Leland v. Lafayette Insurance Co.

77 So. 3d 1078, 11 La.App. 3 Cir. 475, 2011 La. App. LEXIS 1352, 2011 WL 5374755
CourtLouisiana Court of Appeal
DecidedNovember 9, 2011
DocketNo. 11-475
StatusPublished
Cited by4 cases

This text of 77 So. 3d 1078 (Leland v. Lafayette Insurance Co.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Leland v. Lafayette Insurance Co., 77 So. 3d 1078, 11 La.App. 3 Cir. 475, 2011 La. App. LEXIS 1352, 2011 WL 5374755 (La. Ct. App. 2011).

Opinion

AMY, Judge.

hThe plaintiffs filed suit against their property insurer, asserting that the insurer breached its duty of good faith and fair dealing in adjusting losses associated with hurricane-related damage incurred to their rental property. A jury found in favor of the plaintiffs, awarding sums it found due under the policy, statutory penalties and attorney fees, and damages stemming from the events. The insurer appeals. For the following reasons, we affirm as amended.

Factual and Procedural Background

The plaintiffs in this insurance dispute, Clarence “Don” and Myna Leland, own rental property in Lake Charles that was damaged during Hurricane Rita in September 2005. The property, a former home constructed in the early 1900s, had been converted for commercial purposes and was most recently rented to a bridal salon for $600.00 per month. Although the building was undisputedly damaged in the storm by a tree falling into the southern section and shearing a portion of the facade from the building, this dispute arose, at least in part, due to questions regarding the extent of that damage.

The record indicates that, by October 7, 2005, the plaintiffs notified the defendant insurer, Lafayette Insurance Company, of damage to the property and that an adjuster was assigned to the claim. The adjuster, Larry Saint, was employed by CNC Resource, an independent adjusting firm. Differences in opinions regarding the amount of storm-related damage to the property emerged. By January 2006, Lafayette tendered a check in the amount of $20,567.73 per the adjuster’s estimate and deductions for depreciation and the deductible. However, Lafayette’s correspondence included not only the check, but also a “Proof of Loss and Statement as to Full Cost of Repair or Replacement,” which Lafayette requested the plaintiffs sign and return. The form included the following:

| ¡.This authorization to be filled out only in event proceeds of loss are to be paid to other than the insured.
You are hereby requested and authorized to make payment to C.M. Leland & Myna G. Leland in consideration of which the company is discharged and [1081]*1081released from further claim as a result of the loss herein referred to.

Although Lafayette took the position at trial that this language was inapplicable to the plaintiffs and was inadvertently left in the Proof of Loss form issued to the plaintiffs, the plaintiffs did not accept this check, or two subsequent checks, as they felt that the accompanying form constituted a release.

By March 2006, the plaintiffs’ contractor, Jay Briggs, submitted an initial bid of $49,802.00 to repair the damage. According to testimony, the bid was only an initial estimate and did not include certain code upgrades later claimed necessary, nor certain fundamental components to the rebuilding that would have been determined at a later time. Internal documents from Lafayette reveal the insurer’s intent to have its adjuster, Mr. Saint, contact the plaintiffs’ contractor regarding the bid. Despite this intent, no agreeable solution was reached between the parties for approval of Mr. Briggs’ estimate. Throughout the proceedings, Lafayette complained of what it contended was a lack of itemization in Mr. Briggs’ estimate/bid.1 The record contains no information indicating that Lafayette |.^specifically designated the way in which the bid was insufficient, instead expressing a general request for further specificity.

In July 2006, the City of Lake Charles informed the plaintiffs that the property had been deemed “a hazard to safety or health by reason of abandonment, inadequate maintenance, dilapidation, or other dangerous conditions.” It listed more than five pages of corrections to various components of the house, including the foundation, which it required be remedied within fifteen days. Although the plaintiffs notified Lafayette of this development, stating that they did not want to lose their building, Lafayette responded that it had not received further itemized estimates from Mr. Briggs or other contractors. It stated that the plaintiffs failed to fully comply with the “loss conditions” portion of the policy as they had “not provided [Lafayette] with any itemized or competitive bids for repair.” Lafayette further stated in this July 31, 2006 letter that, “[additionally, steps must be taken to mitigate your damages and to resume your operations as quickly as possible.” Lafayette also sought further documentation in support of the plaintiffs’ claim for loss of rents.

Subsequently, the plaintiffs obtained and forwarded an additional roofing estimate in the amount of $12,800.00 and hired their own adjuster, Ron Rhodes of R & D Associates. Afterwards, in October 2006, the plaintiffs forwarded a Sworn Statement of Proof of Loss to Lafayette in which they sought the policy limits of $91,000.00 and a “whole loss and damage” of $102,722.21. They attached Mr. Rhodes’ independent appraisal to their statement. In response, Lafayette informed the plaintiffs that it was rejecting their Proof of Loss, but indicated that it would be assigning a second adjuster to re-inspect the property. Lafayette reiterated that it had received no additional estimates from the plaintiffs’ contractor.

[1082]*1082LLafayette’s second adjuster, Will Page, issued an appraisal in January 2007. By that time, he estimated replacement costs at $39,013.85. After reductions for depreciation and the amount of the first tendered check, Lafayette issued a second check to the plaintiffs for $15,780.33.

The plaintiffs did not negotiate this second check and again made demand for the limits of their policy. They also sought an additional $25,000.00 for the removal of debris from the property pursuant to a March 2007 resolution by the City of Lake Charles authorizing demolition procedures in May 2007 if a permit for the removal or refurbishment of the building was not obtained. Otherwise, the plaintiffs advised that they would pursue statutory penalties and attorney fees for what they contended was Lafayette’s breach of its obligation of good faith and fair dealing. Lafayette denied this claim and noted that its payments to date had been $43,567.73 and that it was awaiting additional documentation for the plaintiffs’ loss of rental income claim.

By the end of April 2007, with the City of Lake Charles’ deadline approaching, the plaintiffs sought a supplemental appraisal from its independent adjuster in light of a variety of “code upgrades” required by the City for reconstruction. Thereafter, the plaintiffs again demanded the policy limits and an additional $25,000.00 they alleged the policy covered for the code upgrades. Lafayette again informed the plaintiffs of its denial of their claim as it “determined that the damage listed has either been considered” or that it “claimed non-covered damages.” Lafayette notified them that, in order to resolve the dispute, it would be sending a structural engineer to inspect the property.

After the denial of the claim, the plaintiffs obtained financing in order to perform the necessary renovations to the building ahead of the City’s deadline. | ¿The plaintiffs ultimately contended that the renovation expenses exceeded $171,000.00. At one point, in June 2007, Lafayette issued a final payment in the amount of $505.80 as a “supplement for fascia, soffit and ceiling molding.” However, the remainder of the claim was denied.

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Cite This Page — Counsel Stack

Bluebook (online)
77 So. 3d 1078, 11 La.App. 3 Cir. 475, 2011 La. App. LEXIS 1352, 2011 WL 5374755, Counsel Stack Legal Research, https://law.counselstack.com/opinion/leland-v-lafayette-insurance-co-lactapp-2011.