259 So. 3d 1141
La. Ct. App.2018Background
- ASI sued armored-car company LeoTran for conversion/breach/bad faith after $1,382,200 in cash went missing while LeoTran was transporting/storing ASI funds; $34,200 was recovered, $1,348,000 remained missing.
- LeoTran had an Armored Car Cargo Liability Policy from intervening Underwriters; Underwriters denied coverage citing a directors-and-officers exclusion for owner Tolleson.
- LeoTran was served via Louisiana Secretary of State on Oct. 30, 2017. ASI moved for a preliminary default on Nov. 14, 2017 (before the 15-day answer period expired) and the preliminary default was entered Nov. 15.
- On Nov. 29, 2017 ASI moved to confirm the default based on affidavits/exhibits; the court confirmed the default that day without an open-court confirmation hearing or live testimony. Final default judgment entered Nov. 29, 2017; notice served Dec. 7, 2017.
- Underwriters intervened and sought to set aside the default and appealed after denial of a new trial; they argued procedural defects (premature preliminary default, lack of open-court confirmation, noncompliance with art. 1702.1) and substantive defects.
- The Fifth Circuit vacated the default judgment and remanded, holding the default procedurally defective for multiple independent reasons.
Issues
| Issue | Plaintiff's Argument | Defendant/Intervenor's Argument | Held |
|---|---|---|---|
| Standing to appeal by insurer-intervenor | ASI implicitly opposed intervention; Underwriters lacked standing because they didn’t timely intervene | Underwriters could intervene because they had a direct justiciable interest as potential payor of any judgment | Underwriters had standing to appeal; could have intervened and were aggrieved by the judgment |
| Timeliness of appeal/new-trial filing | ASI argued Underwriters’ new-trial motion was untimely so appeal untimely | Underwriters filed new-trial motion within seven days after notice per art. 1974 and appealed within art. 2087 delays | Underwriters’ new-trial and devolutive appeal were timely |
| Preliminary default entered before answer period expired | ASI moved for preliminary default after clerk certified no answer; default was valid | Underwriters argued preliminary default was premature because the 15-day period had not yet elapsed when certification was signed | Court held preliminary default was invalid because record shows the clerk’s certification was dated before the statutory 15-day answer period lapsed, rendering subsequent default defective |
| Confirmation procedure for tort claims (La. C.C.P. art. 1702(B)(2) and 1702.1) | ASI contended judgment could be confirmed on submitted documents and alternatively sought hearing; later argued part-contractual basis might permit confirmation without hearing | Underwriters argued that for delictual claims the court had to conduct an open-court confirmation hearing and receive live testimony; also that art. 1702.1 strict requirements for confirming without hearing were not met | Court held confirmation without an open-court hearing and live testimony violated art. 1702(B)(2); even if any part were conventional, ASI failed to strictly comply with art. 1702.1’s mandatory certification and clerk-examination requirements; judgment vacated |
Key Cases Cited
- Arias v. Stolthaven New Orleans, LLC, 9 So.3d 815 (La. 2009) (standard for appellate review of default and requirement that tort claims require plaintiff testimony for confirmation)
- Rosell v. ESCO, 549 So.2d 840 (La. 1989) (appellate duty to redetermine facts de novo when reversible legal error or manifest error of material fact exists)
- Morice v. Alan Yedor Roofing, 216 So.3d 1072 (La. App. 5 Cir. 2017) (presumption supporting a default judgment is rebuttable when record indicates otherwise)
- Lonergan v. MetLife, 729 So.2d 81 (La. App. 5 Cir. 1999) (strict compliance with La. C.C.P. art. 1702.1 is mandatory; defects are fatal)
- VSA, Inc. v. Catalanotto, 708 So.2d 1090 (La. App. 5 Cir. 1998) (failure to satisfy art. 1702.1 requirements undermines default confirmation)
- McCann v. Anderson, 991 So.2d 1086 (La. App. 1 Cir. 2008) (contrast – some circuits allow trial court discretion to review record despite procedural defects)
- Discover Bank v. Peters, 870 So.2d 602 (La. App. 2 Cir. 2004) (same as McCann on trial-court discretion)
- John Guidry Const. Co., Inc. v. Rivertown Properties, Inc., 517 So.2d 853 (La. App. 3 Cir. 1987) (requires strict compliance with procedural rules for default confirmation)