Category: Louisiana

Louisiana Legislature Enacts Changes to Bad Faith Statutes

10.14.2024

The Louisiana Legislature recently enacted Act 3, which reflects an effort to address the handling of insurance claims in Louisiana – particularly for catastrophic losses – and define ambiguities in the law. This blog addresses changes to Louisiana’s “bad faith” statutes. Broadly, Act 3 amends and enacts new sections of La. R.S. 22:1892, repeals La. R.S. 22:1973, and enacts La. R.S. 1892.2 to address situations involving catastrophic losses.

Prior Louisiana Bad Faith Statutes – La. R.S. 22:1892 and La. R.S. 22:1973

Previously, La. R.S. 22:1892(A) stated an insurer must:

Issue payment to an insured within 30 days of receipt of satisfactory proof of loss;
Pay the amount of a bona fide third-party’s property damage or reasonable medical expenses within 30 days of a written settlement agreement;
Initiate loss adjustment within 14 days of notice of a non-catastrophic loss or within 30 days of receipt of notice of a catastrophic loss;
Make a written offer to settle property damage within 30 days of receipt of satisfactory proof of loss.

If an insurer did not follow the requirements of La. R.S. 22:1892(A), the insurer could be required to pay the insured the amount owed under the policy plus a penalty if the insured established that the insurer’s conduct was “arbitrary, capricious and without probable cause.” Courts defined this standard as “vexatious” and without justification. The penalty is calculated as either 50% of the amount owed under the policy or 50% of the difference between the amount owed and a partial tender made by the insurer, if any. Additionally, if the insured established entitlement to the penalty, the insured could also recover attorneys’ fees and costs from the insurer.

Former La. R.S. 22:1973 codified an insurer’s duty of good faith and fair dealing. It set an affirmative duty to adjust claims fairly and promptly and make reasonable efforts to settle claims with the insured, a claimant or both. This general duty of good faith and fair dealing applies only to insureds.^ The statute also outlined six prohibits acts that, if knowingly performed, constituted a violation of the statute. Five of these six prohibited acts applied to both insureds and third-party claimants.^*

If an insured proved a knowing violation of La. R.S. 22:1973, the insurer could be required to pay the amount owed under the policy, damages caused by the insurer’s violation of the statute and a penalty of up to 200% of the damages that the insured or claimant incurred as a result of the breach. Such damages were separate and distinct from the amounts owed under the policy but could extend to anything for which the insured could establish a causal link.˚̃

Revisions to La. R.S. 22:1892

The new revisions enact several important changes. While the text of the new statute should be considered when evaluating any pending or potential claims, a summary is provided here.

Time Delays

Under amended and re-enacted La. R.S. 22:1892(A), insurers must generally adhere to the time delays and conduct outlined under the previous law. Under La. R.S. 22:1892.2, for catastrophic events at residential properties, an insurer’s payment is owed within 60 days of receipt of satisfactory proof of loss. For catastrophic losses at non-residential properties, the statute provides an insurer’s payment is owed within 90 days of receipt of satisfactory proof of loss.

Another exception exists when an insurer initiates loss adjustment before the 14-day or 30-day deadline. If this occurs, the insurer’s obligation to issue a written offer to settle is extended by the number of days the insurer initiates loss adjustment before the deadline.

Reciprocal Duty of Good Faith

Under the new law, La. R.S. 22:1973 is repealed and the general duty of “good faith and fair dealing” owed by an insurer to its insured and the prohibited insurer conduct previously outlined in La. R.S. 22:1973 is now encompassed within §1892.

The new statute also provides that the insured, the claimant or the representative of the insured/claimant owes the duty of good faith and fair dealing. If an insured fails to comply with affirmative duties under the policy, misrepresents pertinent facts and coverages, submits an estimate that lacks a basis in the evidence or the policy, then the insured’s conduct may be considered in determining whether the insurer’s conduct warrants an award of penalties.

Cure Period

For catastrophic losses, the new law states suits may only be brought if the insured first provides the insurer with “cure period notice.” This notice requires that the insured provide the insurer with written notice of the violation, a written formal demand and notice of the facts and circumstances of the dispute. After this notice, several options exist:

The insurer can pay the demand in full (along with the insured’s actual expenses and attorney fees no greater than 20%) within 60 days of the notice and extinguish any further cause of action.

The insurer can issue partial payment on the claim within 60 days of the notice and reduce the penalty owed, if any, by half.

The insurer can request additional information, but this does not extend the insurer’s other deadlines.

Revised Penalty Provisions

The amendments also modify the recoverable penalty. The statute specifies the calculation of the penalty based on the type of violation, the type of property and the type of loss event. Generally, the insured is no longer entitled to recover all damages sustained by a breach of the statute: now the claimant may only recover “proven economic damages.” Notably, the potential for a penalty of up to 200% of the damages sustained as a result of the breach no longer exists.

Timing

The law also formalizes and codifies the prescriptive period for claims brought under La. R.S. 22:1892 or La. R.S. 22:1892.2 to two years.

References:

^Theriot v. Midland Risk Ins. Co., 1995-2895 (La. 5/20/97) 694 So.2d 184.

* Team Contractors, L.L.C. v. Waypoint NOLA, L.L.C., 780 Fed.Appx. 132 (5th Cir. 2019).

˚Durio v. Horace Mann Ins. Co., 2011-0084 (La. 10/24/11) 74 So.3d 1159.

̃ Audubon Orthopedic and Sports Medicine, APMC v. Lafayette Ins. Co., 2009-0007 (La.App. 4 Cir. 4/21/10) 38 So.3d 963.

Preparing for a Storm

09.09.2024

Fortunately, the 2024 hurricane season has been relatively calm. We previously blogged about steps that can be taken after your property is damaged by a hurricane or other natural disaster. (Click here to access our prior blog). With a Tropical Storm, and potential Hurricane, threatening our coast, here are some steps to consider taking to prepare before a storm arrives in the event you must make a property insurance claim for damages after the storm:

DOCUMENT, DOCUMENT, DOCUMENT – The best way to prove the condition of your property before damage is caused is to document it. Take pictures and videos of the interior and exterior of your home or business. Create an inventory of your contents. Narrate the video to provide better descriptions. If your property is damaged, this documentation will be used to verify its condition and make it easier for your insurer to adjust and pay your claim.
INSPECT YOUR PROPERTY – As you are making your preparations, you may consider taking a walk around your property to notice any prior damage to your property. Identify any issues that could affect a potential insurance claim.
KNOW YOUR INSURANCE COVERAGES – Make sure you are aware of the coverages that your insurance policy provides. The Declarations Page to your policy should provide much of this information – the coverage limits, types of coverage provided, deductible, etc. While your insurance agent likely maintains this for you, it is good practice to maintain and know this information, which lets you know what will or will not be covered.
MITIGATE YOUR DAMAGES – You can take steps to prevent damage to your property during the storm. You can pick up items around the property that could become airborne and take whatever precautions you can to prevent damage to your property, particularly the exterior. If your property is damaged, you can make temporary repairs to prevent further damage until your insurance company can get to you (like placing a tarp on the roof).

Louisiana Legislature Sets New Prescription Period for Tort Claims

07.22.2024

The Louisiana legislature recently enacted laws that set new prescription periods for most delictual/tort actions and claims for damage caused to immovable property. Civil Code articles 3492 and 3493 previously established a prescription period of one year for these types of claims. The legislature repealed these articles and enacted Louisiana Code Articles 3493.1 and 3493.2 in their place.

Louisiana Code Article 3493.1 now establishes a prescriptive period of two (2) years for delictual actions/tort claims that runs from the day injury occurred or damage is sustained. It contains language previously included in Louisiana Civil Code Article 3492, which states that prescriptive period does not run against minors or interdicts in actions involving permanent disability and brought pursuant to the Louisiana Products Liability Act or state law governing product liability actions in effect at the time of the injury or damage.

Louisiana Civil Code Article 3493.2 also establishes a prescriptive period of two (2) years when damage is caused to immovable property. This prescriptive period runs from the day the owner of the immovable acquired, or should have acquired, knowledge of the damage.

These changes went into effect of July 1, 2024. Louisiana Civil Code Articles 3493.1 and 3493.2 apply prospectively only and apply to delictual actions arising after July 1, 2024.

“Forensic Defendants” Dismissed from Wrongful Conviction Suit

07.01.2024

On December 9, 1982, a victim was raped and stabbed multiple times in her Baton Rouge residence. In those harrowing moments, the victim was face-to-face with her assailant and vowed that she would remember the characteristics of her assailant in the unlikely event she survived. A friend arrived at the residence and entered the second-floor room containing the assailant and the wounded victim. Fortunately, at that moment, noise from a postal employee caused the assailant to flee the scene. The investigation began that same day.

Sometime later, Archie Williams became a suspect and was then criminally charged after the victim identified Mr. Williams as her attacker. The victim identified a prominent scar on the assailant which, in an unfortunate twist of fate, tended to match a scar on Mr. Williams. Several of the governmental officers involved in the investigation and the April 1983 criminal trial of Mr. Williams were sued many years later in the case styled Archie Williams v. City of Baton Rouge, ET AL. Keogh Cox attorneys Drew Blanchfield, Collin LeBlanc, Cathy Giering, and Chelsea Payne represented a forensic scientist, a lab technician, and a print examiner in the suit (the “Forensic Defendants.”) In his June 10, 2024 ruling, Judge Brian A. Jackson granted a Motion for Summary Judgment in favor of these defendants, dismissing the claims against them with prejudice.

At the 1983 criminal trial, Forensic Defendants testified that they could not identify Mr. Williams as the attacker. Similarly, both the prosecutor and defense counsel advised the jury that the physical evidence did not implicate Mr. Williams. Nevertheless, Mr. Williams was convicted based upon the passionate but mistaken testimony of the victim. Mr. Williams had not committed these crimes but remained incarcerated until his release decades later.

Mr. Williams consistently denied guilt. In 2008, he hoped DNA testing would help to prove his innocence. However, the DNA evidence was of no assistance. In 1999, The FBI launched its National Fingerprint Database (“IAFIS.”) Yet, a 2009 search generated no matches to fingerprints from the crime scene that had not already been identified. In 2014, Next Generation Identification (NGI) replaced IAFIS. By 2016, NGI held approximately 72,000,000 criminal fingerprints and 50,000,000 civil fingerprints. A 2019 search of this ever-expanding database matched fingerprint evidence taken from the 1983 crime scene to the prints of a convicted rapist who had died in prison years before. Mr. Williams was innocent and was soon released through a joint filing by the State of Louisiana and Mr. Williams. His lawsuit against multiple defendants followed.

In response, the Forensic Defendants filed a Motion that advanced the “qualified immunity” granted to governmental officials. In opposition to the Motion, the plaintiff possessed the burden: 1) to raise a fact dispute on whether his constitutional rights were violated by the defendants’ individual conduct; and 2) to show those rights were “clearly established” at the time of the alleged violation. The Court found that the plaintiff did not meet this burden. Although Plaintiff alleged that certain fingerprint evidence had been “suppressed” in violation of the “Brady Rule,” the Court cited the robust factual record showing that the jury was fully aware that no fingerprint evidence identified Mr. Williams and that unidentified prints were present at the crime scene. The Court also rejected the claim that there was any fabricated exculpatory blood or serology evidence.

The facts in Williams highlight the great technological improvements since the early 1980s which now aid the court system, prosecutors, and defense attorneys to protect against the conviction of an innocent suspect. These facts also tell a sad human story of an individual who spent more than 30 years in jail for a crime he did not commit. While it does not replace the lost years, Louisiana has created a fund which provides some financial resources to wrongfully convicted individuals to help them re-enter society. Williams was able to take advantage of this fund.

References:

Archie Williams v. City of Baton Rouge, ET AL, United States District Court, Middle District of Louisiana, No. 3:20-cv-00162.

Louisiana Supreme Court Vacates Prior Decision and Finds Prescriptive Periods for Child Abuse Claims Can Be Revived

06.17.2024

In 2021, the Louisiana Legislature amended La. R.S. 9:2800.9 to provide that a legal action against a person for sexual abuse of a minor, if barred by liberative prescription prior to the effective date of the amendment, is revived for a three-year period after the effective date of the amendment. In 2022, La. R.S. 9:2800.9 was amended again to specifically state the Legislature’s intent to revive any cause of action related to sexual abuse of a minor that previously prescribed under any Louisiana prescriptive period.

On March 22, 2024, the Louisiana Supreme Court issued its decision in Douglas Bienvenu, et al. v. Defendant 1 and Defendant 2, and found the statute was unconstitutional because it conflicted with due process protections set forth in the Louisiana Constitution. Specifically, the Court found that a defendant has a vested property right in accrued prescription and that revival of a prescribed cause of action violated due process.

However, the Louisiana Supreme Court granted the plaintiffs’ request for rehearing, and on June 12, 2024, the Court vacated its prior ruling and found that the amendments to La. R.S. 9:2800.9 were constitutional.

On rehearing, the court agreed that a defendant has a vested property right in accrued prescription but found another step in constitutional analysis was required— examination of whether the legislature’s revival of prescribed causes of action for sexual abuse of minors “comports with substantive due process.” The Court noted, “The essence of substantive due process is protection from arbitrary and capricious action.”

In Bienvenu, the defendants’ right to plead prescription was an economic interest that did not implicate fundamental rights. The statute at issue was social welfare legislation, enacted to address societal costs of child sexual abuse. Therefore, the Court found the applicable due process test was whether the legislation was reasonable in relation to the goal to be attained and was adopted in the interest of the community as a whole. The statute needed only to have a rational relationship to a legitimate governmental interest to survive due process scrutiny.

The Court found the amendments to La. R.S. 9:2800.9 passed this test because (1) the provision assists in identifying hidden child predators so children will not be abused in the future; (2) shifts the costs of the abuse from the victims and society to those who actually caused it; and (3) educates the public about the prevalence and harm from child sexual abuse to prevent future abuse. These interests were found legitimate and compelling. Thus, the statute was constitutional and could be applied retroactively “to revive, for the period stated, all causes of action related to sexual abuse of a minor that previously prescribed under any Louisiana prescriptive period.”

References:

Bienvenu v. Defendant 1, 2023-01194 (La. 3/22/24), 382 So. 3d 38, reh’g granted, 2023-01194 (La. 5/10/24), and opinion vacated on reh’g, 2023-01194 (La. 6/12/24).

Bienvenu v. Defendant 1, 2023-01194 (La. 6/12/24).

The Louisiana Legislature Overhauls the “Direct Action” Statute

06.10.2024

For decades, Louisiana law provided a claimant or injured person an uncommon opportunity (1) to directly name an insurer in a lawsuit, and (2) to make the jury aware of the presence of insurance. This was known nationally as the “Louisiana Direct Action Statute.” This statute, embodied in LSA—R.S. 22:1269, has long been a topic of debate.

The Louisiana Legislature recently amended the “direct action statute” in Act 275 and declared that the injured person “shall have no right of direct action against the insurer” unless at least one of the exceptions applies: the insured files for bankruptcy, the insured is insolvent, service cannot be made on the insured, a tort cause of action exists against a family member, uninsured motorist claims, the insured is deceased, or when the insurer issues a reservation of rights or coverage denial (but only for the purpose of establishing coverage). The Act further provides that the insurer shall not be included in the caption of the case. And, the existence of insurance is not to be disclosed unless the Louisiana Code of Evidence requires it. This new legislation is effective August 1, 2024.

But, the Act also provides for new provisions that allow for the joinder of an insurer after settlement or in connection with a final judgment. The Act further includes specific provisions enacted to provide notice to an insurer of an action and outlines the procedures and timelines for how insurers assert reservation of rights or a denial of coverage.

The revisions to LSA—R.S. 1269 represent a significant change in how lawsuits involving insurance companies will proceed.

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.