Douglas et al v. Renola Equity Fund II, LLC et al

Filing 107

ORDER AND REASONS granting 95 Motion by Louisiana Citizens for Summary Judgment. The Court finds that plaintiffs' have failed to create a genuine issue of material fact as to the viability of their bad faith insurance practices claims against Louisiana Citizens under policy number FO 20091190184.. Signed by Chief Judge Sarah S. Vance on 5/14/15. (jjs)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
STEVE B. DOUGLAS, ET AL.

CIVIL ACTION

VERSUS

NO: 13-6192

RENOLA EQUITY FUND II, LLC, ET AL.

SECTION: R

ORDER AND REASONS
Defendant Louisiana Citizens Property Insurance Corporation
("Louisiana

Citizens")

moves

for

partial

summary

judgment

on

plaintiffs' bad faith insurance practices claims under La. R.S. §§
22:1892 and 22:1973 in relation to policy number FO 20091190184.1
The Court grants the motion because plaintiffs have failed to
provide the Court with any evidence demonstrating that they have a
valid, underlying insurance claim against Louisiana Citizens.

I.

Background
Plaintiffs are former owners and tenants of apartments and

condominiums located at 217 and 301 Plantation Drive in Chalmette,
Louisiana. Following Hurricane Isaac's landfall in August of 2012,
plaintiffs allege that they suffered various injuries and damages
as a result of toxic mold exposure.

Plaintiffs further allege

that, because of the toxic mold and other unrepaired damage caused
by Hurricane Isaac, St. Bernard Parish officials declared the
properties uninhabitable and ordered plaintiffs to vacate their
1

R. Doc. 95.

homes.

Plaintiffs

brought

suit

against

several

defendants

asserting different theories of liability against each defendant.
At issue here are plaintiffs' claims against Louisiana Citizens for
bad faith insurance practices under La. R.S. §§ 22:1892 and
22:1973.2
Louisiana Citizens provided commercial wind and hail insurance
coverage for the apartment buildings at 217 and 301 Plantation
Drive under policy number FO 20091190184.

Renola Equity, II, LLC

is the only entity listed as a named insured on the policy.3
Additionally, Darren Tyus, an employee of Louisiana Citizens,
provided an affidavit stating that "[n]one of the plaintiffs to
this matter made any claims with [Louisiana Citizens] under Policy
Number 20091190184[] prior to the filing of the above captioned
litigation."4

Plaintiffs have not provided the Court with any

evidence in support of their opposition, but nevertheless argue
that summary judgment is inappropriate because: (1) there are
numerous questions of fact as to various peripheral issues;5 (2)

2

R. Doc. 2-2 at 14.

3

R. Doc. 95-3 at 2.

4

R. Doc. 95-5 at 2.

5

Plaintiffs argue that there are genuine issues of material
facts as to (1) "what degree the damages and mold to the
plaintiffs property was caused by substandard construction and/or
caused by a storm which would've been covered under the
plaintiffs' insurance policy," (2) "whether or not the mold that
is found through the plaintiffs' apartments/condos was caused by
the use of Chinese drywall in the property," and (3)"when
2

discovery is in its infancy; and (3) Louisiana Citizens is an
indispensable party to the litigation.6

II.

Legal Standard
Summary judgment is warranted when "the movant shows that

there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a);
see also Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986);
Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
When assessing whether a dispute as to any material fact exists,
the

Court

considers

"all

of

the

evidence

in

the

record

but

refrain[s] from making credibility determinations or weighing the
evidence." Delta & Pine Land Co. v. Nationwide Agribusiness Ins.
Co.,

530

inferences

F.3d
are

395,
drawn

398–99
in

(5th

favor

Cir.
of

the

2008).

All

nonmoving

reasonable
party,

but

"unsupported allegations or affidavits setting forth 'ultimate or
conclusory facts and conclusions of law' are insufficient to either
support or defeat a motion for summary judgment." Galindo v.
Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985); see also
Little, 37 F.3d at 1075.

Louisiana Citizens would have received notice of a claim and/or
proof of loss either from the individuals plaintiffs or from
Renola which is also an insured of Louisiana Citizens." R. Doc.
101 at 2-4.
6

Id. at 3-6.
3

If the dispositive issue is one on which the moving party will
bear the burden of proof at trial, the moving party "must come
forward with evidence which would 'entitle it to a directed verdict
if the evidence went uncontroverted at trial.'" Int'l Shortstop,
Inc. v. Rally's, Inc., 939 F.2d 1257, 1264–65 (5th Cir. 1991). The
nonmoving party can then defeat the motion by either countering
with evidence sufficient to demonstrate the existence of a genuine
dispute of material fact, or “showing that the moving party's
evidence is so sheer that it may not persuade the reasonable
fact-finder to return a verdict in favor of the moving party." Id.
at 1265.
If the dispositive issue is one on which the nonmoving party
will bear the burden of proof at trial, the moving party may
satisfy its burden by merely pointing out that the evidence in the
record is insufficient with respect to an essential element of the
nonmoving party's claim. See Celotex, 477 U.S. at 325. The burden
then shifts to the nonmoving party, who must, by submitting or
referring to evidence, set out specific facts showing that a
genuine issue exists. See id. at 324. The nonmovant may not rest
upon the pleadings, but must identify specific facts that establish
a genuine issue for trial. See, e.g., id.; Little, 37 F.3d at 1075
("Rule 56 'mandates the entry of summary judgment, after adequate
time for discovery and upon motion, against a party who fails to
make a showing sufficient to establish the existence of an element

4

essential to that party's case, and on which that party will bear
the burden of proof at trial.'" (quoting Celotex, 477 U.S. at
322)).

III. Discussion
La. R.S. §§ 22:1892 and 22:1973 provide penalties to insureds
and policy beneficiaries if an insurer acts in bad faith when
adjusting a claim made under an insurance policy.7

In order to

recover statutory penalties under La. R.S. §§ 22:1892 and 22:1973,
a plaintiff "must first have a valid, underlying, substantive claim
upon which insurance coverage is based." Matthews v. Allstate, 731
F. Supp. 2d 552, 566 (E.D. La. 2010).

In other words, the

"penalties in these statutes do not stand alone; they do not
provide a cause of action against an insurer absent a valid,
underlying insurance claim."

Clausen v. Fidelity and Deposit Co.

of Md., 660 So. 2d 83, 85-86 (La. App. 1st Cir. 1995).

See also

Bayle v. Allstate, 615 F.3d 350, 363 (5th Cir. 2010) ("Breach of
contract is a condition precedent to recovery for the breach of the
duty of good faith.").

7

La. R.S. § 22:1892 provides for penalties if an insurer
fails to make a payment or written settlement offer "within
thirty days after receipt of satisfactory proof of loss of that
claim . . . when such failure is found to be arbitrary,
capricious, or without probable cause . . . ." La. R.S. §
22:1973 provides for penalties if an insurer fails to "adjust
claims fairly and promptly and to make a reasonable effort to
settle claims with the insured or the claimant, or both."
5

Plaintiffs

have

failed

to

establish

a

genuine

issue

of

material fact as to whether they have a valid, underlying insurance
claim against Louisiana Citizens under the policy at issue.

As an

initial matter, the insurance contract names Renola Equities, the
owner of the apartment buildings at issue, as the sole named
insured under policy number FO 20091190184.8

See Herbert v. Hill,

855 So. 2d 768, 771-72 (La. App. 2d Cir. 2003) (tenants cannot
bring

bad

faith

adjustment

insurance policy).

practices

claim

under

landlord's

The policy does not provide third party

liability or property coverage. Moreover, even if plaintiffs could
bring a claim under Renola Equities' insurance policy, Louisiana
Citizens provided an affidavit of its claims handler stating that
Louisiana

Citizens

never

received

a

claim

from

any

of

the

plaintiffs in this case under the insurance policy at issue.9
Plaintiffs do not offer any evidence to rebut this assertion.
Louisiana Citizens cannot be liable to plaintiffs for bad faith
adjustment
Louisiana
underlying

practices
Citizens

to

insurance

when

plaintiffs

adjust.
claim,

Thus,

never

filed

absent

plaintiffs'

bad

claims

evidence
faith

of

for
an

insurance

practices claims under policy number FO 20091190184 fail as a
matter of law. See Chet Morrison Contractors, LLC v. Onebeacon Am.
Ins. Co., Civ. A. No. 14-1958, 2015 WL 1221616, at *6 (E.D. La.

8

R. Doc. 95-3 at 2.

9

R. Doc. 95-5 at 2.
6

Mar. 17, 2015) ("Because [plaintiff] has no underlying claim
against [defendants], its claims under La. Rev. Stat. §§ 22:1892
and 22:1973 fail as a matter of law.").
Plaintiffs make three arguments in an attempt to defeat
summary judgment, none of which has merit.

First, plaintiffs

contend that "there are numerous genuine issues of material fact"
that preclude summary judgment.10

The supposed questions of fact,

however, have no bearing on the issue before the Court--whether
plaintiffs

have

a

valid,

underlying

insurance

claim

against

Louisiana Citizens. As stated above, a valid, underlying insurance
claim is a "condition precedent" to claims under La. R.S. §§
22:1892 and 22:1973, Bayle, 615 F.3d at 363, and plaintiffs cannot
defeat summary judgment by attempting to manufacture questions of
fact

as

to

various

peripheral

issues.

Moreover,

none

of

plaintiffs' asserted factual disputes is supported by any evidence
in the record.11

Accordingly, even if plaintiffs' arguments were

germane to the issue at bar, unsupported contentions and references

10

R. Doc. 101 at 2.

11

Again, plaintiffs argue, without providing any evidence
in support, that there are genuine issues of material facts as to
(1) "what degree the damages and mold to the plaintiffs property
was caused by substandard construction and/or caused by a storm
which would've been covered under the plaintiffs' insurance
policy," (2) "whether or not the mold that is found through the
plaintiffs' apartments/condos was caused by the use of Chinese
drywall in the property," and (3)"when Louisiana Citizens would
have received notice of a claim and/or proof of loss either from
the individuals plaintiffs or from Renola." R. Doc. 101 at 2-4.
7

to allegations in the complaint are insufficient to defeat summary
judgment.

See Celotex Corp., 477 U.S. at 324 (To defeat summary

judgment, nonmoving party must "go beyond the pleadings and . . .
designate specific facts showing that there is a genuine issue for
trial."); Weyant v. Acceptance Ins. Co., 917 F.2d 209, 212 (5th
Cir. 1990) ("[T]he party opposing the motion may not sit on its
hands, complacently relying upon the pleadings.").
Plaintiffs next argue that summary judgment is inappropriate
because "discovery in this matter is in its infancy."12

The proper

vehicle for raising this argument is a motion under Federal Rule of
Civil Procedure 56(d), which requires an affidavit or declaration
specifying

"why

additional

discovery

is

necessary

and

how

additional discovery will create a genuine issue of material fact."
Canady v. Bossier Parish Sch. Bd., 240 F.3d 437, 445 (5th Cir.
2001) (internal quotations omitted).

Plaintiffs have not provided

the Court with an affidavit or declaration, and have otherwise
failed to explain how additional time would allow plaintiffs to
create a genuine issue of material fact as to whether plaintiffs
have

a

valid,

underlying

insurance

claim

against

Louisiana

Citizens. Because a Rule 56(d) request to defer ruling on a motion
for summary judgment "may not be invoked by the mere assertion that
discovery is incomplete," plaintiffs cannot defeat summary judgment

12

Id. at 4. The Court questions the verity of this
assertion, as plaintiffs originally filed this case on September
18, 2013. R. Doc. 2-2 at 1.
8

on this ground.

Powell v. Pride Offshore, Inc., Civ. A. No. 11-

640, 2011 WL 2981352, at *2 (E.D. La. July 21, 2011).
Finally,

plaintiffs

contend

that

summary

judgment

is

inappropriate because Louisiana Citizens "is an indispensable party
to this litigation."13

Plaintiffs argue that because an individual

plaintiff, Sam Ford III, has a claim against Louisiana Citizens
under a separate insurance policy, policy number 701851, the Court
cannot grant summary judgment on plaintiffs' bad faith insurance
practices

claims

under

policy

number

FO

20091190184

inhibiting Mr. Ford's ability to prosecute his claim.

without

Plaintiffs

misunderstand Rule 56 and the scope of Louisiana Citizens' motion
for

summary

judgment.

Plaintiffs'

claims

against

Louisiana

Citizens for bad faith insurance practices under policy number FO
20091190184 are entirely separate and distinct from Mr. Ford's
claims under policy number 701851.

Rule 56 expressly contemplates

motions for partial summary judgment, and the Court's granting of
summary judgment on plaintiffs' claims under policy FO 20091190184
will have no effect on Mr. Ford's ability to pursue his claim
against Louisiana Citizens under his separate insurance policy.
See Fed. R. Civ. P. 56 ("A party may move for summary judgment,
identifying each claim or defense--or the part of each claim or
defense--on which summary judgment is sought.").

Accordingly,

plaintiffs' "indispensable party" argument is without merit.

13

Id. at 6.
9

IV.

Conclusion
For the foregoing reasons, the Court finds that plaintiffs'

have failed to create a genuine issue of material fact as to the
viability of their bad faith insurance practices claims against
Louisiana

Citizens

Accordingly,

the

under

Court

policy

GRANTS

number

Louisiana

FO

Citizens'

20091190184.
motion

summary judgment on these claims.

New Orleans, Louisiana, this _______ day of May, 2015.
14th

______________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

10

for