350 So.3d 952
La. Ct. App.2022Background
- On July 16, 2013 Brendon Banks, Sr., an RLH employee, suffered catastrophic injuries when an RLH cement truck left a ramp and fell ~42 feet.
- Banks sued RLH (and initially Progressive, RLH’s insurer) for intentional tort and spoliation, alleging RLH received a Preservation Letter asking it to preserve the truck but disposed of it; trial court later granted partial summary judgment finding RLH liable on spoliation.
- RLH then asserted a third-party claim against Progressive alleging Progressive told RLH it was permissible to dispose of the truck (detrimental reliance).
- In discovery, RLH served a Request for Admission that Progressive received the Preservation Letter; Progressive denied receiving it. RLH later produced an email showing Progressive’s adjuster had been cc-ed on the Preservation Letter.
- Trial court found Progressive violated La. C.C.P. art. 863 and sanctioned Progressive: (1) precluded Progressive from introducing evidence it did not receive the Preservation Letter; and (2) precluded Progressive from introducing evidence it did not give assurances/advice to RLH about disposing the truck. Progressive appealed.
- The appellate court affirmed the sanction precluding Progressive from denying receipt of the letter, but reversed the sanction barring Progressive from contesting whether it gave assurances (because that effectively struck a defense), and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument (RLH/Banks) | Defendant's Argument (Progressive) | Held |
|---|---|---|---|
| Whether Progressive had "reasonable justification" for denying receipt of the Preservation Letter | Denial was false and objectively unreasonable because Progressive had been cc-ed and evidence (email) shows adjuster received it | Checking the claims file before answering satisfied a reasonable inquiry; loss or misfiling of the email justified denial | Denial was not objectively reasonable; checking the file alone was inadequate given notice that an adjuster was cc-ed; sanction appropriate |
| Whether sanctions require willful misconduct | Sanctions appropriate under Art. 863 for failure to make reasonable inquiry; willfulness not required for non-draconian sanctions | Sanctions should require willful or intentional misconduct (citing cases on default/dismissal) | Willfulness not required for the evidentiary sanction imposed; cases requiring willfulness addressed dismissal/default, distinguishable from evidentiary sanctions |
| Whether RLH/Banks were prejudiced by Progressive’s denial | RLH was prejudiced: hindered in preparing case, incurred costs to prove receipt, and settlement positions affected | No meaningful prejudice because RLH always had the Preservation Letter and RLH could have discovered the adjuster’s receipt without sanction | Prejudice shown: minimal showing needed (hindered preparation, settlement leverage); sanction justified on prejudice ground |
| Whether the specific sanctions were excessive or struck a defense | Sought striking defenses but accepted lesser sanctions; precluding denial of receipt and of assurances was appropriate | Precluding reliance-defense evidence (assurances) effectively struck a defense and was excessive; lesser monetary sanctions suffice | Court affirmed preclusion of evidence denying receipt, but reversed preclusion regarding assurances because that would effectively strike Progressive’s detrimental-reliance defense; remanded (monetary sanctions remain an option on remand) |
Key Cases Cited
- Elysian, Inc. v. Neal Auction Co., Inc., 325 So. 3d 1075 (La. App. 4 Cir. 2021) (abuse-of-discretion standard for reviewing Article 863 sanctions)
- Horton v. McCary, 635 So. 2d 199 (La. 1994) (default/dismissal are draconian sanctions reserved for extreme misconduct; willfulness relevant)
- Thomas v. Waste Mgmt. of La., LLC, 314 So. 3d 875 (La. App. 4 Cir. 2021) (prejudice showing is minimal; failure to produce discovery can hinder preparation and settlement)
- Landry v. Landry, 331 So. 3d 351 (La. App. 1 Cir. 2021) (courts should test signer’s conduct by what was reasonable to believe when filing)
- Loyola v. A Touch of Class Transp. Serv., Inc., 580 So. 2d 506 (La. App. 4 Cir. 1991) (subjective good faith does not satisfy Article 863’s objective reasonable-inquiry requirement)
- Keaty v. Raspanti, 866 So. 2d 1045 (La. App. 4 Cir. 2004) (Article 863 intended in part to deter frivolous/improper litigation practices)