AMA Discount, Inc. et al v. Seneca Specialty Insurance Company
Filing
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ORDER and REASONS denying 45 Motion for Partial Summary Judgment, as stated within document. Signed by Chief Judge Kurt D. Engelhardt on 10/4/2016. (NEF: MAG-2) (cbs)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
AMA DISCOUNT, INC., ET AL.
CIVIL ACTION
VERSUS
NO. 15-2845
SENECA SPECIALTY INSURANCE COMPANY
SECTION “N” (2)
ORDER AND REASONS
Presently before the Court is the "Motion for Partial Summary Judgment" that was
filed by Plaintiffs AMA Discount, Inc. d/b/a Chef Discount Market ("AMA"), Ali M. Allan, and
Mohammed Allan (collectively, "AMA Discount") (Rec. Doc.45). With its motion, AMA Discount
seeks a declaration that Seneca Specialty Insurance Company ("Seneca") violated its fiduciary and
other duties owed under La. R.S. 22:1892 and La. R.S. 22:1973 through the following non-exclusive
acts and/or omissions in connection with its handling of the claims asserted against AMA Discount
in the case captioned "Krispy Krunchy Foods, L.L.C., versus AMA Discount, Inc., d/b/a Chef
Discount Market, Ali M. Allan, and Mohammad Allan," bearing case number 15-00590 (the "KKF
Litigation"):
(i) Misquoting its policy language and then reiterating that
same misrepresentation in its responses to AMA Discount’s
tender letters, all in violation of La. R.S. 22:1973(B)(1);
(ii) Failing to accept AMA Discount’s tender of its defense of
the KKF Litigation within 30 or 60 days of same, in violation
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of La. R.S. 22:1892(A)(1) and La. R.S. 22:1973(A) and
(B)(5);
(iii) Failing to make a reasonable effort to settle the claims
asserted against AMA Discount in the KKF Litigation, in
violation of La. R.S. 22:1973(A) as interpreted by the
Louisiana Supreme Court in Kelly v. State Farm Fire & Cas.
Co., 169 So. 3d 328, 341 (La. 05/05/15); and
(iv) Baselessly citing policy exclusions that are clearly
inapplicable while continuing to ignore the Court’s Order that
AMA Discount is entitled to a defense under the Seneca
Policy, again in violation of La. R.S. 22:1973(B)(1) and in
continuing violation of La. R.S. 1892(A)(1) and La. R.S.
22:1973(B) (5).
The Louisiana "bad faith" insurance statutes that are the subject of AMA Discount's
motion provide, in pertinent part:
La. R.S. 22:1973 (Formerly cited as La. R.S. 22:1220)
Good faith duty; claims settlement practices; cause of action;
penalties
A. An insurer, including but not limited to a foreign line and
surplus line insurer, owes to his insured a duty of good faith and
fair dealing. The insurer has an affirmative duty to adjust claims
fairly and promptly and to make a reasonable effort to settle
claims with the insured or the claimant, or both. Any insurer who
breaches these duties shall be liable for any damages sustained as
a result of the breach.
B. Any one of the following acts, if knowingly committed or
performed by an insurer, constitutes a breach of the insurer's
duties imposed in Subsection A of this Section:
(1) Misrepresenting pertinent facts or insurance policy provisions
relating to any coverages at issue.
(2) Failing to pay a settlement within thirty days after an
agreement is reduced to writing.
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(3) Denying coverage or attempting to settle a claim on the basis
of an application which the insurer knows was altered without
notice to, or knowledge or consent of, the insured.
(4) Misleading a claimant as to the applicable prescriptive period.
(5) Failing to pay the amount of any claim due any person
insured by the contract within sixty days after receipt of
satisfactory proof of loss from the claimant when such failure is
arbitrary, capricious, or without probable cause.
(6) Failing to pay claims pursuant to R.S. 22:1893 when such
failure is arbitrary, capricious, or without probable cause.
C. In addition to any general or special damages to which a
claimant is entitled for breach of the imposed duty, the claimant
may be awarded penalties assessed against the insurer in an
amount not to exceed two times the damages sustained or five
thousand dollars, whichever is greater. Such penalties, if
awarded, shall not be used by the insurer in computing either past
or prospective loss experience for the purpose of setting rates or
making rate filings.
D. The provisions of this Section shall not be applicable to claims
made under health and accident insurance policies.
E. Repealed by Acts 1997, No. 949, § 2.
F. The Insurance Guaranty Association Fund, as provided in R.S.
22:2051 et seq., shall not be liable for any special damages
awarded under the provisions of this Section.
See LSA-R.S. 22:1973.
La. R.S. 22:1892 (Formerly cited as La. R.S. 22:658)
Payment and adjustment of claims, policies other than life and health and
accident; personal vehicle damage claims; extension of time to respond to
claims during emergency or disaster; penalties; arson-related claims
suspension
A. (1) All insurers issuing any type of contract, other than those
specified in R.S. 22:1811, 1821, and Chapter 10 of Title 23 of the
Louisiana Revised Statutes of 1950, shall pay the amount of any
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claim due any insured within thirty days after receipt of
satisfactory proofs of loss from the insured or any party in
interest. The insurer shall notify the insurance producer of record
of all such payments for property damage claims made in
accordance with this Paragraph.
(2) All insurers issuing any type of contract, other than those
specified in R.S. 22:1811, R.S. 22:1821, and Chapter 10 of Title
23 of the Louisiana Revised Statutes of 1950, shall pay the
amount of any third party property damage claim and of any
reasonable medical expenses claim due any bona fide third party
claimant within thirty days after written agreement of settlement
of the claim from any third party claimant.
(3) Except in the case of catastrophic loss, the insurer shall
initiate loss adjustment of a property damage claim and of a claim
for reasonable medical expenses within fourteen days after
notification of loss by the claimant. In the case of catastrophic
loss, the insurer shall initiate loss adjustment of a property
damage claim within thirty days after notification of loss by the
claimant except that the commissioner may promulgate a rule for
extending the time period for initiating a loss adjustment for
damages arising from a presidentially declared emergency or
disaster or a gubernatorially declared emergency or disaster up to
an additional thirty days. Thereafter, only one additional
extension of the period of time for initiating a loss adjustment
may be allowed and must be approved by the Senate Committee
on Insurance and the House Committee on Insurance, voting
separately. Failure to comply with the provisions of this
Paragraph shall subject the insurer to the penalties provided in
R.S. 22:1973.
(4) All insurers shall make a written offer to settle any property
damage claim, including a third-party claim, within thirty days
after receipt of satisfactory proofs of loss of that claim.
B. (1) Failure to make such payment within thirty days after
receipt of such satisfactory written proofs and demand therefor or
failure to make a written offer to settle any property damage
claim, including a third-party claim, within thirty days after
receipt of satisfactory proofs of loss of that claim, as provided in
Paragraphs (A)(1) and (4) of this Section, respectively, or failure
to make such payment within thirty days after written agreement
or settlement as provided in Paragraph (A)(2) of this Section
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when such failure is found to be arbitrary, capricious, or without
probable cause, shall subject the insurer to a penalty, in addition
to the amount of the loss, of fifty percent damages on the amount
found to be due from the insurer to the insured, or one thousand
dollars, whichever is greater, payable to the insured, or to any of
said employees, or in the event a partial payment or tender has
been made, fifty percent of the difference between the amount
paid or tendered and the amount found to be due as well as
reasonable attorney fees and costs. Such penalties, if awarded,
shall not be used by the insurer in computing either past or
prospective loss experience for the purpose of setting rates or
making rate filings.
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See LSA-R.S. 22:1892.
AMA Discount's contention that Seneca violated La R.S. 22:1973 by
"misrepresenting pertinent facts or insurance policy provisions relating to any coverages at issue"
by "misquoting its policy language and then reiterating that same misrepresentation in its responses
to AMA Discount's tender letters" is particularly troublesome to the Court given that the assertion
is premised upon Seneca's apparently purposeful omission (in its May 5, 2015 denial letter) of
language found in Exclusion (i) "Infringement of Copyright, Patent, Trademark, or Trade Secret"
that is favorable to AMA Discount. See Rec. Doc. 45-1 at pages 2-3 of 15. Nevertheless, certain
of the declarations sought with AMA Discount's motion seemingly rest upon disputed factual
determinations and assessments of witness credibility that remain reserved to the trier of fact – a
jury – in this matter. Given that, and the issues left undecided by the Order and Reasons (Rec. Doc.
84) denying Seneca's "Motion for New Trial" (Rec. Doc. 23), and denying in part and granting in
part AMA Discount's "Motion to Strike Certain Defenses" (Rec Doc. 26), the Court, having
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carefully considered the parties' submissions and the authorities cited therein, is not presently
persuaded that AMA Discount is entitled to the summary declaratory relief sought by the instant
motion. Accordingly, for these reasons, IT IS ORDERED that AMA's motion for partial summary
judgment (Rec. Doc. 45) is DENIED.
New Orleans, Louisiana, this 4th day of October 2016.
KURT D. ENGELHARDT
United States District Judge
Clerk to Copy:
U.S. Magistrate Judge Joseph C. Wilkinson, Jr.
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