118 So. 3d 1203
La. Ct. App.2013Background
- Hurricane Katrina caused extensive damage to OPSB’s 126 public school properties in New Orleans area.
- OPSB sued Lexington Insurance and four excess carriers (Essex, Clarendon, Westchester, RSUI) under a following-form policy structure.
- Primary layer: Lexington $50M; First Excess $25M; Second Excess $25M (Westchester); Third Layer $100M (RSUI).
- Ordinance or Law endorsement (Code Upgrade) provides limited increased cost coverage but with a two-year expired condition (not to exceed August 29, 2007).
- Excess Insurers moved for partial summary judgment asserting no coverage for costs incurred after August 29, 2007; OPSB argued factual and equitable questions precluded summary judgment.
- Trial court granted summary judgment, dismissing OPSB’s claims for increased construction costs not repaired by August 29, 2007; judgment designated final as to this issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of the two-year limitation | OPSB claims the period is not enforceable due to insurer fault and waiver. | Insurers argue the clause is clear and enforceable; no extension in writing occurred. | Two-year limit enforceable; coverage barred if repairs not completed by 2007. |
| Ambiguity of 'increased construction costs' | Phrase is ambiguous and should be construed against insurer. | Term has plain meaning; not ambiguous given context. | Phrase not ambiguous; understood in ordinary meaning. |
| Waiver/Estoppel of two-year limit | Insurers’ extensions and conduct waive or estop enforcement. | No express waiver; extensions relate only to proofs of loss/discovery, not two-year limit. | Waiver/estoppel not established; limit preserved. |
| Impossibility/Prevention of performance | Bad faith handling prevented OPSB from meeting condition; relief under Article 1772. | Condition not impossible or dependent solely on insurer whim; policy governs. | Doctrine of prevention of performance rejected; Article 1772 inapplicable. |
| Prematurity of summary judgment | Discovery incomplete; summary judgment premature. | Language clear; discovery would not alter outcome. | No abuse; judgment appropriate at this stage. |
Key Cases Cited
- Cadwallader v. Allstate Ins. Co., 848 So.2d 577 (La. 2003) (determines when contract is clear or ambiguous; enforce as written when clear)
- Louisiana Ins. Guar. Ass'n v. Interstate Fire & Cas. Co., 630 So.2d 759 (La. 1994) (insurance policy interpretation; strict construction when ambiguous)
- Tate v. Charles Aguillard Ins. & Real Estate, Inc., 508 So.2d 1371 (La. 1987) (waiver may apply to any provision; proof required)
- Arceneaux v. Amstar Corp., 969 So.2d 755 (La. 4th Cir. 2007) (waiver/estoppel elements for insurance contracts)
- Steptore v. Masco Constr. Co., 643 So.2d 1213 (La. 1994) (four elements of waiver applied to insurance)