STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
10-63
RENIA B. HUDSON
VERSUS
AIG NATIONAL INSURANCE
COMPANY, ET AL.
**********
APPEAL FROM THE TWELFTH JUDICIAL DISTRICT COURT PARISH OF AVOYELLES, NO. 2009-2986-B HONORABLE WILLIAM J. BENNETT, DISTRICT JUDGE
JOHN D. SAUNDERS JUDGE
Court composed of John D. Saunders, Jimmie C. Peters, and Elizabeth A. Pickett, Judges.
AFFIRMED.
Daniel G. Brenner Bolen, Parker, Brenner & Lee, Ltd. P. O. Box 11590 Alexandria, LA 71315-1590 (318) 445-8236 Counsel for Defendant Appellant: AIG National Insurance Co. Jerold Edward Knoll Jr. Esq. Attorney at Law P.O. Box 426 Marksville, LA 71351 (318) 253-6200 Counsel for Plaintiff Appellee: Renia B. Hudson
Mary Helen Johnson Johnson Law Firm, LLC P. O. Box 468 Marksville, LA 71351 (318) 253-0935 Counsel for Plaintiff Appellee: Renia B. Hudson SAUNDERS, Judge.
This case involves an automobile accident where the insured filed suit against
her insurer under her uninsured/underinsured policy not only for the balance of her
policy, but also for penalties that were eventually awarded under La.R.S. 22:1973.
The trial court found that the insurer had acted arbitrarily, capriciously, and without
probably cause in denying the insured’s claim. As such, under La.R.S.
22:1973(B)(5), the trial court awarded the insured an amount double her damages as
a penalty to the insurer for its actions.
The insurer filed this appeal, alleging four assignments of error. We find no
credence in any of these assignments and, therefore, affirm the trial court. Further,
we assess all costs of this appeal to the insurer.
FACTS AND PROCEDURAL HISTORY:
This matter arises out of an automobile accident that occurred on March 20,
2008, involving Renia B. Hudson (Hudson), an AIG National Insurance Company
(AIG) insured, operating a 2004 Mazda Miata and Kasarah Sayer, who was driving
a 1994 GMC pick-up truck. The pick-up truck was owned by Timmy Sayer and
insured by State Farm Mutual Insurance Company (State Farm). The accident
occurred when Hudson was traveling on East Tunica Drive in Marksville, Louisiana,
and the Sayer vehicle pulled out of a gas station, striking Hudson’s vehicle broadside.
The accident occurred solely as a result of the fault of Kasarah Sayer.
The State Farm policy provided a $10,000.00/$20,000.00 liability limit.
Hudson filed a claim with State Farm on that policy and eventually signed a release
in favor of State Farm, Timmy Sayer, and Kasarah Sayer in exchange for the policy
limit of $10,000.00.
At the time of the accident, Hudson had a policy of uninsured/underinsured motorist (UM) insurance coverage issued by AIG for a limit of $25,000.00. On
December 9, 2008, Hudson sent a demand letter to AIG for that limit. Attached to the
demand letter was Hudson’s medical profile, a certificate of coverage from State
Farm stating that the limits on Sayer’s policy of insurance were “10/20/25,” an
affidavit of coverage from Timmy Sayer stating that he had “no other liability
insurance . . . which would provide insurance benefits to [Hudson] for damages
sustained as a result of the collision on 03-20-08,” and a release executed by Hudson
in favor of Timmy Sayer, Kasarah Sayer, and State Farm in exchange for the policy
limits of ten thousand dollars.
Hudson’s medical profile included diagnostic tests taken of her cervical spine
at three different time frames following three different automobile accidents. The
first was taken in 2000, the second in 2005, and the third following the pertinent
accident, in 2008. The objective findings of those tests were that following the 2005
accident, Hudson showed no abnormalities related to her cervical spine, whereas,
after the 2008 accident, she had disc herniations at C4-5 and C5-6 and a disc bulge
at C3-4.
AIG refused to pay under the policy, claiming that it first needed to receive a
recorded statement from Hudson. Suit was filed against AIG on January 9, 2009,
alleging that Hudson was entitled to not only her damages, but also to penalties from
AIG under La.R.S. 22:1220 and 22:658.1
Thereafter, Hudson’s deposition was taken by AIG on May 14, 2009. On May
21, 2009, AIG made an unconditional tender of $11,744.00. Hudson rejected the
tender, and AIG placed those funds in the registry of the court.
1 Louisiana Revised Statutes 22:658 and 22:1220 are currently cited as La.R.S. 22:1892 and 22:1973 respectively.
2 A bench trial was held on July 19, 2009. The trial court issued reasons for
ruling and judgment on September 15, 2009. In its judgment, the trial court awarded
Hudson $25,000.00 from AIG under the terms of the UM policy. Further, the trial
court awarded Hudson $50,000.00 in penalties under La.R.S. 22:1973(B)(5) due to
its finding that Hudson was an extremely credible witness, that AIG’s adjuster, Jeff
Chighizola, testified in a very coy and evasive manner, and that AIG had acted in an
arbitrary and capricious manner without just cause. AIG has appealed this judgment,
alleging the following four assignments of error:
ASSIGNMENTS OF ERROR:
1. The trial court committed manifest error in failing to grant AIG’s motion for involuntary dismissal where no prima facie case was proven by Hudson to satisfy the strict and narrowly construed requirements of the penal statutes La.R.S. 22:1892 and La.R.S. 22:1973.
2. The trial court erred by granting penalties under La.R.S. 22:1973 where Hudson filed suit alleging bad faith prior to any actual occurrence of what Hudson alleges to be “bad faith” under the statute.
3. The trial court committed manifest error in granting La.R.S. 22:1973 damages and penalties where the evidence does not support a finding of insurer bad faith.
4. The trial court erred in calculating the La.R.S. 22:1973 and other “damages” allegedly incurred by AIG’s alleged bad faith actions.
ASSIGNMENT OF ERROR NUMBER ONE:
In its first assignment of error, AIG contends that the trial court committed
manifest error in failing to grant its motion for involuntary dismissal where no prima
facie case was proven by Hudson to satisfy the strict and narrowly construed
requirements of the penal statutes La.R.S. 22:1892 and La.R.S. 22:1973. For the
following reason, we find no basis for this assignment.
Louisiana Code of Civil Procedure Article 1672(B) (emphasis added) states:
3 In an action tried by the court without a jury, after the plaintiff has completed the presentation of his evidence, any party, without waiving his right to offer evidence in the event the motion is not granted, may move for a dismissal of the action as to him on the ground that upon the facts and law, the plaintiff has shown no right to relief. The court may then determine the facts and render judgment against the plaintiff and in favor of the moving party or may decline to render any judgment until the close of all the evidence.
A trial court’s determination on a party’s motion granting an involuntary
dismissal is reviewed using the manifest error standard of review. Gauthier v. City
of New Iberia, 06-341 (La.App. 3 Cir. 9/27/06), 940 So.2d 915. Thus, for this court
to reverse a trial court’s granting of a motion for involuntary dismissal, we must find
that there lacks a factual basis for its determination, i.e., that the determination is
manifestly erroneous, clearly wrong, or unreasonable. See Stobart v. State, through
DOTD, 617 So.2d 880 (La.1993).
In the case before us, it is AIG, the party that made the motion for involuntary
dismissal that is assigning as error the denial of the motion. Our review of the
explicit language of applicable article is that the trial court “may decline to render any
judgment until the close of all the evidence.” La.Code Civ.P. art. 1672(B). Thus,
there is nothing for this court to review, as the denial of a motion for involuntary
dismissal is purely discretionary. See Townsend v. Delchamps, Inc., 94-1511 (La.App.
1 Cir. 10/6/95), 671 So.2d 513, writ denied, 95-2648 (La. 1/12/96), 667 So.2d 522;
Parker v. Winn-Dixie La., Inc., 615 So.2d 378 (La.App. 5 Cir. 1993); Riser v. Am.
Med. Int’l, Inc., 620 So.2d 372 (La.App. 5 Cir. 1993); Blount v. Peabody Shoreline
Geophysical, 439 So.2d 565 (La.App. 1 Cir. 1983). Accordingly, we find no merit
to this assignment of error.
ASSIGNMENT OF ERROR NUMBER TWO:
In its second assignment of error, AIG asserts that the trial court erred by
4 granting penalties under La.R.S. 22:1973 where Hudson filed suit alleging bad faith
prior to any actual occurrence of what Hudson alleges to be “bad faith” under the
statute. We find that AIG’s assertion is without merit.
Louisiana Revised Statutes 22:1973 states, in pertinent part, the following:
A. An insurer, including but not limited to a foreign line and surplus line 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:
....
(5) Failing to pay the amount of any claim due any person insured by the contract within sixty days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause.
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.
AIG argues that the trial court erred in granting penalties to Hudson because
she filed suit on January 7, 2009, within sixty days of December 9, 2008, the date that
the trial court determined AIG had received “satisfactory proof of loss” under La.R.S.
22:1973. AIG’s argument posits a question that is legal in nature, i.e. does the sixty-
day time period under La.R.S. 22:1973(B)(5) have to toll prior to a plaintiff filing a
suit alleging entitlement to penalties under that statute.
5 Appellate review of questions of law is simply to determine whether the trial court was legally correct or legally incorrect. If the trial court’s decision was based on its erroneous interpretation or application of the law, rather than a valid exercise of discretion, such incorrect decision is not entitled to deference by the reviewing court.
Domingue v. Bodin, 08-62, pp. 2 (La.App. 3 Cir. 11/5/08), 996 So.2d 654, 657 (quoting Citgo Petroleum Corp. v. Frantz, 03-88, pp.3-4 (La.App. 3 Cir. 6/403), 847 So.2d 734, writ denied, 03-1911 (La. 10/31/03), 857 So.2d 484 (citations omitted)).
“When a law is clear and unambiguous and its application does not lead to absurd
consequences, the law shall be applied as written and no further interpretation may
be made in search of the intent of the legislature.” La.Civ.Code art. 9.
We find the language of La.R.S. 22:1973(B)(5) to be both unambiguous and
clear. That explicit language does not require the sixty-day period to have run prior
to a plaintiff filing suit in order for that plaintiff to recover the statutory penalties.
Further, rejecting AIG’s proposed prerequisite leads to no absurd consequences. It
is common practice by plaintiffs to file suit and request compensation for legal rights
that are more likely than not to manifest themselves in the future. For example, a
plaintiff can properly file suit for future medical expenses, loss of enjoyment of life,
or loss of consortium. As such, we find no merit in AIG’s argument.
ASSIGNMENT OF ERROR NUMBER THREE:
In its third assignment of error, AIG states that the trial court committed
manifest error in granting La.R.S. 22:1973 damages and penalties where the evidence
does not support a finding of insurer bad faith.
The trial court found that AIG’s actions in adjusting Hudson’s claim violated
La.R.S. 22:1973(B)(5) which states that an insurer can be responsible for penalties
if it fails “to pay the amount of any claim due any person insured by the contract
within sixty days after receipt of satisfactory proof of loss from the claimant when
6 such failure is arbitrary, capricious, or without probable cause.” Whether a refusal
to pay under La.R.S. 22:1973(B)(5) is “arbitrary, capricious, or without probable
cause” and warrants granting an insured penalties takes into account what facts are
known by the insurer at the time of its action. Reed v. State Farm Mut. Auto. Ins. Co.,
03-107 (La. 10/21/03), 857 So.2d 1012. This determination is a factual issue,
therefore, the applicable standard of review is that of manifest error. Id. As such, we
will look to the record to determine whether it supports the trial court’s decision to
award Hudson penalties.
The trial court found that “satisfactory proof of loss” was received by AIG on
December 9, 2008. AIG contends that this finding was in error. AIG bases its
contention that there was not “satisfactory proof of loss” on December 9, 2008, on the
fact that Hudson had not yet given it her recorded statement as required by the
contract between them. While AIG is correct that the language of the policy between
it and Hudson necessitated that Hudson give AIG her recorded statement, Hudson’s
lack of cooperation in this regard does not prohibit her from proving that AIG
received “satisfactory proof of loss” without that statement.
Rather, our supreme court was quite explicit as to what “satisfactory proof of
loss” entails in Reed, 857 So.2d at 1022 (quoting McDill v. Utica Mutual Insurance
Co., 475 So.2d 1085, 1089 (La.1985)(alteration in original)) wherein it stated:
“Satisfactory proof of loss” in a claim pursuant to UM coverage is receipt by the insurer of “sufficient facts which fully apprise the insurer that (1) the owner or operator of the other vehicle involved in the accident was uninsured or under insured; (2) that he [or she] was at fault; (3) that such fault gave rise to damages; and (4) establish the extent of those damages.”
On December 9, 2008, counsel for Hudson sent counsel for AIG a demand
letter with attached documents. Those attached documents included Hudson’s
7 medical profile, a certificate of coverage from State Farm stating that the limits on
Sayer’s policy of insurance were “10/20/25,” an affidavit of coverage from Timmy
Sayer stating that he had “no other liability insurance . . . which would provide
insurance benefits to [Hudson] for damages sustained as a result of the collision on
03-20-08,” and a release executed by Hudson in favor of Timmy Sayer, Kasarah
Sayer, and State Farm in exchange for the policy limits of ten thousand dollars.
Our review of these documents support the trial court’s finding that the
December 9, 2008 letter established “satisfactory proof of loss” under the criteria
stated in Reed. State Farm’s certificate of insurance, Timmy Sayer’s affidavit, and the
release establish the first criterium that “the owner or operator of the other vehicle
involved in the accident was uninsured or under insured.” Id.
The police report submitted as Plaintiff’s exhibit number 3 was readily
available to AIG prior to December 9, 2008. It listed the Sayer vehicle as “Vehicle
1” and Hudson’s vehicle as “Vehicle 2.” The report includes the following:
Vehicle 1 stated that she was exiting out of the Shell Station parking lot to head west on Tunica Dr. when a vehicle stopped traffic in the far right lane to let her in and didn’t see Vehicle 2 coming from the far left land and hit the passenger back side of Vehicle 2.
Vehicle 2 stated that she was traveling straight ahead on Tunica Dr. about to approach the light [at] Tunica and Acton Rd. and Vehicle 1 came from out [of] the parking lot of the Shell [Station] and struck the back passenger side of her vehicle.
Further, the police report listed a violation by the driver of the Sayer vehicle
as “failure to yield” and listed her condition as “inattentive.” The police reported no
deficiencies by Hudson. This report establishes that AIG had knowledge of the
second criterium under Reed, that the driver of the other vehicle was at fault.
Finally, the trial court determined that the final two criteria under McDill, i.e.,
8 that Sayer’s “fault gave rise to damages” and that Hudson can “establish the extent
of those damages,” were met by AIG’s possession of Hudson’s complete medical
profile. We find this determination reasonable.
Hudson’s medical profile sent to AIG on December 9, 2008, included the
results of diagnostic tests conducted in 2000, 2005, and 2008, all of which focused
on Hudson’s cervical area of her spine. The diagnostic test performed in 2000 was
done so after Hudson was in an automobile accident. It showed a “very small focal
left C5-6 disc bulge.” The diagnostic test performed in 2005 was also done after
Hudson was in automobile accident. It showed “no acute osseous abnormality in the
cervical spine” and “calcification along the anterior annular margin and/or
longitudinal ligaments at C4-5 and C5-6, consistent with mild degenerative disease.”
Finally, the diagnostic test performed in 2008, after the accident relevant to the case
before us, revealed “disc herniations at C4-5 and C5-6” and “mild posterior bulging
of the annulus fibrosis at C3-4.” Moreover, a nerve conduction study was done after
the 2008 accident and it revealed “right median motor neuropathy at the wrist.”
These objective findings of increased damage to Hudson’s cervical area of her
spine can reasonably be found, as the trial court did, to establish that Sayer’s “fault
gave rise to damages” and that Hudson can “establish the extent of those damages.”
Id. At its most minor, the 2008 accident can objectively be seen to have caused a new
disc herniation at C4-5, an exacerbation of Hudson’s bulging disc at C5-6 into a disc
herniation, and a new bulging disc at C3-4. Given that the four criteria in Reed can
reasonably be found to have been met, the trial court’s determination that AIG had
“satisfactory proof of loss” on December 9, 2008, is not manifestly erroneous.
It is not disputed that AIG did not make an unconditional tender to Hudson
9 until May 21, 2009. This is well in excess of the threshold “within sixty days after
receipt of satisfactory proof of loss” as stated in La.R.S. 22:1973(B)(5). The
language of La.R.S. 22:1973(C) is as follows: “[i]n 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.” This is
exactly what the trial court did in this case, and we find no error in awarding Hudson
penalties under La.R.S. 22:1973 once it was established that AIG failed to pay
Hudson within sixty days of receiving “satisfactory proof of loss.”
ASSIGNMENT OF ERROR NUMBER FOUR:
In its final assignment of error, AIG argues that the trial court erred in
calculating the La.R.S. 22:1973 and other “damages” allegedly incurred by AIG’s
alleged bad faith actions. We find this argument is completely without merit.
Our supreme court, in Stobart, 617 So.2d at 882, stated the following:
A court of appeal may not set aside a trial court’s or a jury’s finding of fact in the absence of “manifest error” or unless it is “clearly wrong.” Rosell v. ESCO, 549 So.2d 840 (La.1989). This court has announced a two-part test for the reversal of a factfinder’s determinations:
1) The appellate court must find from the record that a reasonable factual basis does not exist for the finding of the trial court, and
2) the appellate court must further determine that the record establishes that the finding is clearly wrong (manifestly erroneous).
AIG’s first argument in this assignment of error is that the trial court committed
manifest error in awarding Hudson loss of earnings for $7,080.56. AIG bases its
argument on two statements made by Hudson. The first is where she testified that she
could have gone back to work at the casino if she had obtained a release from her
10 treating physician. The second is where Hudson testified that she was working on her
grocery business during the time she sought lost wages.
Regarding whether she could return to work, AIG points to the following
testimony of Hudson to assert that the trial court was manifestly erroneous in
awarding Hudson lost wages:
Q Okay. Let me ask you about your testimony that you didn’t return to the casino because you had been terminated. Now first of all we have established that you did not ask Dr. Goux for a letter [on] June 4th where you were applying for your new business license. You didn’t go to Dr. Goux and ask him for a letter to allow you to go back to work?
A Not at that point no.
Q Okay. And you are aware that since you were on leave at that time you could have gone back to work with the casino. They would have taken you back had you gotten a release from Dr. Goux?
A If it was before my ninety days [were] up yes.
Q June 4th was?
A But I couldn’t go back then.
Q All right. Cause [sic] you were unable to do anything at all?
A And not at that point no.
Our reading of this testimony is quite different than that of AIG. In brief, AIG
asserts that “Hudson stated she could have gone back to work at the casino if she had
obtained a release from Dr. Goux.” While this statement, in a vacuum, is accurate,
as Hudson said that had she asked Dr. Goux for a release, she could have gone back
to work at that time, it is a gross misrepresentation of her testimony. Hudson clearly
states in the next few lines that she did not get a release from Dr. Goux at that time
because she could not have done anything at work had she gone back. Thus, this
argument made by AIG falls woefully short of demonstrating how the trial court was
11 manifestly erroneous.
Next, AIG argues that the trial court was manifestly erroneous in awarding
Hudson past lost wages from March 5, 2008, to June 23, 2008, due to her opening a
fruit stand/grocery store during that time period. Again, we find that AIG’s argument
lacks merit.
While it is true that Hudson did attempt to open a fruit stand/grocery store
during the time that she claimed lost wages, Hudson did testify that the business was
open for less than one month and that she received no wages from its operation. AIG
points out that if Hudson was able to fill out the paperwork necessary to open the
business and was able to carry crates of produce in operating the business, she was
able to go back to work. AIG even had a witness, Michael Lopez, testify that he had
seen Hudson carrying crates while operating her business and that those crates looked
very heavy. However, Hudson testified that Dr. Goux had placed a lifting restriction
for her of ten pounds and that neither the paperwork or any of the boxes or crates she
was seen carrying were over ten pounds.
In its reasons for judgment, the trial court stated that “Renia Hudson presented
to the Court as a witness and testified in an extremely calm, credible and impressive
manner.” Given that the trial court was in a superior position to this court regarding
this issue, we must give deference to its findings.
“[W]here two permissible views of the evidence exist, the factfinder’s choice
between them cannot be manifestly erroneous or clearly wrong.” Stobart, 617 So.2d
at 883. This is exactly the situation presented on this issue, and the trial court chose
to give credence to Hudson’s testimony. Accordingly, we find no manifest error by
the trial court in awarding Hudson past lost wages.
12 Finally, AIG argues that the trial court erroneously applied La.R.S. 22:1973.
It bases it argument on an assertion that the clear language of La.R.S. 22:1973 is such
that Hudson had to prove that she suffered actual damages as a result its failure to
tender within sixty days in order to receive penalties. AIG highlights and
unabashedly cites language from Sultana Corp. v. Jewelers Mutual Insurance Co.,
01-2059 (La.App. 1 Cir. 12/31/02), 837 So.2d 134, in an attempt to bolster its
position. However, our supreme court, in Sultana Corp. v. Jewelers Mutual
Insurance Co., 03-360 (La. 12/3/03), 860 So.2d 1112, reversed our first circuit and
found exactly the opposite to be the law in this state., i.e. that proof of actual damages
suffered due to the delay in tendering payment to an insured is not a prerequisite to
the recovery of penalties for an insurer’s breach of statutory duties. AIG’s brief does
include a citation to, but no quotation from, our supreme court’s opinion in Sultana
Corp. Thus, we find AIG’s argument is meritless and disingenuous.
CONCLUSION:
AIG raised four assignments of error. They are: that the trial court committed
manifest error in failing to grant AIG’s motion for involuntary dismissal, that he trial
court erred by granting penalties under La.R.S. 22:1973 where Hudson filed suit
alleging bad faith prior to any actual occurrence of what Hudson alleges to be “bad
faith” under the statute, that the trial court committed manifest error in granting
La.R.S. 22:1973 damages and penalties where the evidence does not support a finding
of insurer bad faith, and that the trial court erred in calculating the La.R.S. 22:1973
and other “damages” allegedly incurred by AIG’s alleged bad faith actions.
We found no merit to any of these assignments. Thus, we affirm the trial
court’s judgment, and assess all costs of this appeal to AIG.
13 AFFIRMED.