Marquette et al v. Southern Fidelity Insurance Company

Filing 112

ORDER denying 56 Motion for Partial Summary Judgment. Signed by Judge Jay C. Zainey. (jrc)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CHARLES MARQUETTE, ET AL.

CIVIL ACTION

VERSUS

NO: 14-2311

SOUTHERN FIDELITY INSURANCE
COMPANY

SECTION: "A" (2)

ORDER AND REASONS
Before the Court is a Motion for Partial Summary Judgment
(Rec. Doc. 56) filed by defendant Southern Fidelity Insurance
Company.

Plaintiffs Charles Marquette and Angela Marquette

oppose the motion.

The motion, noticed for submission on July 1,

2015, is before the Court on the briefs without oral argument.1
I.

Background
Plaintiffs allege that a fire caused substantial damage to

their Belle Chasse residence on April 1, 2014.

Defendant had

previously issued an insurance policy to cover this residence and
related property.

Plaintiffs claim that they promptly reported

the incident to Defendant.

They further claim that they have

demanded payment several times via telephone and letters.

The

policy limits (where relevant) are as follows: 1.) Coverage A,
Dwelling – $266,600.00 ; 2.) Coverage C,

Contents - $57,900.00;

3.) Coverage D, Additional Living Expenses (covered where
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Defendant requested oral argument, but argument would not be
helpful in light of the issues presented.

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necessary).
Defendant acknowledges that Plaintiffs reported the loss on
April 1, 2014.

That same day Defendant contacted Fountain Group

Adjusters to conduct an inspection of the property (which was
undertaken on April 2, 2015) and Enviro-Clean Services, Inc. to
explore fire mitigation options for the property.

On April 2,

2015, Defendant issued a check towards Contents Coverage for
$2000.00.

On April 9, 2015, at Defendant's direction, U.S.

Forensic Engineers examined the property to determine the cause
of fire.

The adjusters produced a report on April 30, 2014,

estimating $118,876.20 in damages to the dwelling (or $95,122.85
after reducing for depreciation and the deductible) and $3348.48
(or $1673.25 after reducing for depreciation) in damages to its
contents.
2014.

Defendant issued checks in these amounts on May 8,

On May 7, 2014, Enviro-Clean submitted an estimate to

Defendant of $40,748.82 in fire mitigation costs.

Defendant

issued another check in this amount six days later.
On August 14, 2015, Plaintiffs demanded coverage for
additional living expenses in the amount of $23,800.00 ($3400 per
month for six months with a one month value deposit).
issued a check for $6800.00 on August 28, 2014.

Defendant

On August 27,

2014, Plaintiffs submitted a demand for contents coverage with a
contents list attached.
check for $55,900.00.

On August 29, 2014, Defendant issued a

Combined with the prior payments, this
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fulfilled the policy limit for that provision.
Plaintiffs allege that the repairs to their home will cost
$266,600.00 and that their interim living arrangements will cost
$23,800.00.

They claim that to date Defendant has paid

$96,122.85 toward the repair costs, $6800.00 toward the interim
living costs, and has refused to authorize an appraisal – all in
derogation of policy requirements.
La. R.S. §§ 22:1892 and 22:1973 provide penalties for
scenarios in which an insurer fails to, among other things,
tender payments under the relevant statutory time periods in such
a way that evidences that the insurer has breached its duty of
good faith and fair dealing.

The courts have summarized the

element for a claim under these statutes (which differ as to the
applicable time periods) that a plaintiff must establish as
follows: 1) the insurer received a satisfactory proof of loss; 2)
that the insurer failed to pay the claim within the applicable
statutory period; and 3) that the insurer's failure to pay was
arbitrary and capricious.

Grilleta v. Lexington Ins. Co., 558

F.3d 359, 368 (5th Cir. 2009).

The terms "arbitrary and

capricious" are the equivalent of conduct that is "unjustified,
without reasonable or probable cause or excuse."

La. Bag Co.,

Inc. v. Audubon Indem. Co., 999 So.2d 1104, 1114 (La. 2008).
an additional statement on the application of this definition,
the Louisiana Supreme Court has stated that "'there can be no
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As

good reason' – or no probable cause – for withholding an
undisputed amount."

Id. at 1114 (citations omitted)(emphasis in

original).
Plaintiffs offer several different types of conduct,
policies, or payments which they argue evidence Defendant's bad
faith.

Defendant responds that several of the offered bases are

red herrings as they are irrelevant to such an analysis, that
Plaintiffs' own conduct caused the delays in payment and
processing the claims, and that any "bad faith" conduct cannot be
predicated on a payment dispute.
Defendant is correct that violations of La. R.S. §§ 22:1892
and 22:1973 cannot rely on "an insurer's payment of less than
full value of an insured's loss" where there is a good faith
dispute or where "an insured fails to provide his insurer with
information required to process his claim. . . ."

Dickerson v.

Lexington Ins. Co., 556 F.3d 290, 299 (5th Cir. 2009).

On August

14, 2014, Plaintiffs demanded payment for additional living
expenses under Coverage D of the policy, which according to
record document evidence, Defendant acknowledged would be
necessary for Plaintiffs and their children.

Plaintiffs attached

the temporary housing provider's contract, signed on August 5,
2015 by the provider and Plaintiffs.

This contract purports to

bind Plaintiffs to its terms, including full payment in advance,
at which time the commencement period of the six month temporary
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housing arrangement would begin.

The contract includes a

cancellation penalty if the signees withdraw prior to
commencement.

The terms of the contract were $3400 per month for

six months for a fully furnished four to five bedroom house.
This equates to a payment of $23,800 necessary to perform under
the contract (including the deposit at the value of one month of
rent).
Defendant responds that it did not pay the full amount as
there was not an actual lease provided, only this contract.
Defendant further states that the house listing attached to the
agreement notes that it will not be available until the end of
August.

Defendant issued a check for $6800 after receiving

Plaintiffs' demand, but it has provided no further funds on this
claim.
A determination of whether Defendant's actions constitute
arbitrary and capricious conduct requires weighing whether this
amount can properly be considered disputed, which in turn
requires a determination as to whether there was a reasonable
basis for the decision and if Defendant acted in good faith
reliance on that basis based on "the facts known to the insurer
at the time of its action."2
1114.

La. Bag Co., Inc., 999 So.2d at

Given the arguments of and evidence submitted by both

2

Of course to find the amount disputed simply because of an
insurer's refusal to pay would eviscerate the protections provided by
La. R.S. §§ 22:1892 and 22:1973.

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parties, the Court finds that such a determination will be better
made by the finder of fact after weighing the submitted evidence.
The Court finds it unnecessary at this time to separately analyze
the additional arguments.

If a violation is found even as

pertains to payment under one provision of the policy, the
penalty is still based on the policy as a whole.
F.3d at 369-71.

Grilleta, 558

Additionally, arguments based on Plaintiffs'

conduct will be able to be fully considered after testimony at
trial.
In closing, the Court recognizes that a violation will not
be found merely where "the insurer denies coverage and a jury
disagrees."

Kodrin v. State Farm Fire and Cas. Co., 314 F. Appx.

671, 680 (5th Cir. 2009).

This will be best addressed through

appropriate jury instructions at trial.
Accordingly, and for the foregoing reasons;
IT IS ORDERED that the Motion for Partial Summary Judgment
(Rec. Doc. 56) filed by defendant Southern Fidelity Insurance
Company is DENIED.

August 21, 2015
JAY C. ZAINEY
UNITED STATES DISTRICT JUDGE

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