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Courts around Louisiana continue to address factual scenarios for when summary judgment on an insured’s first party bad faith claim may be appropriate.

In Creamer Brothers Inc. et al. v. General Casualty Co. of Wisconsin, the federal court for the Western District of Louisiana addressed an insured’s claim for bad faith penalties and attorney’s fees arising out of an insurance claim for damages sustained in a February 2021 ice storm. The pertinent timeline is as follows:

February 22, 2021: Date of Loss/Ice Storm
February 26, 2021: Adjuster inspects property
April 9, 2021: Adjuster completes estimate
April 15, 2021: Insurer issues payment
August 6, 2021: Insured submits damages estimate
August 26, 2021: Insurer reinspects property with engineer
September 24, 2021: Engineer submits report to Insurer
October 7, 2021: Insurer prepares new estimate
October 11, 2021: Insurer tenders supplemental payment
October 12, 2022: Suit filed

The insurer argued summary judgment was appropriate because its damage assessment created a reasonable, well-founded dispute regarding the extent of damage caused by the ice storm. Plaintiff disagreed, arguing bad faith attached because the insurer relied solely on its own expert reports which they argued amounted to an investigation that was so inadequate it could be deemed unreasonable.

The Court sided with the insurer, granting its summary judgment. In so holding, the Court relied on the portion of La. R.S. 22:1892 which provides an insurer’s conduct must be “arbitrary, capricious, or without probable cause” for bad faith to attach. Specifically, the Court stated, “the fact that the parties’ experts reached different conclusions in their respective assessments gives rise to a dispute in the extent of Plaintiffs’ coverage, but does not illustrate a genuine issue of fact as to General Casualty’s ‘bad faith.’”

The Court noted the insurer sufficiently communicated with the insured, provided the insured with multiple expert reports containing their data and conclusions, and “ultimately made payments to Plaintiffs in accordance with those conclusions.” Plaintiff failed to point to evidence General Casualty’s conduct was arbitrary, capricious, or without probable cause, “despite yielding unsatisfactory results.”

In a case out of the Eastern District, Gentilly, LLC v. State Farm Fire & Cas. Co., the Court similarly relied on plaintiff’s failure to establish a general issue of material fact to show the insurer’s conduct was “arbitrary, capricious, or without probable cause.” The Gentilly case arose out of the plaintiff’s insurance claim for damages sustained to its commercial shopping center during Hurricane Ida. The parties engaged in a series of inspections, estimates, expert reports, payments, and supplemental payments over the course of about thirteen months, followed by several months of inactivity, then another period of investigation and adjustment over the course of about nineteen months.

Plaintiff argued the insurer’s 43-day delay in its first payout, failure to have an engineer inspect the property for a year, and gross under-evaluation of the damages as evidenced by its supplemental tender supported its bad faith claim. The Court disagreed.

In support of its conclusion, the Court noted the insurer advised plaintiff the inspection would take multiple days, and the delay in issuing payment arose out of the inspectors’ availability. The Court noted the insurer’s actions were “consistently in line with its expert appraisals.” In conclusion, the Court stated, “[t]hough the payout process was protracted by the scope and complexity of the insured loss, plaintiff fails to raise a genuine issue of material facts indicating that State Farm’s actions were arbitrary, capricious, or without probable cause.”

Louisiana courts have not established a bright-line rule for determining when summary judgment is appropriate on an insured’s bad faith claim. However, these cases seem to suggest that continued adjustment over a period of time may not give rise to bad faith claims where an insured cannot cite to evidence an insurer’s conduct was “arbitrary, capricious, or without probable cause.”

References:

Creamer Brothers Inc. et al. v. General Casualty Co. of Wisconsin, No. 22-cv-6110, 2025 WL 818579 (W.D. La. Mar. 13, 2025).

Gentilly, LLC v. State Farm Fire & Cas. Co., No. 23-cv-262, 2024 WL 5246606 (E.D. La. Dec. 30, 2024).

The Louisiana Supreme Court recently ruled a plaintiff’s bad faith insurance claim was prescribed where the policy at issue required actions to be brought within two years after the date of loss.

In Phyllis Wilson v. Louisiana Citizens Property Insurance Corporation, the plaintiff asserted a bad faith claim against an insurer. The applicable policy of insurance provided “[n]o action can be brought unless the policy provisions have been complied with and the action is started within two years after the date of loss.” The plaintiff alleged that the insurer failed to timely tender payments for losses that occurred on August 27, 2020 and October 20, 2020. However, the plaintiff did not file her suit unit January 9, 2023.

Prior to the Wilson decision, courts frequently relied on the Louisiana Supreme Court’s decision in Smith v. Citadel Ins. Co., which held that actions against insurers under Louisiana’s bad faith statutes are subject to a ten-year prescriptive period. In Smith, the Supreme Court addressed the issue of whether a bad faith action against an insurer was a delictual or tort action subject to a one-year prescriptive period, or a contractual action, which is subject to a ten-year prescriptive period under Louisiana law. The Smith court concluded that the duty of good faith owed by the insurer to the insured “emanates from the contract between the parties” such that the “insured’s cause of action is personal and subject to a ten-year prescriptive period.”

In Wilson, the Louisiana Supreme Court examined whether Smith required the Court to uphold a ten-year prescriptive period for bad faith actions even though the insurance policy at issue prohibited actions brought more than two years after the date of loss. The Wilson court ultimately concluded that an action against an insurer brought more than two years after the date of loss is prescribed where the applicable insurance policy set a term of two years for filing a claim against the insurer.

To reach this conclusion, the Wilson court cited Taranto v. Louisiana citizens Prop. Ins. Corp., which held “in the absence a statutory prohibition, a clause in an insurance policy fixing a reasonable time to institute suit is valid.” The Wilson court then turned to the applicable statute and noted that La. R.S. 22:868(B) “expressly provides that no policy ‘shall contain any condition, stipulation, or agreement limiting right of action against the insurer to a period of less than twenty-four months next after the inception of the loss when the claim is a first-party claim…’” The Wilson court noted the two-year limitation in the applicable policy was consistent with La. R.S. 22:868(B).

The court’s ruling supports the argument that policy provisions requiring actions to be filed within two years of the date of loss are enforceable. However, the Court did not disturb its holding in Smith, noting the Smith case was factually distinguishable because it did not involve a policy that contained a contractual limitation on the insured’s institution of suits.

References:

Phyllis Wilson v. Louisiana Citizens Property Insurance Corporation, No. 2023-CC-01320 (La. 1/10/2024) (per curiam), 2024 WL 108714.

Smith v. Citadel Ins. Co., 2019-00052 (La. 10/22/19), 285 So.3d 1062.

Taranto v. Louisiana citizens Prop. Ins. Corp., 2010-0105 (La. 3/15/11), 62 So.3d 721, 728.