Category: Louisiana

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 —.

Employer Finds Safe Harbor for Mailing Benefits Timely

01.18.2023

When an employee is injured on the job and the employee’s request for workers’ compensation benefits is disputed, La. R.S. 23:1201.1 allows an employer to request a preliminary determination hearing (“PDH”) with the Office of Workers’ Compensation (“OWC”). If the workers’ compensation judge rules at the PDH that benefits are owed, the employer has ten days to comply with the judge’s ruling. The First Circuit recently ruled that an employer can find “safe harbor” if it technically complies with the rigorous deadlines of the statute, which if missed can have profound consequences, subjecting the employer to penalties and attorney fees.

In Kilbourne v. Dixon Correctional Institute, the court recently affirmed a ruling that found an employer complied with La. R.S. 23:1201.1 and could not be subject to penalties or attorney’s fees when it mailed the disputed workers compensation benefits within ten days of the judge’s ruling at the PDH. The ruling was affirmed even though the employee did not receive payment within ten days of the hearing.

The employer in Kilbourne stopped issuing weekly workers compensation benefits after two doctors found the claimant’s ongoing complaints were unrelated to the work accident and the claimant could return to full duty work. The employee then filed a disputed claim with the OWC and requested reinstatement of his benefits. He also requested an award of penalties and attorney’s fees because he claimed the employer’s suspension of indemnity benefits was arbitrary and capricious. The employer requested a PDH to address these issues.

The OWC judge issued a preliminary determination that although the employee was owed supplemental benefits from the date his payments of benefits stopped, the employer was not arbitrary and capricious in its decision to stop payment. Within ten days of the mailing of the PDH ruling, the employer issued and mailed benefit checks to the employee and filed a form with the OWC to provide notice the employer was paying the benefits. Nevertheless, the employee disagreed with the PDH ruling and the matter went to trial.

At trial, the employee argued that he should have received penalties, attorney fees, and interest on the back benefits paid after the PDH ruling. The employee argued the employer failed to comply with section 1201.1 because he did not receive the indemnity benefits until more than ten days after the PDH ruling. However, evidence showed the benefit payments were postmarked and mailed within ten days of the receipt of PDH ruling.

Accordingly, the trial court found that the employer was immune from an award of penalties and attorney fees pursuant to the “safe harbor” provision of section 1201.1. Interest also could not be owed on back pay when the employer complied with the statute. The First Circuit affirmed this decision on appeal. Although providing the claimant funds within 10 days of the PDH ruling remains the best practice for an employer, this ruling informs employers that they should find safe harbor from what could be significant penalties and attorney’s fees if they meet the technical requirements of the statute and mail their compliance with the judge’s ruling within ten days of the PDH.

Case Reference: Kilbourne v. Dixon Correctional Institute, 2022-0455,(La. App. 1 Cir. 11/4/22) ____So. 3d ___,2022 WL 16706951.

Supreme Court Settles Circuit Split on Right to Appeal Summary Judgment

12.12.2022

The Louisiana Supreme Court recently ruled that a co-defendant who pleads comparative fault as an affirmative defense may appeal a summary judgment that dismisses a co-defendant, even when the plaintiff did not file an appeal. The Court’s decision in Amedee v. Aimbridge Hospitality resolved a circuit split among the Louisiana Courts of Appeal regarding this issue.

The Amedee plaintiff filed a personal injury suit against multiple defendants including the City of New Orleans and Premium Parking of South Texas, LLC. After discovery, the City of New Orleans filed a Motion for Summary Judgment seeking dismissal from the suit. The plaintiff did not oppose the city’s motion. Premium Parking was the only party to file an opposition. The trial court granted the city’s motion and dismissed it from the suit. Premium Parking appealed the court’s judgment.

The Fourth Circuit did not address the merits of Premium Parking’s appeal. Instead, the court dismissed the appeal because it found Premium Parking did not have a legal right to appeal the city’s dismissal when the plaintiff did not appeal the judgment.

The Supreme Court disagreed and reversed the appellate court’s ruling. The Court noted that “to prohibit appellate review of a summary judgment by a co-defendant, even where a plaintiff did not appeal, diminishes the search for truth—the object of a lawsuit—and denies a defendant the ability to fully defend itself.” To reach this conclusion, the Court first asked, who may appeal a judgment?

To answer this question, the Court looked to La. C.C.P. art. 2082 and observed the article makes no restriction regarding what party may appeal a final judgment. Further, the Court noted that the right to an appeal is even extended third parties, not involved in the suit, when that third party is allegedly aggrieved by the judgment. See La. C.C.P. art. 2086.

The Court also considered a defendant’s right to appeal in the context of Louisiana’s pure comparative fault system and summary judgments. Under La. C.C. art. 2323, Louisiana’s comparative fault statute, the fault of all parties is to be quantified. La. C.C.P. art. 966(G), provides that when summary judgment is granted in favor of a party or non-party to a suit, the fault of the dismissed party may not be considered in any subsequent allocation of fault in the matter.

The Court noted that while art. 966(G) precludes an allocation of the fault of a party dismissed under the statute, it does not limit the right of a defendant to appeal the dismissal of a co-defendant. No statute limited a defendant’s right to appeal a summary judgment only to those situations where a plaintiff also filed an appeal. Therefore, a defendant who hopes to keep a co-defendant in the case so that fault still may be allocated to the dismissed party at trial now may appeal the co-defendant’s dismissal, even when the plaintiff fails to do so.

Case Reference: Amedee v. Aimbridge Hosp. LLC, 2021-01906 (La. 10/1/22), — So.3d —, 2022 WL 12338929.

Appliers Beware: Louisiana Federal Court Voids Insurance Policy, Denies First-Party Hurricane Claim

11.21.2022

Many insurance policies contain a Concealment or Fraud provision that provides no coverage where the insured concealed or misrepresented any material fact or circumstance, engaged in fraudulent conduct, or made false statements related to the insurance.

But will a court enforce the Concealment or Fraud provision to deny an insured recovery on an otherwise covered peril? According to a recent decision out of the Eastern District of Louisiana, the answer is YES.

In Fahimipour v. United Property & Casualty Insurance Company, the plaintiffs sought contractual and extra-contractual damages from their insurance carrier for damages to their residential property allegedly sustained during Hurricane Zeta. After a bench trial, Judge Morgan concluded Plaintiffs’ application for insurance included a false statement made with knowledge of its falsity and voided the insurance policy from inception, in its entirety.

Citing Talbert v. State Farm Fire & Cas. Ins. Co., the Fahimipour court noted that “Under Louisiana law, an insurance policy is voided entirely and from its inception when the insured makes a material misrepresentation in the application for insurance with the intent to deceive the insurer.” The insurer must prove by a preponderance of the evidence the following elements in order to succeed on such a claim:

(1) the insured made a false statement;

(2) the false statement was material; and

(3) the false statement was made with intent to deceive.

With regard to the first factor, the Court found the insureds obtained and read an inspection report in connection with their purchase of the property. They “were concerned enough about the findings of the inspectors to contact their real estate agent” about the issues. The insureds represented in their insurance application that the property was well maintained, and free of damage, debris, and liability hazards, despite the extensive contradictory findings in the inspection report.

Regarding the second element, the carrier’s in-house expert testified that the insurer would not have bound coverage if the application contained the information from the inspection report. Therefore, the court found the insured’s false statements were material.

The third element – intent to deceive – “must be determined from the surrounding circumstances indicating the insured’s knowledge of the falsity of the representations made in the application and his recognition of the materiality of his representations, or from circumstances which create a reasonable assumption that the insured recognized the materiality.”

In finding the insurer established the third element, the Court noted the insureds were “sophisticated users of insurance.” Evidence showed the insureds previously purchased houses for renovation and resale, owned multiple properties, submitted insurance applications before, and also submitted claims for coverage on at least three prior occasions.

Ultimately, the Court denied plaintiffs any recovery for alleged hurricane damages because of the misrepresentations they made in their application for insurance coverage.

Prior to Fahimipour,Courts had found that post-loss misrepresentations may also void a policy. In Roach v. Allstate Indem. Co., 476 Fed. App’x 778, 779 (5^th Cir. 2012), the plaintiff’s house was damaged in a fire. The Fifth Circuit upheld a summary judgment that voided the plaintiff’s policy after he submitted a falsified claim that included contents not located on inspection following a fire at the residence.

The policy at issue in Roach included a similar Concealment or Fraud provision that stated the policy would provide no coverage if the insured misrepresented any material fact before or after a loss. In granting summary judgment, the district court applied the same three factors used in the Fahimipour case to find the plaintiff made material misrepresentations in his personal property claim when he claimed items not located on inspection.

While the policy in Fahimipour was voided in part because the insureds were “sophisticated users of insurance,” it remains to be seen whether a Louisiana court will void coverage based on a similar provision brought by a less sophisticated insured under a different set of facts.

However, the Fahimipour and Roach decisions show that a court can void a policy, from its inception, because of an insured’s misrepresentations, whether they occur in connection with the application for the policy or after a loss. These rulings also suggest that Louisiana law recognizes an insured also has a reciprocal duty of good faith in its relationship with its insurer.

Case References: Behnaz Fahimipour, et al. v. United Property & Casualty Insurance Company, 2022 WL 16833693 (E.D. La. Nov. 9, 2022); Roach v. Allstate Indem. Co., 476 Fed. App’x 778, 779 (5^th Cir. 2012); Talbert v. State Farm Fire & Cas. Ins. Co., 971 So.2d 1206 (La. App. 4 Cir. 2007).

Outdoor Living: Federal Court Rules That Uneven Terrain in Parking Lot Does Not Present an Unreasonable Risk of Harm

10.05.2022

A federal court for the Middle District of Louisiana recently ruled that a 1½ inch elevation change in a Walmart parking lot did not present an unreasonable risk of harm to the plaintiff patron in Lacaze v. Walmart Stores, Inc. The case involved a slip and fall/trip and fall accident in the parking lot of Walmart’s Burbank Drive store in Baton Rouge. The defendant moved to dismiss the suit where the plaintiff claimed she tripped and fell as she crossed the area where the black asphalt parking lot adjoined the concrete crosswalk as pictured below.

In the area where the asphalt meets the crosswalk, the surface presented a ¼ inch to 1½ inch change in elevation. Plaintiff admitted the black pavement was distinct in appearance and color from the concrete crosswalk. Surveillance showed that plaintiff looked down at her cell phone at the time she tripped and fell. Though in a high pedestrian traffic area, Wal-Mart maintained this was the first reported incident.

The Court found the condition was open and obvious and did not present an unreasonable risk of harm. To reach this decision, the Court made the following observations:

Parking lots have clear and apparent utility. Crosswalks do as well. Crosswalks give patrons a designated area to traverse the lot safely.
The likelihood and magnitude of the risk posed by the condition was low. The Court noted it is common for surfaces of parking lots and sidewalks to be irregular, and no other patrons reported problems or accidents.
The cost of preventing the harm was high. The Court would not consider only the cost of fixing the specific injury-causing defect. Rather, it considered the cost of eliminating all defects in the Walmart parking lot.
Plaintiff conducted an ordinary commercial activity that was not dangerous in nature.

The Court concluded that all but factor four pointed to a single conclusion: the 1½ inch elevation difference did not pose an unreasonable risk of harm. The Court reached this conclusion even though the plaintiff retained an expert who gave opinions regarding possible violations of the Americans with Disabilities Act (ADA) and OSHA regulations. The expert’s opinions were insufficient to defeat summary judgment when the condition was open and obvious. In reaching its ultimate conclusion, the Court joined with several other courts, including the following:

Chambers v. Vill. of Moreauville, where a one-and-one half inch deviation did not present an unreasonable risk of harm;
Reed v. Wal-Mart Stores, where a height variance of one-fourth to one-half inch between concrete blocks in parking lot did not present an unreasonable risk of harm; and
Boyle v. Board of Sup’rs, Louisiana State University, where a depression of up to one inch in a sidewalk did not pose unreasonable risk of harm.

Case References: Lacaze v. Walmart Stores, Inc., No. CV 20-696-JWD-EWD, 2022 WL 4227240 (M.D. La. Sept. 13, 2022); Chambers v. Vill. of Moreauville, 2011-0898 (La. 01/24/12), 85 So.3d 593; Reed v. Wal-Mart Stores, 97-1174 (La. 03/04/98), 708 So.2d 362; and Boyle v. Board of Sup’rs, Louisiana State University, 96-1158 (La. 01/14/97), 685 So.2d 1080.

Louisiana Appeal Court Finds Nonparty “Nonresident” Industrial Site Owner Is Subject to Louisiana’s Subpoena Power

09.28.2022

Can a nonresident corporation, who is not a party to a pending action, be compelled to respond to discovery in Louisiana? The Louisiana Fifth Circuit says YES. See Molaison v Cust-O-Fab Specialty Services, LLC, a case where Keogh Cox successfully handled the appeal.

The Molaison case involved an industrial accident claim where catastrophic injuries were alleged. In this context, the appellate court found that a non-resident company has sufficient presence in Louisiana to subject it to the court’s subpoena power. However, the trial court must first assess the scope of discovery to ensure it is calculated to lead to discoverable evidence and is not too onerous.

In Molaison, the owner of an industrial plant who employed the plaintiff claimed that its nonresident status prevented the parties from requiring it to respond to discovery by deposition or otherwise. The plant owner cited a Louisiana Supreme Court case that held personal jurisdiction, without more, did not subject a nonparty, out-of-state defendant to submit to discovery in this state.

But, in this case, the nonparty maintained a facility in Louisiana and employed the plaintiff. As a consequence, the Molaison court found that the Louisiana “discovery rules control” and “the trial court did not err in finding that (the company) was subject to the subpoena power of a Louisiana court.”

The contractor established it issued the subpoena to obtain evidence from the chemical plant owner that was relevant to the allocation of fault under Louisiana’s pure comparative fault tort system. Therefore, the appeal court reasoned that the nonresident plant owner was subject to the subpoena, “even if (the company) is not obligated to pay in tort by operation of workers compensation immunity.”

Of note, the court also held that the review of a discovery order that finds a nonresident company subject to the subpoena power is a final appealable judgment, as opposed to an interlocutory order subject the discretionary review on supervisory writ.

Case Reference: Molaison v Cust-O-Fab Specialty Services, LLC, 21-585 (La. App 5 Cir. 6/1/22); 343 So. 3d 866.

UM Waiver Completed by Insured’s Assistant Found Invalid

08.01.2022

Uninsured/underinsured motorist coverage (“UM coverage”) is included in all automobile liability policies by Louisiana law unless the insured “rejects [UM] coverage, selects lower limits, or selects economic only coverage.” What constitutes an adequate rejection of UM coverage has been the crux of countless lawsuits across the state. Recently, in Havard v. Jeanlouis, et al, 2021-C-00810 (La. 6/29/22), the Louisiana Supreme Court examined the validity of a corporate representative’s signature in the context of execution of a UM waiver form. Louisiana courts have found that without a valid signature, UM coverage generally may not be waived.

The Havard court recognized that a corporation cannot “sign” its own name, and that an authorized representative must act on its behalf. Under the facts of this case, an administrative assistant attempted to execute a UM waiver form at the corporate representative’s direction with a stamp of the representative’s signature. The plaintiff argued that the use of the stamp did not meet the requirements for proper execution of the UM waiver form at issue.

Considering these facts, the court noted that Louisiana law of mandate provides that “when the law prescribes a certain form for an act, a mandate authorizing the act must be in that form.” The court continued: “Accordingly, where one individual signs a UM form on behalf of another individual and authority is not conferred by law, our Civil Code requires this authority be in writing.”

While the corporate representative in Havard verbally instructed his administrative assistant to complete the waiver with his signature stamp, no written mandate existed between the representative and the assistant to confirm this authority. Absent the written mandate, the court disregarded the express intention of the corporate representative and held the form invalid.

The court recognized the impracticality of its holding. However, it also commented “Concerns over the practical impact within the insurance industry in scrutinizing stamped signed UM forms are unavailing. Inconvenience is not absurdity. The insurer has the authority, opportunity, and responsibility to assure the UM form is completed properly. … Practical considerations regarding increased due diligence requirements are matters of policy best directed to the legislature.”

Cases involving UM waiver forms are fact-sensitive. Havard involved unique facts where the company’s authorized agent did not sign the UM waiver form personally. While Havard may be limited to its facts, it reminds that proper execution of a UM waiver form is necessary for UM coverage to be properly waived.

Louisiana Supreme Court Provides Updated Guidance on Execution of UM Waiver Forms