Judicial Interest Rate for Louisiana Hits a 17-Year High

We previously reported that the Louisiana Supreme Court issued Orders suspending prescriptive, peremptive and abandonment periods for thirty days in the wake of Hurricane Ida. Governor John Bel Edwards has now issued a Proclamation. In addition to other actions, the Proclamation provides that legal deadlines applicable to “legal proceedings in all courts, administrative agencies, and boards” are suspended until September 24, 2021.

The Proclamation also authorizes hotels and motels to cancel reservations which would result in the displacement or eviction of first responders, health care workers, or anyone performing disaster-related work.

Louisiana’s automobile insurance premiums are some of the highest in the United States. With so many other demands on driver’s wallets, it may seem tempting to simply not purchase a liability automobile policy, even if it is required by Louisiana law. Louisiana’s “No Pay, No Play” statute, LA-R.S. 32:866, is intended to fight that temptation. See Progressive Sec. Ins. Co. v. Foster, 1997-2985 (La. 4/23/98), 711 So.2d 675. Below are some key considerations for drivers and insurers on either side of a potential “No Pay, No Play” dispute.

For Drivers

The “No Pay, No Play” statute means just what it seems—if you do not pay for your own liability insurance, you cannot recover under someone else’s liability insurance even if the accident is not your fault … at least to a point.

Specifically, the “No Pay, No Play” statute precludes someone who does not have liability insurance from recovering from another driver’s policy (1) the first $15,000 of bodily injury damages and (2) the first $25,000 of property damage. Of course, if damages do not exceed these amounts, it means the uninsured driver cannot recover his or her damage at all.

Of course, some exceptions exist. For example, the statute does not apply (meaning, it does reduce the plaintiff driver’s recovery) if the other driver is cited for operating his or her vehicle while intoxicated and is convicted or pleads nolo contendere; if the other driver intentionally causes the accident; if the other driver flees the scene; or if the other driver is in furtherance of the commission of a felony. However, the off-chance that a driver falls into an exception should not outweigh the obligation to comply with Louisiana law.

For Insurers

Generally, liability insurers should assert the “No Pay, No Play” affirmative defense when it appears a plaintiff driver lacks liability insurance. However, insurers should also keep in mind that this defense also has limitations.

For instance, the “No Pay, No Play” statute is not necessarily a total bar to a plaintiff’s recovery. If damages exceed $15,000 for bodily injury and/or $25,000 for property damage, payment may still be owed for these excess damages.

Secondly, the party asserting the “No Pay, No Play” affirmative defense—usually a defendant insurer—bears the burden of establishing that the plaintiff driver lacked insurance coverage on the vehicle he or she was operating at the time of the incident.

This burden can sometimes present difficult issues. For instance, in Johnson v. Henderson, 2004-1723 (La.App. 4 Cir. 3/16/05), 899 So.2d 626, the plaintiff was operating a vehicle he did not own. The defendant failed to yield and struck the plaintiff’s car. The defendant and his insurer asserted the affirmative defense under “No Pay, No Play.”

The facts of the case suggest the vehicle that the plaintiff was operating was not insured, but plaintiff paid his “premiums” to the owners of the vehicle, had an ostensibly valid insurance card, and believed he was insured. The court found that the defendants failed to carry their burden of establishing a lack of coverage. As a result, the insurer owed the plaintiff the full amount of his damages—a total of $5,855.00 that would otherwise have been precluded under the statute.

The “No Pay, No Play” issue is easily avoided: Louisiana drivers should get the insurance required by the statute. Failure to do so runs the risk of discounting (and potentially barring) recovery for accidents that are not the driver’s fault.

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