Nelcome J. Courville, Jr. v. Lamorak Insurance Company
369 So.3d 387
La. Ct. App.2019Background
- Nelcome Courville developed mesothelioma from asbestos exposure in the 1960s–1970s and died; his wife and children (Relators) brought survival and wrongful-death claims.
- Reilly-Benton Company, a named defendant, filed for bankruptcy in October 2017; Relators later named Liberty Mutual as a direct defendant under La. R.S. 22:1269 for Reilly-Benton’s liability.
- Liberty Mutual and Reilly-Benton executed a 2013 Settlement Agreement resolving coverage disputes between them.
- Liberty Mutual moved for summary judgment arguing the 2013 Settlement barred Relators’ recovery; the trial court granted the motion and dismissed Liberty Mutual with prejudice.
- Relators sought emergency writ review; the appellate court granted the writ and reversed the trial court, holding the Settlement Agreement unenforceable against third-party tort victims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of a post-injury settlement between insurer and insured to limit insurer liability to tort victims | Settlement cannot limit insurer’s preexisting liability to injured third parties; public policy and statute bar post‑injury reductions | Settlement resolved coverage disputes and is binding between insurer and insured, so it extinguishes or limits insurer liability | Settlement unenforceable as to third-party tort victims; trial court reversed |
| Applicability of Washington v. Savoie (public‑policy rule against post‑injury reformation) | Washington bars any post‑injury reformation of insurance that prejudices injured third parties | Parties may rely on freedom of contract and settlement finality between insurer and insured | Washington governs; post‑injury reformation that prejudices tort victims is barred |
| Effect of La. R.S. 22:1262 (prohibition on retroactive annulment of liability policies) | The statute prohibits retroactive annulment; the 2013 Settlement is a post‑occurrence annulment and thus null as to victims | Settlement is not an unlawful annulment or statute does not apply to bar settlements between insurer and insured | The Settlement functionally annuls coverage for pre‑existing injuries and violates §1262; it is null and void as to third‑party tort victims |
Key Cases Cited
- Long v. Eagle, 158 So.3d 968 (La. App. 4th Cir. 2015) (an insurer–insurer settlement was considered; court explained Washington/statutory protections do not shield insurers, and noted a different analysis if an injured plaintiff attacks the settlement)
- Washington v. Savoie, 634 So.2d 1176 (La. 1994) (establishes public‑policy rule prohibiting post‑injury reformation or retroactive reduction of insurance coverage that prejudices injured third parties)