263 So. 3d 1157
La. Ct. App.2018Background
- Plaintiff Harold Fils was injured in an August 28, 2013 accident and sued his UM carrier, Starr, on August 27, 2015 for additional UM benefits after Starr tendered $45,000 which Plaintiff said did not cover his medical expenses.
- Plaintiff amended his petition on January 26, 2017 to add bad-faith claims under La. R.S. 22:1973 and 22:1892 for Starr's handling of the UM claim; original petition contained no bad-faith allegations.
- Starr filed a peremptory exception of prescription; the trial court dismissed the bad-faith claims as prescribed and entered a final judgment.
- On initial appeal this court affirmed that a one-year prescriptive period applied to the bad-faith claims; Plaintiff moved for rehearing.
- On rehearing the court revised its view and held that bad-faith claims by an insured against its insurer arise from the insurance contract and are subject to the ten-year liberative prescription of La. Civ. Code art. 3499; the prior affirmance was reversed and the case remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicable prescriptive period for an insured's bad-faith claim against its insurer | Bad-faith claims arise from contractual/fiduciary duties tied to the insurance contract and thus prescribe under the 10-year rule (art. 3499) | Bad-faith penalty statutes create independent tortlike duties subject to the 1-year delictual prescription | Held: 10-year prescriptive period applies to insured's bad-faith claims; reversed trial court dismissal |
Key Cases Cited
- Roberie v. Southern Farm Bureau Cas. Ins. Co., 194 So.2d 713 (La. 1967) (recognized insurer liability for failing to inform/advice insured during settlement negotiations)
- Theriot v. Midland Risk Ins. Co., 694 So.2d 184 (La. 1997) (statute recognizes duty of good faith as outgrowth of contractual/fiduciary relationship)
- Manuel v. La. Sheriff's Risk Mgmt. Fund, 664 So.2d 81 (La. 1995) (discussed relationship between bad-faith statute and insurance contract)
- Cantrelle Fence & Supply Co. v. Allstate Ins. Co., 550 So.2d 1306 (La. App. 1 Cir. 1989) (applied 10-year prescription to insurer penalty claim)
- Zidan v. USAA Prop. & Cas. Ins. Co., 622 So.2d 265 (La. App. 1 Cir. 1993) (third-party claimant; applied one-year prescription for claims involving non-insured third parties)
- Langsford v. Flattman, 864 So.2d 149 (La. 2004) (bad-faith cause of action available only to insureds)
- Kelly v. State Farm Fire & Cas. Co., 169 So.3d 328 (La. 2015) (reiterated that duty of good faith is an outgrowth of contractual/fiduciary relationship)