Eric Holt v. State Farm Fire & Casualty Co.


PUBLISHED OPINION FILED. [09-30795 Affirmed ] Judge: RHB , Judge: CES , Judge: LHS Mandate pull date is 12/21/2010 [09-30795]

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Eric Holt v. State Farm Fire & Casualty Co. Case: 09-30795 Document: 00511306850 Page: 1 Date Filed: 11/30/2010 Doc. 0 IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED November 30, 2010 N o . 09-30795 Lyle W. Cayce Clerk E R I C HOLT, Plaintiff - Appellee v. S T A T E FARM FIRE & CASUALTY CO., Defendant - Appellant A p p e a l from the United States District Court for the Eastern District of Louisiana B e fo r e BARKSDALE, STEWART, and SOUTHWICK, Circuit Judges. C A R L E. STEWART, Circuit Judge: W e are asked in this appeal to consider whether a prescriptive statute in L o u is ia n a retroactively applies to Plaintiff-Appellee Eric Holt's cause of action. Holt's home in New Orleans, Louisiana suffered extensive fire damage in J a n u a r y 2007, and he sought to recover payment under his homeowners policy w it h Defendant-Appellant State Farm Fire & Casualty Company (State Farm). Dissatisfied with State Farm's response to his claim, Holt filed suit against the in s u r e r in February 2008. Between the time Holt's cause of action arose in J a n u a r y 2007 and his lawsuit in February 2008, the state legislature amended Case: 09-30795 Document: 00511306850 Page: 2 Date Filed: 11/30/2010 No. 09-30795 t h e applicable prescriptive statutes in the Louisiana insurance code. Previously, a n insured had only 12 months from loss to file a suit; the amendment extended t h e prescriptive period to 24 months. State Farm moved the district court for s u m m a r y judgment, arguing that Holt's suit was time barred and that he could n o t benefit from the extended prescription period. The district court denied the m o t io n , concluding that the amended prescription period applied retroactively t o Holt's claim. We affirm. I. A. H o lt was out of town when his property suffered extensive fire damage on o r about January 17, 2007. When Holt returned to New Orleans and discovered t h e fire in February 2007, he contacted State Farm about his loss. State Farm r e fu s e d to pay the claim. Holt sued State Farm in Louisiana trial court on F e b r u a r y 12, 2008, and State Farm thereafter removed the suit to federal d is t r ic t court. Holt sought payment under his homeowners policy, as well as s t a t u t o r y penalties, general and specific damages, attorney's fees, and costs. State Farm denied liability. The insurance company also argued that Holt's c la im was prescribed under both the contract and Louisiana insurance law. In October 2008, State Farm moved for summary judgment on the basis o f its prescription argument. State Farm argued that both the insurance policy a n d Louisiana insurance law required that Holt file his lawsuit within 12 m o n th s of January 17, 2007, the date his house suffered fire damage. Thus, b e c a u s e Holt's lawsuit was filed in February 2008, it was time barred. Holt o p p o s e d the motion, arguing that he benefitted from the 2007 amendment to the L o u is ia n a insurance laws that extended the applicable prescription period from 1 2 months to 24 months. The amendment, Act 43 of 2007 (Act 43), became e ffe c t iv e in mid-2007. Holt argued that because Act 43 went into effect before h is cause of action had prescribed, the statute retroactively applied to his suit 2 Case: 09-30795 Document: 00511306850 Page: 3 Date Filed: 11/30/2010 No. 09-30795 a n d extended the prescription period, thereby rendering his lawsuit timely filed. State Farm countered that Act 43 could not be applied retroactively for two r e a s o n s : (1) it was a substantive law, and therefore, under Louisiana law, had p r o s p e c t iv e application only; and (2) even if it were not a substantive law and t h e r e fo r e capable of being applied retroactively, such application was u n c o n s t it u t io n a l. The district court denied State Farm's motion for summary ju d g m e n t , concluding that Act 43 applied retroactively to Holt's claim. Finding t h a t its order involved a controlling question of law as to which there was a s u b s t a n t ia l ground for difference of opinion, the district court certified the p r e s c r ip t io n issue for immediate appeal to this court. We granted State Farm le a v e to appeal, and have jurisdiction under 28 U.S.C. 1292(b). B. T h e sole question presented in this appeal is whether Act 43, which e x t e n d e d the applicable prescription period in this case, applies retroactively to H o lt 's cause of action. Act 43 amended the prescriptive periods in two Louisiana in s u r a n c e statutes: La. Rev. Stat. 22:629(B) and 691(F).1 The previous v e r s io n of 22:629(B) provided that for specified types of insurance, including fir e , an insurance policy could not limit a right of action against an insurer to le s s than 12 months after the inception of the loss. Similarly, the previous v e r s io n of 22:691(F) provided that a suit for recovery under the standard fire in s u r a n c e policy in Louisiana had to commence within 12 months after the in c e p tio n of the loss. Act 43 changed the prescriptive periods in both statutes fr o m 12 months to 24 months. It went into effect on August 15, 2007.2 In 2009, 22:629 was redesignated 22:868, and 22:691 was redesignated 22:1311. See Acts 2008, No. 415, 1. The Louisiana Constitution provides that, except where the legislature specifies an effective date for a statute, "[a]ll laws enacted during a regular session of the legislature shall take effect on August fifteenth of the calendar year in which the regular session is held." LA. CO N S T . art. III, 19. 2 1 3 Case: 09-30795 Document: 00511306850 Page: 4 Date Filed: 11/30/2010 No. 09-30795 F in a lly , Holt's homeowners policy, which provided fire insurance to his p r o p e r t y at all relevant times, specified that with respect to lawsuits against the in s u r e r , "[t]he action must be started within one year after the date of loss or d a m a g e ." The policy also stated that when a policy provision conflicted with the a p p lic a b le state law, the state law would govern. II. W e review a district court's grant or denial of summary judgment de novo, a p p ly in g the same standard as the district court. Am. Int'l Specialty Lines Ins. C o . v. Canal Indem. Co., 352 F.3d 254, 25960 (5th Cir. 2003). Summary ju d g m e n t is appropriate if there is no genuine issue as to any material fact and t h e moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 5 6 (c ). The facts and evidence must be taken in the light most favorable to the n o n -m o v a n t . Am. Int'l Specialty, 352 F.3d at 260. When, as here, jurisdiction is based on diversity, we apply the substantive la w of the forum state. Erie R. v. Tompkins, 304 U.S. 64 (1938). To determine L o u is ia n a law, we look to the final decisions of Louisiana's highest court. Am. I n t'l Specialty, 352 F.3d at 260. In the absence of a final decision by that court a d d r e s s in g the issue at hand, a federal court must determine, in its best ju d g m e n t , how the state's highest court would resolve the issue if presented with it . Id. As the Louisiana Supreme Court has not addressed the retroactive a p p lic a b ilit y of Act 43, the district court had to make an "Erie guess"; on appeal, w e do the same, de novo. III. A r t ic le 6 of the Louisiana Civil Code sets out the governing rule of s t a t u t o r y construction applicable to this case. That article, titled "Retroactivity o f laws," states: I n the absence of contrary legislative expression, substantive la w s apply prospectively only. Procedural and interpretative 4 Case: 09-30795 Document: 00511306850 Page: 5 Date Filed: 11/30/2010 No. 09-30795 la w s apply both prospectively and retroactively, unless there is legislative expression to the contrary. A court's application of Article 6 requires a two-fold inquiry.3 Cole v. Celotex C o r p ., 599 So. 2d 1058, 1063 (La. 1992). First, the court must ascertain whether in the enactment, the legislature expressed its intent regarding retroactive or p r o s p e c t iv e application. If the legislature did so, the judicial inquiry ends. If the le g is la t u r e did not, the court must then classify the enactment as substantive, p r o c e d u r a l, or interpretive.4 Id. at 1063. Substantive laws "either establish new r u le s , rights, and duties or change existing ones." Prejean v. Dixie Lloyds Ins. C o ., 655 So. 2d 303, 308 (La. 1995). Procedural laws, in contrast, "describe the m e t h o d of enforcing, processing, administering or determining rights, liabilities o r status." Id. Thus, if a statute "merely prescribes the method of enforcing a r ig h t which previously existed or maintains redress for invasion of rights, it is c la s s ifie d as procedural." Id. Interpretive laws "merely establish the meaning t h a t the interpretive statute had from the time of its enactment." Id. A s is clear from its text, Article 6 expressly authorizes the retroactive a p p lic a t io n of laws that a court deems procedural or interpretive. Indeed, the L o u is ia n a Supreme Court over thirty years ago stated that according to its "con sist e n t interpretation" of the Louisiana laws, procedural laws generally "will b e given retroactive effect in the absence of language showing a contrary in t e n t io n ." Lott v. Haley, 370 So. 2d 521, 523 (La. 1979). "This jurisprudential r u le is subject to the exception that procedural . . . laws are not accorded A related statute, La. Rev. Stat. 1:2 provides: "No Section of the Revised Statutes is retroactive unless it is expressly so stated." Section 1:2 has been held to apply only to substantive and not procedural or interpretive legislation. Morial v. Smith & Wesson Corp., 785 So. 2d 1, 10 (La. 2001). It is therefore construed as being co-extensive with La. Civ. Code art. 6. Id. Although Article 6 employs the word "interpretative," the Louisiana Supreme Court has consistently discussed the statute using the slightly shorter variant "interpretive." 4 3 5 Case: 09-30795 Document: 00511306850 Page: 6 Date Filed: 11/30/2010 No. 09-30795 r e t r o a c t iv e effect where such retroactivity would operate unconstitutionally to d is t u r b vested rights." Id. In determining whether Act 43 applies retroactively to Holt's cause of a c t io n , we start with the first prong of the Article 6 inquiry: whether the le g is la t u r e expressed its intent regarding retroactive or prospective application. A review of Act 43 shows that it does not contain a clear and unmistakable e x p r e s s io n of such legislative intent. We thus proceed to the second prong of the in q u ir y to determine whether Act 43 is substantive, procedural, or interpretive. I n Louisiana, statutes of limitation are generally treated as procedural la w s . Chance v. Am. Honda Motor Co., 635 So. 2d 177, 178 (La. 1994); see also L o tt, 370 So. 2d at 523 (same). Under this "well established principle of s t a t u t o r y interpretation," statutes of prescription generally apply to all actions in s t it u t e d after the effective date, even though the cause of action may have a c c r u e d before the enactment of the legislation. Chance, 635 So. 2d at 178. The L o u is ia n a Supreme Court has specified two exceptions to this rule of r e t r o a c t iv it y for prescriptive statutes: the statute is not retroactive where such a p p l i c a t io n would (1) strip a party of a vested right, or (2) revive an already p r e s c r ib e d cause of action. Lott, 370 So. 2d at 52324. With respect to the first, w h e n a party acquires a right either to sue for a cause of action or to defend h im s e lf against one, that right becomes a vested property right and is protected b y due process guarantees. Falgout v. Dealers Truck Equip. Co., 748 So. 2d 399, 4 0 7 (La. 1999). With respect to the second, the Louisiana Supreme Court has e x p lic it ly declined to retroactively apply a prescription statute to revive an a lr e a d y prescribed cause of action. See Chance, 635 So. 2d at 179. This is b e c a u s e while a defendant does not acquire anything during the running of the p r e s c r ip t iv e period, once the time period has elapsed, the defendant may plead t h e exception of prescription to defeat the plaintiff's claim. Id. at 178. Once the d e fe n d a n t 's right to plead prescription has vested, any retroactive application of 6 Case: 09-30795 Document: 00511306850 Page: 7 Date Filed: 11/30/2010 No. 09-30795 a n extended prescriptive period would improperly disturb that vested right, and is therefore impermissible. See id. ("Because the defendant acquires the right t o plead the exception of prescription, a change in that right constitutes a s u b s t a n t iv e change in the law as applied to the defendant."). D e s p ite the "well established principle" in Louisiana that prescriptive s t a t u t e s are generally procedural, State Farm argues that Act 43 is substantive a n d therefore applies on a prospective basis only. In support of its argument, S t a te Farm relies solely on a Louisiana Supreme Court case that was decided on a n expedited basis to address the legislature's extension of the prescriptive p e r io d for insurance claims arising from Hurricanes Katrina and Rita. See State v . All Prop. and Cas. Ins. Carriers Authorized & Licensed to Do Bus. in the State o f La., 937 So. 2d 313 (La. 2006). In the wake of those two hurricanes, the L o u is ia n a legislature enacted Acts 2006, Nos. 739 and 802 (collectively, 2006 A c t s ), to extend the prescriptive period within which insured parties could file c e r t a in claims under their insurance policies for Katrina- and Rita-related lo s s e s . Id. at 317. The issue presented was whether the 2006 Acts were c o n s t it u t io n a l. Id. at 319. The Louisiana Supreme Court, undertaking the two-prong analysis under A r t ic le 6 of the Louisiana Civil Code, first concluded that the 2006 Acts clearly in d ic a te d the legislature's intent that the provisions be applied both r e t r o a c t iv e ly and prospectively. All Prop., 937 So. 2d at 322. With this c o n c lu s i o n , the Article 6 inquiry should have ceased. See Morial v. Smith & W e s s o n Corp., 785 So. 2d 1, 10 n.8 (La. 2001) ("The Article 6 inquiry is at an end b e c a u s e we can determine the legislature's intent regarding retroactive a p p lic a t io n of the statute.").5 The court itself recognized as much: "Our finding See also Bourgeois v. A.P. Green Indus. Inc., 783 So. 2d 1251, 1258 (La. 2001) ("An analysis of whether an enactment is substantive, procedural or interpretive is necessary only in the event that the legislature's intent regarding retroactive application . . . cannot be 5 7 Case: 09-30795 Document: 00511306850 Page: 8 Date Filed: 11/30/2010 No. 09-30795 o f the legislature's intent to have the provisions of these Acts apply retroactively a n d prospectively would normally end our inquiry." All Prop., 937 So. 2d at 322. Under its usual Article 6 analysis, the court would have next considered any c o n s t it u t io n a l limitations to the retroactive application of the statute. See, e.g., S m ith v. Bd. of Trustees of La. State Employees' Ret. Sys., 851 So. 2d 1100, 1105 (L a . 2003) ("[E]ven where the legislature has expressed its intent to give a s u b s t a n t iv e law retroactive effect, the law may not be applied retroactively if it w o u ld impair contractual obligations or disturb vested rights."). If there were n o n e , the court would defer to the intent expressed by the legislature. Rousselle, 6 3 3 So. 2d at 1245. B u t in All Prop., the Louisiana Supreme Court eschewed its usual Article 6 analysis. Despite concluding that the legislature clearly intended the 2006 A c t s to have retroactive application, the court felt obligated to reach the second p r o n g of the Article 6 inquiry and classify the statutes as substantive, p r o c e d u r a l, or interpretative. See All Prop., 937 So. 2d at 322. The court first n o te d that "prescriptive statutes are generally procedural in nature, which w o u ld allow retroactive application of these Acts to causes of action that arose p r io r to their effective dates." Id. However, because "the legislation at issue has t h e effect of extending a prescriptive period," the court concluded that the 2006 A c t s were substantive in nature. Id. at 323 (citing Chance, 635 So. 2d at 178). The court then undertook the requisite constitutional analysis, and concluded t h a t the retroactive application of the 2006 Acts did not violate the federal or L o u is ia n a constitutions. Id. at 330. S t a t e Farm argues that because the Louisiana Supreme Court in All Prop. c o n c lu d e d that the 2006 Acts were substantive laws, we must conclude the same w it h respect to Act 43. We disagree. To begin with, the clear weight of the determined."); Rousselle v. Plaquemines Parish Sch. Bd., 633 So. 2d 1235, 1245 (La. 1994) ("[T]he first step of the article 6 inquiry is dispositive and no further inquiry is necessary."). 8 Case: 09-30795 Document: 00511306850 Page: 9 Date Filed: 11/30/2010 No. 09-30795 c a s e la w from the Louisiana Supreme Court supports the conclusion that Act 43, a s it applies to Holt's cause of action, is a procedural law. See Chance, 635 So. 2 d at 178 (prescriptive periods are generally procedural laws); Lott, 370 So. 2d a t 523 (same). As there is no "legislative expression to the contrary," Act 43 has r e t r o a c t iv e applicability in this particular case.6 LA. CIV. CODE art. 6. Neither o f the two exceptions to this general rule of retroactivity apply here: the r e t r o a c t iv e application of Act 43 will not strip any party to this case of a vested r ig h t , nor will it revive an already prescribed cause of action. At the time of Act 4 3 's effective date in August 2007, State Farm's right to plead prescription had n o t yet vested; that right would not vest under the prior 12-month period until J a n u a r y 2008. Likewise, Holt's cause of action for recovery under his fire in s u r a n c e had not yet prescribed, and therefore the retroactive application of Act 4 3 will not revive any claim here. Under these circumstances, the conclusion t h a t Act 43 retroactively applies to Holt's claim is inescapable. A d d it io n a lly , we decline to give weight to the conclusion in All Prop. that t h e 2006 Acts were substantive. That conclusion was unnecessary to the o u tc o m e of All Prop. and is therefore dictum. See BLACK'S LAW DICTIONARY 1177 ( 9 t h ed. 2009) (obiter dictum is "unnecessary to the decision in the case and t h e r e fo r e not precedential"). As the Louisiana Supreme Court has made clear t im e and again, once a court determines that the Louisiana legislature intended fo r a statute to apply retroactively, that ends the Article 6 inquiry. See Morial, 7 8 5 So. 2d at 10 n.8; Bourgeois, 783 So. 2d at 1258; Rousselle, 633 So. 2d at 1245. Absent any constitutional limitations to the retroactive application of the s t a t u t e , the court must defer to the intent expressed by the legislature. In All P r o p ., the Louisiana Supreme Court ultimately concluded that the retroactive To be clear, we do not hold that Act 43 has retroactive applicability to all claims that arose before Act 43's effective date. We limit our holding to the facts of this case and to Holt's cause of action, which had not prescribed at the time of Act 43's effective date. 6 9 Case: 09-30795 Document: 00511306850 Page: 10 Date Filed: 11/30/2010 No. 09-30795 a p p lic a b ilit y of the 2006 Acts was not unconstitutional. The court's analysis and o u tc o m e would have been the same had it omitted--as precedent r e q u ir e d -- c o n s id e r a t io n of whether the statutes were substantive or not. We do n o t find the state court's analysis in dictum to be persuasive. IV . W e conclude that the extended prescriptive period in Act 43 applies r e t r o a c t iv e ly in the instant case and AFFIRM the district court's judgment. 10

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