Sacks v. Allstate Property and Casualty Insurance Company
ORDER AND REASONS that both Plaintiff and Defendant's 11 & 21 Motions for Summary Judgment are hereby DENIED as forth in document. Signed by Judge Eldon E. Fallon on 10/24/2017. (cms)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
AND CASUALTY INSURANCE
SECTION “L” (5)
ORDER AND REASONS
Before the Court are cross-motions for summary judgment. See Rec. Docs. 11 & 21.
Plaintiff Ralph Sacks (“Sacks”) asks this Court to grant summary judgment on the issue of bad
faith damages and to award penalties and attorney’s fees against Allstate. On the other hand,
Defendant Allstate Property and Casualty Insurance Co. (“Allstate”) argues that there is
insufficient information to support a bad faith claim. Having considered the parties’ arguments,
submissions and applicable law, the Court now issues this Order and Reason.
This case arises from injuries Sacks allegedly sustained as a result of an automobile
accident. Rec. Doc. 1-2 at 3. Plaintiff initially filed this action in the 24th Judicial Court for the
Parish of Jefferson. Rec. Doc. 1 at 1. Defendant timely removed and maintained this Court has
diversity jurisdiction pursuant to 28 U.S.C. § 1332.
Plaintiff alleges he had stopped his vehicle at a stop sign on Lafayette Street at its
intersection with 5th Street in Jefferson Parish, Louisiana, when he was struck from behind by
Claire Gregorie, who was found to be at fault for the accident. Rec. Doc. 1-2 at 3-4. Plaintiff
claims he sustained three herniated cervical discs and underwent a cervical epidural injection and
shoulder surgery. Id. at 5. State Farm Fire Insurance Company provided a policy of liability to
Ms. Gregorie at the time of the accident. Id. at 4. On June 6, 2016, State Farm tendered its policy
limit of $15,000.00 to Plaintiff. Id. at 5.
The instant dispute arises from Plaintiff’s uninsured/underinsured motorist policy with
Defendant Allstate, which Plaintiff had at the time of the accident. Id. On May 3, 2016, Plaintiff
made a demand for an unconditional tender of the policy. See id.; Rec. Doc. 11-1 at 3. Plaintiff
alleges he sent in the necessary supporting medical records and bills with his demand, and that this
constituted satisfactory proof of loss for Allstate to make an unconditional tender. Rec. Doc. 211 at 3. Allstate claims that Plaintiff’s initial demand package did not include the necessary
declaration form containing information about the tortfeasor’s underlying coverage. Rec. Doc.
11-1 at 3. Allstate avers that it notified Plaintiff’s counsel of the missing form on May 16, 2016.
Id. Allstate did not receive the missing information until August 1, 2016. Id. at 3-4.
After reviewing the medical records, Allstate notified Plaintiff that the medical record had
it contained no express opinions from Plaintiff’s physicians linking
Plaintiff’s medical treatment to the accident. Rec. Doc. 11-1 at 3-4. Therefore, on August 17,
2016, Allstate requested further information from Plaintiff’s physicians in order to determine
whether any of the alleged injuries were due to preexisting or subsequent injuries. Rec. Doc. 111 at 4. Allstate alleges that because it was missing this material information, a question of
causation remained, and therefore it did not initiate tender to Plaintiff. Id.
On October 11, 2016, Plaintiff initiated this instant lawsuit, alleging that Allstate failed to
make a tender. See Rec. Doc. 1-2. Specifically, Plaintiff claims Allstate acted in bad faith by (1)
failing to make an unconditional tender within 30 days of satisfactory proof of loss in accordance
with Louisiana Revised Statutes 22:1892 and 22:1973; (2) failing to properly settle the claim in a
timely manner after receipt of satisfactory proof of loss in accordance with Louisiana Revised
Statutes 22:1892 and 22:1973; and (3) failing to timely investigate the veracity of the claim. Id.
After the lawsuit was filed, Allstate conducted discovery and resolved the medical
causation issue. See Rec. Doc. 11-1 at 5. On May 30, 2017, it issued an unconditional tender of
$107,188.00, based on Plaintiff’s shoulder arthroscopy and an epidural steroid injection. Id.
Shortly thereafter, Allstate initiated an additional unconditional tender of $142,812.00 based on
Plaintiff’s neck surgery. Id. at 5-6. This exhausted Plaintiff’s policy limit. Id. at 6. The only
issue that remains now is whether Allstate acted in bad faith by allegedly delaying its payments.
Defendant filed a motion for summary judgment dismissing Plaintiff’s suit, arguing that,
as a matter of law, there is not sufficient evidence to establish that Allstate acted in an arbitrary
and capricious manner in handling Plaintiff’s claim. See generally Rec. Doc. 11-1. Specifically,
Allstate asserts that it had reasonable and legitimate questions about Plaintiff’s insurance claim.
Id. at 1. Plaintiff filed a cross-motion for summary judgment, arguing that Allstate acted in an
arbitrary and capricious manner by failing to timely investigate his claim and failing to make a
timely unconditional tender. Rec. Doc. 21-1 at 1.
Summary judgment is appropriate when “the pleadings, the discovery and disclosure
materials on file, and any affidavits show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986) (citing FED. R. CIV. P. 56(c)); 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 refrains from making credibility determinations or weighing the
evidence.” Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th
Under Federal Rule of Civil Procedure 56(c), the moving party bears the initial burden of
“informing the district court of the basis for its motion, and identifying those portions of [the
record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex,
477 U.S. at 322. When the moving party has met its Rule 56(c) burden, “[t]he non-movant cannot
avoid summary judgment . . . by merely making ‘conclusory allegations’ or ‘unsubstantiated
assertions.’” Calbillo v. Cavender Oldsmobile, Inc., 288 F.3d 721, 725 (5th Cir. 2002) (quoting
Little, 37 F.3d at 1075). “The mere existence of a scintilla of evidence in support of the plaintiff's
position will be insufficient; there must be evidence on which the jury could reasonably find for
the plaintiff.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 253 (1986). All reasonable
inferences are drawn in favor of the nonmoving party, but a party cannot defeat summary judgment
with conclusory allegations or unsubstantiated assertions. Little, 37 F.3d at 1075. A court
ultimately must be satisfied that “a reasonable jury could not return a verdict for the nonmoving
party.” Delta, 530 F.3d at 399.
Bad Faith of the Insurer
Under Louisiana law, insurance companies owe a duty of good faith to the insured. See
La. R. S. 22:1973. Insurers who breach this duty may be liable for damages as well as discretionary
penalties and attorney’s fees under Louisiana Revised Statutes 22:1892.
Id.; Dickerson v.
Lexington Ins. Co., 556 F.3d. 290, 297 (5th Cir. 2009). One who claims entitlement to penalties
and attorney fees has the burden of proving the insurer received satisfactory proof of loss as a
predicate to a showing that the insurer was arbitrary, capricious, or without probable cause. Reed
v. State Farm, 857 So.2d 1012, 1020 (La. 2003). A “satisfactory proof of loss” is that which is
sufficient to fully apprise the insurer of the insured’s claim. Louisiana Bag Company, Inc. v.
Audubon Indemnity Company, 999 So.2d 1104, 1119 (La. 2008); McDill v. Utica Mutual
Insurance Company, 475 So. 2d 1085, 1089 (La. 1985). The Fifth Circuit has held that in order to
prove that the insurer acted in bad faith when failing to timely pay, the insured must prove that the
insurer (1) received satisfactory proof of loss, (2) failed to pay within the established timeframe,
and (3) acted “arbitrarily and capriciously.” Dickerson, 556 F.3d. at 297.
“Satisfactory proof of loss” has been defined by Louisiana courts as having sufficient
information to “fully apprise the insurer of the insured’s claims.” McDill, 475 So.2d at 1089.
Louisiana courts typically interpret the arbitrary and capricious requirement as an unjustified
failure to pay, “without reasonable or probable cause or excuse.” Id. (quoting Reed, 857 So.2d at
1021). Arbitrary and capricious have the same meaning under both Louisiana Revised Statutes
22:1973 and 22:1892. A plaintiff may recover attorney’s fees under Louisiana Revised Statute
22:1892, and may seek damages and penalties under 22:1973. Dickerson, 556 F.3d. at 297.
Additionally, “[a]n insurer does not act arbitrarily and capriciously . . . when it withholds payment
based on a genuine (good faith) dispute about the amount of a loss or applicability of coverage.”
The sanctions of penalties and attorney fees are not assessed unless a plaintiff’s proof is
clear that the insurer was in fact arbitrary, capricious, or without probable cause in refusing to pay.
Reed, 857 So.2d at 1021; Lemoine v. Mike Munna, L.L.C., 148 So.3d 205, 215 (La. App. 1st Cir.
June 6, 2014). One who claims entitlement to penalties and attorney fees has the burden of proving
the insurer received satisfactory proof of loss as a predicate to a showing that the insurer was
arbitrary, capricious, or without probable cause. Reed, 857 So.2d at 1020. And it is a high burden.
See Lewis v. State Farm Insurance Co., 946 So.2d 708, 725 (La. Ct. App. 2d Cir. 2006) (citing
Holt v. Aetna Casualty & Surety Co., 680 So. 2d 117 (La. Ct. App. 2d Cir. 1996)) (noting plaintiffs
seeking penalties for a breach of good faith bear high burden of proof).
Plaintiff alleges that Allstate acted in bad faith in handling his claim. Rec. Doc. 21-1.
Specifically, Plaintiff argues that Allstate acted arbitrarily and capriciously by breaching its duty
to timely investigate his claim, and by failing to make a timely unconditional tender. Id. at 1.
Allstate filed a cross-motion for summary judgment, claiming that it had reasonable and legitimate
questions about Plaintiff’s claims. Rec. Doc. 11-1 at 1. Simply put, the question before this Court
now is whether Allstate’s acted arbitrarily and capriciously when Allstate allegedly delayed its
The answer to that question rests in part on whether and when Allstate received satisfactory
proof of loss. See McDill, 475 So. 2d at 1087; see also Louisiana Bag Co., Inc. v. Audubon Indem.
Co., 999 So. 2d 1104, 1119 (La. 2008). To establish a “satisfactory proof of loss” of an
uninsured/underinsured motorist’s claim, the insured must establish that the insurer received
sufficient facts which fully apprise the insurer that (1) the owner or operator of the other vehicle
involved in the accident was uninsured or underinsured; (2) that he was at fault; (3) that such fault
gave rise to damages; and (4) establish the extent of those damages. McDill, 475 So. 2d at 1089
(citing Hart v. Allstate Insurance Company, 437 So. 2d 823 (La. 1983).
Opinion of medical causation is needed before an insurance tender. Odstrcil v. State Farm
Mut. Auto Ins. Co, 221 So. 3d 83, 87 (La. App. 3d Cir. May 3, 2017), reh’g denied (Aug. 2, 2017)
(statutory timeframe of 30-days did not start until insured produced medical opinion on causation).
For example, in Boudreaux v. State Farm Mutual Automobile Insurance Co., 896 So.2d 230 (La.
Ct. App. 4th Cir. 2005), the plaintiff sued defendant insurer for denying her claim, alleging it had
done so in bad faith. Id. at 232. Nonetheless, the court reasoned that defendant insurer did not err
in denying the claim—because plaintiff had failed to provide the insurer with the requested
medical records of her back surgery. Id. at 236. Likewise, in Reed, the court held that defendant
insurer did not have satisfactory proof of loss because after investigation of plaintiff’s prior
medical history, it had reason to believe the accident at issue may have aggravated a pre-existing
condition. 857 So. 2d at 1023.
Here, there is a dispute of material facts regarding when satisfactory proof of loss was
established. Allstate contends that the medical record initially provided by Plaintiff failed to link
his injuries to the July 22, 2015 accident. Rec. Doc. 11-1 at 4. Plaintiff allegedly did not return
forms from Allstate requesting clarification. See id. Even after Plaintiff provided updated medical
records on September 1, 2016, the doctors’ statements allegedly did not link the medical treatment
to the accident. This is analogous to the situation in Reed, where the insurance company
reasonably believed that the accident may have arisen from a pre-existing condition. See Reed,
857 So. 2d at 1023. Plaintiff opposes these contentions, claiming that the information he provided
was sufficient to receive a tender within the statutorily-provided 30 days.
Whether the delay in payment is arbitrary and capricious generally requires a factual
determination. In Merwin v. Spears, the Louisiana Supreme Court reversed a summary judgment
in favor of the insured, finding that the determination of whether the insurer’s decision to deny the
claim was reasonable necessarily involved consideration of factual issues. 90 So.3d 1041 (La.
The court further observed that summary judgment is “rarely appropriate for a
determination based on subjective facts such as intent, motive, malice, knowledge or good faith.”
Id. at 1042; see also 15 La. Civ. L. Treatise, Insurance Law & Practice § 11:6 (4th ed.). Under La.
R.S. 22:1973, the outcome of the “arbitrary and capricious aspect of the bad-faith penalty inquiry
requires a factual finding of the reasonableness of the dispute, i.e., a reasonable defense, as well
as a finding that the insurer acted in good faith in its reliance upon that reasonable defense.”
Thibodeaux v. Arvie, 2017-625, 2017 WL 3775712 *5 (La. Ct. App. 3d Cir. Aug. 31, 2017).
Therefore, such “fact-intensive inquiry  is not ripe for resolution on summary judgment.” Id.
In this case, based on the record alone, the Court cannot determine when Allstate received
satisfactory proof of loss from the accident and whether the alleged delay rise to the level of
arbitrary and capricious. The record has missing information: it is unclear when Allstate received
satisfactory proof of loss during discovery, which triggered the eventual unconditional tender. The
Court cannot speculate—let alone find—bad faith simply based on the sequence of events here.
Finding bad faith requires a factual determination, a task best left for the jury. See Thibodeaux,
2017 WL 3775712, at *5 (arbitrary and capricious aspect of bad-faith penalty requires a factual
finding of reasonableness of the dispute). Accordingly, summary judgment on Plaintiff’s bad faith
claim is inappropriate at this juncture.
Based on the foregoing, accordingly,
IT IS ORDERED that both Plaintiff and Defendant’s motions for summary judgment
(Rec. Docs. 11 & 21) are hereby DENIED.
New Orleans, Louisiana, this 24th day of October, 2017.
ELDON E. FALLON
United States District Judge
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