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

Filing 117

ORDER AND REASONS - the Court GRANTS defendant's motion 106 for summary judgment. Plaintiffs' claims against Imperial Fire under policy number F220028644 are DISMISSED WITH PREJUDICE.. Signed by Chief Judge Sarah S. Vance on 9/18/15. (jjs)

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

CIVIL ACTION
NO: 13-6192

VERSUS
RENOLA EQUITY FUND, II, LLC, ET AL.

SECTION: R(2)

ORDER AND REASONS
Defendant Imperial Fire and Casualty Insurance Company ("Imperial Fire") moves
for summary judgment on plaintiffs' bad faith insurance practices claims under La. R.S. §§
22:1892 and 22:1973 in relation to policy number F220028644. 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 Imperial Fire.

I.

BACKGROUND
Plaintiffs are former owners and tenants of condominiums located at 217 Plantation

Drive in Chalmette, Louisiana. Plaintiffs allege that following Hurricane Isaac's landfall in
August of 2012, they suffered various injuries and damage as a result of exposure to toxic
mold. Plaintiffs further allege that, because of the toxic mold and other unrepaired damage
caused by Hurricane Isaac, St. Bernard Parish officials declared the property uninhabitable
and ordered plaintiffs to vacate their homes. Plaintiffs brought this suit against several
defendants asserting different theories of liability against each defendant. At issue here are

plaintiffs' claims against Imperial Fire for bad faith insurance practices under La. R.S. §§
22:1892 and 22:1973.1
Imperial Fire provided flood insurance coverage for the property at 217 Plantation
Drive under a General Property Form Standard Flood Insurance Policy ("SFIP"), number
F220028644. Renola Equity, II, LLC ("Renola") is the only entity listed as a named insured
on the policy.2 In addition, Scott Holmes, Vice President of Claims for a company that
services Imperial Fire's SFIP policies, provided an affidavit stating that "Imperial Fire does
not have any record of Renola Equity Fund II, LLC or any of the Plaintiffs reporting a flood
loss claim caused by flooding associated with Hurricane Isaac that occurred on or about
August 29, 2012."3 Holmes further states that Imperial Fire was served with this lawsuit
on or about September 24, 2013 and that "[s]ervice of this lawsuit was Imperial Fire's first
notice of the August 29, 2012 Hurricane Isaac flood loss claim."4
Imperial Fire now moves for summary judgment, arguing that plaintiffs have failed
to demonstrate the privity of contract required for a valid insurance claim. Imperial Fire
further argues that even if privity existed, plaintiffs' claims should still be dismissed because
plaintiffs failed to provide timely notice of the flood loss claim and did not timely submit
a signed and sworn Proof of Loss in support of the amount claimed, as required by the
terms of the SFIP.5 Plaintiffs do not oppose the motion.
1

R. Doc. 2-2 at 16.

2

R. Doc. 106-2 at 1.

3

R. Doc. 106-3 at 3.

4

Id.

5

R. Doc. 106-1.
2

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 F.3d 395, 398–99 (5th Cir. 2008). All
reasonable inferences are drawn in favor of the nonmoving 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.
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
3

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 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.6 To recover statutory penalties under these provisions, 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. 1 Cir. 1995). See also Bayle v. Allstate, 615 F.3d 350, 363 (5th Cir.

6

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."
4

2010) ("Breach of contract is a condition precedent to recovery for the breach of the duty
of good faith.").
Plaintiffs have failed to establish a genuine issue of material fact as to whether they
have a valid, underlying insurance claim against Imperial Fire under the policy at issue. As
an initial matter, the insurance contract names Renola, the owner of the building at issue,
as the sole named insured under policy number F220028644. See Herbert v. Hill, 855 So.
2d 768, 772 (La. App. 2 Cir. 2003) (holding that tenants cannot bring bad faith adjustment
practices claim under landlord's insurance policy). Because the policy does not provide
third party liability or property coverage, plaintiffs have no valid insurance claim against
Imperial Fire. See Randall v. Lloyd's Underwriter's at London, 602 So. 2d 790, 791 (La.
App. 4 Cir. 1992) ("It is a well-accepted principle in Louisiana jurisprudence that, absent
a contrary statutory provision, actions ex contractu cannot be maintained against a party
by an individual who is not party thereto."); Saunders v. Nat'l Flood Ins. Program, No.
CIV.A. 13-5613, 2014 WL 3161459, at *2 (E.D. La. July 8, 2014) (holding that insured had
no claim for breach of insurance contract when there was no privity of contract between
insurer and insured).
Moreover, even if plaintiffs could bring a claim under Renola's insurance policy,
Imperial Fire provided an affidavit of a claims adjustor stating that Imperial Fire never
received a claim from any of the plaintiffs in this case under the policy at issue. Plaintiffs
offer no evidence to rebut this assertion. Imperial Fire cannot be liable to plaintiffs for bad
faith adjustment practices when plaintiffs never filed claims for Imperial Fire to adjust.
Thus, absent evidence of an underlying insurance claim, plaintiffs' bad faith insurance
practices claims under policy number F220028644 fail as a matter of law. See Chet
5

Morrison Contractors, LLC v. Onebeacon Am. Ins. Co., Civ. A. No. 14-1958, 2015 WL
1221616, at *6 (E.D. La. 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.").

IV.

CONCLUSION
For the reasons stated above, the Court GRANTS defendant's motion for summary

judgment. Plaintiffs' claims against Imperial Fire under policy number F220028644 are
DISMISSED WITH PREJUDICE.

New Orleans, Louisiana, this 18th day of September, 2015.
___

_____________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

6