344 So.3d 797
La. Ct. App.2022Background
- June 2016 water overflow at plaintiffs' home; mold discovered during plumbing inspection and by subsequent mold testing.
- Federated inspected, tendered checks including a $5,000 payment identified as the policy's mold sublimit; plaintiffs disputed amounts and demanded appraisal.
- Appraisal award (total ≈ $43,600) was finalized and paid; plaintiffs later sought an additional $31,858.51 for mold remediation.
- Federated moved for summary judgment, arguing the policy's mold endorsement limits mold-related increases in loss to $5,000 (already paid) and that refusal to appraise additional mold was not bad faith.
- Trial court granted summary judgment dismissing all claims against Federated (including all bad faith claims). Plaintiffs appealed.
- Fifth Circuit: affirmed that the mold endorsement is unambiguous, that Federated paid the $5,000 mold sublimit and owed no further mold proceeds, and that dismissal of the bad-faith claim concerning refusal to appraise mold was proper; reversed dismissal of plaintiffs' other bad-faith claims because those were not addressed in Federated's motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Ambiguity/enforceability of mold endorsement | Endorsement placement and fine print make it ambiguous/adhesionary | Endorsement language is clear; sublimit is stated in Declarations and enforceable | Endorsement is unambiguous and enforceable |
| Whether mold-related damages caused by a covered peril are fully covered (vs. capped) | If mold resulted from a covered water loss, related damages should be covered beyond sublimit | Endorsement reinstates coverage for losses caused by a covered peril but limits any increase in loss caused by mold to the sublimit | Losses caused by the covered water event are covered; any increase attributable to mold (remediation, access, testing) is subject to the $5,000 sublimit |
| Whether Federated paid the full mold limit | Plaintiffs say additional remediation costs remain unpaid | Federated paid the $5,000 sublimit and paid for wet/damaged property per appraisal; remediation-only costs are within the sublimit | Federated paid the $5,000 mold limit; no additional mold proceeds owed |
| Bad-faith claims against insurer | Plaintiffs asserted bad-faith for (1) refusal to appraise mold, (2) inadequate pre-appraisal payments, and (3) failure to timely/adequately pay ALE | Federated moved only on the bad-faith theory tied to refusing to appraise additional mold (arguing payment of the sublimit defeated that claim) | Dismissal of the bad-faith claim about refusing to appraise mold is affirmed; dismissal of plaintiffs' other bad-faith claims is reversed because Federated did not seek summary judgment on them |
Key Cases Cited
- Cadwallader v. Allstate Ins. Co., 848 So.2d 577 (La. 2003) (insurer contract interpretation; court's role is to determine parties' common intent)
- Ross v. C. Adams Const. & Design, LLC, 70 So.3d 949 (La. App. 5 Cir. 2011) (standard of appellate de novo review on summary judgment)
- Orleans Parish Sch. Bd. v. Lexington Ins. Co., 123 So.3d 787 (La. App. 4 Cir. 2013) (distinguishes mold as cause v. mold as loss; courts must identify damages that are increases caused by mold)
- LeBlanc v. Babin, 786 So.2d 850 (La. App. 5 Cir. 2001) (rules on policy ambiguity and strict construction against insurer)