NAT. UNION FIRE INS. CO. v. Cagle

649 So. 2d 642, 94 La.App. 3 Cir. 322, 1994 La. App. LEXIS 2983, 1994 WL 597680
CourtLouisiana Court of Appeal
DecidedNovember 2, 1994
Docket94-322
StatusPublished
Cited by5 cases

This text of 649 So. 2d 642 (NAT. UNION FIRE INS. CO. v. Cagle) 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
NAT. UNION FIRE INS. CO. v. Cagle, 649 So. 2d 642, 94 La.App. 3 Cir. 322, 1994 La. App. LEXIS 2983, 1994 WL 597680 (La. Ct. App. 1994).

Opinion

649 So.2d 642 (1994)

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Plaintiff/Appellant,
v.
Charles F. CAGLE, et al., Defendants/Appellees.

No. 94-322.

Court of Appeal of Louisiana, Third Circuit.

November 2, 1994.
Writ Denied March 17, 1995.

*643 Joe Payne Williams, Robert Elton Arceneaux, Charles Rene Penot Jr., Mack E. Barham, Maureen O'Connor Sullivan, New Orleans, for Nat'l Union Fire Ins. Co. of Pittsburgh.

Carl W. Cleveland, New Orleans, Henry Cole Gahagan Jr., Natchitoches, David B. Means III, Mansfield, Mary Olive Pierson, Baton Rouge, Charles F. Cagle et al.

Bobby Stephen Gilliam, Penny D. Sellers, Shreveport, for Succession of Jess Loyd Jr.

Before DOUCET, PETERS and BERTRAND[*], JJ.

BERTRAND, Judge.

National Union Fire Insurance Company of Pittsburgh, Pennsylvania filed a petition to nullify a judgment rendered in favor of Charles F. Cagle[1], et al. (hereinafter referred *644 to as "the Cagles") and against the Succession of Jess Loyd, Jr. The Cagles were granted summary judgment in the nullity action, and the petition for nullity was dismissed. National Union appeals the decision of the trial court and assigns as error both the granting of summary judgment and certain pretrial discovery rulings made by the district judge. For the reasons which follow, we reverse the judgment rendered below and remand for trial on the merits.

FACTS

Jess Loyd, Sr. was vice president and supervisor of the agricultural lending department of the First National Bank of Shreveport. The Cagles were in the cattle ranching business and were customers of FNB since the 1970s. Loyd handled all of the Cagles' loans and financial transactions and oversaw all economic decision making in their cattle ranching operations. After more than thirty-five years at FNB, Loyd retired in 1986. Shortly after his retirement, FNB personnel approached the Cagles about their debt to the bank. The Cagles were apparently unaware of the enormity of their debts. They sought the assistance of counsel and eventually learned through investigation that Loyd's control of their businesses and financial transactions was in deviation of bank policies. In 1987, Loyd died from an apparent suicide.[2]

The record reveals that the Cagles initially asserted claims of fraud and personal profiteering against Loyd's succession in the underlying suit and in a federal RICO[3] action. They alleged that Loyd devised elaborate kickback schemes and participated in other fraudulent activities; some of these activities were described in detail in an affidavit filed in the RICO suit by one of the attorneys based on her investigation of Loyd's dealings. They asserted similar claims of fraud against FNB and others, and FNB sued its bond carriers based on the same allegations. Eventually, all claims were settled or otherwise disposed of except for the Cagles' suit against the succession in state court, which ultimately resulted in the judgment sought to be nullified by National Union. The succession was insured by National Union, which provided directors' and officers' liability and corporation reimbursement insurance policies to FNB. National Union's policies, however, specifically excluded coverage of any claims for loss caused by an FNB officer who has committed acts of fraud or personal profiteering. Accordingly, because of this exclusion, National Union took only a minimal interest in the litigation even though it was notified of the pending claims.

Prior to trial against the succession, the Cagles and the succession entered into an agreement whereby all parties agreed "to forebear [sic] in the collection of any judgment rendered against the Succession ... except to the extent that it may be reasonably ascertained that policies of insurance or indemnity are available and provide coverage therefore [sic]. The [Cagles] specifically reserve the right to assert claims against the Loyd Succession but only to the extent that it may be reasonably ascertained that policies of insurance or indemnity are available and provide coverage therefore [sic] to the Succession." National Union was not a party to this agreement and was not informed of its existence. National Union also was not a party to the litigation at this time.[4]

Also pursuant to the aforementioned agreement, the parties agreed to transfer the *645 litigation from Caddo Parish to Natchitoches Parish, a parish in which venue would not have been proper otherwise. The succession expressed its intention to minimize the "time, effort, money, inconvenience, and publicity associated with the defense of the claims," and agreed to provide relevant information to the Cagles at the Cagles' costs.

By 1991, the Cagles were ready to proceed to trial against the succession. In September, they filed amended petitions whereby all allegations of fraud, dishonesty, and personal profiteering were deleted. Instead, the plaintiffs asserted claims for breach of contract, duress, tortious interference with business relationships, breach of fiduciary relationships, and negligent misrepresentation. The succession forwarded the amended petitions to National Union's New York office along with other pleadings and without any notation of the substance of the amendments. When National Union did not respond by November, the succession sent the same mailing by certified mail, and then agreed to a trial date in December. Although National Union could have been named as a defendant regardless of its policy provisions (see footnote four), the Cagles chose not to name National Union as a party, and National Union did not intervene. The trial took place on December 16 and 17, 1991. Counsel for the succession filed an answer on the morning of trial and attended the proceedings.[5] However, apparently in keeping with the intentions stated in the forbearance agreement, the succession's counsel did not present any evidence, testimony, or argument, made no objections, and did not cross-examine any witnesses. At the conclusion of the trial, the judge ruled from the bench in favor of the Cagles on the negligent misrepresentation and duress claims, and awarded damages of over $14 million, plus interest, costs, expert fees, and attorneys fees.

Immediately upon receipt of the written judgment, the Cagles forwarded it to National Union and demanded full payment.

National Union then intervened in the suit and appealed the judgment. This Court affirmed the finding of negligent misrepresentation and the damage award based on the evidence in the record; writs to the Supreme Court were denied. See Cagle v. Succession of Loyd, 617 So.2d 592 (La.App. 3rd Cir.), writs denied, 620 So.2d 877 (La.1993). National Union also filed the nullity action which is the subject of this appeal. As of this writing, proceedings related to coverage are ongoing in federal court and are the subject of an exception of res judicata filed by the Cagles in the instant suit.

The procedural background of the nullity action is as follows: The Cagles answered the unserved petition for nullity on May 25, 1993. In July, National Union moved for a dismissal without prejudice[6], which was opposed by the Cagles and was ultimately denied by the trial judge. In August, discovery disputes arose involving interrogatories, requests for production of documents, and requests for admissions of fact. Both sides moved to quash certain depositions.

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649 So. 2d 642, 94 La.App. 3 Cir. 322, 1994 La. App. LEXIS 2983, 1994 WL 597680, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nat-union-fire-ins-co-v-cagle-lactapp-1994.