policy on May 7, 2003.

On September 9, 2006, the Fellowship Hall was broken into, numerous items

were stolen, and the building was vandalized. On or about October 20, 2006, Good

Hope filed a property loss notice with ICT, which notice was forwarded to GuideOne.

By letter dated February 1, 2007, GuideOne notified Good Hope that it was denying

its claim based on a vacancy provision in the policy that precluded coverage for

losses arising from theft and vandalism if the building where the loss occurred has

been vacant for more than sixty consecutive days. According to the letter,

GuideOne’s investigation into the loss had revealed that the building had, in fact,

been vacant in excess of sixty days before the date of the loss.

On November 30, 2007, Good Hope filed a petition for damages against ICT

only, with the mistaken belief that ICT was its insurance company. Upon discovering

that ICT was the insurance agency and that GuideOne was the actual insurer who had

1 provided the policy covering the church’s property, Good Hope amended its petition

to name GuideOne as an additional defendant. It later amended its petition a second

time to assert allegations against ICT as its insurance agent rather than as its insurer.

Thereafter, ICT filed an exception of peremption based upon La.R.S. 9:5606, the

statute establishing the one-year and three-year periods of limitation for actions

brought against insurance agents. Following a hearing, the trial court granted the

exception and dismissed Good Hope’s claims against ICT. Good Hope appealed and

this court affirmed. See Good Hope Baptist Church v. ICT Ins. Agency, Inc., an

unpublished decision bearing docket number 08-1268 (La.App. 3 Cir. 4/1/09).

In the meantime, GuideOne filed a motion for summary judgment urging that

its policy did not provide coverage for Good Hope’s loss because of the vacancy

provision. Good Hope opposed the motion, arguing that several genuine issues of

material fact remained, such as whether the Fellowship Hall was undergoing

renovations and/or being used for storage at the time of the loss, thus making the

vacancy provision inapplicable. The trial court denied the motion, and GuideOne

sought supervisory writs, which this court denied on the basis that we found no error

in the trial court’s ruling. See Good Hope Baptist Church v. ICT Ins. Agency, Inc.,

an unpublished writ bearing docket number 09-46 (La.App. 3 Cir. 6/8/09).

GuideOne then filed a peremptory exception of prescription on August 27,

2009, contending that Good Hope’s claims were prescribed because Good Hope had

not filed suit against it until December 13, 2007, more than one year after suffering

the loss on September 9, 2006. It argued that because Good Hope’s claim was one

for property damage, the one-year prescriptive period for delictual actions found in

La.Civ. Code art. 3492 applied to bar Good Hope’s claim. GuideOne submitted that

2 Good Hope’s claim for attorney fees and penalties pursuant to La.R.S. 22:19731 had

likewise prescribed.2 With regard to Good Hope’s claim for attorney fees and

penalties under La.R.S. 22:1892,3 GuideOne contended that the provision, by its very

terms, did not apply because Good Hope’s underlying claim was time barred.

Good Hope opposed the motion on the grounds that the policy expressly

provided that it had two years from the date when the damage occurred to file suit

against GuideOne. In the alternative, Good Hope claimed that if even a one-year

prescriptive period did apply, its suit against GuideOne was timely as it was filed

within one year of GuideOne’s denial of coverage, during which time GuideOne

received “proof of loss” and was processing Good Hope’s claim. Good Hope stressed

that it had not filed suit against the person who caused the vandalism and theft

damage to its Fellowship Hall, but rather this suit was brought against its insurer

based upon the insurance contract existing between them.

1 This statute was renumbered from La.R.S. 22:1220 by 2008 La. Acts No. 415, § 1, effective January 1, 2009. 2 See Zidan v. USAA Property and Casualty Ins. Co., 622 So.2d 265 (La.App. 1 Cir.), writ denied, 629 So.2d 1138 (La.1993), wherein the first circuit applied the one-year liberative prescription period found in La.Civ.Code art. 3492 to an insured’s action brought pursuant to La.R.S. 22:1220. See also Brown v. Protective Life Ins. Co., 353 F.Supp.2d 739, 743 (E.D.La. 10/1/04). 3 This statute was renumbered from La.R.S. 22:658 by 2008 La. Acts No. 415, § 1, effective January 1, 2009.

3 Following a hearing on October 26, 2009, the trial court ruled from the bench

that it was granting GuideOne’s peremptory exception of prescription based upon

La.Civ.Code arts. 3471,4 3492,5 and 3493.6

On appeal, Good Hope claims that the trial court committed legal error by: (1)

characterizing the obligation GuideOne owed to it as one for property damage and

applying the one-year prescriptive period applicable to delictual actions rather than

the ten-year prescriptive period applicable to personal actions; and (2) disregarding

the clear and unambiguous language of the GuideOne policy and the mandate of

La.R.S. 22:868, both of which provide a two-year period within which claims can be

brought against GuideOne.

LAW

“The party alleging that a claim has prescribed ordinarily bears the burden of

proof. However, when it appears that prescription has run from the face of the

pleadings, the burden of proof then shifts to the party not asserting prescription to

prove that prescription has been interrupted or suspended.” Piper v. Shelter Mut. Ins.

Co., 07-111, p. 3 (La.App. 3 Cir. 5/30/07), 958 So.2d 120, 122, writ denied, 07-1319

(La. 9/28/07), 964 So.2d 369.

“An insurance contract is a conventional obligation that constitutes the law

between the insured and the insurer.” Myles v. Consol. Cos., Inc., 05-192, p. 4

4 Louisiana Civil Code Article 3471, entitled “Limits of Contractual Freedom,” provides that “[a] juridical act purporting to exclude prescription, to specify a longer period than that established by law, or to make the requirements of prescription more onerous, is null.” 5 Louisiana Civil Code Article 3492 provides, in pertinent part, that “[d]elictual actions are subject to a liberative prescription of one year. This prescription commences to run from the day injury or damage is sustained.” 6 Louisiana Civil Code Article 3493, entitled “Damage to immovable property; commencement and accrual of prescription,” provides that “[w]hen damage is caused to immovable property, the one year prescription commences to run from the day the owner of the immovable acquired, or should have acquired, knowledge of the damage.”

4 (La.App. 3 Cir. 6/1/05), 906 So.2d 677, 680, writ denied, 05-2245 (La. 2/17/06), 924

So.2d 1019. Moreover, “insurance contracts are interpreted in the same manner as

other contracts.” Id. In Tally v. Blue Cross Blue Shield of Louisiana, 99-1974, p. 3

(La.App. 3 Cir. 5/3/00), 760 So.2d 1193, 1195, writ denied, 00-1561 (La. 8/31/00),

766 So.2d 1278, this court noted the following with respect to the interpretation of

insurance contracts:

Interpretation of a contract is the determination of the common intent of the parties. LSA-C.C. article 2045. If the words of an insurance policy are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the party’s intent and the agreement must be enforced as written. LSA-C.C. article 2046.

The Civil Code further provides, with regard to standard-form contracts, that “[i]n

case of doubt that cannot be otherwise resolved, a provision in a contract must be

interpreted against the party who furnished its text,” and that “[a] contract executed

in a standard form of one party must be interpreted, in case of doubt, in favor of the

other party.” La.Civ.Code art. 2056.

In Louisiana, an insurer owes its insured the following statutorily-recognized

affirmative duties:

A. An insurer . . . owes to his insured a duty of good faith and fair dealing. The insurer has an affirmative duty to adjust claims fairly and promptly and to make a reasonable effort to settle claims with the insured or the claimant, or both. Any insurer who breaches these duties shall be liable for any damages sustained as a result of the breach.

B. Any one of the following acts, if knowingly committed or performed by an insurer, constitutes a breach of the insurer’s duties imposed in Subsection A:

(1) Misrepresenting pertinent facts or insurance policy provisions relating to any coverages at issue.

....

(4) Misleading a claimant as to the applicable prescriptive period.

5 C. In addition to any general or special damages to which a claimant is entitled for breach of the imposed duty, the claimant may be awarded penalties assessed against the insurer in an amount not to exceed two times the damages sustained or five thousand dollars, whichever is greater. Such penalties, if awarded, shall not be used by the insurer in computing either past or prospective loss experience for the purpose of setting rates or making rate filings.

La.R.S. 22:1973. In addition, La.R.S. 22:1892 requires an insurer to “pay the amount

of any claim due any insured within thirty days after receipt of satisfactory proofs of

loss,” failing which the insurer may be cast with a penalty and reasonable attorney

fees and costs.

DISCUSSION

Good Hope contends that the trial court erred in characterizing its suit against

GuideOne as one for property damages rather than breach of contract. It argues that

this initial error caused the trial court to apply the one-year prescriptive period found

in La.Civ.Code arts. 3492 and/or 3493 to Good Hope’s claim. As a result, it contends

that the trial court incorrectly determined that Good Hope’s claim had prescribed on

its face and improperly shifted the burden of proof to Good Hope. Good Hope

submits that had the trial court more closely examined the pleadings, it would have

realized that Good Hope’s claims sound in contract, rather than in tort, and it would

have applied the prescriptive period found in La.Civ.Code art. 3499, which provides

that “[u]nless otherwise provided by legislation, a personal action is subject to a

liberative prescription of ten years.”

Good Hope’s arguments in this regard rely primarily on We Sell Used Cars,

Inc. v. United National Insurance Co., 30,671 (La.App. 2 Cir. 6/24/98), 715 So.2d

656, wherein the second circuit reversed the trial court’s finding that the insured’s

claim for property damage under a policy of comprehensive and/or collision

6 insurance coverage was delictual in nature and had prescribed under the one-year

period found in La.Civ.Code art. 3492. Instead, the appeal court determined that the

action was contractual in nature, subject to the ten-year prescriptive period found in

La.Civ.Code art. 3499, and thus not prescribed. In so ruling, the We Sell court

applied the following analysis:

In reviewing the grant of an exception of prescription, the character of the action given by the plaintiff in his pleadings, determines the prescription applicable to it. Northcott Exploration Co. v. W.R. Grace & Co., 430 So.2d 1077 (La.App. 3d Cir. 1983); Starns v. Emmons, 538 So.2d 275 (La.1989); J.W. Warren & Associates v. Audubon Ins. Co., 93-1650 (La.App. 3 Cir. 7/6/94) 638 So.2d 1241. “The nature of a cause of action must be determined before it can be decided which prescriptive term is applicable.” State Through Department of Highways v. City of Pineville, 403 So.2d 49, 54 (La.1981); Hampton v. Hibernia Nat. Bank, 598 So.2d 502, 503 (La.App. 2d Cir. 1992). The nature of an obligation in Louisiana, for the purpose of determining the applicable prescriptive period, is either contractual, quasi-contractual, delictual, quasi-delictual or legal. See Dean v. Hercules, Incorporated, 328 So.2d 69, 72 (La.1976); Taylor v. David New Operating Co., Inc., 619 So.2d 1251, 1253 (La.App. 3 Cir. 1993).

We [Sell]’s petition, in pertinent part, is reproduced below:

2.

On or about October 23, 1993, plaintiff sustained property damage to its 1993 Plymouth Acclaim automobile.

3.

At all times pertinent herein, plaintiff had comprehensive and/or collision coverage on said vehicle with defendant.

4.

Plaintiff reported its property damage timely to defendant and, despite numerous demands, defendant has refused to pay for the damages to plaintiff's property.

It is well settled that in certain circumstances the same acts or omissions may constitute breaches of both general duties and contractual

7 duties, and may give rise to both actions in torts and actions in contracts. By making reference to “property damage,” and “comprehensive and/or collision coverage,” We [Sell]’s petition indicates the objective of the lawsuit is to enforce coverage under the insurance contract. It is important to note that We [Sell]’s petition makes no reference to “negligence,” “liability without negligence,” “intentional misconduct” nor “tortious acts” or “delictual acts.”

United owed a special duty to We [Sell] by virtue of a contract to do a particular thing, and the violation of that contractual duty furnishes a cause of action. The nature of the action brought by We [Sell] is established in the petition as a contractual action.

A contract can give rise to more than one obligation. United undertook several obligations by entering into the insurance contract, a tort obligation and a contractual obligation. Because suit was filed more than one year after the property damage, any tort action that We [Sell] would bring has prescribed. However, the tenor and import of the petition illustrate that We [Sell] is attempting to enforce a special contractual right.

Furthermore, the alleged wrong committed by United, not providing comprehensive/and/or collision coverage to the insured for property damage, is a passive breach of contract. United failed to perform a special obligation contractually assumed toward We [Sell], an obligation arising from an insurance contract to provide collision/comprehensive coverage.

Id. at 658-59.

In the present case, GuideOne insists that the one-year prescriptive period

found in La.Civ.Code arts. 3492 and 3493 applies to Good Hope’s claims. However,

in making that argument, it does not directly refute Good Hope’s contention that its

claims are for breach of contract rather than for tort.

We have carefully reviewed both the original and the amended petitions in this

matter, and we find the allegations made therein by Good Hope against GuideOne to

be substantially similar to the allegations made by the plaintiff/insured against the

insurer in We Sell. It is clear that those allegations sound in contract. It follows that

to the extent, if any, that Good Hope’s claims sound in tort, those claims are

8 prescribed under La.Civ.Code arts. 3492 and 3493. To the extent Good Hope’s

claims sound in contract, however, those claims have not prescribed because the

prescriptive period applicable to those claims, in the absence of any other applicable

provision in the law or in the GuideOne policy, is the ten-year period found in

La.Civ.Code art. 3499. The trial court erred insofar that it found Good Hope’s claims

against GuideOne sounded only in tort and that all of Good Hope’s claims against

GuideOne are prescribed on that basis.

Good Hope next contends that the trial court committed legal error by

disregarding the language of the GuideOne policy which provides a two-year period

within which to file an action under the policy.7

The following provision is included in the “Commercial Property Conditions”

section of the policy GuideOne issued to Good Hope:

D. LEGAL ACTION AGAINST US

No one may bring a legal action against us under this Coverage Part unless:

1. There has been full compliance with all of the terms of this Coverage Part; and

2. The action is brought within 2 years after the date on which the direct physical loss or damage occurred.

7 Good Hope further contends that the policy provision comports with the legislative pronouncement in La.R.S. 22:868(B) that no insurance contract “shall contain any condition, stipulation, or agreement limiting right of action against the insurer to a period of less than twenty- four months next after the inception of the loss.” GuideOne points out that the version of La.R.S. 22:868 that applied on September 9, 2006, when Good Hope suffered the theft and vandalism to its Fellowship Hall, contained a one-year prescriptive period and did not apply to claims for burglary or theft. Thus, GuideOne submits that any substantive changes made to that statute after that date cannot be applied to this matter because the legislature did not expressly provide that the changes were to apply retroactively. Because we have resolved this matter on other grounds, we do not address Good Hope’s arguments concerning La.R.S. 22:868. Likewise, we do not have to determine which version of La.R.S. 22:868 applies to this matter.

9 GuideOne contends that we should ignore this policy provision because it is

contrary to La.Civ.Code art. 3471’s mandate that a “juridical act purporting . . . to

specify a longer [prescriptive] period than that established by law . . . is null.” In

other words, GuideOne argues that it should not have been allowed to include the

provision in its policy because it has the effect of extending the one-year prescriptive

period within which Good Hope could file suit against it.

Good Hope counters that GuideOne’s argument is flawed because its claims

sound in contract, and, thus, the ten-year prescriptive period found in La.Civ.Code

art. 3499 applies to this matter. As a result, it argues that the policy provision

requiring it to file suit against GuideOne within two years of the date of loss shortens,

rather than lengthens, the applicable prescriptive period.

As previously noted, we have determined that Good Hope’s claims sound in

contract and would be subject to the ten-year prescriptive period found in

La.Civ.Code art. 3499, but for the policy provision requiring it to file any action

based on the policy within two years of a loss. On this basis, we further determine

that the policy provision is not violative of La.Civ.Code art. 3471’s prohibition

against the extension of a prescriptive period by a contract because GuideOne’s

contract of insurance shortens rather than lengthens the period in which Good Hope

had to file suit on any claims sounding in contract against GuideOne. Therefore, we

find that the trial court erred as a matter of law in concluding otherwise.

CONCLUSION

The trial court erred in finding that the one-year prescriptive period found in

La.Civ.Code arts. 3492 and 3493 applied to all of Good Hope’s claims, thus making

those claims prescribed because its suit against GuideOne was filed more than one

10 year after the September 9, 2006 theft and vandalism to its Fellowship Hall. The trial

court further erred in its implicit holding that the provision in the GuideOne policy

requiring Good Hope to file suit against GuideOne within two years of any loss

violated La.Civ.Code art. 3471.

Good Hope’s claims sound in contract. The provision in the GuideOne policy

served to shorten the otherwise applicable ten-year prescriptive period to two years.

Because Good Hope filed suit against Guide One on December 13, 2007, within two

years of its September 9, 2006 loss, Good Hope’s underlying claims are not

prescribed.8

DECREE

For the reasons expressed herein, the judgment of the trial court granting

GuideOne’s peremptory exception of prescription is reversed, and this matter is

remanded for further proceedings consistent with the views expressed in this opinion.

All costs of this appeal are assessed against GuideOne Insurance Company.

8 We need not determine at this juncture whether Good Hope’s claims for attorney fees and penalties pursuant to La.R.S. 22:1973 and 22:1892 have prescribed.