Category: Louisiana

Louisiana Appellate Court Examines How Accidents are Defined under Louisiana Workers’ Compensation Law

04.10.2024

Generally, Louisiana Workers’ Compensation laws provide coverage for an employee who sustains personal injuries by an accident arising out of and in the course of his or her employment. La. R.S. 23:1021(1) defines “accident” as:

“An unexpected or unforeseen actual, identifiable, precipitous event happening suddenly or violently, with or without human fault, and directly producing at the time objective findings of an injury which is more than simply a gradual deterioration or progressive degeneration.”

In Rayborn, Sr. v. Continental Cement Company, LLC et al, the plaintiff-employee filed suit when the worker’s compensation carrier terminated benefits based on its assertion that the plaintiff’s left knee injury was not the result of an “accident” as defined in the statute. The evidence presented at trial established the following:

After returning home from work one day, the plaintiff began to feel soreness behind his left knee and believed he “may have pulled a muscle.”
The plaintiff sought medical attention at a local clinic 2 days later.
The plaintiff told clinic staff that his “leg was hurting,” and that he “was at work climbing up and jumping down off of barges all week.”
After returning from a pre-planned family trip one week later, the plaintiff told to his managers at work that he hurt his knee “some kind of way” and that he was “doing too much climbing up and jumping down from barges “and his knee “just started hurting.”
The chart from follow-up clinic visits stated, “Patient had [an] injury while at work when he jumped from a height and later that day felt a discomfort in the left lateral knee.”
Additional records noted the plaintiff “injured his knee on the job; however it was not readily apparent until [his] knee became stiff later that evening.”
The plaintiff later consulted with an orthopedic surgeon whose initial chart entry stated, “Over the course of the week, his knee began bothering him in the patellofemoral area and it started to become tight and swollen.”

At the conclusion of trial, the workers’ compensation court ruled that the plaintiff successfully proved that he sustained a work-related injury of his left knee on a particular date by climbing and jumping while performing his work duties. On appeal, the workers’ compensation carrier argued that plaintiff’s assertion that he was injured “some kind of way” over the course of a week was not sufficient to meet the requirement of a specific, identifiable accident in the course and scope of employment under La. R.S. 23:1021(1).

In affirming the decision of the OWC judge, the appellate court highlighted numerous opinions from the Louisiana Supreme Court and other courts of appeal wherein the statutory definition of “accident” was liberally construed to reject an interpretation that excluded “those workers who are worn down, rather than immediately crippled by, their work.” The opinion notes that it is well-settled in the case law that an “accident” exists when “heavy lifting or other strenuous efforts, although usual and customary, cause or contribute to a physical breakdown or accelerate its occurrence because of a pre-existing condition.”

The opinion added, “It is presumed the legislature is aware of how Louisiana courts have interpreted the statute; yet, it has taken no steps to overrule more than thirty years of Louisiana jurisprudence.” In so holding, it is unclear whether the court considered La. R.S. 23:1020.1(D), in which the Legislature specifically rejected the jurisprudential doctrine requiring a liberal interpretation of Workers Compensation statutes in favor of an employee. Despite this statement from the Legislature on the construction of Workers Compensation statutes, the Rayborn opinion suggests that courts may continue to base their decisions on the liberal interpretation of “accident” that has been developed and adopted by Louisiana courts when analyzing what types of injuries are covered under Louisiana Workers’ Compensation Law.

References:

Rayborn v. Cont’l Cement Co., LLC, 2023-0403 (La. App. 1 Cir. 1/10/24), 2024 WL 132802.

Wage Garnishment –Failure to Comply with Louisiana Procedures Can Result in Costly Penalties for Louisiana Employers

12.04.2023

Although courts have described the outcome as “harsh,” a recent ruling shows that a judgment creditor can recover the full amount of an employee’s unpaid debt from an employer if that employer fails to comply with specific garnishment procedures.

A party that prevails in a lawsuit and is awarded damages is known as a judgment creditor. In order to collect on the judgment, Louisiana law allows a judgment creditor to garnish the wages of the judgment debtor, the party cast in judgment. Once a judgment against an employee is obtained, the judgement creditor may issue garnishment interrogatories to the employer requesting information related to the employee’s job, rate of compensation, manner of payment, and whether there are other judgments or garnishments affecting the employee’s compensation.

It is imperative that the employer file sworn answers to all garnishment interrogatories within 30 days from the date of service.^ Louisiana courts treat unsworn answers to interrogatories as a failure to answer,* and an employer’s failure to timely answer garnishment interrogatories can result in costly penalties. In fact, a Louisiana employer can be held liable for the full amount of the employee’s judgment if procedural requirements are not followed.

La. C.C.P. art. 2413(A) states that if the employer fails to answer the garnishment interrogatories within 30 days from the date of service, then the judgment creditor may proceed against the employer for the amount of the unpaid judgment, with interest and costs. La. C.C.P. art. 2413(B) provides that the employer must pay the entire amount of the judgment unless it proves the actual amount it owed to the employee at the trial on the contradictory motion. Regardless of the decision on the contradictory motion, La C.C.P. art. 2413(C) requires the employer to pay the costs and reasonable attorney’s fees of the judgment creditor.

The First Circuit Court of Appeals recently examined these procedures in Tower Credit, Inc. v. Williams.^^ The judgment creditor in the Tower Credit case issued garnishment interrogatories to the judgment debtor’s employer. However, the employer failed to timely respond to garnishment interrogatories. When the judgment creditor filed a Motion for Judgment Pro Confesso against the employer to require it to appear and present evidence regarding the amount of wages it should have withheld after receiving the garnishment interrogatories, the employer failed to appear for the hearing.

Given the employer’s failure to timely respond to the interrogatories and its failure to appear for the hearing, the First Circuit found that the creditor was entitled to a judgment pro confesso against the employer for the entire amount of the employee’s debt. Citing the unique facts of the case, which included evidence that the judgment debtor/employee no longer worked for the employer cast in judgment, the Louisiana Supreme Court recently granted vacated part of the judgment pro confesso and remanded the matter for rehearing.**

However, this case shows that Louisiana courts will enforce La. C.C.P. art. 2413 and cast an employer in judgment for its employee’s debt, even though courts have described the statute’s penalties as “harsh.” Tower Credit shows that employers should respond to garnishment interrogatories within the timeframe provided by law. In the event the deadline is passed, La. C.C.P. art. 2413(B) requires the employer to appear for the judgment pro confesso hearing if it intends to argue it should not be indebted for the judgment. Failure to do both could result in the employer being held liable for the full amount of its employee’s unpaid debt.

References:

^ See La. C.C.P. art. 2412(D).

*See All Star Floor Covering, Inc. v. Stitt, 804 So. 2d 705 (La. Ct. App. 1st Cir. 2001).

^^Tower Credit, Inc. v. Williams, 2022-0106 (La. App. 1 Cir. 9/16/22), 352 So. 3d 1029, writ granted, judgment vacated in part, 2022-01556 (La. 2/7/23), 354 So. 3d 659.

**Tower Credit, Inc. v. Williams, 2022-01556 (La. 2/7/23), 354 So. 3d 659.

Judicial Interest Rate for Louisiana Hits a 17-Year High

11.20.2023

The Judicial Interest Rate for 2024 in the State of Louisiana has been set at 8.75%. This is the highest the rate has been since 2007.

Generally, judicial interest is interest payable on a judgment that has not been satisfied. Depending on the underlying basis for the judgment, the date that the interest begins to accrue can be before the judgment is rendered. For example, La. R.S. 13:4203 provides, “Legal interest shall attach from date of judicial demand, on all judgments, sounding in damages, ‘ex delicto’, which may be rendered by any of the courts.”

In Workers Compensation matters, La. R.S. 23:1201.3 states, “Any compensation awarded and all payments thereof directed to be made by order of the workers’ compensation judge shall bear judicial interest from the date compensation was due until the date of satisfaction. The interest rate shall be fixed at the rate in effect on the date the claim for benefits was filed with the office of workers’ compensation administration.”

La. R. S. 13:4202 sets forth the method for the annual calculation of judicial interest in Louisiana: “The commissioner of financial institutions shall ascertain, on the first business day of October of each year, the Federal Reserve Board of Governors approved ‘discount rate’ published daily in the Wall Street Journal. The effective judicial interest rate for the calendar year following the calculation date shall be three and one-quarter percentage points above the discount rate as ascertained by the commissioner.” In consideration of these factors set by statute, the Judicial Interest Rate for 2024 will be set at 8.75%.

For context, the historic rates for the last 20 years are:

2023- 6.50%

2022- 3.50%

2021- 3.50%

2020- 5.75%

2019- 6.00%

2018- 5.00%

2017- 4.25%

2016- 4.00%

2015- 4.00%

2014- 4.00%

2013- 4.00%

2012- 4.00%

2011- 4.00%

2010- 3.75%

2009- 5.50%

2008- 8.50%

2007- 9.50%

2006- 8.00%

2005- 6.00%

2004- 5.25%

Court Examines Requirements of Financing Provision in Purchase Agreement for Residential Property

10.02.2023

Purchase agreements for residential property routinely include financing provisions that require the buyer to show that he has applied for a loan. The Louisiana Fourth Circuit Court of Appeals recently analyzed such a provision in Abdelqader v. Ramos. The plaintiff in Abdelqader entered into a purchase agreement with the defendant for an unimproved lot on which the plaintiff planned to build his home.

The financing provision in the purchase agreement required the buyer to provide the seller with (1) written documentation; (2) from a lender; (3) that a loan application has been made; and (4) that Buyer authorized lender to proceed with the loan approval process. The provision also required that this documentation be provided to the seller “within 3 calendar days after” the date of Agreement.

After the parties executed the purchase agreement, various disputes led the seller to terminate the agreement and re-list the property for sale. The plaintiff sued for stipulated damages and attorney’s fees, which were allowed under the contract if either party breached the purchase agreement.

The buyer introduced evidence that his agent sent the seller’s broker a USDA pre-approval letter and certificate of eligibility for financing under a USDA Rural Development Program. These documents were sent to the seller’s agent before the parties executed the purchasing agreement. Generally, such pre-approval letters show the buyer appears qualified for a loan in the amount of the purchase. They do not confirm a loan was applied for or approved by the lender for the property to be purchased.

The seller argued that the pre-approval letter furnished by the buyer before the parties entered into the purchase agreement was not an actual loan application and did not verify that a loan application for the purchase had been made. The seller also argued that the buyer did not comply with the terms of the financing provision because he did not provide the subject documents within the three-day window after the purchase agreement was signed. The court rejected these arguments. The Court found the agreement did not require the buyer to produce his loan application to the seller or that the loan application be dated within three days of the Agreement. The buyer’s lender produced the pre-approval letter and the certificate of eligibility in response to the buyer’s application for financing and pursuant to the buyer’s instruction to proceed with the loan process. Though its ruling may be limited to the facts of this case, the Court found that the buyer complied with the terms of the financing agreement.

It appears the court viewed the seller’s claim that the seller did not comply with the financing provision of the purchasing agreement as after the fact justification for the seller unilaterally terminating the purchase agreement for some unrelated dispute. The Court found that the seller breached the purchase agreement and awarded the buyer stipulated damages of 10% of the contract price and attorney’s fees. This ruling also serves as a reminder that purchase agreements for residential properties are contracts, and breaches of these contracts can have consequences if terminated on a whim.

Reference:

Abdelqader v. Ramos, 2022-0305 (La. App. 4 Cir. 11/30/22), 353 So.3d 750.

Make Sure You Are Sure! – A Comment on the Finality of Settlement Agreements under Louisiana Law

09.08.2023

Preparing for a trial is a tense and stressful process for attorneys and their clients. Sometimes, during trial preparation, a crucial piece of evidence can come to light that may push a case from a path towards trial to a path towards a settlement agreement. A “settlement” or “compromise” under Louisiana law is just that – an agreement between the parties to settle the dispute raised in the lawsuit, usually with the exchange of a sum of money. Often, settlements are reached in the weeks leading up to trial or even on the courthouse steps.

This type of scenario occurred in Nola Title Company, LLC v. Archon Information Systems. While in the thick of trial preparation, audio recordings from one of the parties were discovered. That party concluded this evidence would be prejudicial to its case at trial, which spurred settlement negotiations. The parties eventually agreed to a compromise and notified the court of the settlement via an email to the judge’s law clerk. The next day, the attorneys reported to court and verbally outlined the terms of the settlement agreement on the official court record.

Two weeks later, the defendants hired new counsel. Two months after that, counsel for the plaintiff forwarded the formal settlement documents to memorialize the agreement that was made between the parties and entered into the court’s record. However, the defendants refused to sign the paperwork and did not timely make the payments that previously were agreed upon. Therefore, the plaintiff filed a motion to enforce the settlement agreement.

In opposition to the motion to enforce, the defendants argued: 1) that their prior counsel did not have authority to enter into the settlement agreement; and 2) that the agreement on the record of the court was invalid because it did not include a provision about the audio recording, which the defendant claimed was a key element of the agreement between the parties. After an evidentiary hearing, the trial court found that the settlement that was stated on the record was an enforceable settlement agreement.

The Louisiana Court of Appeals for the Fourth Circuit affirmed the ruling of the trial court. In its opinion, the appellate court includes a summary of the law governing settlements in Louisiana. After a thorough review of the applicable law, the court came to the following conclusions:

The settlement agreement on the record of the court was a binding settlement agreement, even if the parties contemplated a future formal written agreement;
When a compromise is placed on the record, the recital must include full disclosure of the material terms;
Any “missing terms” from the recorded settlement agreement were not a material element of the settlement; and
The defendants’ prior counsel had authority to enter into the settlement as written.

Based upon the court’s ruling, if the parties have a meeting of the minds and settlement terms are entered on the trial court record, there are no “do-overs” or “take-backs.” It is important to “make sure you are sure” when entering the crucial courthouse steps settlement agreement.

References:

Nola Title Company, LLC v. Archon Information Systems, et. al., 2022-CA-0967 (La. App. 4 Cir. 4/13/23), 360 So. 3d 166.

Louisiana First Circuit Finds for State Trooper in Fatal Shooting

08.01.2023

On July 27, 2023, the Louisiana First Circuit entered judgment in favor of Louisiana State Trooper Andre Bezou in the shooting death of Coltin LeBlanc. The case was defended by Keogh Cox attorneys Drew Blanchfield, Brian Butler, and Collin LeBlanc. In support of its ruling, the First Circuit cited La. R.S. 9:2798.1 which provides qualified immunity for an officer’s actions, unless their action constituted “criminal, fraudulent, malicious, intentional, willful, outrageous, reckless, or flagrant misconduct.” The court found Trooper Bezou was entitled to qualified immunity under the facts of this case.

After midnight in an area of Hammond, La. dotted with bars and restaurants, Trooper Bezou spotted LeBlanc driving a large Ford truck. Trooper Bezou testified that he witnessed two traffic violations and initiated a stop. “Bodycam” footage captured the interaction. LeBlanc exited the vehicle, and when the trooper asked for identification, LeBlanc indicated it was in his truck. LeBlanc moved to the cab of the truck, and Trooper Bezou followed, stopping within the open driver’s side door. Based upon his observations during this interaction, Trooper Bezou suspected LeBlanc was intoxicated. Later testing confirmed that LeBlanc had a blood alcohol level more than two times the legal limit.

But LeBlanc was not attempting to retrieve his license. Instead, he revved the engine and attempted to flee with Trooper Bezou immediately next to the vehicle. Trooper Bezou later testified he feared that LeBlanc would steer the vehicle to run him over with the back left wheel. In reaction, Trooper Bezou latched onto the truck and LeBlanc sped around a corner and down the roadway. Trooper Bezou was able to draw his weapon and gave multiple orders to stop. Trooper Bezou testified that he feared he would be thrown from the vehicle or scraped against parked cars in the area. When the trooper received no indication LeBlanc would relent, he opened fire. Thereafter, the truck came to a rest.

In the subsequent litigation, plaintiffs argued that Trooper Bezou used “excessive force” and should have attempted to move away and allow LeBlanc to flee the scene. In response, Keogh Cox cited Harmon v. City of Arlington, 16 F.4^th 1159 (5^th Cir. 2021), where the federal Fifth Circuit held that no “clearly established precedent” would prohibit an officer from firing while perched on the running board of a fleeing vehicle. Finding no excessive force under the facts of the case, Harmon acknowledged the simple truth that “there is an obvious threat of harm to an officer” who is “on the side of a fleeing vehicle.” The facts presented to the First Circuit showed that Trooper Bezou gave more warning to relent than was given in Harmon.

The New York Times covered this incident in an article titled, “Before the Final Frame: When Police Missteps Create Danger.” 11/17/21. In its coverage, the New York Times reported that Trooper Bezou “appeared to be in grave danger.” It then suggested that the trooper could have just backed away. However, courts are instructed not a gauge questions of immunity from an out-of-context application of “20/20 hindsight.” Because the facts in this case showed Trooper Bezou was in grave danger “at the moment” force was used and was faced with a split-second decision, he was protected from liability.

A Matter of Control: Vicarious Liability in Construction Projects

05.16.2023

Under Louisiana’s comparative fault system, each party in a lawsuit generally is only liable for their own percentage of fault. However, in some instances, a party may be “vicariously” liable for the fault of another party. One example of vicarious liability is an employment relationship, where an employer can be liable for the fault of its employees. On the other hand, vicarious liability generally does not apply when the alleged “employee” is found to be an independent contractor. Whether a worker qualifies as an employee or an independent contractor often becomes an important issue in suits related to construction projects.

The test for determining whether a party is an employee or an independent contractor involves analysis of who has the right to control his or her work. In the construction context, courts distinguish between “operational control” (which suggests an employment relationship) and control as it relates to the results of the work (which suggests an independent contractor relationship). Two recent cases examine this issue and provide examples of how courts analyze the type of control necessary to establish vicarious liability in the construction projects.

In Stonetrust Com. Ins. Co. v. TBT Contracting, Inc. of LA, homeowners hired a general contractor to renovate their home. During the project, an electrical subcontractor was injured after falling through an attic space. It was alleged that the general contractor created a hazard by cutting a hole in the attic and concealing it. The plaintiff sued the general contractor and the homeowner. The court had to determine whether the homeowner could be liable for the subcontractor’s injuries, which would require a finding that the homeowner was vicariously liable for the general contractor’s fault.

The plaintiff argued that the homeowners were particularly involved in the project. It presented evidence to show the homeowners would give suggestions regarding the work to be performed and also directed alterations or additions to the work. The plaintiff argued that this demonstrated control over the general contractor’s work. However, the court disagreed. Despite the homeowners’ level of involvement, the court held that their control was limited to the results of the work, and was not “operational control.” The general contractor therefore was an independent contractor, and the homeowners were not vicariously liable for its acts.

In Baham v. Fisk Elec. Co., a city worker brought suit against a general contractor after suffering injuries from an electrical shock. The worker alleged that the general contractor was vicariously liable for the fault of its subcontractor. While evidence showed the subcontractor relied on the general contractor for the location of its work, the court found that this was not “operational control.” The court observed that general contractors are entitled to exercise supervisory control over its independent contractors to ensure compliance with the contract. It further found that suggestions or instructions given to an independent contractor do not equate to control over the methods or details of the work. Absent such “operational control” vicarious liability could not be imposed.

Though they may be limited to their facts, these cases show courts usually require a showing of more than suggestions or instructions regarding the work to establish the “operational control” necessary to trigger vicarious liability. Absent such a showing, independent contractors usually remain independent.

Case References:

Stonetrust Com. Ins. Co. v. TBT Contracting, Inc. of LA, 2022-0971 (La. App. 1 Cir. 4/14/23), 2023 WL 2947826

Baham v. Fisk Elec. Co., 2022-0551 (La. App. 4 Cir. 3/22/23), 2023 WL 2595253

Louisiana Supreme Court Clarifies Analysis for Open & Obvious Conditions

05.03.2023

It seems intuitive that people have an obligation to avoid potentially harmful conditions that are open and obvious. Nevertheless, treatment of open and obvious conditions in Louisiana law has proved tricky because many cases did not apply a uniform analytical framework. In Farrell v. Circle K Stores, Inc. and the City of Pineville, the Louisiana Supreme Court recently offered needed guidance on the appropriate analysis for open and obvious conditions.

The plaintiff stopped at a gas station and decided to walk her dog in a nearby grassy area. To get to the grassy area, Farrell had to cross a pool of water that was “approximately the length of a tractor-trailer.” Farrell attempted to jump across the narrowest part of the pool, but slipped and fell. She sued for damages arising from her injuries. The defendants moved for summary judgment on the grounds that the condition was open and obvious. The trial court and court of appeal denied the defendants’ motion. However, the Louisiana Supreme Court reviewed the matter and reversed.

In finding that the condition was open and obvious, the court began its analysis by outlining the elements that a plaintiff must establish to recover for damage arising from a defect under Louisiana Civil Code articles 2315, 2316, 2317 and 2317.1:

That the defendant owed plaintiff a duty to conform its conduct to a specific standard;
That the defendant breached the duty owed;
That the defendant’s conduct was the cause-in-fact of the plaintiff’s injuries;
That the defendant’s conduct was the legal cause of the plaintiff’s injuries; and,
That the plaintiff suffered damages.

The court also highlighted the requirement under La. R.S. 2317.1 that plaintiff show the defendant knew or should have known of the condition before the injury occurred.

The court noted that some courts had assessed whether a condition was open and obvious in the context of whether the defendant owed the plaintiff a duty, while other courts had assessed whether a condition was open and obvious in the context of whether the defendant had breached the duty that was owed. In Farrell, the court found a duty was owed under the code articles referenced above. It clarified that whether a condition was open and obvious should be considered during analysis of whether the duty was breached, pursuant to Louisiana’s “risk/utility” test. This test requires consideration of whether the condition presented an unreasonable risk of harm, which considers whether the condition had any social utility; the likelihood and magnitude of harm the condition presented; the cost of preventing the harm; and the nature of the plaintiff’s conduct, including whether plaintiff’s conduct was socially useful or inherently dangerous.

Specifically, whether a condition is open and obvious should be considered in determining the likelihood of harm and magnitude of harm to an objectively reasonable person. The court further advised that the specific nature of the condition should be considered, such as its location and size. In contrast, a plaintiff’s particular and subjective knowledge of the condition is not relevant in determining whether defendant has breached a duty.

The Farrell court applied this analysis to the facts. It found that the pool served no useful purpose. No evidence existed regarding the cost to eliminate the risk. With respect to Farrell’s conduct, the court found that walking a dog was not dangerous by nature and may have an important social function, but this did not weigh heavily in the analysis. However, with respect to whether the condition as open and obvious, the court considered the location of the pool at the edge of the parking lot, the size of the pool, and the fact that it was apparent to all who encountered it. Thus, the condition was open and obvious, and the likelihood of and magnitude of the harm was minimal.

The court concluded that these factors collectively showed the condition was not unreasonably dangerous. The defendants did not breach their duty to plaintiff, and summary judgment should have issued for the defendants. In so holding, the Supreme Court provided clarifying guidance on analysis of open and obvious conditions under Louisiana law.

Case Reference:

Farrell v. Circle K Stores, Inc. and the City of Pineville, 2022-000849 (La. 3/17/23), — So.3d —-, 2023 WL 2550503.

Louisiana Supreme Court Finds Business Interruption Coverage Does Not Apply to Losses Attributable to COVID-19

04.17.2023

The COVID-19 pandemic had a profound impact on the global economy. Louisiana was not spared, and many businesses had to close as sales to their customers slowed or stopped altogether. Not surprisingly, the question arose regarding whether business interruption insurance would provide coverage to businesses in this situation. The Louisiana Supreme Court recently was asked this question in Cajun Conti, LLC v. Certain Underwriters at Lloyd’s, London and found that the policy at issue did not provide such coverage.

The mayor of New Orleans issued a proclamation on March 16, 2020, that prohibited most public and private gatherings. This applied to restaurants, whose business initially was limited to takeout and delivery services. Before the pandemic, Oceana Grill, a restaurant located in the French Quarter, could serve up to 500 customers at one time. However, it had to limit its business to takeout and delivery services when the mayor’s proclamation was announced. Because of social distancing guidelines, it remained at 60% or less capacity throughout the pandemic.

Oceana maintained a commercial insurance policy with loss of business income coverage and filed suit to request a declaratory judgment that the “policy provides business income coverage from the contamination of the insured premises by COVID-19.” Oceana’s insurer argued that there was no coverage under the policy because COVID-19 did not cause “direct physical loss of or damage to property” under the policy’s terms.

The trial court denied Oceana’s request for declaratory relief at trial. The appellate court reversed and found the policy’s terms ambiguous because it held “direct physical loss” could mean loss of use of the property. Because the pandemic prevented the full use of the property due to capacity limitations, the appellate court found coverage was triggered.

The Supreme Court disagreed and reversed the appellate court’s decision, finding its focus on the use of the property to be misguided. The Court found that suspension of operations “caused by direct physical loss of or damage to property,” as defined by the policy, required “the insured’s property to sustain a physical, meaning tangible or corporeal, loss or damage.” The Court noted that the restaurant’s physical structure was not lost or damaged because of the pandemic. COVID-19 restrictions did not cause damage or loss that was physical in nature. Therefore, the policy did not provide coverage for loss of business income.

Whether a policy affords coverage depends on the terms and conditions of each policy and the facts of each case. However, in light of this decision, businesses with insurance policies that include provisions with language like that at issue in Cajun Conti should not anticipate coverage for loss of business income allegedly caused by the COVID-19 pandemic.

Case References:

Cajun Conti LLC v. Certain Underwriters at Lloyd’s, London, 2022-01349 (La. 3/17/23), 2023 WL 2549132.

Class Action Basics: What Are They and When Are They Certified?

03.21.2023

Sometimes, a number of people or parties will file claims, in which each party alleges the same or similar injuries that were caused by the same or similar conduct. In these circumstances, federal and Louisiana law recognize class actions as procedural devices that can be used to aggregate the parties’ claims into a single action.

The purpose and intent of class action procedure is to adjudicate and obtain res judicata effect on all common issues applicable to the representatives who bring the action. However, this res judicata effect also applies to all others who are “similarly situated,” provided they are given adequate notice of the pending class action and do not timely exercise the option to exclude themselves from the class. Class actions are commonly filed in matters that involve common facts and damages such as plant explosions, claims based upon allegedly defective products, or claims involving employment practices or civil rights violations.

Before a court can hold a trial on the merits of a class action, the court must determine whether all of the procedural requirements are met for certification of the class. In making this determination, the court rules on whether the matter may proceed as a class action or whether the named parties must bring individual claims. In Louisiana, the threshold requirements for class certification are found in La. C.C.P. art. 591(A), which provides:

A. One or more members of a class may sue or be sued as representative parties on behalf of all, only if:

(1) The class is so numerous that joinder of all members is impracticable.

(2) There are questions of law or fact common to the class.

(3) The claims or defenses of the representative parties are typical of the claims or defenses of the class.

(4) The representative parties will fairly and adequately protect the interests of the class.

(5) The class is or may be defined objectively in terms of ascertainable criteria, such that the court may determine the constituency of the class for purposes of the conclusiveness of any judgment that may be rendered in the case.

Every one of these requirements must be met for an action to be maintained as a class action. Stated differently, the class cannot be certified if even one of these threshold requirements is not met. A party seeking class certification must also establish one of the additional requirements outlined in La. C.C.P. art. 591(B).

In Doe v. Southern Gyms, LLC, the Louisiana Supreme Court held that a court must conduct a “rigorous analysis” of the class certification requirements, to ensure that every one of them are satisfied before a case is certified as a class action. Moreover, it is the plaintiff’s burden to prove that every requirement of La. C.C.P. art. 591 is satisfied. While only the procedural requirements for class certifications are relevant to determine if a matter should be certified, the “rigorous analysis” required of the court oftentimes requires analysis of the overlapping merits of the plaintiff’s underlying claim. See Wal-Mart Stores, Inc. v. Dukes.

Whether a matter should be certified as a class action is often a contested issue involving high stakes. If it is certified, the matter proceeds as a class action, where the claims are asserted on behalf of the entire class and can result in substantial damage awards. If the matter is not certified, the claim representatives must pursue their claims individually, which leads to significantly less exposure for defendants named in the action.

Case References:

Doe v. Southern Gyms, LLC, 2012-1566 (La. 3/19/13), 112 So.3d 822, 829.
Wal-Mart Stores, Inc. v. Dukes, — U.S. —, 131 S.Ct. 2541, 2550, 180 L.Ed.2d 374 (2011).

Court Finds Legal Malpractice Claim Perempted Because the Client Knew It Received “Bad Advice” More than One Year Before Suit Was Filed

02.28.2023

Legal malpractice claims in Louisiana are governed by a peremption period that cannot be interrupted or suspended. La. R.S. 9:5605(A) provides that a legal malpractice claim must be brought one year from the date of the alleged malpractice, or within one year from the date the alleged malpractice should have been discovered. However, even when a claim is filed within one year of discovery, it must be filed within three years of the date of the alleged malpractice. If a party fails to assert a legal malpractice claim before the peremption period expires, the right to bring the claim is lost.

The Louisiana Supreme Court holds that “peremption commences to run in a legal malpractice case when a claimant knew or should have known of the existence of facts that would have enabled him to state a cause of action for legal malpractice.” In Crosby v. Waits, Emmett, Popp & Teich, LLC, the court recently examined the types of circumstances that should inform a plaintiff that an act of alleged malpractice occurred, which would trigger the peremptive period in which the plaintiff’s claim must be filed.

The plaintiff in Crosby owned 75% of a company and was in the process of buying out the minority stakeholder. The company was involved in litigation at the time. Initially, the minority stakeholder maintained all of the recovery and risk related to the suit. In April 2016, an attorney advised the plaintiff to accept an offer to split the recovery and risk in the suit 50/50 as part of the sale. The plaintiff then accepted the 50/50 offer. The litigation concluded after the sale, in February 2018, and resulted in an adverse judgment for which the plaintiff was responsible pursuant to the 50/50 agreement.

The plaintiff filed suit on February 12, 2019, within one year of the verdict in the underlying litigation, and claimed that its attorney committed malpractice when he advised that plaintiff accept the offer to split the recovery and risk in the suit. Specifically, it was alleged the attorney failed to examine the nature of the litigation or discover that the seller’s employees were aware the suit bore serious risk. The plaintiff’s representative testified that he did not keep track of the litigation and therefore could not have known the attorney engaged in the alleged malpractice until the jury rendered its verdict in the underlying suit.

However, the minority stakeholder testified that he knew the 50/50 offer was a bad deal for the plaintiff. Another employee testified he thought the risk of loss in the underlying suit was apparent to everyone involved. The court agreed. Based upon the evidence presented, “it should have been obvious to all concerned that the 50/50 option was favorable” to the minority stakeholder, who was adverse to the plaintiff’s interest.

The court held that the plaintiff should have known its attorney may have committed an act of malpractice when he advised it to accept the 50/50 split before the underlying litigation concluded. Accordingly, suit was not filed within one year of when the plaintiff should have known the alleged act of malpractice occurred. The plaintiff’s claims that it lacked such knowledge could not stand up to conflicting evidence. Thus, the claim was peremepted, and the plaintiff’s suit was dismissed.

Case References:

Crosby v. Waits, Emmett, Popp & Teich, LLC, 2022-0395 (La. App. 4 Cir. 11/21/22), 352 So. 3d 145.

Jenkins v. Starns, 2011-1170, p. 15 (La. 1/24/12), 85 So.3d 612, 621.

Appellate Court Rules a Waiver of UM Coverage Can Only Be Changed at the Insured’s Written Request

02.07.2023

Under Louisiana law, all automobile liability policies include uninsured/underinsured motorist coverage (“UM coverage”) unless the insured affirmatively rejects such coverage, selects lower limits, or selects economic only coverage in writing. The question of what qualifies as a valid rejection of UM coverage has been debated in numerous lawsuits across the state. In Barbera v. Andrade, examination of this issue continued, and the court ruled that an initial rejection of UM coverage remains effective until changed by the insured’s written request.

In Barbera, the court examined whether UM coverage was triggered under a policy when the insured, who previously waived coverage, failed to respond to the insurer’s request to complete a new UM waiver form. It was undisputed that the insured executed a valid waiver of UM coverage in 2001. In 2014, the insurer sent the insured a letter that asked the insured to complete an updated coverage selection form and return it to the insurer’s office. The insured did not execute the updated form. A driver insured under the policy was involved in a motor vehicle accident in 2017 and filed a claim for UM benefits.

The insured argued the letter sent with the waiver form in 2014 was ambiguous and could be read to mean that failure to respond would mean that UM coverage would be read into the policy by default. Evidence also showed that some of the insurer’s employees also thought the failure to respond with the updated form would result in UM coverage.

However, La. R.S. 22:1295(1)(a)(ii) provides, “An insured may change the original uninsured motorist selection or rejection on a policy at any time during the life of the policy by submitting a new uninsured motorist selection form to the insurer on the form prescribed by the commissioner of insurance.” Thus, the Court ruled that the insured’s initial rejection of UM coverage could only be changed via written request by submitting a waiver form to the insurer. The intent of the parties was inconsequential.

Because the insured executed a valid UM waiver in 2001, it remained part of the existing policy. No event, such as a change in the policy’s liability limits, occurred that required the execution of a new UM selection waiver form, and the insured did not submit a new form to the insurer to obtain UM coverage. Therefore, UM coverage was not afforded under the policy, and summary judgment was affirmed in favor of the insurer.

Case Reference: Barbera v. Andrade, 22-147 (La. App. 5 Cir. 11/30/22), 2022 WL 1733087, — So.3d —.