Prest v. Louisiana Citizens Property Insurance Corp.
125 So. 3d 1079
La.2012Background
- Plaintiffs Kennedy, Lewis, Renton & Associates, Inc. (KLR) insured property of Kirk Prest in Boothville, LA under Citizens policy with four buildings total coverage of $350,000; ownership included Fin & Feather entities; post-Ivan repairs and expansions followed by requests for increased coverage in July and August 2005.
- Citizens’ guidelines required written requests by mail to increase policy limits; increases bound the day after postmark; no payment was required for increases unless new policy or renewal.
- KLR sent July 2005 increase request by certified mail, received confirmation Citizens acknowledged; August 2005 request sent by regular mail, with no follow-up by KLR; Katrina hit Aug 29, 2005, damaging the property and affecting perceptions of coverage.
- Citizens later denied the increases in May 2006, treating the policy as originally limited to $350,000; Plaintiffs sued Citizens and, alternatively, KLR for negligence and related damages; settlement with Citizens in Dec. 2008 resolved the Citizens claims for $322,576.96, with Plaintiffs preserving claims against KLR.
- Trial court found KLR negligent for August 2005 request; awarded Mr. Prest $75,000 general damages and $137,386.44 in special damages; court of appeal reduced special damages to $100,180.40; Supreme Court granted writ to review general damages.
- Court ultimately held that KLR failed to exercise reasonable diligence in August 2005 and reversed the general damages award; special damages were affirmed as amended; overall affirmative liability finding against KLR affirmed in part and reversed in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Negligence whether KLR exercised reasonable diligence to procure increased coverage | Prest argues KLR undertook to procure increases and caused reliance on assurances | KLR argues Citizens bore fault; August request not properly followed by follow-up | KLR negligent for August 2005 request |
| Whether the trial court erred in awarding general damages for mental anguish | Prest seeks general damages for mental distress due to alleged negligence | No physical injury or special circumstances shown | Abused discretion; general damages reversed |
| Whether special damages (attorney fees, loss of use) were properly awarded | Special damages pleaded or conformed to evidence; collateral-source funds irrelevant | Attorney fees lack basis absent statute/contract; loss-of-use disputed | Special damages affirmed as amended; pleadings conforming expansion allowed |
| Collateral source / double recovery issues | Recovery from Citizens and KLR should not reduce Plaintiffs’ damages | Double recovery claims; offsets apply | No prohibited double recovery; collateral source rule preserved other damages |
| Whether pleadings could be amended to conform to the evidence (special damages)** | Demand for damages broadened to include special damages | Pleadings not previously framed to cover such items | Pleadings properly expanded to conform to evidence; no merit in objection |
Key Cases Cited
- Karam v. St. Paul Fire & Marine Ins. Co., 281 So.2d 728 (La. 1973) (insurer’s duty to procure and notify; client may recover losses from agent’s failure to procure coverage)
- Moresi v. State Through Dept. of Wildlife and Fisheries, 567 So.2d 1081 (La. 1990) (negligence leading to serious mental distress exceptions to rule against pure emotional distress)
- Bozeman v. State, 879 So.2d 692 (La. 2004) (collateral source rule; damages not reduced by independent recovery)
- Kansas City Southern Ry. v. Dept. of Transp. & Development, 846 So.2d 734 (La. 2003) (collateral source; tortfeasor not relieved by plaintiff’s foresight in purchasing insurance)
- Bryant v. New Orleans Public Serv. Inc., 406 So.2d 767 (La. App. 4th Cir. 1981) (losses from diminished patrimony; damages recoverable from independent sources)
- Wainwright v. Fontenot, 774 So.2d 70 (La. 2000) (special damages; conformity to pleadings per Article 1154)
- Karam, 281 So.2d 728 (La. 1973), 281 So.2d 728 (La. 1973) (see above (dup. in list))