McMullen Builders, LLC v. Kinney Insurance Agency, LLC

• Court: Louisiana Court of Appeal
• Decided: March 10, 2010
• Docket: CA-0009-1055
• Status: Unknown

Opinion

NOT DESIGNATED FOR PUBLICATION

STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT

09-1055

MCMULLEN BUILDERS, L.L.C.

VERSUS

KINNEY INSURANCE AGENCY, L.L.C., ET AL.

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

APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT PARISH OF CALCASIEU, NO. 2006-6145 HONORABLE WILFORD CARTER, DISTRICT JUDGE

JIMMIE C. PETERS JUDGE

Court composed of Sylvia R. Cooks, Jimmie C. Peters, and Billy H. Ezell, Judges.

AFFIRMED.

John S. Bradford Paul P. Marks Stockwell, Sievert, Viccellio, Clements & Shaddock, L.L.P. Post Office Box 2900 Lake Charles, LA 70602 (337) 436-9491 COUNSEL FOR PLAINTIFF/APPELLANT: McMullen Builders, L.L.C. David J. Calogero Davidson, Meaux, Sonnier & McElligott, L.L.P. 810 South Buchanan Street Post Office Box 2908 Lafayette, LA 70502-2908 (337) 237-1660 COUNSEL FOR DEFENDANTS/APPELLEES: Kinney Insurance Agency, L.L.C. UTICA Mutual Insurance Company PETERS, J.

The plaintiff, McMullen Builders, L.L.C. (McMullen Builders) appeals the jury

verdict dismissing its claim against Kinney Insurance Agency, L.L.C. (Kinney

Agency), and UTICA Mutual Insurance Company, Kinney Agency’s errors and

omissions insurer. For the following reasons, we affirm the trial court judgment in

all respects.

DISCUSSION OF THE RECORD

The litigation arises from a June 21, 2006 fire that caused severe damage to a

structure owned by McMullen Builders. McMullen Builders asserted in its suit that

representatives of Kinney Agency negligently failed to obtain fire insurance coverage

on the structure, thus causing McMullen Builders significant damages.

The record establishes that two brothers, Bill and John McMullen, own

McMullen Builders, a limited liability company whose business is building and

remodeling homes, and that the company obtained ownership of the structure at issue

in this litigation mid-morning on June 20, 2006. McMullen Builders planned to

remodel this house, which was located on Camellia Lane in Sulphur, Louisiana, and

on the afternoon of June 20, Melanie McMullen, John’s wife, was sent to run a

number of errands on behalf of McMullen Builders, one of which was to attempt to

obtain insurance coverage for the house.

Melanie testified that she often acted as McMullen Builders’ “girl Friday,”

running errands as needed, and that on the afternoon of June 20, 2006, at

approximately 1:30 p.m., she picked up papers associated with the title transfer from

the attorney’s office and took them to Lisa McMullen at the office. Lisa, who is

Bill’s wife, then gave Melanie a check to pay off a lien on the house. Bill, who was

at the office at the time, requested that she stop by Kinney Agency in Sulphur and secure insurance coverage for the newly-purchased house. Lisa then gave Melanie

a blank check made out to Kinney Agency to cover the cost of coverage.

At that time, Kinney Agency generally handled McMullen Builders’ insurance

needs, having procured workers’ compensation and general liability coverage as well

as insurance on a mobile home the limited liability company owned. Lee Kinney, the

owner of Kinney Insurance Agency, was an independent insurance agent who wrote

insurance with a number of different companies.

At 2:15 p.m., Melanie paid to cancel the lien at the City of Sulphur office. She

testified that after completing her business at the Sulphur office, she went directly to

the Kinney Agency, arriving some fifteen minutes later. Melanie said that she arrived

just as Jamie Meche, the agency secretary, was leaving to care for a sick child. She

then spoke with Lee concerning the insurance issue and took notes during the

conversation.1 According to Melanie, Lee told her that the structure would be

covered, for her to come back in the morning and he would have everything he

needed, but concluded with “Just go ahead, I’ve got you covered. . . . Don’t worry,

I’ve got you covered right now. Let me make a phone call, and then we’ll wrap

things up in the morning.” According to Melanie, she left the Kinney Agency at

approximately 3:00 p.m. She then telephoned Bill to inform him that she had secured

insurance as per his instruction, and that the only issue was that of liability.

Bill testified that he did not remember the telephone conversation with

Melanie, but that had she telephoned him to inform him that she was not able to

obtain insurance, he would have remembered that. John testified that he telephoned

Lee at the agency and that Lee told him there was no reason for him to come in

1 Her notes, which were introduced into evidence, reflected a notation that the insurance would cost $861.05 for six months, with a $1,000.00 deductible.

2 because Melanie had taken care of the insurance.2 According to John, Lee informed

him that he had coverage, and that the only issue was liability coverage.

Lee’s testimony contradicted that of both Melanie and John. According to Lee,

Melanie did come to his office to purchase insurance, but she arrived at 4:00 p.m.,

not at 2:30 p.m. as she had testified. He was in the process of giving her a quote

when he was informed that someone else was living in the house.3 Not being sure he

could write a policy on a house that would be renovated while a tenant occupied it,

he needed to contact the company that would provide the coverage. He testified that

the company with whom he would have to place the insurance was based in Georgia,

in the eastern time zone, where it was already 5:00 p.m., and that it had already closed

for the day. Lee disagreed with the statement that Melanie credited to him in her

testimony. Specifically, he testified that he never told Melanie that the structure at

issue was covered, saying

I know I did not insinuate coverage in any stretch, form, fashion. I looked at her right square in the eyes, and I said, I cannot help you today. There is no coverage. I can’t help you at all. Come back in the morning.

According to Lee, he fully intended to write the policy the following day, but there

was nothing he could do on the afternoon of June 20.

With regard to John’s telephone conversation with him, Lee testified that it

never happened. According to Lee, John did telephone the agency, but Lee was busy

at the time and Julie took a message. He testified that he did not return John’s

telephone call because Melanie came by his office after John had called. Lee’s office

2 John’s cellular telephone records indicate he telephoned Kinney Agency at 3:31 p.m. on June 20, 2006. 3 Although McMullen Builders acquired ownership of the property, the previous owner continued to occupy the home.

3 telephone message book contained a message slip that has neither a time nor a date,

but indicates that John did call. However, the message slip is sandwiched between

one dated at 3:12 p.m. and another dated at 4:15 p.m. on June 20. Jamie testified that

she wrote the message slip.

Jamie did not support Melanie’s timeline either. She testified that while she

did not remember specifically when she left work on June 20, but the last telephone

message she took was noted at 4:24 p.m. On cross-examination, Melanie admitted

that the timeline she testified to on direct was not entirely accurate. She

acknowledged that she did not go directly to the agency office after cancelling the

lien. Instead, while at the City’s office, she made arrangements for the water to be

turned on at the newly-acquired house.

Sometime in the early morning hours of June 21, 2006, the house burned.

Eventually it was torn down. When Kinney Agency denied McMullen Builders’

claim for insurance coverage on the house, this suit resulted. Following the trial, the

jury rejected McMullen Builders’ claim. Thereafter, the trial court executed a

judgment incorporating the jury’s verdict and taxed McMullen Builders with all costs,

including $2,600.00 in expert witness fees.

McMullen Builders appeals, with seven assignments of errors:

1. Whether, as a matter of law, the jury clearly erred in not recognizing that McMullen Builders proved that Kinney owed a duty to McMullen, that Kinney breached that duty and that the breach resulted in injury to McMullen.

2. Whether, as a matter of law, the jury clearly erred in not recognizing that McMullen proved that Kinney represented that the house was covered, that McMullen justifiably relied on that representation, and that McMullen changed its position based on such justifiable reliance.

4 3. Whether the trial court, as a matter of law, erred in not allowing testimony showing evidence of a habit of Kinney Insurance.

4. Whether the trial court, as a matter of law, erred in not allowing impeachment evidence.

5. Whether the trial court, as a matter of law, erred in not allowing the relevant evidence of the replacement cost value of the subject property.

6. Whether the trial court, as a matter of law, erred in excluding evidence of what McMullen Builders paid to demolish the house after it was destroyed by fire.

7. Whether the trial court erred in the amount it awarded to the defendants’ expert witness.

OPINION

For the purposes of continuity we will address the assignments of error out of

order.

Assignments of Error Numbers Three and Four

We first address the two evidentiary issues: whether the trial court erred in not

allowing testimony intended to show evidence of a habit of Kinney Agency and

whether the trial court erred in not allowing evidence designed to impeach Lee’s

deposition testimony. In reviewing these issues, we recognize that “[a] trial court is

given vast discretion in its ruling on the admissibility of evidence.” Gold, Weems,

Bruser, Sues & Rundell v. Granger, 06-859, p. 9 (La.App. 3 Cir. 12/29/06), 947 So.2d

835, 843, writ denied, 07-421 (La. 4/27/07), 955 So.2d 687.

Before the trial began, the trial court granted the defendants’ motion in limine

to exclude the testimony by Bonnie Spears, the office manager for New Horizons

Counseling Center. She was to testify that she had contacted Kinney Agency on

behalf of New Horizons Counseling Center to obtain insurance coverage on a

building owned by the Center, that Lee had told her that the building was covered, but

5 that in fact Lee did not obtain the requested insurance coverage. McMullen Builders

argues on appeal that this testimony was admissible under La.Code Evid. art. 406,

which allows “[e]vidence of the habit of a person or of the routine practice of an

organization.” However, although La.Code Evid. art. 406 allows testimony relating

“specific instances of conduct,” these must be “sufficient in number to warrant a

finding that the habit existed or that the practice was routine.” Here, where the

testimony at issue related only one instance of conduct, we find that the trial court did

not abuse its vast discretion in finding that the proffered testimony was not

admissible.

McMullen Builders also argues that the trial court erred in granting the

defendants’ motion in limine to exclude evidence of other claims made against

Kinney Agency. In his June 12, 2007 deposition, Lee acknowledged being sued by

New Horizens; but when asked “[h]ave you ever been sued by anyone else,” Lee

answered “[n]o, sir.” McMullen Builders sought to introduce evidence of two other

lawsuits against Kinney Agency to establish that Lee’s deposition testimony was

untruthful.4 The trial court rejecting both offerings. Specifically, the trial court found

that because the Cunningham suit had been filed only against the agency and not

against Lee personally, it could not be used to impeach Lee’s testimony that he had

not been sued by anyone else. Concerning the English case, the defendants

introduced evidence to establish that the petition in that matter had been served

through Lee’s office, and not to him personally, on Friday, June 8, 2007, and he did

not see the petition until the next week. Because his deposition was taken on

4 The suits are identified in the record as Cunningham v. Kinney Insurance Agency, L.L.C., filed on May 2, 2007; and English v. Kinney Insurance Agency, L.L.C. & Edward Lee Kinney, Jr., filed on June 4, 2007.

6 Tuesday, June 12, 2008, the trial court prohibited McMullen Builders from using the

suit’s existence to impeach Lee.

In its reply brief on appeal, McMullen Builders asserts that Lee accepted

personal service in English the day before his deposition. However, our review of the

proffer by McMullen Builders on this issue reveals that the record contains no return

of service or other evidence to establish when Lee was served with the lawsuit. We

find that the trial court did not abuse its vast discretion in refusing to admit evidence

of the two suits.

We find no merit in either of these two assignments of error.

Assignments of Error Numbers One and Two

In its first assignment of error, McMullen Builders argues that the jury clearly

erred in rejecting its argument that Kinney Agency breached the duty to procure the

insurance requested and that McMullen Builders suffered injury because of that

breach. In its second assignment of error, it argues that the jury clearly erred in not

recognizing that McMullen Builders proved that Lee represented to Melanie (and

therefore to the limited liability company itself) that the house was covered, that

McMullen Builders justifiably relied on that representation, and that McMullen

Builders changed its position based on such justifiable reliance. Because both

assignments of error center around the same issue—whether the jury erred in not

finding that Lee told Melanie and/or John that there was insurance coverage on the

house—we address these two assignments of error together.

The supreme court, in Karam v. St. Paul Fire & Marine Ins. Co., 281 So.2d

728, 730-31 (La. 1973), articulated the relevant duty of an insurance agent as follows:

An insurance agent who undertakes to procure insurance for another owes an obligation to his client to use reasonable diligence in

7 attempting to place the insurance requested and to notify the client promptly if he has failed to obtain the requested insurance. The client may recover from the agent the loss he sustains as a result of the agent’s failure to procure the desired coverage if the actions of the agent warranted an assumption by the client that he was properly insured in the amount of the desired coverage.

Additionally, in Porter v. Utica Mut. Ins. Co., 357 So.2d 1234, 1238 (La.App. 2 Cir.

1978), the second circuit stated:

In order to recover for loss arising out of the failure of an insurance agent to obtain insurance coverage, the plaintiff must prove: (1) an undertaking or agreement by the insurance agent to procure insurance; (2) failure of the agent to use reasonable diligence in attempting to place the insurance and failure to notify the client promptly if he has failed to obtain the insurance; and (3) the actions of the agent warranted an assumption by the client that he was properly insured.

See also Graves v. State Farm Mut. Auto Ins. Co., 01-1243, pp. 3-4 (La. App. 3 Cir.

6/26/02), 821 So.2d 769, 772, writ denied, 02-2320 (La. 11/15/02), 829 So.2d 435.

Whether Lee breached his duty is a factual determination subject to the

manifest error/clearly wrong standard of review. Stobart v. State, Through Dep’t. of

Transp. & Dev., 617 So.2d 880 (La.1993). In order to reverse a factfinder’s

determination of fact, an appellate court must review the record in its entirety and

meet the following two-part test: (1) find that a reasonable factual basis does not

exist for the finding, and (2) further determine that the record establishes that the

factfinder is clearly wrong or manifestly erroneous. Stobart, 617 So.2d 880. Where

there is conflict in the testimony presented at trial, the factfinder’s reasonable

evaluations of credibility and reasonable inferences of fact should not be disturbed

on appeal. Rosell v. ESCO, 549 So.2d 840 (La.1989). A factfinder’s credibility

determinations are subject to the strictest deference, and the manifest error or clearly

wrong standard demands great deference for the factfinder’s findings. Theriot v.

8 Lasseigne, 93-2661 (La. 7/5/94), 640 So.2d 1305. “[T]he issue to be resolved by a

reviewing court is not whether the trier of fact was right or wrong, but whether the

factfinder’s conclusion was a reasonable one.” Stobart, 617 So.2d at 882. Thus, if

the factfinder’s decision is reasonable in light of the record reviewed in its entirety,

the court of appeal may not reverse even though the appellate court would have

weighed the evidence differently. Rosell, 549 So.2d 840.

The evidence at trial concerning what time Melanie arrived at the agency

office, what Lee told Melanie at the conclusion of their meeting that day, whether

John spoke to Lee at 3:31p.m., and, if so, what Lee told John, was certainly

contradictory. The jury could have determined that Lee and Julie were more credible

than John and Melanie. Such a determination would lead the jury to conclude that

when John called the agency at 3:31 p.m., Julie answered the phone and took a

message for Lee; that Melanie arrived at the office at around 4:00 p.m.; and that Lee

told her he could not write a policy on the house that day.

While we might well have made different credibility determinations and

reached a different result, we cannot say that the jury was clearly wrong in accepting

the testimony of Lee and Julie to conclude that Lee used reasonable diligence in

attempting to place the insurance McMullen Builders requested, and that Lee told

Melanie that McMullen Builders did not have insurance coverage on the house.

We find no merit in these two assignments of error.

Assignments of Error Numbers Five and Six

Because we affirm the jury’s verdict, we need not address these assignments

of error.

9 Assignment of Error Number Seven

Finally, McMullen Builders argues that the trial court erred in awarding the

defendants $2,706.00 in expert witness fees. The trial court “may render judgment

for costs, or any part thereof, against any party, as it may consider equitable.”

La.Code Civ.P. art. 1920. Louisiana Revised Statutes 13:3666(A) provides that a

witness called to testify as to an opinion founded on a professional examination and

to state the results of the examination “shall receive additional compensation, to be

fixed by the court, with reference to the time employed and the degree of learning or

skill required.” Further, La.R.S. 13:3666(B) provides that “[t]he court shall

determine the amount of the fees of said expert witnesses which are to be taxed as

costs to be paid by the party cast in judgment . . . .” In determining expert witness

fees, “each case must turn on its own peculiar facts and circumstances.” Hazelwood

Farm, Inc. v. Liberty Oil And Gas Corp., 02-266, p. 19 (La.App. 3 Cir. 4/2/03), 844

So.2d 380, 394, writs denied, 03-1585, 03-1624 (La. 10/31/03), 857 So.2d 476. An

appellate court can modify a trial court’s assessment of costs only upon a showing of

abuse of discretion. Id.

Mark Tammariello, an expert in the field of insurance agency practice, testified

for the defendants. He had submitted two statements for services rendered in the

litigation. The first statement, for $1,750.00, represented charges for services

rendered after being retained through the taking of his deposition. The second

statement, for $2,707.35, represented charges for services rendered after the

deposition through trial. The trial court did not tax the expert’s total charges as costs

to McMullen Builders. Instead, the trial court taxed only $2,600.00, or slightly over

fifty percent, of the expert’s charges as costs to be assessed to McMullen Builders.

10 The dispute in this assignment of error relates to allocation of the charges in

the first statement because the parties had entered into an agreement concerning the

costs associated with their expert witnesses and their deposition testimony.

Specifically, “each party agreed to pay their own expert witness fees for depositions.”

The first statement was broken down to one-half hour discussing the case with the

defendants’ attorney, seven and one-half hours reviewing depositions provided to

him, and two hours testifying at the deposition. McMullen Builders argues on appeal,

as it did below, that the entire $1,750.00 statement should be considered a part of the

agreement with regard to expert witness deposition testimony, and that the

appropriate award should be somewhere around one half of the second statement. On

the other hand, the defendants argue that the agreement related only to the two hours

spent in the deposition, and that the preparation could be equally considered as trial

preparation.

In reaching the expert witness award, the trial court recognized the agreement

as covering only the time spent in deposition testimony and reduced the award of

expert witness fees accordingly. The trial court obviously agreed with the

defendants’ interpretation even though the seven and one-half hours of preparation

time occurred within a few days prior to the August 30, 2008 deposition.

We find no abuse of discretion in the trial court’s award of expert witness fees.

DISPOSITION

For the foregoing reasons, we affirm the judgment rendered in favor of Kinney

Insurance Agency, L.L.C., and UTICA Mutual Insurance Company dismissing the

claims of the plaintiff, McMullen Builders, L.L.C. We also affirm the trial court’s

11 judgment awarding the defendants $2,600.00 in expert witness fees. We assess all

costs of this appeal to McMullen Builders, L.L.C.

This opinion is NOT DESIGNATED FOR PUBLICATION. Rule 2-16.3, Uniform Rules, Courts of Appeal.