Maloney Cinque, L.L.C. v. Pacific Insurance Co.
89 So. 3d 12
La. Ct. App.2012Background
- Pacific Insurance, Ltd. appeals a judgment in favor of Maloney Cinque, L.L.C. and Maloney Sept, L.L.C. alleging breach of contract and bad faith penalties related to Katrina wind and flood claims.
- Plaintiffs owned Mardi Gras Truck Stop and Big Easy Truck Stop damaged by both flood and wind; flood waters reached at least four feet at each site.
- Trial court awarded extra expenses, consequential damages, and statutory penalties; court later amended judgment after new-trial motions.
- Timeline shows delays in payments: initial wind/BI payments were late; coinsurance calculations slowed timely payment; some BI payments were untimely.
- The policy includes 90% coinsurance for BI/extra expense and 100% coinsurance for BI and extra expense; penalties hinge on timely payment after satisfactory proof of loss.
- The court ultimately ajdudicated penalties, BI damages, and extra expenses, and recast the judgment after rehearing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of wind-damage payments | Cinque-Sept says payments were untimely under 22:658/22:1220. | Pacific argues payments timely once sufficient information was available (coinsurance delay not sanctions). | Partial penalties awarded; some wind payments deemed untimely and penalties applied. |
| Application of penalties under 22:658 vs 22:1220 | Penalties for late payments apply under both statutes where applicable. | Penalty computation should align with the correct statutory framework for the breach of good faith. | Penalties recalibrated to 22:658 for late wind payments; 22:1220 penalties limited or adjusted on BI-related issues. |
| Consequence damages (lost profits) and BI loss calculation | Delays caused full BI losses and extended reopening dates; damages should reflect lost profits. | BI loss should be calculated consistent with coinsurance and policy terms; insurer not liable for disputed BI amounts. | Consequence damages for BI awarded with adjustments for coinsurance; BI loss figures recast with policy terms andPara. penalties. |
| Coinsurance provision application to penalties and BI | Coinsurance should not be applied to penalties for BI under 22:1220; focus on policy-based BI loss. | Coinsurance applies to BI loss and impacts damages and penalties. | Coinsurance not applied to 22:1220 penalties; applied to BI losses for consequential damages per rehearing decision. |
| Interest on penalties | Interest accrues from date of judgment on penalties. | Interest on penalties should accrue from date of judgment after award (Sher rule). | Judicial interest for penalties directed from date of judgment. |
Key Cases Cited
- Reed v. State Farm Mut. Auto. Ins. Co., 857 So.2d 1012 (La. 2003) (statutes penal in nature; prove satisfactory proof of loss)
- Daney v. Haynes, 630 So.2d 949 (La.App. 4th Cir. 1993) (coinsurance dispute not defense to late payment; undisputed portions paid)
- Sibley v. Insured Lloyds, 442 So.2d 627 (La.App. 1st Cir. 1983) (insurer must pay undisputed portion to avoid penalties)
- Warner v. Liberty Mut. Fire Ins. Co., 543 So.2d 511 (La.App. 4th Cir. 1989) (partial payments and undisputed portions; insurer must tender undisputed portion)
- Fontana v. Louisiana Sheriffs’ Automobile Risk Program, 697 So.2d 1037 (La.App. 1 Cir. 1997) (reasonable doubt exists; bad faith not inferred when disputes exist)
- Sher v. Lafayette Ins. Co., 988 So.2d 186 (La. 2008) (insurance contract interpretation; penalties from judgments; good faith duties)
- Durio v. Horace Mann Ins. Co., 74 So.3d 1159 (La. 2011) (distinction between contractual damages and 22:1220 penalties)
- Wegener v. Lafayette Ins. Co., 326 So.3d 1220 (La. 2011) (analysis of penalties under 22:1220/22:1973 in bad faith claims)
- Neal Auction Co., Inc. v. Lafayette Ins. Co., 13 So.3d 1135 (La.App. 4th Cir. 2009) (public adjuster conflict of interest; contract and contingency issues)