Bridgefield Casualty Insurance Company v. River Oaks Management, Inc.
FINDINGS OF FACT AND CONCLUSIONS OF LAW. Signed by Judge Jane Triche Milazzo on 7/19/2016.(Reference: All Cases)(ecm)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
BRIDGEFIELD CASUALTY INSURANCE
RIVER OAKS MANAGEMENT, INC.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Bridgefield Casualty Insurance Company (“Bridgefield”) filed this action
seeking a judgment declaring that the Louisiana workers’ compensation
insurance policy sold to River Oaks Management, Inc. (“River Oaks”) does not
provide coverage for an accident that occurred in Mississippi. River Oaks is
an apartment management firm headquartered in Louisiana.
began writing workers’ compensation insurance policies for River Oaks in
2005. Each policy was written for a term of one calendar year and contained a
declaration page indicating that the policy provided workers’ compensation
insurance for the state of Louisiana. Beginning in 2006, the declarations pages
noted the policies included “Other States” coverage for nine additional states,
including Mississippi. Part Three of the policy provides that if River Oaks
begins work during any policy year in a listed “Other State,” the policy will
provide workers’ compensation coverage for work performed in the “Other
State” during that same policy year. Part Three also provides that, if River
Oaks has work in an “Other State” on the first day of a policy period, the policy
will not provide workers’ compensation coverage for work performed in that
state during that policy year unless River Oaks notifies Bridgefield of the work
within 30 days of the effective date of the policy (January 31st). In other words,
if River Oaks begins work in an “Other State” any time after January 1 of a
policy year, that work will be covered by the policy. On the other hand, if River
Oaks has ongoing work in an “Other State” on January 1 of any policy year, it
must notify Bridgefield in accordance with the policy.
Prior to 2011, River Oaks operated exclusively in Louisiana.
September 30, 2011, River Oaks contracted with an apartment complex in
Mississippi to provide apartment management services.
subsequently contracted with two other Mississippi apartment complexes in
the fall of 2011. River Oaks’ work in Mississippi continued into 2012, but it
failed to notify Bridgefield in accordance with the policy. On June 8, 2012, a
River Oaks employee fell off a ladder at one of River Oaks’ Mississippi
locations, sustaining severe injuries. When the employee made a claim for
workers’ compensation coverage, Bridgefield contended that the policy did not
apply to the Mississippi injury because River Oaks failed to comply with the
policy’s notice provisions. This litigation resulted.
On November 4, 2013, this Court granted summary judgment to
Bridgefield. The Court held that the policy was clear and unambiguous, that
River Oaks had failed to comply with the policy’s notice provisions, that there
was no coverage for the accident in question, and that none of River Oaks’
affirmative defenses had merit.
River Oaks appealed.
The Fifth Circuit
affirmed this Court’s holding that the policy did not provide coverage for the
accident but held that there was a genuine dispute of material fact regarding
River Oaks’ waiver defense.
The matter was remanded to this Court for
resolution of the sole remaining issue: “whether Bridgefield waived its right to
deny coverage for River Oaks’ failure to comply with the notice provision.” This
case proceeded to a bench trial on April 22, 2016. Having considered the
evidence admitted at trial, the arguments of counsel, and the post-trial
briefing, this Court makes the following findings of fact and conclusions of law.
To the extent a finding of fact constitutes a conclusion of law, and vice versa,
the Court adopts it as such.
FINDINGS OF FACT
1. River Oaks Management, Inc. is a Louisiana corporation engaged in the
real estate management business. It provides property management
services to apartment complexes.
2. Bridgefield Casualty Insurance Company insured River Oaks under a
workers’ compensation/employer’s liability policy number 198-03829,
effective from January 1, 2012 to January 1, 2013 (the “2012 Policy”).
This policy provides worker’s compensation and employer liability
coverage, subject to certain terms, conditions, limitation, and
3. Part One of the 2012 policy provides workers’ compensation insurance.
4. Section 3.A of the 2012 Policy’s Information Page states that part 1 of
the policy applies to Louisiana.
5. Section 3.C of the 2012 Policy Information Page identifies Mississippi
as a state for which the Other States Insurance Coverage under Part
Three Applies, subject to the conditions contained therein.
6. Part Three of the 2012 Policy (“Other States Insurance”) provides as
A. How this Insurance Applies
1. This other states insurance applies only if one or more states are
shown in Item 3.C. of the Information Page
2. If you begin work in any one of those states after the effective date of
this policy and are not insured or are not self-insured for such work, all
provisions of the policy will apply as though that state were listed in
Item 3.A. of the Information Page.
3. We will reimburse you for the benefits required by the workers
compensation law of that state if we are not permitted to pay the
benefits directly to the person entitled to them.
4. If you have work on the effective date of this policy in any states not
listed in Item 3.A. of the Information Page, coverage will not be afforded
for that state unless we are notified within thirty days.
Tell us at once if you begin work in any state listed in item 3.C. of the
7. Prior to September 20, 2011, River Oaks operated exclusively in
In the last quarter of 2011, River Oaks entered into
Apartments and the Andrews Apartments complexes in Mississippi.
8. River Oaks did not notify Bridgefield on or before January 1, 2012, the
effective date of the 2012 Policy, that River Oaks was working or had
existing business operations in Mississippi.
9. River Oaks did not notify Bridgefield within thirty days after the
effective date of the 2012 Policy that it had business operations in
10. Between January 1, 2005 and January 1, 2012, Bridgefield conducted
premium audits of River Oaks’ payroll records for the purpose of
determining the final audited premium for the policy period for the
previous policy year. The premium audit results were also used to set
monthly estimated premiums for the policy year during which the audit
11. In March 2012, Ms. Lynette Greco, a premium auditor and employee of
Summit Consulting, Inc. (“Summit”), Bridgefield’s managing general
agent, went to River Oaks Louisiana office to conduct the annual
premium audit. As a part of this audit, she reviewed approximately 150
pages of documents to make her premium calculations.
documents contain references to the payment of Mississippi employees.
12. Ms. Greco’s review of documents during the premium audit lasted
between 30 minutes and an hour. This audit was one of approximately
600 audits conducted each year by Ms. Greco.
13. Ms. Greco’s inspection focused on the total dollar amounts of payroll
found on particular pages of certain documents. She did not study each
page provided. She was neither required to do so nor did she have any
reason to do so.
14. Ms. Greco’s premium audit did not specifically identify that River Oaks
had Mississippi Payroll during the year ending December 31, 2011.
15. During the audit, no one from River Oaks spoke to Ms. Greco about its
Mississippi operations or Mississippi addresses for River Oaks
16. On June 8, 2012, Ernest Stoltz suffered a fall while working for River
Oaks at the Madison Apartments in Mississippi.
subsequently notified Bridgefield of the accident and submitted a claim
pursuant to the 2012 Policy.
17. At the time of the accident, Bridgefield did not have notice that River
Oaks was doing business in Mississippi.
CONCLUSIONS OF LAW
The sole issue remaining to be decided on remand is whether
Bridgefield waived its right to deny coverage for River Oaks’ failure to
comply with the notice provision. River Oaks contends that the remand
from the Fifth Circuit obligates the Court to find in its favor. This Court
respectfully disagrees. Were that the case, trial of this matter would
have been unnecessary. This matter was remanded from the Fifth
Circuit because the Court needed to make a factual finding—whether
Bridgefield had notice of River Oaks’ Mississippi opperations. Having
answered that question in the negative, the Court finds that River
Oaks’ claim of waiver must fail, as discussed below.
“‘Waiver is usually defined as the intentional relinquishment of a
known power or privilege.’ Tate v. Charles Aguillard Ins. & Real Estate,
Inc., 508 So.2d 1371, 1373 (La.1987) (Dennis, J.) ‘Waiver occurs when
there is an existing right, a knowledge of its existence and an actual
intention to relinquish it, or conduct so inconsistent with the intent to
enforce the right as to induce a reasonable belief that it has been
relinquished.’ Id. at 1374. . . . ‘[A] waiver may apply to any provision of
an insurance contract, even though this may have the effect of bringing
within coverage risks originally excluded or not covered.’ Steptore v.
Masco Constr. Co., 93–2064 (La.8/18/94); 643 So.2d 1213, 1216 (Dennis,
J.) (emphasis added); see also Tate, 508 So.2d at 1375 (same). An
insurer may waive a provision that falls short of granting it the right to
cancel the entire policy, such as the exclusion-of-coverage provision at
issue here.” Bridgefield Cas. Ins. Co. v. River Oaks Mgmt., Inc., 590 F.
App’x 308, 315-16 (5th Cir. 2014).
The party asserting waiver, typically the insured, bears the burden of
proof and persuasion on that issue. See State Farm Mut. Auto Ins. Co.
v. Cooper, 707 So.2d 986, 989 (La. App. 3d. Cir 1997).
“‘[U]nder Louisiana law, the acceptance of premium payments by an
insurer after receiving knowledge of facts creating a power of avoidance
or privilege of forfeiture constitutes a waiver of such power or privilege.’
Home Ins. Co. v. Matthews, 998 F.2d 305, 309–10 (5th Cir.1993)
(internal quotation marks omitted); see also Swain v. Life Ins. Co. of
La., 537 So.2d 1297, 1300 (La.Ct.App.1989) (same). Subjective
knowledge by the insurer is not required. ‘It is well established that an
insurer is charged with knowledge of the contents of its own policy.’
Steptore, 643 So.2d at 1216. And ‘notice of facts which would cause a
reasonable person to inquire further imposes a duty of investigation
upon the insurer, and failure to investigate constitutes a waiver of all
powers or privileges which a reasonable search would have uncovered.’
Id.” Bridgefield Cas. Ins. Co. v. River Oaks Mgmt., Inc., 590 F. App’x
308, 316 (5th Cir. 2014).
This Court finds that Bridgefield did not waive its right to deny
coverage based on noncompliance with the notice provisions of the
policy. Based on the testimony admitted at trial the Court concludes
that Bridgefield was neither on notice regarding River Oaks’
Mississippi business activities nor on notice of facts that would have
triggered a duty to investigate. Though subjective knowledge of an
occurrence that would allow the insurer to disclaim coverage is not
required, the insurer must, at the very least, have knowledge of some
fact that “would cause a reasonable person to inquire further.” River
Oaks would have this Court impute to Bridgefield the entire contents
of every document that passed through Ms. Greco’s hands as she
conducted the premium audit. The Court declines to do so. The purpose
of the audit was limited to determining the total amount of payroll from
the preceding year. Ms. Greco did not read every line of every page
presented to her, instead focusing on specific lines to glean the
information pertinent to her limited task.
These documents were
neither retained by Bridgefield nor made a part of its file. This is a far
cry from the cases in which Louisiana courts have found waiver,
wherein some facially apparent fact conveyed to the insurer placed it
on notice. See, e. g. Swain v. Life Ins. Co. of La., 537 So. 2d 1297 (La.
App. 2 Cir. 1989) (finding insurance company could not deny coverage
based on “sound health” provisions when policy was issued despite the
fact that the insured obtained the policy while on crutches, displaying
visible signs that his health was questionable); Home Ins. Co. v.
Matthews, 998 F.2d 305 (5th Cir. 1993) (finding waiver of policy
provision allowing legal malpractice insurer to disclaim coverage due to
dishonest answers on application where insurer accepted premiums
despite the fact that insured attached notice of 16 claims against him
The 2012 Policy does not provide coverage for benefit claims by River
Oaks employee Ernest Stolz for injuries sustained in the course and
scope of his employment in Mississippi.
For the foregoing reasons, this Court finds that the 2012 Policy does not
provide coverage for benefits claims by River Oaks employee Ernest Stolz for
injuries sustained in the course and scope of his employment in Mississippi.
New Orleans, Louisiana this _____ day of July, 2016.
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE
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