When a Settlement Is Not a Settlement

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.

On June 27, 2025, in an Opinion authored by Justice Amy Coney Barrett, the United States Supreme Court determined that “universal injunctions,” injunctions issued by district judges that apply nationwide, “likely exceed the equitable authority that Congress has given to federal courts.” In Trump v. CASA, Inc., the Supreme Court, with a 6-3 vote, concluded that district courts do not have authority to issue universal injunctions which seek to prohibit the enforcement of a law or policy against anyone nationwide. The decision limits the relief afforded by the district courts in consolidated matters to only the parties in those actions.

By prohibiting the use of “universal injunctions” in federal courts, litigants already have started to utilize another procedure to seek the relief they seek – class actions. Class actions are a special procedure provided by both federal and state law that allows one or more class representatives to file suit and seek to represent the interests of other similarly situated individuals or companies. Prior to the Supreme Court’s ruling in Trump v. CASA, Inc., a single litigant could apply for a universal injunction through an individual action. Now that the Supreme Court has declared that process unavailable for application of an injunction nationwide, class actions may be the procedural process litigants attempt to use to achieve that same purpose. It remains to be seen whether class actions will be an effective way to achieve broader relief for individuals impacted by government policies.

References:

Trump v. CASA, Inc., --- S.Ct. ---, No. 24A884, 2025 WL 1773631 (U.S. June 27, 2025).

Louisiana law favors the settlement of disputes. With a settlement, both sides agree to avoid costly litigation and obtain a certain, negotiated result. While neither side is completely happy with the result in a typical settlement, the case is at least closed and the financial and emotional drain of litigation is ended. But the recent decision in The Marietta Trust and The Warren Trust v. J.R. Logging, Inc., Fair Hills Farm, LLC, Jerry Avants, Jr., Thomas Keaty, Jr. and XYZ Insurance Company, 2016 CA 1136 (La. App. 1 Cir. 5/11/17) shows what can happen when one of the parties change their mind. This case is important because it calls into question whether an exchange of emails is sufficient to reach a final settlement.

The Marietta Trust case involved a dispute regarding the wrongful cutting of timber and the parties seemingly came to a resolution. Via email, the case was negotiated and the terms were agreed upon. Formal settlement documents were drawn up and money was exchanged. However, when the time came to execute the final documents, one set of defendants refused to sign the paperwork. This refusal to sign came after the attorney for these defendants directly stated in an email that his "clients have agreed to the settlement." Id. at *4. In response to the refusal to sign, the other parties filed a Joint Motion to Enforce Settlement Agreement which was denied by the Trial Court.

Settlement agreements are governed by the Louisiana Civil Code art. 3071 which provides that litigation can be resolved via settlement or compromise. A settlement agreement can take two forms: 1) recitation in open court; or 2) a writing. “The purpose of the writing requirement is to serve as proof of the agreement and the acquiescence therein.” Marietta Trust, 2016 CA 11336, Id. at *3. The writing must be signed by the parties or their agents. “Until the parties sign a written document or documents evincing their consent to the terms of the proposed agreement, a party is free to change his or her mind.” Id. at *3. Prior courts have found that emails meet the "writing" requirements. See, Geer v. BP America Production Co., 2014-450 (La. App. 3 Cir. 11/5/14), 150 So. 3d 621; Dozier v. Rhodus, 2008-1813 (La. App. 1 Cir. 5/5/09), 17 So. 3d 402.

The appellate court in Marietta Trust refused to enforce the "settlement." The court found that the exchange of emails was insufficient to meet the "writing" requirement of Civil Code article 3071 because neither the emails nor any other evidence showed that the attorney possessed "the express consent necessary to accept the terms of the settlement." Id. at *3.

When is a settlement not a settlement? Maybe when it came to you through your inbox. So, if an email from the attorney is not sufficient to perfect a settlement, what can we do? The answer offered by the 1st Circuit is to either: 1. Recite in open court; or 2. Obtain a writing that includes the client’s express consent given to the attorney to settle the case (presumably for the amount in the writing).