Dixon et al v. Liberty Mutual Insurance Company et al

Filing 36

RULING AND ORDER Adopting 32 Report and Recommendations, of the U.S. Magistrate Judge. Denied 8 Motion to Remand. Plaintiffs' claims against Defendant Michelle Nash be and are hereby DISMISSED WITHOUT PREJUDICE because she was improperly joined. Denied as moot 23 Motion to Dismiss. Granting in part 7 Motion to Dismiss for Failure to State a Claim. Plaintiffs' vicarious liability claims against Defendant Liberty Mutual Insurance Company be and are hereby DISMISSED WITHOUT PREJUDICE. In all other respects, the Motion be and is hereby DENIED. Defendants Liberty Mutual Insurance Company and Liberty Mutual Fire Insurance Company may resubmit their motion attaching evidence that they did not issue a policy to Plaintiffs. Denied 17 Motion for Leave to File Surreply. Signed by Judge Brian A. Jackson on 2/6/2024. (EDC)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
SARITA A. DKON, ET AL. CIVIL ACTION

VERSUS
LIBEETY MUTUAL INSURANCE
COMPANY, ET AL. NO. 23-00313-BAJ-RBJ

RULING AND ORDEK
This is an insurance dispute. Plaintiffs' house caught fire in December 2022,
"rendering a total loss. (Doc. 1-1 ^ 2, 9). After receiving notice that their "insurance
policy's limits were not sufficient" to rebuild or replace their home, Plaintiffs sued the

Liberty Mutual Defendants and the insurance agent who first sold them the
residential policy in 2014, Defendant Michelle Nash. (Id. ^ 11). Plaintiffs allege that
Nash and Defendants negligently misrepresented that Plaintiffs' residential policy
"would cover 100% of the cost to rebuild/replace the [H]ome," among other related
claims. (Id. at ^ 12). On March 21, 2023, Defendants removed Plaintiffs' cause of
action to this Court, arguing that Nash, the only Defendant preventing complete
diversity under 28 U.S.C. § 1332, was improperly joined.

Now before the Court is Plaintiffs' Motion to Remand (Doc. 8), which argues
that Nash was properly joined because she determined or approved changes in the

base policy limit which did not provide full replacement costs coverage for the [Home]
while [also] misrepresenting to the Plaintiffs that the policy did provide full
replacement costs coverage." (Doc. 8-1 at 13, 14). Because joinder was proper,
Plaintiffs argue, remand is appropriate because the parties lack complete diversity,

as required by 28 U.S.C. § 1332. (Id.). Defendants oppose remand, contending that
joinder was improper because the claims against Nash are perempted by Louisiana

Revised Statute § 9:5606, which sets forth a three-year peremption (or limitations)
period for bringing negligence claims against an insurance agent. (Doc. 14).

On January 10, 2024, the Magistrate Judge issued a Report And
Recommendation (Doc. 32, the Report") recommending that Plaintiffs' Motion
to Remand be denied. The Report further recommends that Nash be dismissed

without prejudice as improperly joined. (Doc. 32 at 9). Plaintiffs object to the Report,
arguing that the three-year peremptive period under La. R.S. § 9:5606 does not apply

here, because the yearly renewal of Plaintiffs policy in IVTarch 2022 was really an
entirely new policy which restarted the peremption clock for their claims against
Nash. (Doc. 34). According to Plaintiffs, Nash's initial act of negligence—representing
incorrectly that the policy provided full replacement coverage—was recommitted
when Plaintiffs policy was reissued and therefore the claims against Nash are not
perempted.

"[T]he test for [improper] joinder is whether the defendant has demonstrated
that there is no possibility of recovery by the plaintiff against an in-state defendant^]"
Smallwood v. Illinois Cent. R. Co., 385 F. 3d 568, 573 (5th Cir. 2004). If Plaintiffs'
claims against Nash are perempted under La. R.S. § 9:5606, Plaintiffs have no
possibility of recovery against her. Generally, subsequent renewals of insurance
policies 'do not operate to restart peremption. Wlzite v. Allstate Ins. Co., 513
F.Supp.2d 674, 681 (E.D. La. 2007) (quoting Dobson v. Allstate Ins. Co., No. 06-252,

2006 WL 2078423, at *8 (E.D. La. Jul. 21, 2006)). "In order for each renewal to be the
basis of a separate tort, the complained of conduct must consist of separate and
distinct acts, each of which gives rise to immediately apparent damages. Id. (quoting

Biggers v. Allstate Ins. Co., 04-282 (La. App. 5 Cir. 10/26/04), 886 So.2d 1179, 1182);
see also Sonnier v. La. Farm Bureau Mut. Ins. Co., 2005-1006 (La. App. 3 Cir. 3/1/06),

924 So.2d 419, 422, writ denied, 2006-0704 (La. 5/26/06), 930 So. 2d 33 (holding that
a renewal may constitute a separate act if an insured requests specific coverage at
the time of renewal). "The inquiry is whether the actions of the insurance agent at
the time of renewal can be construed to constitute an act separate from the initial
policy procurement." WJzite, 513 F.Supp.2d at 681 (quoting Gomez v. Allstatelns. Co.,

No. 06-8274, 2007 WL 1166150, at *2 (E.D. La. Apr. 17, 2007)).
Here, there is no "evidence that [PJlaintiffs contacted [Nash] in the three years
before the loss to discuss their coverage." Farris v. State Farm Fire & Cas. Co., No.

2:06CV2036, 2007 WL 734682, at *6-7 (W.D. La. Jan. 22, 2007) (finding peremptive
period had run and dismissing insurance agent defendant). In fact, Plaintiffs have

failed to point to any actions by Nash during the 3 years prior to the filing of this
lawsuit that warranted Plaintiffs' assumption that their home was insured in an
amount sufficient to rebuild it.

Plaintiffs, who argue that the yearly increases to the policy limits alone
constituted acts of negligence sufficient to restart the peremption period, rely heavily
on a single ruling from 2006, Giardina v. Allstate Ins. Co., CIV.A. 06-6415, 2006 WL
3406743, (E.D. La. Nov. 22), in which a court granted a motion to remand under

similar circumstances. Notwithstanding- that nonbinding precedent, the Court finds
that the case law weighs heavily in favor of requiring more than regular increases in
the premium to justify restarting the peremption period. See Prac. Healthcare
Supply, Inc. v. AssuredPartners Gulf Coast Ins. Agency, LLC, 112 F. Supp. 3d 519,

526-28 (W.D. La. 2015) (A policy renewal will restart the peremptive period only if
the insured and his agent renegotiate the terms and provisions of the policy or discuss
substantive changes to the policy at the time of the renewal and those changes are
not accurately reflected in the renewed policy."); Rowe v. Primerica Life Ins. Co., No.

CV 19-863-SDD-SDJ, 2020 WL 5658201, at *5-6 (M.D. La. Sept. 23, 2020) (finding
claims perempted where plaintiffs petition was "devoid of any factual allegation even
referencing any annual renewals or communication"); White, 513 F. Supp. at 681
(finding subsequent renewals generally do not re-start peremption period unless
there are additional "separate and distinct acts" associated with renewal that give
rise to "immediately apparent damages"); Sitaram, Inc. v. Bryan Ins. Agency, Inc.,

47,337 (La. App. 2 Cir. 9/19/12), 104 So.3d 524, 531 (finding no peremption because
each year, prior to policy renewal date, plaintiff told insurance agent he wanted to
insure his property to the maximum extent, and the insurance agent's failure to
follow these directions constituted a separate and distinct act).

Here, Plaintiffs have failed to allege that they engaged in any communications,
negotiations, or other actions with Nash regarding their policy in the 3 years prior to
filing suit. Moreover, the insurance policy changed in no way save the regular annual
increases in the policy limit. (See Doc. 32 at 5). For these reasons, the three-year

peremption period of La. R.S. § 9:5606 started running when the policy was first

issued in 2014 and did not restart. Plaintiffs' claims against Nash are therefore
perempted.
Upon de novo review, and having carefully considered the Notice of Removal
(Doc. 1), the parties' memoranda setting forth their various arguments and respective
positions regarding the Court's exercise of jurisdiction over this action, Plaintiffs'

objection to the Report, and related filings, the Court APPROVES the JVIagistrate
Judge s Report And Recommendation and ADOPTS it as the Court s opinion in this
matter.

Also before the Court is Defendants Liberty Mutual Insurance Company
(LMIC) and Liberty M:utual Fire Insurance Company's (LMFIC) Motion To Dismiss
For Failure To State a Claim (Doc. 7), which seeks dismissal of Plaintiffs' claims
because neither Defendant issued a policy of homeowners insurance to Plaintiffs."

{Id. at 4). Plaintiffs oppose the motion. (Doc. 9). With respect to Defendant LMIC,
Plaintiffs argue that LMIC was Nash's employer and is "vicariously liable for her
negligence." (Id. at 2). Because the Court is dismissing Plaintiffs' claims against Nash
as perempted, no vicarious liability claims can lie against her employer. See Charles
v. Mancuso, No. 2:20-CV-00800, 2023 WL 6053759, at *4 (W.D. La. Sept. 15, 2023)

(citing Doss v. Morris, 86 Fed. App'x 25, 29 (5th Cir. 2004)) (dismissing all state law
claims against employer because plaintiffs' claims were insufficient as to employee

officers on summary judgment). Plaintiffs' vicarious liability claims against

Defendant LMIC will therefore be dismissed.1
As for the additional claims against Defendants LMIC and LMFIC, Plaintiffs
argue that the mere assertion that these Defendants did not issue an insurance policy
"is insufficient to support their dismissal when viable causes of action have been

alleged against them." (Doc. 9 at 2). The Court agrees. LMIC and LMFIC allege that
they did not issue an insurance policy to Plaintiffs; Plaintiffs allege that LMIC and
LMFIC did. At this stage, however, the Court must "acceptQ all well-pleaded facts as

true and view Q those facts in the light most favorable to the plaintiff." Bnstos v.
Martini Club Inc., 599 F.3d 458, 461 (5th Cir. 2010) (quotation marks omitted).
Courts under similar circumstances have allowed insurance company defendants to
attach documentation showing that no policy was issued to a plaintiff. See, e.g., Little
v. USAA Cas. Ins. Co., No. 1:09CV102, 2009 WL 10676838, at *1 (S.D. Miss. Mar. 9,

2009); Banks v. State Farm Fire & Cas. Co., No. 1:22-CV-03934, 2023 WL 6466245,
at *1 CW.D. La. Oct. 4, 2023). Although the Court must credit Plaintiffs' claims on the

pleadings before it, LMIC and LMFIC may resubmit their motion attaching evidence
to substantiate its claim.

Accordingly,

1 Plaintiffs have also filed a Motion for Leave to File Surreply (Doc. 17) to Defendants
LMIC and LMFIC's M:otion to Dismiss. Plaintiffs argue that because LMIC and LMFIC
raised challenges to the claims against Defendant Nash in their Reply in Support of the
Motion (Doc. 13), Plaintiffs should be given leave to "address the new issues raised." (Doc. 17
at 2). Those "new issues," however, have been extensively litigated in Plaintiffs' IVIotion to
Remand and are addressed in the Magistrate Judge's Eeport and this Order. Plaintiffs will
not be given leave to file additional briefing to rehash arguments regarding an issue that has
been decided. See Warrior Energy Servs. Corp. v. ATP Titan M/V, 551 F. App'x 749, 751 (5th
Cir. 2014) ( [S]urreplies are heavily disfavored by courts. ).

IT IS ORDERED that Plaintiffs' Motion To Remand (Doc. 8), be and is
hereby DENIED.

IT IS FUETHER ORDEKED that Plaintiffs' claims against Defendant
Michelle Nash be and are hereby DISMISSED WITHOUT PREJUDICE because
she was improperly joined.2

IT IS FURTHER ORDERED that Defendant Michelle Nash's Motion to
Dismiss (Doc. 23) be and is hereby DENIED AS MOOT.
IT IS FURTHEK ORDERED that Defendants Liberty Mutual Insurance
Company and Liberty Mutual Fire Insurance Company's Motion to Dismiss for

Failure to State a Claim (Doc. 7) be and is hereby GRANTED IN PART.
Plaintiffs' vicarious liability claims against Defendant Liberty Mutual Insurance

Company be and are hereby DISMISSED WITHOUT PREJUDICE. In all other
respects, the Motion be and is hereby DENIED. Defendants Liberty Mutual
Insurance Company and Liberty Mutual Fire Insurance Company may resubmit

their motion attaching evidence that they did not issue a policy to Plaintiffs.

IT IS FURTHER ORDERED that Plaintiffs' Motion for Leave to File

2 See Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 210 (5th

Cir. 2016) ("[T]he dismissal of a nondiverse party over whom the court does not have
jurisdiction must be a dismissal without prejudice in every instance.").

7

Surreply (Doc. 17) be and is hereby DENIED.

A

Baton Rouge, Louisiana, this v day of February, 2024

fL-,
JUDGE BRIAN A( JACKSON

UNITED STATES DISTRICT COURT
MIDDLE DISTEICT OF LOUISIANA