265 So. 3d 62
La. Ct. App.2019Background
- Plaintiff Bruce Feingerts had personal property stored offsite at two facilities (ERS and CRDN) while his home was being remediated after a 2003 windstorm; he purchased a renter's policy from Louisiana Citizens (Citizens) covering wind/wind-driven rain but excluding flood.
- Hurricane Katrina (Aug. 29, 2005) flooded both storage facilities; Feingerts claimed that roof/wind-driven rain damaged stored contents before the flooding.
- Feingerts timely reported ALE (additional living expenses) and property claims to Citizens on Aug. 31, 2005; Citizens made delayed ALE payments and conducted sporadic, inconsistent investigations of the storage sites.
- Feingerts sued (Aug. 28, 2007) asserting property damage, unpaid ALE, and statutory penalties/attorney’s fees under La. R.S. 22:1892 and 22:1973 for arbitrary and capricious handling.
- Trial court awarded $45,000 for property damage but did not find Citizens arbitrary and capricious; Feingerts appealed.
- The appellate court increased the property award to the $100,000 policy limit, reversed the denial on bad-faith penalties, and remanded for assessment of penalties and fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Citizens acted arbitrarily and capriciously in delaying ALE payments | Feingerts: timely produced receipts and proof; Citizens unreasonably delayed payment and failed to timely investigate | Citizens: delay was due to a legitimate coverage/investigation dispute and missing adjuster report | Held: Citizens acted arbitrarily and capriciously for unreasonable delay; remanded to fix penalties/fees |
| Whether Citizens acted arbitrarily and capriciously in handling property-damage claim for stored goods | Feingerts: timely proved causation (wind-driven rain before flood) and provided inventories/values; Citizens failed to investigate, delayed expert review, and ignored inventories | Citizens: disputed causation and valuation; asserted flood exclusion and questioned values | Held: Sufficient proof of wind-driven rain damage; Citizens’ investigation was deficient and arbitrary/capricious; remanded for penalties/fees |
| Whether Citizens waived or must be estopped from asserting flood-exclusion defense | Feingerts: failure to issue reservation-of-rights or non-waiver letter waived the defense | Citizens: preservation of coverage defenses (argued on appeal) | Held: Moot (court awarded policy limits on property claim) — no ruling on waiver issue |
| Whether Citizens should receive a full credit for Feingerts’ settlement with CRDN’s insurer | Feingerts: trial court erred in giving full credit against Citizens’ liability | Citizens: offset appropriate against its obligation | Held: Moot (award of policy limits rendered the issue moot) |
Key Cases Cited
- Louisiana Bag Co., Inc. v. Audubon Indem. Co., 999 So.2d 1104 (La. 2008) (insurer must tender undisputed portion; substantial dispute precludes bad-faith penalties)
- McDill v. Utica Mut. Ins. Co., 475 So.2d 1085 (La. 1985) (insurer should tender a reasonable payment when dispute concerns extent of loss)
- Citadel Broadcasting Corp. v. Axis U.S. Ins. Co., 162 So.3d 470 (La. App. 4 Cir. 2015) (elements for recovering penalties under bad-faith statutes)
- Sher v. Lafayette Ins. Co., 988 So.2d 186 (La. 2008) (definition of arbitrary, capricious or without probable cause in penalties context)
- Guillory v. Lee, 16 So.3d 1104 (La. 2009) (bad-faith statutes are penal and strictly construed)