25-02004
Bankr. W.D. La.Jun 26, 2025Background
- Elvis Thompson, while employed by Terry Graham Trucking Inc. (TGTI), was involved in a 2017 truck accident.
- Thompson was not a named insured under the Prime Holdings Insurance Services, Inc. (Prime) policy but was a covered driver under Louisiana's mandatory motor vehicle law, La. R.S. § 32:900.
- Multiple lawsuits followed, and both Prime and its appointed attorney allegedly mishandled the litigation, exposing Thompson and TGTI to excess judgments.
- Prime settled TGTI's bad faith claim for $75,000, and procured Thompson’s release of his purported bad faith claim for $1,000 while Thompson was homeless.
- The Chapter 7 Trustee sought to void Thompson's release (Count 1) and pursue the bad faith claim against Prime (Count 3), arguing Thompson qualified as an "insured" with standing for bad faith under Louisiana law.
- Prime moved to dismiss, arguing Thompson lacked standing as a non-named insured under Louisiana's insurance bad faith statutes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can Thompson, as a permissive driver, assert a bad faith claim under La. R.S. §§ 22:1973/1892? | Trustee: Coverage under motor vehicle law qualifies Thompson to assert a bad faith claim. | Prime: Only named insureds/privity holders can assert bad faith; Thompson wasn't named. | Only named insureds or those in privity may assert; Trustee (via Thompson) cannot. |
| Does unwinding the $1,000 release confer a valid bad faith claim recovery right to the Trustee? | Unwinding gives Trustee a revived bad faith action. | No valid bad faith claim exists, so unwinding is moot. | Unwinding is moot—no underlying claim exists to revive. |
Key Cases Cited
- Theriot v. Midland Risk Ins. Co., 694 So.2d 184 (La. 1997) (holding only named insureds in privity with insurer can assert bad faith claims under La. law)
- Manuel v. La. Sheriff's Risk Mgmt. Fund, 664 So.2d 81 (La. 1995) (clarifying that insured status derives from contractual privity with insurer)
- Smith v. Citadel Ins. Co., 285 So.3d 1062 (La. 2019) (duty of good faith arises only from the contractual relationship between insurer and named insured)
- Langsford v. Flattman, 864 So.2d 149 (La. 2004) (third-party claimants not entitled to assert bad faith claims under La. bad faith statutes)