La Louisiane Bakery Co. v. Lafayette Insurance Co.
61 So. 3d 17
La. Ct. App.2011Background
- Hurricane Katrina caused wind damage to La Louisiane Bakery and disrupted its operations from Aug. 29 to Oct. 9, 2005.
- La Louisiane carried a wind policy with business interruption coverage; Lafayette’s ACC clause excluded losses due to flood, sump pump, or power failure if caused concurrently.
- The jury found loss of business income was caused exclusively by a covered loss and awarded $83,247 plus damages and penalties under La.R.S. 22:1220.
- Lafayette challenged the verdict on ACC applicability, adequacy of the business income award, and penalties.
- The court affirmed, holding ACC inapplicable to wind-driven loss of income and upholding the jury’s damages and penalties.
- The trial record included competing adjusters’ reports, credibility determinations favorable to La Louisiane, and questions about the health department survey timing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| ACC applicability to wind vs. flood damages | ACC barred only flood; wind loss is covered | ACC excludes concurrent flood-related losses | ACC inapplicable to wind-driven loss; wind is the covered cause of loss |
| Proof of loss for business income | Plaintiff's records establish the loss | Defendant argues speculative/unsupported figures | No manifest error; $83,247 supported by record evidence and credibility determinations |
| Period of restoration | Period extended to Oct. 8–9 for restoration | Health survey suggests earlier restoration date | No manifest error; 41-day period reasonable under circumstances |
| Penalties under La.R.S. 22:1220 | Insurer acted arbitrarily and failed to pay undisputed portion | Reasonable reliance on coverage questions; no arbitrary denial | Insurer breached duty to adjust promptly; penalties affirmed |
Key Cases Cited
- Hall v. Folger Coffee Co., 874 So.2d 90 (La. 2004) (manifest-error standard for appellate review of factual findings)
- Parish Nat. Bank v. Ott, 841 So.2d 749 (La. 2003) (manifest-error review; deference to trial-court credibility determinations)
- Sher v. Lafayette Ins. Co., 988 So.2d 186 (La. 2008) (ACC clause interpretation; flood term not ambiguous in policy)
- Leonard v. Nationwide Mut. Ins. Co., 499 F.3d 419 (5th Cir. 2007) (three categories of damage under ACC; wind-only covered)
- In re Katrina Canal Breaches Consolidated Litigation, 466 F.Supp.2d 729 (E.D. La. 2006) (ambiguity of 'flood' under levee breach context; district court ruling criticized)