Oubre v. Louisiana Citizens Fair Plan
2011 La. LEXIS 3014
| La. | 2011Background
- This is a class action where Katrina/Rita insureds allege Citizens failed to timely initiate loss adjustment, triggering penalties under LA Rev Stat § 22:658(A)(3) and § 22:1220(C).
- District Court certified the class and granted penalties totaling $92,865,000, later reduced by credits for opt-outs/releases.
- Citizens argued issues included whether it was an insurer, whether loss adjustment was timely, and whether emergency orders/ ALE payments affect liability.
- The District Court held that initiating loss adjustment can be satisfied by scheduling an inspection, with or without an appointment, within 30 days for catastrophic loss.
- The Court of Appeal reversed, requiring a bad-faith finding to impose penalties, and that § 22:1220(C) imposes a ceiling of $5,000 when damages are not proven.
- The Louisiana Supreme Court reversed, holding no bad-faith showing is required to impose penalties under § 22:658(A)(3), and that § 22:1220(C) caps penalties at $5,000 when damages are not proven; summary judgment was appropriate against the asserted class.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether bad faith must be shown to impose penalties under § 22:658(A)(3). | Oubre argues no bad faith needed; strict statutory text provides penalties for 30-day inaction. | Citizens argues penalties depend on breach of good faith; requires bad faith. | Penalties imposed without showing bad faith. |
| Whether § 22:1220(C) sets a five-thousand-dollar cap when damages are not proven. | Five thousand is the minimum (or greater of 2x damages or 5k) when no damages are proven. | Five thousand is a ceiling; penalties up to 2x damages or 5k whichever greater depending on damages. | Five-thousand-dollar cap is the ceiling when damages are not proven. |
Key Cases Cited
- Sultana Corp. v. Jewelers Mut. Ins. Co., 860 So. 2d 1112 (La. 2003) (penalties do not require proof of damages when seeking § 22:1220 penalties)
- Hart v. Allstate Ins. Co., 437 So. 2d 823 (La. 1983) (penal statutes strict construction)
- Midland Risk Ins. Co. v. State Farm Mut. Auto. Ins. Co., 643 So.2d 242 (La.App. 3 Cir. 1994) (penalties to deter insurer conduct)
- Adams v. Stratton, 831 So.2d 290 (La.App. 5 Cir. 2002) (statutory penalties framework guidance)
- Hall v. State Farm Mut. Auto. Ins. Co., 658 So.2d 204 (La.App. 3 Cir. 1995) (damages analysis in penalties context)