Michael L. BELANGER, Plaintiff-Appellant v. GEICO GENERAL INSURANCE COMPANY, Defendant-Appellee.
No. 15-30018.
United States Court of Appeals, Fifth Circuit.
Aug. 21, 2015.
614 F. App‘x 684
IV. CONCLUSION
For the foregoing reasons, we MODIFY the judgment of the district court to reflect a dismissal on the merits, rather than for lack of subject matter jurisdiction under Rooker-Feldman, of the § 1983 claims and the CFAA claims. We VACATE the judgment of dismissal of the abuse-of-process and tortious-interference state-law claims, and we REMAND for the district court to consider whether the continued exercise of supplemental jurisdiction is warranted. We AFFIRM the judgment of dismissal of the conversion, wrongful-execution, restitution, and so-called “equitable estoppel and judgment forfeiture” claims for lack of subject-matter jurisdiction as barred by Rooker-Feldman.
PER CURIAM:*
Plaintiff-Appellant Michael Belanger appeals from the district court‘s final judgment dismissing his suit against Defendant-Appellee GEICO General Insurance Company (“GEICO“) with prejudice pursuant to
Brady Keith Patin, Law Offices of Spencer H. Calahan, L.L.C., Baton Rouge, LA, for Plaintiff-Appellant.
W. Paul Andersson, Alex P. Tilling, Esq., Leake & Andersson, L.L.P., New Orleans, LA, for Defendant-Appellee.
I.
The relevant facts are undisputed. On December 27, 2007, Belanger was in an automobile accident with Natalie N. Stephen, GEICO‘s insured. Belanger sued Stephen and GEICO in state court. He alleges that, before trial, he offered to settle his claim against both parties for the policy limits of $25,000, but GEICO rejected his offers. Following a trial, the court entered a judgment against Stephen in the amount of $450,000 and against GEICO for the policy limits of $25,000, plus interest and court costs.
The trial court denied the defendants’ motions for post-judgment relief on September 8, 2011, and entered a signed order to that effect on November 17, 2011. GEICO appealed the $25,000 judgment against it suspensively, but Stephen appealed the $450,000 judgment against her only devolutively, as discussed below. The Louisiana First Circuit Court of Appeal affirmed the trial court‘s judgment on November 13, 2012, and the Louisiana Supreme Court denied the defendants’ application for a writ of certiorari on April 1, 2013.
GEICO filed a motion to dismiss under
The district court held that Belanger‘s claim is time-barred.1 The district court concluded that Belanger‘s claim arose when the excess judgment was entered against Stephen, more than one year before he filed this action. The court also determined that contra non valentem does not apply to exempt the claim from prescription. Accordingly, the district court granted GEICO‘s motion to dismiss. This appeal followed. On appeal, Belanger continues to argue that the claim did not arise until the Supreme Court denied a writ and now argues for the first time on appeal that the applicable prescriptive period is 10 years rather than one year. He has waived his contra non valentem argument by failing to pursue it on appeal.
II.
GEICO‘s motion was styled as a motion to dismiss under Rule 12(b)(6) or, in the alternative, for summary judgment under Rule 56, but neither party relied on summary judgment evidence, and the relevant facts are undisputed.1 Thus, we may apply the Rule 12(b)(6) standard: “[A] motion to dismiss under 12(b)(6) is viewed with disfavor and is rarely granted.”2 In deciding a Rule 12(b)(6) motion, all well-pleaded facts must be taken as true and all inferences must be drawn in favor of the plaintiff.3 This court reviews de novo a district court‘s dismissal for failure to state a claim.4
In this diversity action arising under Louisiana substantive law, we “should first look to final decisions of the Louisiana Supreme Court.”5 Absent such a deci
III.
This appeal concerns when the claim asserted by Belanger arose, and what prescriptive period is applicable to that claim. If, as Belanger argues, the claim did not arise until the Louisiana Supreme Court denied a writ, less than one year before Belanger filed this suit, then it is timely even under the one-year prescriptive period applied by both parties and the district court below. If, however, it arose when the excess judgment was entered against Stephen, more than one year before Belanger filed suit, then the length of the prescriptive period alone will determine whether the claim is timely.
IV.
The bad faith claim at issue that Belanger obtained by assignment from Stephen arises under
A. An insurer, including but not limited to a foreign line and surplus line insurer, owes to his insured a duty of good faith and fair dealing. The insurer has an affirmative duty to adjust claims fairly and promptly and to make a reasonable effort to settle claims with the insured or the claimant, or both. Any insurer who breaches these duties shall be liable for any damages sustained as a result of the breach.8
The district court concluded that the claim arose on April 26, 2011, the day the state trial court entered the excess judgment against Stephen:
While neither party cited any Louisiana Supreme Court or appellate court cases that addresses this specific issue, the case cited by the defendant, Mathies v. Blanchard [959 So.2d 986 (La.Ct.App. 2007)], is persuasive. In Mathies, the Louisiana First Circuit Court of Appeal found that entry of the judgment on the principal demand in excess of the policy limits harms the insured and gives rise to the right to enforce the cause of action for a[n] insurer‘s bad faith failure to settle a claim against its insured within the policy limits. Although the appellate court was addressing the issue of prematurity rather than prescription of the claim, the court established that the injury/damage arising from an insurer‘s bad faith refusal to settle was sustained at the time an excess judgment was entered. Because the allegations in the Petition show that the Petition was filed more than one year after the state court entered an excess judgment, the burden shifted to the plaintiff to show that prescription was interrupted by the state court appeal process or did not commence on the date of the judgment.9
The district court‘s reliance on Mathies appears to be well founded. Although Mathies did not concern precisely when a cause of action under section 1973 arises,10
While Louisiana courts have recognized a cause of action against an insurer for bad faith failure to settle a claim against its insured within the policy limits, no Louisiana court has been called upon to determine when the right to enforce the cause of action arises. However, numerous courts in other jurisdictions have squarely addressed the issue, and have repeatedly held that an excess judgment is a prerequisite to an action for bad faith failure to settle a claim against an insured within the policy limits. See Romstadt v. Allstate Insurance Company, 59 F.3d 608, 611 (6 Cir.1995); Kelly v. Williams, 411 So.2d 902, 904 (Fla. App. 5 Dist.1982); Crabb v. National Indemnity Company, 87 S.D. 222, 231, 205 N.W.2d 633, 638 (S.D.1973); Amoco Oil Company v. Reliance Insurance Company, 1998 WL 187336 (W.D.Mo.4/14/98); Ragas v. MGA Insurance Company, 1997 WL 79357 (E.D.La.2/21/97).11
The key question in all of these cases was whether the insured had been exposed to liability as a result of an excess judgment. In Romstadt and Kelly, the courts held that the insureds could not assert a bad faith claim because they had never, in effect, been exposed to liability for an excess judgment. The Kelly court noted that “a cause of action for bad faith arises when the insured is legally obligated to pay a judgment that is in excess of his policy limits.”12 In Crabb, the South Dakota Supreme Court held that even a judgment-proof insured was exposed to liability when an excess judgment was entered against him because, for instance, “such a judgment will potentially impair his credit, place a cloud on the title to his exempt estate, impair his ability to successfully apply for loans, and may eventually require him to go through bankruptcy.”13 The court concluded: “It is the entry of a final judgment in excess of the policy limits, rather than its satisfaction, which harms the insured and gives rise to a cause of action against the insurer for a wrongful or unreasonable refusal to settle within the policy limits.”14
In this case, the state court entered the excess judgment on April 26, 2011, and the district court signed an order denying a motion for JNOV and new trial on November 17, 2011. The appeals process finally concluded on April 1, 2013, with the Supreme Court‘s writ denial, and Belanger filed this action on October 4, 2013. Because the question under Mathies is when the insured became legally obligated to pay the excess judgment, the outcome turns on how the underlying action was appealed.
The excess judgment against Stephen, the insured, was appealed devolutively, not suspensively, and that distinction determines the outcome here. Under Louisiana law, a suspensive appeal is one which “suspends the effect or the execution of an
Because the excess judgment was appealed only devolutively, not suspensively, it was fully enforceable during the appeals process. Because Stephen was legally obligated to pay the excess judgment in 2011 (regardless of whether she actually paid it), her bad faith claim against GEICO arose at that time, more than one year before she filed this action in October of 2013. Thus, if Stephen‘s bad faith claim is subject to the one-year prescriptive period, Belanger‘s action is untimely.
V.
The only thing that might save Belanger‘s bad faith claim is a longer prescriptive period. It is important to note that although Belanger was not GEICO‘s insured, the claim he asserts was assigned to him by Stephen, who was GEICO‘s insured. Thus, he essentially stands in the shoes of the insured. Belanger argued for the first time on appeal that the prescriptive period for a bad faith claim by an insured against an insurer under
“Under Louisiana law, ‘[t]he correct prescriptive period to be applied in any action depends on the nature of the action; it is the duty breached that should determine whether an action is in tort or contract.‘”17 “Unless otherwise provided by legislation, a personal action is subject to a liberative prescription of ten years.”18 A contract action is subject to the default 10-year period, “run[ning] from the time of breach or the time the cause of action arises.”19 However, Louisiana law provides, in relevant part, that “[d]elictual actions are subject to a liberative prescription of one year. This prescription commences to run from the day injury or damage is sustained.”20 The Fifth Circuit has explained:
The classical distinction between contractual and delictual damages is that the former flow from an obligation contractually assumed by the obligor, whereas the latter flow from a violation of general duty owed by all persons. However, even when a tortfeasor and victim are bound by a contract, Louisiana courts usually apply delictual prescription to actions that are really grounded in tort.21
As the Aspen opinion noted, the Eastern District cases rely on Zidan, which did not concern a claim by an insured and thus does not necessarily determine the issue.23 The Aspen opinion identified a fundamental distinction between a claim by a third party and a claim by an insured:
“The proper prescriptive period to be applied in any action depends upon the nature of the cause of action.” It is logical that the claim by a third-party to an insurance contract against an insurer would be classified as a tort and subject to the one-year prescriptive period for delictual actions, but it is not logical that a first-party claim, that is, a claim by an insured against its insurer, would be classified as a delictual claim. A first-party claim arises out of the relationship created by the insurance contract and, therefore, is either contractual or quasi-contractual in nature. Indeed, Section 1973 “recognizes the jurisprudentially established duty of good faith and fair dealing owed to the insured, which is an outgrowth of the contractual and fiduciary relationship between the insured and the insurer.” Both contractual and quasi-contractual claims are classified, under Louisiana law, as personal actions subject to a liberative prescription of ten years.24
The Aspen reasoning has some support. The longstanding “jurisprudentially established duty” was announced in Wooten v. Cent. Mut. Ins. Co., 166 So.2d 747 (La.Ct. App. 1964), which concluded that a claim by an insured may sound in either tort or contract, which would determine not only the appropriate venue for suit (as in Wooten itself) but also the applicable prescriptive period. The Louisiana Supreme Court has not only recognized this jurisprudential duty since the late 1960s, but also has recognized that the duty was ultimately incorporated into
Ordinarily, the failure to raise an argument before the district court results in its waiver or forfeiture on appeal,26 subject only to plain error review, under which we cannot grant relief unless the error is plain.27 In this case, Belanger‘s counsel stated at oral argument on appeal that he chose not to assert the 10-year prescriptive period argument in the district court because the state of Louisiana law is uncertain on this point. We agree. Even though Louisiana law might ultimately apply the ten-year prescriptive period to his claim, the legal uncertainty means Belanger cannot obtain relief under plain error review.28
We might have discretion, under appropriate circumstances, to excuse the waiver of an argument on a pure question of law where both parties have had a chance to fully brief the issue.29 Although this issue is a pure question of law, and the parties, at the court‘s request, had a chance to provide supplemental briefing on it, we decline to excuse Belanger‘s waiver. Based on his representations at oral argument, it is clear that Belanger‘s counsel did not fail to raise this argument out of mere inadvertence, but rather made a conscious decision. We therefore hold that he actively waived the argument that Belanger‘s claim is subject to a 10-year prescriptive period.30 The question of which prescriptive period applies to a bad faith claim by an insured against an insurer under
VI.
Because Belanger‘s assigned claim arose when the excess judgment was entered